May It Please The Court
Quote of the Day - Money lent to a friend must be recovered from an enemy.
Insurers Not Allowed To Collect Deductibles In Subrogation Suits
In order to save money, many businesses increase their insurance deductible. It reduces premiums and works well if you don't have a claim for several years. The idea is to save the premium reductions and offset the higher deductible if a claim arises. It obviously doesn't work well if you have a claim right away.
There's another twist to be aware of now, however, thanks to this recent court of appeal decision, Pacific Gas & Electric v. American Guarantee and Liability Insurance Company. If you deal closely with your insurance, then you've likely heard of "subrogation." Among other things, it's the method insurance companies use to recover payments to their insureds when someone other than their insured caused the loss. After they fork over a claim payment, the insurer sues the party that caused the loss. Insurance policies typically give the right of subrogation to the insurer when the insurer pays a claim.
Let's cover the facts. PG&E caused an industrial power failure, which resulted in a fire that caused damage to telephone equipment belonging to Pac-West Telecom. Pac-West's insurer, American Guarantee and Liability Insurance Company, a Zurich subsidiary, paid Pac-West's $67,000 loss, and then sued PG&E.
PG&E fought back and argued that while American Guarantee could recover the money it paid to Pac-West, it was not entitled to sue to recover Pac-West's deductible. That normally might not be a big deal to most businesses, but Pac-West had a large deductible: $50,000.
The appellate court agreed and PG&E ended up paying only the $17,000 above Pac-West's deductible to American Guarantee.
The moral of the story? After your insurer pays your claim, the matter isn't finished. If your insurer is going to sue the party that caused your loss, you need to join in that lawsuit in order to recover your deductible. Your insurance carrier can't recover that money for you.
2006 Judicial Election Picks From MIPTC
Every few years we have the opportunity to shape the judiciary here in Orange County, California. Many of you (and the firm's clients) have asked who to elect as judges. Realize here for a moment that you have as much power as Governor Schwarzenegger. Well, almost. He can appoint, but we can elect. So, for the upcoming slate of judges here in the county, here's MIPTC's picks for the local ballot:
For our local Superior Court: Shelia Hanson.
Heaven help us all with the raft of Propositions. I'm not going to wade into that morass.
Nebraska Court Snuffs Out Claim For T-shirt That Caught Fire
In my closet is a T-shirt I've had since high school. I should probably throw it away because it's full of holes, but I'm a guy. I hold on to things like that. Especially since it reminds my that I somehow managed to make it through three-a-day practices before football season started. Sure, I'm almost 50 now, but that's not the point. I was younger then.
You understand, don't you?
Jeffery J. Marksmeier apparently did, and it was almost his undoing. In 1999, Jeff was wearing an old T-shirt manufactured by McGregor (link has sound) that wasn't manufactured after 1990. And he was burning leaves. Obviously, he doesn't live here in California; he's from Nebraska where things like that are still legal. While he was burning leaves, however, he apparently leaned over a little too close to the pile of leaves and his T-shirt caught fire.
Jeff was severely burned, and to recover for his damages, in 2003, he sued McGregor and a company called Delta Apparel, Inc., which manufactured the T-shirt under license from McGregor. Apparently in the interim, there has been a change in the materials used to manufacture T-shirts, and Jeff claimed strict liability for using a material that didn't have flame retardant on it.
Instead, the Nebraska Supreme Court made short work of Jeff's lawsuit, and dismissed his claims against both McGregor and Delta. The high court cited Nebraska's statute of repose for bringing lawsuits against manufacturers of goods that were manufactured more than 10 years before the suit was filed. The Nebraska court had not had the opportunity to interpret its statute of repose before, but no worries, it found that Tennessee used the same one. With a hat tip to a series of Tennessee cases, the court snuffed out Jeff's claims against these two manufacturers.
Jeff and his mother were unable to testify when they got the T-shirt and how long it had been on the shelf at the store where they bought it. Jeff even thought the T-shirt might have come from Goodwill. McGregor, on the other hand, knew exactly when that particular T-shirt had stopped rolling off the manufacturing presses: 1990. More than 10 years had elapsed between then and the time Jeff filed suit, so Jeff did not pass go or collect $200.
Maybe it's time I clean out my closet.
The Million Dollar Comma Used As A Curved Sword
The marriage between contracts and grammar is necessary in order to understand what the parties rights are under those contracts. So here's today's grammar/contracts question: how would you interpret the following sentence?
“This agreement shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party.”
Does it mean: (A) the termination provision applies only to the initial five-year term; or, (B) the termination provision applies to both the initial five-year term and the renewal? Be careful here, your decision will swing one million Canadian dollars to one of the two companies in this dispute, either Rogers Communications or BCE, more commonly known as Bell Canada. One other alternative may be that the termination provision applies only to the renewal.
Here's a clue: the interpretation may turn on either how it reads in French or a legal grammar rule known as the "rule of the last antecedent." So far, the regulators ruled in favor of Bell Canada, which wanted an early termination of its contract with Rogers. In response, Rogers filed a 69-page declaration regarding the use of commas, arguing that the termination modified only the renewal five-year term.
MIPTC sides with Bell Canada and the regulator. As drafted, the modifier seems to apply to the initial term and the renewal. Perhaps the best way to find out what it meant is to ask the lawyer who wrote it, however. But that's just me.
Yo! Adrian! Pass The Cheesesteak!
And don't let me forget the quintessential, gorpiest food of all time, a grillswith (see flameworker's description). It's a Charlottesville, Virginia 2:00 a.m. concoction designed to cure all evils and designed to absorb alcohol in UVA college students who visit the White Spot. It's two glazed doughnuts, slathered in butter and then tossed on the grill until caramelized. Then, just to make sure you have enough sugar coursing through your veins, it's topped with at least one dollop of vanilla ice cream. Add chocolate topping at your own risk.
But I'm getting off track.
As a former resident of P A (that's what the locals call Pennsylvania), and when I could afford the calories more, I loved Philly cheesesteaks. The recipe? A standard white Italian roll of bread, shaved steak, grilled onions and white cheese. If you were daring, you'd add a dash of marinara sauce (or just about anything else - everybody's got their own variances).
It seems, however, that the place to get the best Philly cheesesteak is a matter of dispute. There seems to be little, if no dispute that Pat Olivieri invented the sandwich back in the 30's. His two grandsons, who each operate a Philly cheesesteak eatery, disagree over who makes the best one, and who's entitled to use the trademarked name.
But you don't have to travel to Philly to make your own. The recipe can be easily duplicated, but you have to stick to the recommended main ingredients to get the full effect.
It just tastes better in Philly, but MIPTC won't recommend one Olivieri eatery over the other. I've had both, and they're both terrific.
Should Snarky S's Sneak Into High Court Opinions? We Need A Ruling.
It's a tough philosophical divide, and one that needs a ruling from an entity with more authority than the United States Supreme Court, since the nine justices can't agree on how to handle grammar. What am I talking about? That most confounding of all grammatical rules: whether to add an apostrophe to a word that ends in an "S." If you count the votes, however, you'll see that the Supreme Court's ruling in its Kansas v. Marsh June 2006 opinion is 7-2 against adding an extra "S" to a word that already ends in an "S."
Say, for example, "Williams." Admittedly, I have a dog in this fight.
We're led into this debate by Grammarian extraordinaire Jonathan M. Starble, who is an attorney in West Hartford, Connecticut. He must be a saint to address this issue since he doesn't suffer from the same malady as Justices Thomas, Stevens, Roberts and me, among many others. Not others'. And where does that period go anyway - inside or out?
Mr. Starble's article, headlined Gimme an 'S' (subscription needed) is a grammatical oxymoron in itself, but that's another story. He offers an insightful look at the High Court's usage of the plural possessive over the course of several cases, and examines in detail how each justice has approached the problem.
His conclusion indicates that Justice Thomas adopts the hard-and-fast rule that no word ending in 'S' deserves another 'S' after it. Justice Souter, on the other hand, takes a more flexible approach: "s should always be added after the apostrophe when forming a singular possessive, regardless of whether the nonpossessive form already ends in s."
Then he examines Justice Scalia's practice, which not surprisingly is all over the map: "Scalia appears to believe that most singular nouns ending in s still demand an additional s after the apostrophe." Then Mr. Starble notes, "it would seem that he believes the extra s should be omitted if the existing s is preceded by a hard consonant sound. So, whereas Thomas makes his s determination based strictly on spelling, Scalia appears to look beyond the spelling and examine pronunciation as well."
Justice Stephens, otherwise avoids the entire issue, in the case and constructed his sentences to avoid the possessive question.
So what is the answer?
MIPTC consulted the authorities, as well as Messrs. Starble, Thomas, Roberts, Souter and Stevens, and found a series of rules that will drive even the most dedicated grammarian crazy. The most widely accepted legal grammarian, Brian Garner (who took on the task or rewriting Black's Law Dictionary) puts the basic rule this way in his A Dictionary of Modern Legal Usage: "A. Generally. The best practice, advocated by [Grammar Gods] Strunk & White in The Elements of Style and by every other authority of superior standing, is to add -'s to all singular possessives . . . To form the plural possessive, an apostrophe is added to the -s- of the plural, e.g. Bosses'."
Not all authorities agree, however. I guess that's what make some less superior than Mr. Garner advocates. Take, for example, H.W. Fowler's A Dictionary of Modern English Usage. Here's what Mr. Fowler has to say: "It was formerly customary, when a word ended in -s, to write its possessive with an apostrophe but no additional s . . . But elsewhere we now usually add the s and the syllable - always when the word is monosyllabic, and preferably when it is longer." That's Justice Souter's version.
For the apostrophe-challenged, here's an easy way to think of it: add the apostrophe and another "S" if you pronounce the second "S" when you say the word. For my name, it would be Williams's, even though my grammar checker wants to make it William's.
But be careful.
For Justice Thomas, it's Thomas'.
At least that's MIPTC's ruling.
The City Ordered To Repay Macy's Overpaid Taxes, With Interest
Taxes can be very . . . well, taxing, to say the least. Most of us don't like paying them, but then when we find out that we're paying taxes twice on the same thing, well, that's really frustrating.
Macy's was so frustrated with San Francisco's tax system that it asked for a refund, and when The City refused, Macy's sued. Here's how the tax system worked in San Fran: businesses were required to calculate taxes based on both payroll expenses and gross receipts, and then pay the larger (you're not surprised, are you?) of the two calculated amounts.
There was just one problem with that scheme. If your business operated only in The City (which is coextensive with The County), then your payroll expenses would almost always outstrip your gross receipts. On the other hand, if like Macy's, your business operated both in and outside of San Francisco, then your gross receipts would almost always be higher than your payroll taxes, and you would end up paying more than the businesses inside The City.
Macy's saving grace was based on the United States and the California Constitutions, which both prevent discriminatory tax schemes like this one, typically referred to as a "tandem tax." After a one-day trial, Macy's was able to show that it paid 1.2% more in taxes than local, in-City businesses. The trial court ordered The City to refund the taxes, and awarded Macy's its attorneys fees and costs.
But hold on a moment, said The City.
The City appealed, claiming that to refund the taxes would put Macy's in a better position than businesses inside The City and County of San Francisco, and that just couldn't be allowed. I guess The City missed the part that overtaxing business who operated outside The City wasn't allowed, either, buy hey, I'm just a lawyer.
The Appellate Court understood the argument, and understood the tax scheme much better than San Francisco did. In the case entitled: Macy's Department Stores v. City and County of San Francisco, it ordered The City to repay only the increased differential that The City had overcharged Macy's. The Appellate Court also saw the case as more of a draw than a victory for either side, and ordered the trial court to reconsider its award of attorneys fees and costs to Macy's. It did, however, uphold the trial court's award of interest on the overcharged taxes at seven percent.
Call me silly, but an illegal tax scheme is an illegal tax scheme, and The City should be paying all of Macy's attorneys fees and costs, and also giving Macy's a kicker for standing up and fighting City Hall.
Coast to Coast Internet Radio Separate Church and State
Weeks ago, Congress removed a provision in a military bill that would have allowed chaplains to offer prayer at mandatory non-denominational events. Christian conservatives in Congress are expected to renew their fight to allow military chaplains to pray in the name of Jesus at public events, citing First Amendment rights.
Join me and my fellow Law.com blogger and co-host Bob Ambrogi as we discuss the spirited topic on Coast to Coast with three lively expert guests: Charles L. "Chip" Babcock, one of the top First amendment lawyers in the country from Jackson Walker LLP, David W. New, Esq., popular speaker for religious freedom issues, the Constitution and the First Amendment and contributor to Faith & Action and Eliot Mincberg, Vice President, General Counsel and Legal Director of People For the American Way Foundation.