Claims and Bad Faith Law Blog

DROWNING THE LAW IN THE BATHTUB: THE DRAFT EXECUTIVE ORDER.

In the past week, articles here, here, and here have explored the draft Executive Order of December 16, 2020 in this space.  We have journeyed through the XO's slight-of-hand diversions from the Attorney General to the Secretary of Defense, from the Attorney General to a new Special Counsel after seizing voting machines used to elect President Biden, and perhaps most insulting to lawyers, or at least to researchers, the XO's citation to the wrong statutes.

          The XO did not update the statutes cited in it, although the newly renumbered statutes had been around for years by the time the XO was written.

          That may have been the result of incompetence, but it is hard to assign incompetence to at least three legal references that are deceptive and misleading.  Today we move from incompetence to deceptive and misleading, from falsehoods to reality.

          One is the reference to an order issued by Judge Amy Totenberg in the Northern District of Georgia before the 2020 election.  Judge Totenberg denied a preliminary injunction to plaintiffs who challenged the voting system that was chosen by the Georgia State government to use in the 2020 election.

          Let's stop and think about that for a moment:  The voting system was chosen by the Georgia State government before the 2020 election for use in the 2020 election.  No-one else, not federal officials or party officials or anyone else chose that voting system, only Georgia State government officials chose it.

          Judge Totenberg pointed out a number of potential flaws in that system, but she refused to stop its use:

Despite the profound issues raised by the Plaintiffs, the Court cannot jump off the legal edge and potentially trigger major disruption in the legally established state primary process governing the conduct of elections based on a preliminary evidentiary record.

(Emphasis added.)  When the full evidentiary record was made after the election, not one but several recounts found the election in Georgia free of any significant fraud in 2020.  There were no more "potential" flaws at that point; by then, they had presumably been corrected or they did not occur in reality.

          Contrary to the assertions in the draft XO.  It must have been delicious for them to quote an order written by the sister of Nina Totenberg, who was and is the long-time Supreme Court correspondent for PBS.  But it was apparently even more delicious for them to mis-quote Judge Totenberg.  Deceptive and misleading.

          Any lawyer knows that a preliminary evidentiary record is likely to be not even remotely close to being a full evidentiary record, perhaps not even in the same neighborhood.  Yet the draft XO represents Judge Totenberg's order to the civilian world as the same thing.  And without pointing out that Judge Totenberg's ruling was to deny the lawsuit even on a preliminary evidentiary record.  Deceptive and misleading.

          Second, the draft XO declares that Coffee County, Georgia "refused to certify its result."  That is flat-out false.  Here is what the Coffee County, Georgia officials actually did and said, in the real world:

"Accordingly, the Coffee County Board of Elections and Registration have voted to certify the votes cast in the election night report.  The election night numbers are reflected in the official certification of results submitted by our office."  Letter from Coffee County Board of Elections and Registration to Georgia Secretary of State Brad Raffensperger, Dec. 4, 2020 (emphasis added).

The Coffee County Board of Elections and Registrations voted to certify the election results in 2020; to say that it "refused to certify" is false.  Just simply false.  And misleading and deceptive.  And perhaps other things, Michaeleen.

          The final thing worth mentioning at this time is the draft XO's similar flaw in its description of voting machines in Antrim County, Michigan.  That description is now the subject of Dominion Voting Systems' lawsuit for libel and slander, so I will not comment further on it except to say that a Committee of the Michigan Legislature with a Republican Chair and a majority of Republican members issued a written report finding that the voting machines in Antrim County did not include any significant fraud.   They also sent a written request to the Michigan Attorney General to take action against those who falsely said that fraud was committed with the voting machines in Antrim County.

          Is there no end?

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

IDENTIFYING THE WOMAN THEIR XO PICKED FOR SPECIAL COUNSEL?

Yesterday's article pointed out the answer to another good question, continuing from an earlier article posted here.  Yesterday's question that springs off the page of the draft XO is why the Secretary of Defense would be directed to use the National Guard.  Why not the Army?  Download Draft Executive Order dated December 16 2020.

          We learned that both answers to the two questions are the same, i.e., the same answer to why not the Army as to why not the Attorney General:  Because they wouldn't do it.

          But there are more questions, including who is the person who would be appointed Special Counsel with full resources "necessary to carry out her duties"?  And why did they need a Special Counsel after they seized the voting machines?

          I'm afraid I haven't come up yet with an answer to why they made a Special Counsel position after they seized the voting machines.  They still had an Attorney General ... oh, right.

          So let's explore the appointment by this order of a Special Counsel with all the resources "necessary to carry out her duties[.]"  These people never used "her" or "she" meaning to be inclusive of everyone, and it is unlikely that they started on "December 16, 2020."  This crowd would not be likely to talk about "her" unless they had a woman already in mind.

          So if they had a woman in mind when they wrote this document, who did they have in mind?  That's not too hard to figure out if only because there were so few women among them.

          There were Elaine Chao and Betsy DeVos.  Unlikely.  They were both already in the Cabinet.  And almost three weeks to the day after this XO was drafted, they would resign.

          What about the lawyers at the time?  One of the lawyers would have been a natural to fill the Special Counsel job this document would make. 

          Cleta Mitchell was a lawyer in good standing with these people.  Two weeks after the XO was written, she was on the January 2nd telephone call when the former guy called to try to intimidate Georgia Secretary of State Brad Raffensperger.  After that call, her law firm "distanced itself" from her, so the reporting goes, and a few days after that she resigned from her law firm.

          According to reports, Sidney Powell is the probable choice.  Reports are already circulating that she would have been the likely pick to be the Special Counsel of this XO.

          Well, whoever it was going to be, this XO says that she would have all the resources at the disposal of the government still in power to do her duties as the Special Counsel of this XO.

          But that still leaves questions about the statutes they invoked, the district judge's order they kind of quoted, and the recount they did not come clean on....

To be continued ....

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

MORE QUESTIONS ABOUT THE DRAFT XO DATED DECEMBER 16, 2020.

The biggest question to my mind about the draft Executive Order dated December 16, 2020 continues to be why the Secretary of Defense and not the Attorney General should be ordered to seize voting machines that were used to elect President Biden.  

          Another good question that erupts  -- not just arises -- from the draft XO is why the Secretary of Defense would be directed to use the National Guard.  Why not the Army?  Download Draft Executive Order dated December 16 2020.

          Same answer as to why not the Attorney General:  Because they wouldn't do it.

          Recall the summer of 2020, specifically, the protests after the death of George Floyd.  In June 2020, Attorney General Barr had to use prison guards and border guards to strong-arm the protestors in the streets of Washington, D.C.   He and his boss the TFG just could not get the Army to do it.  The closest they could get is ordering the 82nd Airborne Division to the outskirts of D.C. before the 82nd Airborne went back to their barracks.

          The Army just wouldn't do it.  They would not fire on their own countrymen.  They wouldn't even beat them up.  Thus the border guards, and thus the prison guards, from all over, who came to Washington instead.

          Also recall that in the Summer of 2020 there was a lot of talk about the TFG invoking the Insurrection Act and using active-duty military to put the rioters away.  The Secretary of Defense at the time was Mike Esper.  He said then that he did "not support invoking the Insurrection Act."  Mr. Esper also said that active-duty soldiers should be used domestically "as a matter of last resort, and only in the most urgent and dire of situations," which did not include the protests against the death of George Floyd.

          As we noted yesterday, Mr. Esper was replaced as Secretary of Defense five months later, in November.  His replacement was one Christopher Miller, who had been a White House aide to TFG.

          The Attorney General obviously learned a lesson from the events of the Summer of 2020.  Others did not.

          So, same answer as before:  The order is not directed to the Attorney General or to the Army because they could not depend on the Attorney General to order that the voting machines be seized, and they could not depend on the Army to do it.

          But there are more questions, including who is the person who would be appointed Special Counsel with full resources "necessary to carry out her duties"?

To be continued ....

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

STIPULATED PROTECTIVE ORDERS ARE NOT FOR EVERYONE.

"Stipulated protective orders might be commonplace in complex commercial litigation, but nothing requires that the parties agree to one in any given case."  Perirx, Inc. v. Regents Univ. Cal., No. 2:20-cv-02212-JDW, 2022 WL 180221, at *5 (E.D. Pa. January 20, 2022).

Research resources on Discovery Confidentiality at https://www.dennisjwall.com/disc.htm.

 

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

QUESTIONS RAISED BY THE DRAFT EXECUTIVE ORDER DATED DECEMBER 16, 2020.

The most glaring takeaway from the draft Executive Order of December 16, 2020 to my mind is the assignment to the Secretary of Defense of seizing voting machines used to elect President Biden.

          There are many things wrong with this draft XO, but that is the biggest one I think.  The document recites that "the Secretary of Defense shall seize, collect, retain and analyze" the voting machines "under United States Code Title 42, Sections 1974-1974(e)".  Download Draft Executive Order dated December 16 2020.

          First of all, there aren't any such things as Sections 1974-1974(e) now, and there weren't then.  Those statutes were renumbered long ago and reassigned to 52 United States Code Sections  20701, et seq.

          They do not authorize the Secretary of Defense to do a thing.  The statutes, then and now, give authority to the Attorney General and jurisdiction to the U.S. District Courts, not to the Secretary of Defense.

          And the authority these statutes give is not the authority to seize voting machines.

          So in all this, the question:  Why the Secretary of Defense and not the Attorney General?  Why order the Secretary of Defense to seize voting machines and not not the Attorney General, who is more involved with elections than the Pentagon, after all?

          The Attorney General at the time -- remember that this document is dated "December 16, 2020" -- already showed that he was not inclined to seize voting machines, we now know.  The Secretary of Defense at the time was a protege of TFG, appointed as recently as November 2020.

          The goal was to seize voting machines, so the goal had to include picking someone who was likely to perpetrate the seizure of voting machines rather than oppose it.  This first question has a simple answer.  That's why the Attorney General was not included here.  He wouldn't be likely to go along with it.  Someone else had to be the choice to perpetrate the scheme.

          Really, in the end, simple as that.  But why mobilize the National Guard, and why not the Army?

To be continued ....  

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

 

AFRAID OF THEIR OWN SHADOW. THEY'RE BEING VERY AFRAID.

I have developed a sixth sense for when a decision has already been made, usually when a judge rules against my client.  I will not disguise the fact that I do not agree with the Supreme Court majority's decision against a vaccine mandate in America's workplaces during a pandemic that has killed some 800,000 people so far.  But I do not write because I disagree with the substance of that decision.

          I write instead because nobody signed it.  I noticed that nobody signed the opinion when I saw that it was issued "Per Curiam."  That's a sure sign to any lawyer that the judges on that Court did not put their individual names on it.

          This was also a ruling on an application for a stay.  The ruling was that the Secretary of Labor, acting through the Occupational Safety and Health Administration (OSHA), does not have the power to mandate "that covered workers receive a COVID-19 vaccine[.]"

          This may be another example of the notorious shadow docket, or at least of the notorious use of the shadow docket to reduce publicity and avoid personal accountability.  It is also reasonable to say that judges who do not put their names to the opinions they write are ashamed of them.  The judges that do not sign their names to a decision use the shadow docket because they are afraid of their own shadow.  This decision shows that they are very afraid.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

DUTY TO DEFEND FACTUAL ALLEGATIONS IN PENNSYLVANIA UNDERLYING COMPLAINT.

In Vitamin Energy, LLC v. Evanston Ins. Co., ___ F.4th ___, No. 20-3461, 2022 WL 39839, *1 (3d Cir. Jan. 5, 2022), the Court applied Pennsylvania law, where a liability insurance company's duty to defend is determined by comparing the allegations in the underlying complaint against the insured, with the provisions of the policy at issue.  In that case, Vitamin Energy "took its insurer to court" for declaratory relief, breach of contract, and "bad-faith denial of coverage[.]"  Vitamin Energy, 2022 WL 39839, at *2.  The appellate court determined that the underlying complaint adequately alleged an "Advertising Injury," holding that there is a duty to defend here.

          Note that Pennsylvania law on the duty to defend requires a comparison of the policy with the factual allegations in the underlying complaint.  Vitamin Energy, 2022 WL 39839, at *3, *6.

          The Third Circuit panel said nothing about the bad-faith claim.  The appellate court vacated and remanded in an appeal from a judgment on the pleadings, not intending "to signal how the coverage dispute here should ultimately be decided," but "focused now solely on the duty to defend."  Vitamin Energy, 2022 WL 39839, at *6.

Other jurisdictions determine the liability carrier's duty to defend differently, such as by comparing the policy to the claims alleged in the underlying complaint.  The different tests are examined in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 3:53-3:54 (West 3d edition, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

PREVIEW OF CATASTROPHE CLAIMS: THE COVID REPORT.

This is a preview of the Spring 2022 Supplement edition of Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, § 7:20, Virus Exclusions and the Coronavirus Pandemic of Covid-19:

A couple of cases to consider before concluding this Section involve coverage claims under insurance policies arising from damages allegedly caused by the Covid-19 virus, but the policies did not contain a Virus Exclusion.  The cases merit consideration in this Section because the decisions illustrate the importance of Courts, counsel, and clients refusing to follow a "majority view" simply because they are told that it is a majority view, or that binding precedent has already decided the issues, without looking at the actual insurance policy involved in their cases.

          In K.C. Hopps, Ltd. v. Cincinnati Insurance Co.,^[1] the plaintiff claiming coverage "owns and operates ... bars, restaurants, catering services, and/or event spaces in the Kansa City metropolitan area[.]"^[2]  The "all-risk commercial property insurance policy" that the plaintiff purchased from the defendant carrier required "direct 'loss' to Covered Property" at the covered premises "'caused by or resulting from any Covered Cause of Loss.'"^[3]  As in the above cases considered in this Section, "loss" was a key to coverage under the policy.  "Loss" was only defined in the policy by reference to a pair of terms that were not themselves defined:  "'accidental physical loss or accidental physical damage'," yet a "'loss' is a prerequisite" to all of the coverages sought in the lawsuit.^[4]

          The K.C. Hopps Court looked behind the decisions in other cases, including an interpretation in a Covid-19 case by its governing Eighth Circuit Court of Appeals of an identically worded insurance policy issued by the same carrier, Cincinnati Insurance Company.^[5]  Instead of bowing to a platitude, namely, a party's invocation of binding Circuit precedent to determine the outcome in the present case, the K.C. Hopps Court read the Circuit Court's precedential decision in context:

    However, the Eighth Circuit did not determine that SARS-CoV-2 [Covid-19] can never cause “physical loss” or “physical damage.” Instead, the Eighth Circuit held that the “policy here clearly requires direct ‘physical loss’ or ‘physical damage’ to trigger business interruption and extra expense coverage. Accordingly, there must be some physicality to the loss or damage of property—e.g., a physical alteration, physical contamination, or physical destruction.”  [The Court was quoting from Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141, 1144 (6th Cir. 2021)] (citations omitted). In turn, the Court agrees with Plaintiff that Oral Surgeons supports its position that “proof of physical contamination is sufficient to meet the Policy's requirement for physical loss or damage.”^[6]

          The Eighth Circuit's decision in Oral Surgeons came on the carrier's motion to dismiss.  The District Court's decision in K.C. Hopps was based on the record on competing motions for summary judgment.

          On that record, "unlike the plaintiff in Oral Surgeons, Plaintiff submits evidence supporting the inference that SARS-CoV-2 [Covid-19] is physical, contaminated its premises, and made Plaintiff's property unsafe."^[7]

          Simply put, said the K.C. Hopps Court, "[t]his theory of 'loss' is recoverable under the plain language of the Policy."^[8] The result was a holding that the Plaintiff's interpretation of the policy at bar prevailed:

    Accordingly, the Court finds that “physical loss” or “physical damage” under the Policy not only includes actual, tangible physical alteration of the property, but also includes physical contamination which renders the property unsafe.^[9]

          This was not the end of the story in the K.C. Hopps case, however, neither for the defendant carrier nor for the plaintiff policyholder.  The plaintiff would still have to prove what the record did not yet show, i.e., material facts were in genuine dispute as to whether the plaintiff had proven that the virus was in fact on its premises, that the coronavirus "actually caused a physical loss or physical damage to Plaintiff's premises," and that it had caused some or all of the damages complained of.^[10]

Interested in how the story of Catastrophe Claims is playing out so far in the coronavirus pandemic of Covid-19?  Check out the Two-Thousand page book Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters (Thomson Reuters, November 2021 edition available now, May 2022 edition forthcoming).

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

 

[1] K.C. Hopps, Ltd. v. Cincinnati Ins. Co., ___ F. Supp. 3d ___, No. 20-cv-00437-SRB, 2021 WL 4302834 (W.D. Mo. Sept. 21, 2021).

[2] K.C. Hopps, 2021 WL 4302834, at *1.

[3] K.C. Hopps, 2021 WL 4302834, at *1.

[4] K.C. Hopps, 2021 WL 4302834, at *1.

[5] The Eighth Circuit decision came in  the case of Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021).  The Oral Surgeons decision is cited in note 4 in this Section, supra.

[6] K.C. Hopps, Ltd. v. Cincinnati Ins. Co., ___ F. Supp. 3d ___, No. 20-cv-00437-SRB, 2021 WL 4302834, at *6 (W.D. Mo. Sept. 21, 2021).

[7] K.C. Hopps, 2021 WL 4302834, at *6.

[8] K.C. Hopps, 2021 WL 4302834, at *6.

[9] K.C. Hopps, 2021 WL 4302834, at *8.

[10] K.C. Hopps, 2021 WL 4302834, at *14.

CLASS ACTION ARBITRATION, MASS ARBITRATION?

Interested in exploring the prospects of mass arbitration of your clients' claims, in a class action arbitration?  Explore the possibilities in your practice by consulting first with two informed and informative professors of law, Hila Keren, Divided and Conquered:  The Neoliberal Roots and Emotional Consequences of the Arbitration Revolution, 72 Fla. L. Rev. 575 (2020), and a Reply which Professor Keren invited, by David Horton, All Alone in Arbitration, 72 Fl. L. Rev. F. 75 (2021).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

WHEN DOES AN EXCESS CARRIER HAVE DUTIES OF GOOD FAITH?

There is a theory by which primary carriers and policyholders assert that excess carriers have a duty of good faith and fair dealing even when the underlying limits defined in the excess policy have not yet been exhausted.  The theory is that if the underlying claims against the insureds  are big enough, then first of all, excess carriers have duties to address those claims, and second, when they address such claims they must act in good faith and deal fairly with such claims.

          The excess carrier's obligations under California law emphatically do not include that theory.  "The excess insurer's obligations begin only once a certain level of loss or liability is reached, i.e., once underlying limits are exhausted."  Vizio, Inc. v. Arch Ins. Co., No 2:20-CV-06864-ODW (ASx), 2021 WL 6135756, at *3 (C.D. Cal. December 29, 2021).

          And again:

An excess insurer's duties are triggered by exhaustion of the primary coverage, not by being put on notice that a claim might invade excess coverage.

Vizio, 2021 WL 6135756, at *3.

          There being no coverage under the excess policy for the underlying claim at the time that Vizio claimed it was owed duties of good faith and fair dealing by its excess carrier, the Court granted the excess carrier's motion to dismiss Vizio's claim of bad faith against the excess carrier.  Vizio, 2021 WL 6135756, at *5.

 The Relation of Primary Insurer With Excess Carriers and Reinsurers is addressed by Dennis J. Wall in Chapter 6, Volume 1 LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d ed. West, 2022 Supplements in process). 

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.