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March 2004
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More On Satellite/Aerial Photo Capability

Thanks to Ann Byrne at Quid Pro Quo for the pointer to the Keyhole website. The Keyhole service is kind of pricey unless you will be able to use it a lot. That capability should be something that insurance companies subscribe to and make available to panel counsel, in my view.

A cheaper service for occasional use is GlobeXplorer Image Atlas. I used GlobeXplorer recently in preparing a coverage opinion concerning a designated premises endorsement, and was able to get a nice satellite photo of an entire apartment complex for around $25.

An alternative is to go to your regional firm which does aerial photography and which maintains image libraries. In this area, one such firm is Air Photographics, which I have also used.


Slayer's Rule and Corruption of the Blood

The Court of Appeals of Maryland recently considered the issue whether the grandchildren of a decedent may inherit from the decedent pursuant to the intestacy laws where the children’s father, who is the decedent’s son, could not inherit because of the Slayer’s Rule. The answer was no.

The Slayer’s Rule prevents a murderer, or anyone claiming through or under the murderer as an heir or representative, from sharing in the distribution of the victim ’s estate as an heir by way of statutes of descent and distribution, or as a devisee or legatee under the victim’s will. The Slayer's Rule was adopted in Maryland under the common law.

Corruption of blood is a common law doctrine providing that when any one is attainted of felony or treason, then his blood is said to be corrupt; by means whereof neither his children, nor any of his blood, can be heirs to him, or to any other ancestor, for that they ought to claim by him. And if he were noble or gentleman before, he and all his children are made thereby ignoble and ungentle. Article 27 of the Maryland Declaration of Rights prohibits application of the doctrine in Maryland. It provides: “[t]hat no conviction shall work corruption of blood or forfeiture of estate.”

The Slayer's Rule does not violate the prohibition of corruption of blood because the slayer never acquired a beneficial interest in the victim’s estate. By the act of murder the slayer never obtained an interest in the decedent’s estate. Therefore, anyone claiming through the slayer, even though innocent of any wrong doing, may not share in the victim’s estate.

If statutes of descent and distribution need to be changed to allow the children of a slayer to inherit from the slayer’s victim, the change must come from the legislature and not the judiciary.


Fourth Circuit Rejects Absolute Immunity of PTO Investigators, Including A Staff Attorney, Involved In Attorney Disciplinary Investigation

Richard W. Goldstein, a patent lawyer, appeals an award of absolute immunity accorded certain officials of the Patent and Trademark Office for their conduct in an attorney disciplinary investigation. Goldstein also appeals the denial of his challenge to a certification on the scope of defendant David Purol’s employment and the denial of discovery on the certification. Because defendants Harry Moatz, Lawrence Anderson, and James Toupin are not absolutely immune from Goldstein’s Bivens claim for damages,1 and because the district court did not separately consider whether the defendants are immune from suit for declaratory relief, we vacate and remand on those aspects of this appeal. . . .

Goldstein v. Moatz, et al.

Judge Motz dissented, stating in part that:

But the OED’s "issuance of the RFIs" to Goldstein simply does not provide the basis for any cause of action against OED. In fact, almost half a century ago, the Supreme Court considered and expressly rejected a contention very similar to Goldstein’s. See Hannah v. Larche, 363 U.S. 420, 424 (1960). In Hannah, the plaintiffs complained, inter alia, of the "315 written interrogatories" sent to them by a commission in the course of an investigation. The Court upheld the constitutionality of all of the commission’s procedures, including its issuance of the assertedly burdensome and irrelevant interrogatories and its refusal to furnish the targets of the investigation with the names of the complainants and contents of the complaints. Id. at 424, 451. The Court explained that the commission had engaged in "purely investigatory and factfinding" activities, which might "subsequently be used as the basis for legislative or executive action," but which did not in themselves "affect an individual’s legal rights." Id. at 441. To impose in this context the constitutional procedures appropriate when "governmental agencies adjudicate or make binding determinations which directly affect the legal rights of individuals" would, the Court concluded, "make a shambles of the investigation and stifle the agency in its gathering of facts." Id. at 442-44. So it is here. . . .

Man Bites Dog story -- D.C. Law Firm's Default Judgment Against Former Client for Unpaid Legal Fees Is Upheld

Even in D.C., sometimes (but rarely) default judgments are upheld. In a recent case, a law firm's default judgment against a former client for roughly $55,000 in legal fees was upheld.

Generally, law firms are well advised not to bring suit to collect unpaid fees, because more often than not, there follows a counterclaim for legal malpractice. On the other hand, sometimes law firms decide that if the word on the street is that they will not sue to collect their fee, the problem of uncollected receivables will get out of hand. It probably is an issue that is debated from time to time in most firms.


Nullum Tempus Doctrine Held Inapplicable In Maryland To Action By County for Breach of Contract

In Baltimore County v. RTKL Associates, Inc., No. 77, Sept. Term, 2003 (Md. April 9, 2004), the Court of Appeals has held that a county does not enjoy the benefit of nullum tempus, and that as a plaintiff, its action for breach of contract is governed by the three-year statute of limitations set forth in CJP sec. 5-101. The nullum tempus doctrine refers to the maxim, nullum tempus occurrit regi (time does not run against the King). This doctrine has been carried over in the common law in most States to some extent as a matter of public policy, to preserve the public rights, revenues, and property from injury and loss, by the negligence of public officers. The Court of Appeals reasoned that the nullum tempus doctrine is an aspect of the more general sovereign immunity of the State. Counties and municipalities do not enjoy common law sovereign immunity in contract cases, and therefore the entire underpinning of nullum tempus is absent for them.

The Court of Appeals explicitly stated it was not, in this case, disturbing the governmental/proprietary function test as applied to the nullum tempus doctrine in tort actions brought by a county. However, it certainly is an open question whether the Court will abrogate that rule in the future.

The Court also held that the requirement in CJP sec. 3-2C-02 that a claim filed against a "licensed professional" be supported by a certificate of merit from a qualified expert, applies only to an action against an individual professional, and does not apply to actions against a professional association. While the law permits a corporate practice of architecture and engineering under certain circumstances, only individuals may be licensed. Thus, the certificate of merit requirement is limited to actions against licensed individuals and is not applicable to suits against corporate firms.


Fourth Circuit Holds That Virginia Would Follow General Rule That Indemnity Agreement Between Insureds May Shift Entire Loss To A Particular Insurer, Notwithstanding 'Other Insurance' Clauses

In St. Paul Fire & Marine Ins. Co. v. American International Specialty Lines Insurance Co. (AISLIC), Nos. 02-2360 and 02-2361, dated April 9, 2004, the Fourth Circuit decided the allocation of loss between four insurers, St. Paul, TIG, CNA and AISLIC, for the cost of a $4 million settlement of a Virginia food poisoning case. The insurers funded $3 million of the settlement through an interim agreement, and also agreed to resolve their coverage and allocation issues after the lawsuit settled. The insureds were corporations that were the owners and management companies of the Leesburg, Virginia resort where the food poisoning occurred.

The Fourth Circuit decided that AISLIC had to reimburse St. Paul for the $1 million that St. Paul already paid toward the settlement and also had to pay toward the settlement the $1 million plus interest for which TIG erroneously was held to be responsible.

The management companies were insured by St. Paul's primary layer of $1 million, and TIG's $10 million of umbrella coverage. The owners were insured by CNA's $1 million of primary coverage, and AISLIC's $50 million of umbrella coverage excess to the CNA policy. Each of the four policies had some form of 'other insurance' clause.

There were reciprocal indemnification clauses in the management contract between the owner and the management company. The owner was required to indemnify the management company and its agents from liability arising from ordinary negligence or the like at the resort; but the management company was required to indemnify the owner as to liability arising from gross negligence, fraud, or willful conduct.

The underlying settlement agreement established the named defendants' collective liability, but explicitly did not resolve the controversy among the insurers as to their ultimate liabilities.

The district court ruled that the primary layers (CNA and St. Paul) would each be exhausted, and that TIG and AISLIC would pay the remaining $2 million equally.

The Fourth Circuit found that the critical issue was the indemnification obligation created by the management contract between the insureds, and that that obligation should be assessed before any conflicts between the policies are resolved. The Court stated, "in the end, we largely disregard the parties' free-standing arguments about the various policies, for this case's resolution is controlled by the [management agreement's] . . . indemnification provisions."

The Fourth Circuit agreed that the district court erred in construing the indemnification provisions as an attempt by the management company's insurers to use extrinsic evidence to modify the terms of the owner's insurance policies. The Court agreed that if the settlement liabilities of the management companies must be indemnified by the owners, and if CNA/AISLIC must cover the owner's contractual indemnification obligations in full, then St. Paul and TIG would have no obligation to pay into the settlement.

The Fourth Circuit held that Virginia courts would apply the indemnification provisions now rather than wait for a subsequent action that would produce the same result; that the indemnification provisions control the allocation of liability between the insurers because it results in the owner having responsibility for the management company and its agent's share of the settlement; and that since that results in the St. Paul/TIG line having no obligation to cover any of the settlement liability, the alleged conflict between the two lines' other insurance provisions is irrelevant.

The Fourth Circut essentially followed the reasoning of an Eighth Circuit case, Walmart Stores, Inc. v. RLI Ins. Co., 292 F.3d 583 (8th Cir. 2002).

Further it relied on Couch on Insurance for the general rule that "an indemnity agreement between the insureds or a contract with an indemnification clause . . . may shift an entire loss to a particular insurer notwithstanding the existence of an 'other insurance' clause in its policy.' Couch on Insurance, sec. 219:1, at 219-7 (3d ec. 1999).

The Fourth Circuit rejected AISLIC's argument that the applicability of the reciprocal indemnification clauses in the management contract should be left for a subsequent action. Rather, the Court held that it was appropriate to rely on the facts and causes of action pled in the Complaint. The actual claims against the named defendants were based on theories of breach of warranty, negligence, negligence per se and res ipsa loquitur, all of which give rise to an indemnification obligation solely on behalf of the owners.

Thus, the Court held that the CNA/AISLIC line is primarily responsible for the management companies shares of the settlement, and that St. Paul and TIG had no obligation to contribute anything to the settlement.

The Court also criticized AISLIC's brief for "borderline-duplicitous unremarked capitalization of quoted materials in the argument section of its brief -- which has the effect of making 'additional insured' appear to be a defined term in the AISLIC policy -- 'additional insured' is not so defined."