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Maryland Court of Appeals Determines Number of Claims Under An LPL Policy

If a grandmother retains an attorney to represent five minor children (who are brothers and sisters) with respect to lead-based paint poisoning, sustained while residing in the same rental property, and the attorney files a single complaint, presenting all of the claims in a single consolidated action, and later the attorney's alleged negligence in preparing the cases results in summary judgment in favor of the landlord, is the attorney's insurance coverage under his LPL policy the single limit (because the claims are related), or the aggregate limit?

It is difficult to see how the claims would not be "related" under these circumstances, given that it was joint representation by a single attorney in a consolidated lawsuit against a single defendant, the landlord; and given that the facts as to the presence of peeling or flaking lead paint in the premises would have been common to all the cases. In other words, the evidence as to liability would in large part have been common for all the children. Further, there was probably a joint retainer agreement, and the costs of the litigation would no doubt have been prorated among the minor plaintiffs.

Nevertheless, the Maryland Court of Appeals has held that these claims are not "related", and that the aggregate limit of liability under the LPL policy applies.

In Beale v. American Nat. Lawyers Ins. Reciprocal, No. 87, Sept. Term, 2002 (Md. Feb. 19, 2004), the Court held that where an attorney represented multiple clients in a tort action, a malpractice insurance provision which defines the per claim limit of liability as "all damages arising out of the same, related, or continuing Professional Services without regard to the number of claims made, demands, suits proceedings, claimants, or Persons Insured involved," the aggregate limit of liability applies, and not the limit for a single claim.

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D.C. Court of Appeals Applies Statute of Limitations Defense Based On Inquiry Notice in Medical Malpractice Case

In Berkow v. Sibley Memorial Hospital, (D.C. Feb. 5, 2004), the Court considered the application of the discovery rule to the facts of this medical malpractice suit.

The plaintiff’s suit arose from a cancer misdiagnosis. Some of the defendants were added after the commencement of suit by an amended complaint filed more than four years after the plaintiff learned of the misdiagnosis, and those defendants raised a statute of limitations defense.

The issue was whether the 3 year statute of limitations began to run generally on the date that plaintiff learned that his primary physician misdiagnosed the cancer.

The Court held that the plaintiff was on inquiry notice of any wrongdoing of defendants who may have contributed to the injury as of the date he first learned of the misdiagnosis. If plaintiff had acted reasonably, he would have investigated the roles of all the doctors in failing to discover the cancer.

The Court rejected the argument that plaintiff’s case was saved by the discovery role.
Once a plaintiff is on inquiry notice, the benefit of tolling ends.

The Court also rejected application of the “continuing treatment rule.” The continuing treatment rule only tolls the statute of limitation until the doctor ceases to treat the patient in the specific matter at hand. In this case, it did not toll the statute generally as to unrelated health issues, even though one of the doctors continued to treat the plaintiff.


"Pizza Exclusion" in Auto Insurance Policy Invalidated by Maryland Court of Appeals

In Salamon v. Progressive Classic Insurance Co., No. 46, Sept. Term, 2003 (Md. Feb. 10, 2004), the Court of Appeals held that the "pizza exclusion", which purports to allow the insurer to deny coverage if an insured driver was delivering "property for compensation" at the time of the accident, is not authorized expressly under the Maryland compulsory auto insurance statute, and therefore, the exclusion is invalid.

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Maryland Court of Appeals Holds That A Plaintiff Seeking Punitive Damages Has No Obligation To Establish A Defendant's Ability To Pay

In Darcars Motors v. Silver Spring Inc. v. Borzym, No. 33, Sept. Term, 2003 (Md. Feb. 9, 2004), the Court reviewed a jury award for punitive damages against an automobile dealership, and concluded that the evidence was sufficient to support the jury's finding on actual malice and that the plaintiff had no duty to present evidence of the dealership's financial condition in support of his pursuit of a punitive damages award.

The Court held that when called upon to decide the sufficiency of the evidence in support of an award of punitive damages, judges must consider that the claimant must prove "actual malice" by clear and convincing evidence.

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New Trial Denied In Legg Mason Copyright Infringement Case Involving $19 Million Jury Verdict

That this is the golden age of intellectual property is evidenced further by the Legg Mason case, which looks like it will be headed to the 4th Circuit and from there, to the U.S. Supreme Court.

Last October, a jury found Legg Mason liable to Lowry's Reports for wilful copyright infringement and breach of contract, and awarded $19,725,270.00 in damages.

The U.S. District Court for the District of Maryland has recently denied Legg Mason's motion for a new trial and judgment as a matter of law. Lowry's Reports, Inc. v. Legg Mason, Inc., No. WDQ-01-3898.

Legg Mason argued that the awards in this case were excessive, based on erroneous jury instructions, and contrary to the evidence. It argued that the actual harm in this case was limited to $59,000 and that the $19 million dollar verdict is so disproportionate that it violates due process.

Lowry argued that its registered works were copied over 40,000 times but the recovery was limited to 240 awards.

The trial court found that because the jury's finding of willfulness is sustainable based on the evidence, and the award is within the statutory range, it is entitled to substantial deference.

There was evidence that Legg Mason was a sophisticated entity that repeatedly infringed Lowry's copyrights, even when asked to stop.

Legg Mason also relied on State Farm Mutual v. Campbell and BMW of North America v. Gore, in arguing that the jury's award must be reduced because its connection to the actual damages is so attentuated.

The trial court held that the Gore guideposts do not limit the statutory damages here because of the difficulties in assessing compensatory damages in this case. Statutory damages exist in part because of the difficulties in proving and providing compensation for actual harm in copyright infringement actions. The Court concluded that:

The unregulated and arbitrary use of judicial power that the Gore guideposts remedy is not implicated in Congress’ carefully crafted and reasonably constrained statute.

The trial court denied Lowry's request for another $1,573,178.38 in attorney's fees, on the grounds that the jury award will compensate Lowry's and allow it to pay its attorney's fees.


Fourth Circuit Upholds $90,000 Judgment Under Fair Credit Reporting Act For Failure To Conduct Reasonable Investigation

In Johnson v. MBNA America Bank, N.A., No. 03-1235 (4th Cir. Feb. 11, 2004), the Court affirmed a jury verdict in favor of the plaintiff based on an action against the defendant bank for violation of the Fair Credit Reporting Act (FCRA) by failing to conduct a reasonable investigation of the plaintiff's dispute concerning a credit card account issued by the bank that appeared on the plaintiff's credit report.

The account in question was a MasterCard account opened by the plaintiff's ex-husband. Apparently the account was originally opened prior to the marriage; and during the marriage the plaintiff was listed as an authorized user and was placed on the billing address. However, the plaintiff claimed that she was merely an authorized user and was never a co-applicant.

After the divorce, the ex-husband filed for bankruptcy, and the bank promptly removed his name from the account. At the same time, the bank contacted the plaintiff, and informed her that she was reponsible for the approximately $17,000 balance on the account.

The plaintiff disputed the account with each of the three major credit reporting agencies. Each credit reporting agency sent the bank an automated consumer dispute verification. In response, the bank reviewed its records and notified the credit reporting agencies that the disputed information was correct.

The plaintiff then brought suit on the grounds that the bank violated the FCRA by failing to conduct a proper investigation of her dispute. A jury found that the bank had negligently failed to comply with the FCRA, and awarded the plaintiff $90,300 in actual damages.

The bank appealed on the grounds that the FCRA only imposed a minimal duty on creditors to briefly review their records to determine whether the disputed information is correct, and that the Act does not contain any qualitative component that would allow courts or juries to assess whether the creditor's investigation was reasonable.

The 4th Circuit held that section 1681s-2(b)(1) of the Act requires creditors, after receiving notice of a consumer dispute from a credit reporting agency, to conduct a reasonable investigation of their records to determine whether the disputed information can be verified.

The 4th Circuit also held that a jury could reasonably conclude based on the evidence that the bank acted unreasonably in failing to verify the accuracy of the information in dispute. The bank's agents testified that in investigating consumer disputes generally, they do not look beyond the information contained in its computer system and never consult underlying documents such as account applications.


Thirty-Day Removal Period When Service Is On Statutory Agent

In White v. Lively, No. 1:03CV00138 (W.D. Va. Feb. 12, 2004), U.S. District Judge James P. Jones considered the application of the 30-day period for removal to federal court where service was made on a statutory agent, who was in this case, the Commissioner of the Department of Motor Vehicles of Virginia.

The Court held that:

While there is no decision by the Supreme Court or the Fourth Circuit on point, the overwhelming view among other courts is that service on a statutory agent such as the Commissioner does not start the running of the thirty-day removal period. See Lilly v. CSX Transp., Inc., 186 F. Supp. 2d 672, 673-74 (S.D.W. Va. 2002) (reviewing cases). I agree with the reasoning of those courts that because statutory agents for service of process are not true agents, it would be contrary to the plain meaning of the removal statute to limit a defendant’s removal period before actual receipt of the suit papers. See 14C Charles Alan Wright et al., Federal Practice and Procedure § 3732, at 288-89 (3d ed. 1998) (explaining rationale of majority view).

The Court cautioned that the same reasoning does NOT apply to cases where substitute service is made on an agent designated by the defendant.

In the opinion, the Court also pointed out that under Fed. R. Civ. P. 81(c), in a removed action in which the defendant has not answered, the defendant shall file a responsive pleading within the longest of the following periods: (1) within 20 days after the receipt through service or otherwise of a copy of the complaint; or (2) within 20 days after service of summons; or (3) within 5 days after the filing of the petition for removal.

Thus, in this case, the defendant's answer, filed on the same date as the notice of removal, was timely, even though under Virginia procedural rules, it was filed two days late.

The Court cautioned that the better practice is to answer within the deadline under state procedure, if possible, since if the case is thereafter remanded by the federal court, the state court may then enter a default judgment.

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