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1 A. D. C D E F E N S E ASSOCIATION OF DEFENSE COUNSEL OF NORTHERN CALIFORNIA AND NEVADA VOL. 23, NO. 1 / SPRING 2008 In This Issue: Malpractice Claims Against Providers of Health Care Following Nevada s 2004 Initiative Petition Who Is Representing You in Sacramento While You Are Representing Your Clients? The Pursuit of Justice or Money?

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3 STAFF editors-in-chief Stephen A. Schram John M. Vrieze Editorial/Art Direction John Berkowitz A. D. C D E F E N S E Melissa Aliotti Martin Ambacher Mike D. Belote Michael J. Brady Paul Brisso Arthur J. Casey William G. Cobb Paul R. Cotter Dave Daniels Laura Flynn Meg Gambino Contributors Peter O. Glaessner Linda Lynch Michael Mordaunt Joe Nocera Justin H. Pfrehm Todd Roberts Tiza Serrano-Thompson Stephen A. Schram Jim Treppa Patricia Tweedy John M. Vrieze Christopher Wood ADC HEADQUARTERS Office 2520 Venture Oaks Way, Suite 150 Sacramento, CA Phone: (916) Fax: (916) ADC HEADQUARTERS Staff Executive Director Jennifer Blevins, CMP John Berkowitz Publications Director/Graphic Design Nathan Carlson Account Executive Michael Cochran Webmaster Joseph Davis Special Projects Jessica Drake Administrative Assistant Kim Ingersoll Membership/Education/Advertising Erin René Nelson Meeting Planner Stephanie Schoen Special Projects Tricia Schrum, CPA Accountant The price of subscription is included in the membership dues. All other subscriptions are $ per year. The opinions and viewpoints expressed in the articles of the Defense Comment Magazine do not necessarily represent the opinions of, or reflect the official position of, the Association of Defense Counsel of Northern California and Nevada or the editors. ASSOCIATION OF DEFENSE COUNSEL OF NORTHERN CALIFORNIA AND NEVADA VOL. 23, NO. 1 / SPRING 2008 Features Malpractice Claims Against Providers of Health 4 Care Following Nevada s 2004 Initiative Petition An experienced Nevada Trial Attorney analyzes the impact of recent revisions to Nevada Statutes. William G. Cobb Who Is Representing You in Sacramento 11 While You Are Representing Your Clients? While busy attorneys represent their clients interests, the California Defense Counsel organization is representing the interest of defense attorneys in Sacramento. Stephen A. Schram The Pursuit of Justice or Money? 16 In cases where lawyers abuse the system, litigation can look more like an income-distribution racket than a search for justice. Reprinted (by permission) New York Times Commentary from December 8, 2007 Indemnification Clauses in Construction Contracts: 18 New Legislation Closes One of Several Loopholes Rules interpreting indemnity obligations in construction contracts are again addressed by the Legislature, and an analysis of potential rights or obligations may depend on the date of the contract. Paul R. Cotter Meet the 2008 ADC President 22 The new ADC President, Pat Tweedy, intends to provide more opportunities for ADC members to network with each other, the insurance industry and judges, while guiding the organization with her own love of life. John M. Vrieze Departments President s Message By Patricia Tweedy 2 California Defense Counsel (CDC) Report By Mike Belote 3 Meet ADC Board Members By John M. Vrieze 28 Substantive Law Committee Reports 30 Trials and Tribulations Members Recent Jury Trials 32 Tip of the Cap 36 In Memoriam By Peter O. Glaessner 37 Northern Lights By Paul Brisso 38 Defense Comment would be pleased to consider publishing articles from ADC members and friends. Please send all manuscripts and/or suggestions for article topics to: Stephen A. Schram, Sedgwick, Detert, Moran & Arnold, One Embarcadero Center, 16th Floor, San Francisco, CA. Phone: (415) ; Fax: (415) ; Spring 2008 Defense Comment 1

4 President s Message It is going to be an absolutely fantastic year for members of the Association of Defense Counsel as we strive for excellence in our practices. If you are reading the Defense Comment you are holding one of the best, if not the best, periodicals for California and Nevada Civil Defense Practitioners. The editor, Stephen Schram of Sedgwick, Detert, Moran & Arnold and his co-editor John Vrieze of Mitchell, Brisso, Delaney & Vrieze, continue to provide current law, stories and articles that impact your practice. The ADC is committed to excellence in content and journalistic style so that our members have current information at their fingertips that is a pleasure to read. Patricia Tweedy 2008 President The goal of the ADC is to support the fine lawyers that comprise our membership. The organization s goals for 2008 include providing continuing education of the highest quality. The seminars will be offered to members at a rate that is greatly reduced from that paid by non-member attorneys. ADC continuing education offerings in 2008 will include a public entity seminar in Oakland, California and a two-session Toxic Tort seminar in San Francisco. We will also have an employment law seminar, a transportation seminar and numerous brown bag lunches. The Law Firm Management Seminar on August 1-2, 2008 in Monterey, California will be an event unsurpassed by any other of its kind. The seminar will pay for itself by the dollars you will save in software and hardware investment and information technology consulting services. You will learn how your profit can be greatly improved with simple time-tested technology. You will learn from IT-savvy lawyers (not sales people) the technology that is available to help you reduce your workforce, reduce your workload and manage your cases profitably. Law firms should send their managing partners, their law office administrators and their young lawyers who have embraced technology. Law firms should send any lawyer who has an interest in moving into the 21st Century. The Law Firm Management Seminar will provide education on numerous issues that have come up or will surely arise in the practice. Included in the offering will be managing requests by partners and employees for lengthy leaves of absence to handle caregiver responsibilities. What are your rights and obligations? Can you respond favorably to these requests in a way that serves the employee or partner and the firm? This seminar will include the ever-popular and informative roundtable discussions. We expect this seminar to be a very well-attended event. 2 Defense Comment Spring 2008 Continued on page 40

5 California Defense Counsel (CDC) Report Michael D. Belote, Esq. California Advocates, Inc. In football, it has been said that the quarterback receives too much credit for wins, and too much blame for losses, the recent exploits of Eli Manning notwithstanding. A similar comment has been made about government leaders, that they take too much credit for economic good times and receive too much blame for recessions. Whatever his other strengths and weaknesses, Jimmy Carter probably didn t cause the inflation and high interest rates of the late 1970 s, but they were at least partially responsible for his lack of a second term. In California, history is still out on the degree to which Gray Davis was responsible for budget deficits and power outages, but the recall ended his political career just the same. In other words, there is a certain inexorability to forces such as the economy. Politicians, all of whom would rather govern in times of plenty, sometimes must simply respond to market forces. As this column is written, California tax revenues continue to come in below projections, and various costs continue to rise. The result is a current year cashflow shortage and a projected budget deficit in fiscal year of at least $14 billion. Consideration of all manner of pet projects will come to a resounding standstill. The judicial branch cannot escape receiving some of the budget pain. The Governor has called for 10% across-the-board reductions, which, if enacted, would reduce the judicial branch budget by approximately $245 million. Fortunately, the actual spending reduction would be less, because the budget reduction is calculated on formulae which include growth factors, but still the reduction is significant. And because much of court activity is completely nondiscretionary, such as criminal caseloads and family law matters, the cuts will fall disproportionately on the civil side. Given the reality that state budgets are likely to be constricted for several years, it stands to reason that some judicial branch projects, however important, may go unfunded for a time. Court facilities and other infrastructure, case management upgrades, interpreter expansions, self-help programs for unrepresented litigants and other programs will be tested against limited budget revenues. On the other hand, the hope is that the third installment of additional judgeships will continue to be funded. Why is all of this important to CDC and the rest of the civil bar? For one thing, because the budget shortfalls are likely to put increased pressure on civil filing fees. There is always a tendency to raise user fees in times of budget pressure, and a legislativelyimposed moratorium on filing fee increases has expired. CDC will be participating in a working group to address possible increases in filing fees, and the tension is simple and fundamental: the need for additional revenue balanced against the problem of reducing access to justice. Continued on page 41 Spring 2008 Defense Comment 3

6 Malpractice Claims Again Providers of Health Care Following Nevada s 2004 Initiative Petition 4 Defense Comment Spring 2008 By William G. Cobb, Esq. Erickson, Thorpe & Swainston, Ltd.

7 st In the 2004 General Election, Nevada voters approved an Initiative Petition which amended certain provisions of Chapter 41A of the Nevada Revised Statutes ( Actions for Medical or Dental Malpractice ). Ballot Question No. 3, entitled Keep our Doctors in Nevada (KODIN), 1 was characterized as a measure which would ostensibly only allow persons who were genuinely injured by a physician s negligence to recover economic losses. The measure also embraced several liability, abolished the collateral source rule and capped noneconomic damages at $350,000 in malpractice actions. The stated intent of this ballot measure was to stabilize medical malpractice premiums and [to] help your doctor stay in Nevada. 2 The purpose of this article is not to comment on whether any implementation of Question 3 will indeed resolve the fullblown medical liability crisis 3 proponents of the Initiative contended it would. Instead, this article will discuss certain anomalies which are now inherent in the medical/health care malpractice arena as a result of KODIN. A New Definition of Professional Negligence Now Pertains to a Broad Range of Health Care Providers Question 3 did not replace in toto Chapter 41A of the Nevada Revised Statutes, which previously only addressed actions for medical, osteopathic, dental or hospital malpractice. 4 Rather, the Initiative Petition amended Chapter 41A so that this chapter now pertains to a broader range of providers of health care, including optometrists and dispensing opticians, chiropractors, registered physical therapists, licensed psychologists, doctors of oriental medicine and certain other health care professionals. 5 Although malpractice also remains defined in Chapter 41A for doctors and dentists, 6 KODIN adopted a definition of what is called professional negligence which is extended to providers of health care. Codified as NRS 41A.015, professional negligence is a negligent act or omission to act... in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death. * * * What a negligent act or omission to act necessarily entails, however, is not defined by the Initiative Petition. Continued on page Spring 2008 Defense Comment 5

8 Malpractice Claims continued from page Whether the authors of Question 3 intended the Initiative s definition of malpractice to supersede the prior statutory definitions of malpractice is unknown. However, not only did Chapter 41A previously include definitions of dental and medical malpractice before the passage of the Initiative, these definitions remain today as part of the statutory scheme found in Chapter 41A of the Nevada Revised Statutes. 7 For example, dental malpractice is defined in NRS 41A.004 as having the meaning ascribed to malpractice in NRS This statute (NRS ) requires a showing the dentist failed to exercise the degree of care, diligence and skill ordinarily exercised by dentists in good standing in the community in which he practices (the issue of the community in which he practices is discussed infra). 9 This definition of dental malpractice is not markedly different from the definition of professional negligence in KODIN. Nevertheless there are some noteworthy distinctions between NRS 41A.004/NRS (dental malpractice) and NRS 41A.015 (professional negligence). For example, there is nothing in NRS 41A.015 which requires professional negligence to be established by comparison to the care, diligence and skill of other dentists in good standing (discussed infra is the requirement of expert testimony in medical/dental malpractice actions under NRS 41A.100). Similar to dental malpractice, medical/ osteopathic malpractice remains defined in Chapter 41A as the failure of a physician to exercise reasonable care, skill or knowledge ordinarily used under similar circumstances. 10 This definition, like that of dental malpractice, currently coexists in the Nevada Revised Statutes with the KODIN definition of professional negligence. Professional Negligence is defined in KODIN as being a negligent act or omission to act. 11 But what is a negligent act? Presumably one has to return to the previously-discussed definitions of medical or dental malpractice in Chapter 41A which pre-existed this legislative initiative. These predecessor definitions more precisely delineated what constituted malpractice, at least for those professions. Additionally, NRS 41A.100 requires that negligence in the performance of medical care must be established, generally speaking, with expert medical testimony. A provider of medical care is defined in NRS 41A.100 to include a physician, dentist, registered nurse or licensed hospital. In light of this definition, in a dental malpractice case, dental expert testimony would be required to establish dental malpractice, nursing expert witnesses in a nursing malpractice case, and so on. But note the anomaly in the requirement for expert testimony under NRS 41A.100: this statute specifically addresses only medical, dental or nursing cases. Its plain language (and the requirement of expert testimony therein) does not apply to other providers of health care, such as psychologists, dispensing opticians, physical therapists, etc., who are now brought within the scope of Chapter 41A. Compare, NRS 41A.100, requiring expert testimony in medical, hospital, dental and nursing malpractice cases, with NRS 41A.015, which defines the negligence of a broad spectrum of health providers is silent as to any expert testimony requirement. The question thus posed is this: Is it only medical, dental, nursing and hospital malpractice claims which must be established via expert testimony or does this requirement pertain to all health care professionals? The Nevada Supreme Court in a 1991 decision set forth elements of a negligence claim brought as a malpractice action. In Lopez v. Las Vegas Medical Center, the Court stated that to prevail on a medical negligence claim, the plaintiff generally must show that (1) the defendant had a duty to exercise due care towards the plaintiff; (2) the defendant breached the duty; (3) the breach was an actual cause of the plaintiff s injury; (4) the breach was the proximate cause of the injury; and (5) the plaintiff suffered damage. 12 The cause of action in Lopez arose before the Legislature s adoption of a statutory definition of malpractice in Yet these Lopez elements of proof should still be applicable not only to the pre-existing legislative scheme but the Initiative s definitions of malpractice as well, particularly with regard to the burden of establishing the duty of care. The issue becomes, as will be discussed next, how the duty of care and any breach of such a duty are to be established. is expert testimony required for professional negligence actions against providers of health care? Prior to the public s vote on KODIN, Nevada law had long held that medical malpractice must be established through expert medical testimony demonstrating a deviation from the standard of care. 14 NRS 41A.100 codified that obligation, at least, as noted above, as to certain other professions (i.e., dental, hospital and nursing malpractice). The Initiative s definition of professional negligence 15 does not explicitly adopt what is called the professional standard (which requires expert testimony to establish professional negligence) for all of the professionals identified as providers of health care. However, one assumes an Initiative Petition which stated its goal was to stabilize malpractice premiums and Continued on page 6 Defense Comment Spring 2008

9 Malpractice Claims continued from page to help doctors stay in Nevada was not intended to make it easier for a plaintiff to establish malpractice. The recent decision of the Nevada Supreme Court in IGT v. Second Judicial District Court addressed the issue of statutory interpretation. 16 Although its analysis was not done in the context of a ballot initiative impacting a previously codified statute, nevertheless IGT s instructions provide guidance on how Chapter 41A might be construed in light of these amendments: When interpreting a statute, a court should consider multiple legislative provisions as a whole. The language of a statute should be given its plain meaning unless, in so doing, the spirit of the act is violated. Thus, generally, a court may not look past the language of a facially clear statute to determine the legislature s intent. An ambiguous statute, however, which contains language that might be reasonably interpreted in more than one sense or that otherwise does not speak to the issue before the court, may be examined through reason and considerations of public policy to determine the legislature s intent. 17 Presumably, therefore, if a Court were faced with the interpretation of a KODIN issue, that considerations of public policy would govern. As such, the pre-existing statutes and KODIN amendments would presumably be interpreted harmoniously to fulfill the public policy espoused by KODIN, i.e., to stabilize medical malpractice premiums and to keep our doctors in Nevada. Accordingly, KODIN s provisions would likely be liberally construed. Inasmuch as professional negligence must be established with expert testimony in medical and dental malpractice actions, presumably malpractice actions against the other providers of health care who are now brought within the scope of Chapter 41A would face similar requirements. This reciprocal requirement of expert testimony would at least apply to those providers of health care whose professions have specific statutes defining malpractice. Examples of such statutes which specifically define negligence for that respective profession (in addition to doctors and dentists) would be the statutory provisions applicable to psychologists and homeopathic physicians. The definitions for these professions, not so coincidentally, basically parallel the definition of dental malpractice discussed above. 18 Certainly as to dentists, medical doctors and doctors of osteopathy, any action asserting malpractice generally required expert testimony by reason of the terms and provisions of Chapter 41A. 19 Until 2004, and prior to KODIN, it was an open question whether the standard of care in a malpractice action against a provider of health care who was not covered by Chapter 41A must be established by expert testimony. This issue, however, was resolved by the Nevada Supreme Court s decision in Bronneke v. Rutherford. 20 In this case, the Court extended the requirement of establishing professional medical negligence with expert testimony to actions against chiropractors. Bronneke reviewed the statutory definition of chiropractic malpractice found in NRS (which is similar to the definition of dental malpractice found in NRS ). This statute states that chiropractic malpractice is determined by examining whether the chiropractor exercise[d] the degree of care, diligence and skill ordinarily exercised by chiropractors in good standing in the community in which he practices. Based on this definition, the Nevada Supreme Court observed that even though NRS 41A.100 is limited to the medical profession, expert chiropractic testimony would still be necessary to establish malpractice * * * 21 One would thus presume that the Bronneke rationale would necessitate testimony in a professional negligence action from an expert in the particular field in which the health care professional practices. This interpretation would certainly be appropriate as to those health care professions where the legislature has actually defined malpractice relative to those professions, such as with chiropractors, 22 dentists, 23 homeopathic physicians 24 and psychologists. 25 In each of these professions, comparison to the care, diligence and skill exercised by professionals in the professional s field would be required by statute in order to establish malpractice. will actions against other health care providers not included under kodin s definition require expert testimony? But what about those providers brought within the scope of Chapter 41A by the Initiative Petition for whom the Legislature has not specifically defined malpractice within that profession? While dispensing opticians, optometrists, registered physical therapists, podiatric physicians and doctors of Oriental medicine were included among the KODIN definition of providers of health care, 26 the respective chapters of the Nevada Revised Statutes regulating these professions do not have corresponding definitions of what constitutes malpractice for these providers. While each chapter governing these professions notes that malpractice or repeated malpractice may be grounds for professional discipline, 27 there is no specific corresponding definition of malpractice for these professions. Accordingly, there is no expression of legislative intent regarding whether any negligence of this group of professionals Continued on page 8 Spring 2008 Defense Comment 7

10 Malpractice Claims continued from page must be determined by examining the degree of care, diligence and skill ordinarily exercised by health care providers in that profession who are in good standing in the community (as the Legislature did for chiropractors, dentists, psychologists, etc.). And to carry this rhetorical question one step further, what of those health care professionals who were not brought under the umbrella of the KODIN definition of providers of health care? Health care professions which were omitted therefrom include homeopathic physicians, occupational therapists, athletic trainers, massage therapists, social workers and marriage or family therapists. All of these professions are governed by Title 54 of the Nevada Revised Statutes, as are doctors, dentists, chiropractors, etc., yet each was excluded from the Initiative s definition of a health care provider. The issue thus becomes, whether after KODIN, expert testimony would be required to establish deviation from the acceptable degree of care, diligence and skill which would be ordinarily exercised by similar providers. While there has been no case reported in Nevada where this issue has arisen, one could reasonably assume, certainly as to those professions who were included in KODIN s definition of health care providers, that establishing professional negligence in that field will require expert testimony. This should also hold true where the profession in question has a statutory definition of malpractice which incorporates the concept of a deviation from the care, diligence and skill exercised by other providers in that profession, particularly after Bronneke (such as to chiropractors, psychologists, etc.) Moreover, in light of the Court s rationale in Bronneke, embracing what is called the professional standard which requires expert testimony to establish a deviation from the standard of care, 28 one could assume such a requirement might be imposed as to all such actions against any provider of health care. the role of material risk in informed consent cases The requirement of expert testimony would also pertain to professional negligence actions based on informed consent. Of course, in the medical arena, consent of the patient to a surgical procedure or other treatment is required. 29 Whether the medical doctor deviated from the obligation to discuss a risk sufficiently material so as to require disclosure is also the subject of expert testimony in medical malpractice actions. 30 A patient need not be apprised of the risk of treatment if the procedure is simple and the danger remote and commonly appreciated to be remote. 31 Whether a risk is material is also the subject of expert witness testimony. 32 Nevada embraced this rationale in the Bronneke decision and extended the expert witness requirement to informed consent claims as it previously held applicable in standard malpractice actions. 33 One final comment about the interplay between the locality rule which has found its way into certain definitions of malpractice appearing in the Nevada Revised Statutes -might be in order. In several of the statutes defining professional malpractice, the deviation which must be demonstrated is determined by testimony from one who is in good standing in the community (which is the definition as to psychologists) 34 or even one who is in good standing in the community in which he practices (which is basically the definition of dental and chiropractic malpractice). 35 These community requirements seemingly smack of the locality rule. Nevada, of course, overturned the locality rule as applied to medical specialists in Orcutt v. Miller. 36 In Wickliffe v. Sunrise Hospital, Inc., 37 the Court embraced a national standard in an action against a hospital. In the Bronneke decision, although not specifically an issue on appeal, the Court similarly adopted a national standard for adjudicating claims of chiropractic malpractice. 38 Thus, it appears to be a reasonable assumption, in spite of restrictive language in certain statutory definitions of professional negligence, that where the deviation from the standard of care must be established by a professional from the community in which he practices, that community will be a national one. conclusion Despite adopting a new definition of professional negligence, which is silent as to any requirement of establishing a duty and the breach thereof through expert testimony, it appears that an action against a provider of health care in Nevada (with certain exceptions) must still be established by expert testimony demonstrating the deviation from the standard of care. This requirement applies not only to medical doctors and dentists but likely to all providers of what is considered health care in Nevada. 8 Defense Comment Spring 2008

11 Malpractice Claims continued from page 8 Endnotes 1 The text of the Initiative may be found at IP1.pdf. 2 Argument in favor of Question 3, Nevada Secretary of State s Office. 3 Id. 4 See NRS 41A.004 (definition of dental malpractice ), NRS 41A.009 (definition of medical malpractice, which includes hospitals) and NRS 41A.013 [defining physician to include those persons licensed under Chapter 630 (mainly medical doctors and physician assistants) and under Chapter 633 (osteopathic physicians)]. 5 NRS 41A NRS 41A.009 & NRS 41A NRS 41A.004 & 41A NRS 41A NRS ; emphasis added; 10 NRS 41A.009 and NRS 41A.013; emphasis added. 11 NRS 41A Nev. 1, 4, 805 P. 589, (1991; citation omitted; emphasis in the original). 13 See Laws of Nevada, 1985, p. 2006; amended, p See e.g., Beattie v. Thomas, 99 Nev. 579, 584, 668 P. 2d 268, 271 (1983); Brown v. Capana, 105 Nev. 665, , 782 P. 2d 1299, (1989); NRS 41A.100(1). 15 NRS 41A IGT v. Second Judicial District Court, 127 P. 3d 1088 (2/9/06). 17 Id (internal footnotes omitted). 18 NRS : the failure on the part of a psychologist to exercise the degree of care, diligence and skill ordinarily exercised by psychologists in good standing in the community. NRS 41A.004 and NRS : the failure to exercise the degree of care, diligence and skill ordinarily exercised by dentists in good standing in the community. NRS 630A.060, the failure to exercise the degree of care, diligence and skill ordinarily exercised by homeopathic physicians in good standing in the community in which he practices. 19 NRS 41A.100 requires expert testimony in an action against a provider of medical care, unless one of five exceptions is demonstrated (e.g., foreign substance left in surgical site, unintended burn, etc.) Nev. 230, 89 P. 3d 40 (2004). 21 Id. at p NRS NRS NRS 630A NRS NRS 41A See e.g., grounds for discipline against nurses [NRS (7)(e)]; against dispensing opticians [NRS (L)]; against podiatrists [NRS (i)]; against optometrists (NRS & NRS ). 28 Bronneke, supra, 89 P. 3d at p See generally, NRS et seq. and NRS 41A.100. See also Brown v Campagna, 105 Nev. 665, , 782 P. 2d 1299, (1989); see also, Patient Rights, NRS et seq. 30 Id; See also Smith v Cotter, 107 Nev. 267, 272, 810 P. 2d 1204, 1207 (1991). 31 Cobbs v. Grant, 8 Cal. 3d 229, 104 Cal. Rptr. 505, 502 P. 2d 1, 12 (1972). 32 See, e.g., Canterbury v. Spence, 464 F. 2d 772, 778 (D.C. Cir. 1972). 33 Bronneke v. Rutherford, 89 P. 3d 40, 46 (2004). For a more comprehensive discussion of the informed consent doctrine and the requirement of expert testimony, see, Cobb, defending the informed consent case, The Defense Counsel Journal, Vol. 72, No. 4, p NRS Chiropractic malpractice, NRS ; dental malpractice, NRS (emphasis added). Note, however, the definition of the community in which the dentist practices is not necessarily local Nev. 408, 414, 595 P. 2d 1191 (1979) Nev. 542, , 706 P. 2d 1383, Bronneke, supra, 89 P. 3d at p. 46. Spring 2008 Defense Comment 9

12 10 Defense Comment Spring 2008

13 Who Is Representing You in Sacramento While You Are Representing Your Clients? By Stephen Schram, Sedgwick, Detert, Moran & Arnold By a n d l a r g e, t h e Association of Defense Counsel of Northern California and Nevada (ADC) members a re ver y busy representing their clients, volunteering to help others and enjoying precious time with their families. Most have little time to spend monitoring proposed leg i slat ion i n Sacramento or considering the state of the civil justice system. Fortunately, for ADC members and all civil practitioners, there is a representative in Sacramento who does spend considerable time evaluating legislation that may positively or negatively impact members practice and who works to promote beneficial legislation. This same representative surveys the national political landscape to alert busy lawyers of trends, ballot measures or funding that may skew the procedural rules to disadvantage defense attorneys, may limit access to the civil justice system, or may be just an outright political assault on judges. ADC s representative is the California Defense Counsel (CDC). What is the CDC? The CDC is the political arm of the ADC and the Association of Southern California Defense Counsel (ASCDC). It is a nonprofit organization. Attorneys who enlist as members of the ADC and ASCDC become CDC members at the same time. The CDC Board includes ADC and ASCDC representatives. ADC Executive Committee members who serve on the CDC Board are President Pat Tweedy, First Vice President Mark Bonino, Second Vice President Karen Jacobsen, Secretary-Treasurer Andy Weiss and Immediate Past President Jonathan Bacon. ADC members Mark Adams and Pat Beasley serve on the CDC Board as Members-At- Large. ADC member (and Past President) Steven Gurnee serves as Ex Officio Senior Advisor to the CDC Board. Among CDC officers are ADC members (and Past Presidents) Dennis Howell, President, and Peter Glaessner, Treasurer. Pat Beasley summarizes the importance of CDC to defense attorneys: No other organization in Sacramento looks out for our interests as practicing California attorneys as much as the CDC. It is an important voice for us, especially when addressing issues or positions espoused by the plaintiffs bar and its organization, the Consumer Attorneys of California. More importantly, there are non-lawyer, political groups in this country who are mounting an assault on the civil justice system through such tactics as ballot measures to limit access to the justice system or campaigns to attack judges who make unpopular rulings. Who Speaks for the CDC in Sacramento? The CDC speaks and acts through its chief lobbyist in Sacramento, Michael Belote. Mike Belote may be best known to Defense Comment readers as the author of the quarterly column entitled California Defense Counsel Report. What may be less known about Belote is his 10 years of indefatigable efforts working for CDC members benefit in Sacramento, or how he became the voice of defense attorneys in Sacramento. Belote is a graduate of the University of California at Berkeley and, in 1987, obtained his law degree from the McGeorge School of Law. He is admitted to practice before state and federal courts in California. Early in his career, Belote worked as a legislative advocate for the California Society of Continued on page 12 CDC Board Member Pat Tweedy CDC Board Member Mark Bonino CDC Board Member Karen Jacobsen CDC Board Member Andy Weiss CDC Board Member Jonathan Bacon CDC Member- At-Large Mark Adams CDC Member- At-Large Pat Beasley CDC Ex Officio Senior Advisor Steven Gurnee CDC President Dennis Howell CDC Treasurer Peter Glaessner CDC Lobbyist Michael Belote Spring 2008 Defense Comment 11

14 Who Is Representing You? continued from page 11 Certified Public Accountants, and later for the California Association of Realtors. Later, he served as Vice President and Legislative Counsel for the California Land Title Association. In 1990, Belote joined California Advocates, Inc. California Advocates is a firm that provides representation for business, professional and local government interests regarding issues pending in the California legislative or executive branches of government a lobbyist. For the CDC, the first element of an effective government relations program is pure legislative lobbying, Belote has said. During each biennial legislative session, there are 2,500-3,000 new bills introduced in the California Legislature. Many are amended four or five times. Most of the new bills are suggested by constituents or interest groups, such as the CDC. Only a minority of the bills introduced are conceived by legislators. About 70 to 80 bills propose some change that may be relevant to civil practitioners. Yet, Belote and his colleagues must read every new bill and amendment to assess its impact on their clients, and to prepare to discuss the legislative benefits and detriments with their clients, California legislators, California s governor, or California s judiciary. Belote described the second element of the CDC s government relations program as working with the Judicial Council. In recent years, the Judicial Council has been moving to create a truly statewide court system by eliminating unnecessary procedural differences from one superior court to another as well as local local rules. This process involves discussions among members of the California judiciary, the Consumer Attorneys of California and the CDC. When we walked into a Judicial Council meeting convened by the Chief Justice (Ron George), you could see and appreciate the respect that the justice had for Mike, said Jon Bacon, who participated in these discussions as a CDC representative. Chief Justice Ronald George The third element of an effective program is placing CDC members in contact with California legislators. When an issue important to civil practitioners arises, Belote reaches out to those CDC members who have established personal or professional relationships with Assembly members or state Senators to advocate on behalf of defense attorneys. This is a complicated function given the need to track thousands of pending bills, the legislators who support or oppose the bill, and CDC members who may be able to influence a given legislator. It may sound like high school civics, but it really does matter to legislators when they hear from valued constituents, Belote says. The final element is less complicated than the other three: money. Legislators do not enjoy the need to raise money for campaign expenses, but until someone invents a new system, it is simply a fact of Sacramento life, Belote said. No CDC member should be surprised to learn that campaigns to elect an Assembly member can cost hundreds of thousands of dollars and campaigns to elect a state Senator millions of dollars. It is not surprising that there are interests in Sacramento, including the plaintiffs bar and industry groups, who routinely make annual contributions to political campaigns in the seven figure range. No one is suggesting that defense attorneys ever will raise and contribute annually funds in the seven figure range to campaigns, and the system is far too sophisticated to simply confer a win to the largest contributor, said Belote. Nonetheless, he noted that key legislators do contact the CDC for contributions to defray campaign expenses. The CDC established and maintains a political action committee (PAC). The CDC Candidates PAC is the entity legally authorized to make appropriate contributions for the CDC. The source of the PAC s funds are CDC member contributions. What Is CDC Doing These Days For ADC Members? At the 2007 ADC Annual Meeting, with the ease of someone extremely knowledgeable on a subject, Belote sketched the big picture of current state government activity: Contribute to CDC Continued on page 13 Contributions to CDC may be made via either a single contribution by check or a monthly contribution by a credit card. Contributions may be made on behalf of a firm or an individual. Contributions may be anonymous. The tax identification number for the CDC PAC is (Contributions to the CDC PAC are not tax deductible for federal or state income tax purposes.) Send your contribution to: California Defense Counsel, 925 L Street, Suite 1250, Sacramento, CA Defense Comment Spring 2008

15 Who Is Representing You? continued from page 12 The California legislature is midway through its biennial session. Of the thousands of bills introduced, the legislature sent 964 bills to the Governor s office for signature or veto. Per the state Constitution, Governor Arnold Schwarzenegger has 30 days to act on a bill. A 15-minute or so individual presentation on each submitted bill is provided to the Governor. In totality, and without political bias, the Governor basically acts the way he says he will, Belote said during his presentation at the Annual Meeting. On business matters, he is conservative: no new regulation; no new taxes. He is a social moderate; he signs many bills that anger the more conservative elements of the Republican Party. On the environment, he tends to be a progressive. Of interest to the CDC members are approximately 70 bills of the thousands introduced. About 50% of the 70 will be enacted. At the Annual Meeting, Belote discussed 20 bills that the Governor did sign, noting legislation that may or may not benefit a civil practitioner are described at CDC s Web site (www.caladvocates. com). 1 All-in-all, it was a good year for the defense bar, Belote said. We prevailed on bills that we did not like and enacted bills that do help civil practitioners. Three of the enacted bills discussed by Belote illustrate the environment in which he works representing CDC member s interests on legislation that impacts civil practice: Additional Superior Court Judges Assembly Bill : Historically, the number of judicial seats statewide was controlled by politicians, Belote told Annual Meeting attendees. Now, the Judicial Council has control, and advises the legislators where judges are needed in California s 58 counties. For years, Chief Justice Ronald George has been advocating funding and appointment of additional judges. Based upon national statistics, there should be 400 more superior court judges in California to serve adequately its population. Trial lawyers among ADC members have experienced trial postponements for lack of court rooms in many counties. Additional judgeships have been a subject of discussion at Judicial Council Committee meetings that include CDC members. However, appointment of additional judges is subject to budgetary constraints, Belote emphasized. Each seat costs $1 million annually. Nonetheless, the Chief Justice spearheaded the Judicial Council s effort to secure a commitment from the Legislature to add 150 judges statewide. The first 50 were funded in AB 159 funded 50 in Another 50 seats will be proposed in a bill for But, with the State facing a $14 billion budget deficit in 2008; who knows, questions Belote. Telephonic Appearances Assembly Bill 500: California Governor Arnold Schwarzenegger The CDC and the plaintiffs bar alerted the Chief Justice that the rules for telephonic appearances differ among superior courts. Local rules were inconsistent. CDC advocated that court rules should encourage telephonic appearances, and consistency between courts would encourage telephonic appearances. The Chief Justice appointed a working group consisting of the CDC, Consumer Attorneys and judiciary members. The plaintiffs bar agreed with CDC, and advocated the rule change. Judges wanted flexibility to require appearances for a variety of reasons. All agreed that policy should be to encourage telephone appearances. The Judicial Council recommended to the Legislature that procedural rules should be revised to provide the Case Management Conference appearances presumptively should be eligible for a telephonic appearance provided that, prior to the CMC, counsel meet and confer in good faith and file timely CMC statements. The rule change would apply to all 58 superior courts in California. As the bill becomes effective January 1, 2008, Belote appeals to CDC members to Continued on page 14 Spring 2008 Defense Comment 13

16 Who Is Representing You? continued from page 13 notify him if the rule change is working to benefit them, or create unnecessary inefficiencies in their practice. The Judicial Council wants to know if it s working, Belote said at the Annual Meeting. Dismissal of Doe Defendants Assembly Bill 1264: This is a bill that provides that Doe defendants cannot be severed prior to the introduction of evidence at trial, except upon stipulation or motion of the parties. Prior to enactment, the Trial Court Delay Reduction Act required the Judicial Council to adopt standards for timely disposition of actions. This bill prohibits delay reduction rules from severing Doe defendants early in the litigation. Belote used this Bill as an example to describe how CDC activity impacts legislation affecting ADC members. During Judicial Council discussions on the proposal, the plaintiffs bar needed the cooperation of judges and the CDC. The Consumers Attorney s lobbyist is aware, as is Belote, that the Governor looks for consensus on proposed legislation. The process leading to the Bill s enactment was politically interesting, Belote said. We are in a period of gridlock if the plaintiffs bar and defense bar disagree on a major issue. The Governor is likely to veto a bill tilted toward the plaintiffs bar. He signed this Bill because, I believe, that he was convinced it was a good measure supported by judges, the CDC and plaintiffs. Construction Contractual Indemnity Senate Bill 138: The legislature is working to stamp-out Type I indemnity obligations, Belote said. This bill is consistent with the legislative message that Type I indemnity clauses are void as a matter of public policy. Elsewhere in this edition of Defense Comment, attorney and ADC member Paul Cotter analyzes SB 138 and its impact in the context of the development of indemnity obligations in California. During his address to the 2007 Annual Meeting, Belote also listed pending legislation that should interest CDC members: E-Discovery Assembly Bill 926: This is the most significant pending bill that should interest ADC members, said Belote. The CDC has had an enormous role crafting the proposed E-Discovery legislation. The Judicial Council established working groups again comprised of the CDC, plaintiffs bar and judges - to evaluate federal E-discovery rules and reasonable revisions to these rules to facilitate California practice. For the CDC, along with Belote, ADC Past Presidents Peter Glaessner and Wayne Maire, as well as ASCDC Past President Wally Yoka were very active in these working group discussions. There has been a break-through in these discussions that should lead to enactment during the 2008, second half of the biennial legislation session, Belote said at the Annual Meeting. CDC Lobbyist Michael Belote Hanif/Nishihama Reduction 3 Elimination Senate Bill 93: This bill would prohibit the amount paid by Medi-Cal from being considered as evidence of past medical damages or for the purpose of reducing the third party s liability to the beneficiary in any third party action. Without this evidence, plaintiff can present uncontroverted evidence of the health care providers charges in support of a damages claim without any consideration what is actually paid for services by Medi-Cal. The Consumer Attorneys worked to amend the Bill late in the first biennial session, and the Bill as amended was sent to the Governor. The CDC questioned whether it raised more issues than resolved. The Governor vetoed the Bill. Class Action Reform Assembly Bill 1505: No matter the potential benefit to clients of the defense bar, some bills are just DOA in the legislature. As described by Belote, a Bill addressing California class actions was sponsored by a business Continued on page Defense Comment Spring 2008

17 Who Is Representing You? continued from page 14 group oriented toward tort reform. Very generally, the Bill proposed a series of changes to rules including appealing class certification orders either granting or denying certification. The plaintiffs bar still exercises enormous influence in the legislature, and it is very difficult to pass bills over their opposition, said Belote. It was no surprise that this bill was killed, he said. Given the proposal s fate in the legislature, Belote expects interest groups to appeal directly to voters through a proposition to resurrect class action reform. Disabled Persons Equal Access Rights Senate Bill 747: At the Annual Meeting, Belote reported that the CDC continues with extensive negotiations with the business and ADA rights advocates to stem abusive ADA lawsuits. He described an example of a plaintiffs law firm filing 400 lawsuits per month against small businesses, particularly ethnic businesses, alleging ADA violations. The obvious problem facing the legislative process is how to compromise between the interests of business and ADA groups. CDC advocates relief for businesses owners, who exercise reasonable measures to comply with ADA provisions, from some statutory remedies available to prevailing ADA plaintiffs. One scenario may be where an owner hires an ADA compliance consultant who recommends renovation to comply with ADA access requirements, and the owner does renovate the premises, the relief sought by an ADA plaintiff against the owner would be limited by proposed legislation. What Can ADC Members Do These Days To Empower The CDC? The answer is simple: make a contribution to CDC. Not a surprise. What may surprise ADC members is the source of contributions to ADC. Traditionally, support comes from across the spectrum, said Belote. Support comes from ADC and ASCDC members along with the support of smaller and mid-size firms who support these organizations through payment of membership dues and additional contributions of $50 to $5,000 to CDC. This is what allows CDC to maintain its presence in Sacramento, said Belote. For busy practitioners, CDC watches the lawmakers in Sacramento, protecting your interest while you are busy protecting your clients interests, volunteering and recreating. Endnotes 1 At the Web site, go to Client Only Services, scroll down to California Defense Counsel; enter cdc and 475 and then you can view an active status report, search for bills, etc. 2 Pending bills also may be accessed at 3 Hanif/Nishihama Reductions After Greer v. Buzgheia by Gregory D. Pike and Ryan Vlasak, Defense Comment (Summer 2007 ed.), Vol. 22, No. 2, p. 7. (Available at Spring 2008 Defense Comment 15

18 The Pursuit of Justice, or Money? By Joe Nocera If I don t bring the lead paint industry to its knees in three years, I will give them my boat. So declared Ronald L. Motley to The Dallas Morning News in the fall of 1999 and why not? In addition to being the owner of a very large yacht, Mr. Motley is also one of the country s pre-eminent plaintiffs lawyers, the titular head of the 70-lawyer firm Motley Rice, based in Charleston, S.C. At the time of that interview, he was on top of the world. He had just spearheaded the drive against the tobacco industry, resulting in a $246 billion settlement with the 50 states. His fees ran into the hundreds of millions, if not billions, of dollars. Retire? he scoffed in that same interview. There are too many corporate crooks out there manufacturing dangerous products and injuring kids as a result. He vowed to use his tobacco winnings to go after more bad guys, like those evildoers populating the lead paint industry. And that he has. In the wake of the Merck-Vioxx column I wrote a few weeks ago in which I took the position that plaintiffs lawyers aren t always on the side of the angels I was deluged with messages from readers who said, in effect, Oh yes they are! And up to a point, I would agree: who can argue with the billions of dollars the plaintiffs bar extracted from the big banks that enabled Enron? (I can t help noting, however, that the lead lawyer in the Enron lawsuits, William S. Lerach, will soon be in prison, having pleaded guilty to a felony directly related to the way he used to practice law.) But for every Enron, there are cases where lawyers abuse the legal system. In these cases, litigation can look more like an income-redistribution racket than a search for justice. So I come forward this morning with a new example of litigation run amok. I offer you Mr. Motley s lead paint litigation. Lead is poisonous. We all know that, though a century ago, we thought that people needed to have a lot of lead in their systems for it to present a health problem. But now we also know that lead in the bloodstream, even in small doses, has the potential to cause problems in babies. Today, any child who has more than 10 micrograms per deciliter is considered to have an elevated blood lead level though under these modern standards, the entire baby boomer generation had elevated blood lead levels as children. Here s what else we know. We know how to get the lead problem under control. In the mid-1970s, the government passed laws eliminating lead in gasoline, paint and tin cans. (Lead in gasoline was by far the biggest cause of elevated blood lead levels.) And states and cities passed laws mandating that landlords keep their properties freshly painted so that old lead paint chips would not fall off and be eaten by children. Basically, what we have succeeded in doing in this country is reduce the incidence of lead poisoning by 90 percent and the blood lead levels by 90 percent, said Dr. Philip J. Landrigan, the head of the Department of Community and Preventive Medicine at Mount Sinai School of Medicine. He told me that this constituted a great public health triumph. Despite this belief, however, Dr. Landrigan has testified as an expert witness on behalf of plaintiffs. Although lead was outlawed in paint in 1978 and though many industry players had removed it even earlier than that the lawsuits began in These were not, however, Motley Rice lawsuits. Most were product liability suits that claimed the pigment manufacturers knew that lead was dangerous and had therefore knowingly harmed the consumer. The cases went nowhere, for two primary reasons. First, it was hard to make the case in court that the companies had done anything wrong. Yes, there were bad documents there are always bad documents but most of them were a half a century old, as the science around lead was emerging in this country. They mainly showed that the Lead Industries Association was less than keen about embracing the emerging consensus about the dangers of lead to small children. But the industry didn t try to cover up the science, and as the science became clearer Continued on page Defense Comment Spring 2008

19 The Pursuit of Justice, or Money? continued from page 16 in the 1950s the industry voluntarily took lead out of interior paint. I realize that many people think companies should rush to abandon legal products at the first whiff of a problem, but if that were really the standard, the shelves would be bare. The second problem is that it was impossible to know which manufacturer s paint had been used on a particular house. For most judges, that was the real deal-breaker. For as long as there has been product liability law, it has been rooted in the notion that in order to sue a wrongdoer, you have to know who the wrongdoer is. Plaintiffs lawyers tried to argue that since all the manufacturers used lead pigment, they were all guilty and their guilt should be proportional to their market share. But aside from Wisconsin, this was universally rejected by the courts. And there things stood until Motley Rice arrived on the scene. In Rhode Island, where Motley Rice has an office - and lots of political ties - the firm agreed to join forces with the attorney general s office, just as it had in the tobacco case, and take 16.7 percent of the proceeds if its side won. A lawyer named Fidelma Fitzpatrick came up with the most novel theory yet: the state should sue the companies on the ground that lead paint was a public nuisance. It was so far-fetched that another lawyer in the office would later tell a reporter that, at first, they called it Fidelma s Wacky Idea. Ms. Fitzpatrick explained to me that since the substance was still so prevalent, it was a public nuisance and therefore all the companies were guilty of creating that nuisance. See how easy that was? Suddenly, the case was no longer about an individual who had been harmed by lead or an absentee landlord who hadn t maintained his property. It was about those dastardly pigment makers who had put lead in paint. Armed with this new theory, Motley Rice went to trial in Rhode Island in Hung jury. Then, in 2006, the case was retried and Motley Rice won. Evidence? laughed Jane Genova, a blogger who has followed the case closely. There was no evidence. The judge s instructions said you didn t need evidence. If the jurors found that lead paint created a public nuisance, then they should find for the plaintiffs. Sure enough, they did. (It didn t help that the companies didn t put on a defense, so sure were they of victory.) In the last year, it s gotten even worse for the defendants, at least in Rhode Island. The state, with the help of its friends at Motley Rice, recently unveiled an abatement plan that would require the companies to pay for the inspection of a staggering 240,000 homes as well as thousands of other structures like hospitals and day care centers, and remove lead from most of them. The estimated cost for doing this almost surely understated is $2.4 billion, with a hefty chunk of that going to the lawyers, of course. Never mind that for the vast majority of homes, the far better and cheaper solution is simply to keep them maintained. Or that this plan has been ginned up even though the case is still on appeal. Meanwhile, to capitalize on its success in Rhode Island, Motley Rice and other big-time plaintiffs lawyers have raced all over the country, trying to get other jurisdictions interested in suing the same defendants on the same grounds. Fortunately, they have had less luck. This past summer, the public nuisance theory was rejected by high courts in New Jersey and Missouri. In Wisconsin, two high-profile trials were held this year; the plaintiffs lost them both. Still, Motley Rice has cases going in Ohio, California and Wisconsin. I think New Jersey is going to be an aberration, Ms. Fitzpatrick said. She made it sound as if her firm remained undeterred since, after all, it is on the side of the angels. There is no doubt they knew, she said of the companies. When I brought up her contingency fee, she bit my head off. The real story here is the amount of money the defendants have spent defending these cases, she said. We re the only group of lawyers who haven t been paid in 10 years. No wonder she s still at it. But what are the companies supposed to do? Let Motley Rice bankrupt them because of something they did three decades ago that was perfectly legal? When I asked Dr. Landrigan why he was working for the plaintiffs he said: The removal of paint from apartment buildings is expensive. States and cities are chronically underfunded. So basically, getting a judgment against the companies is a way to get revenue to do the removal. You will never hear a purer distillation of the real motivation for bringing these suits. The companies have lots of money, so make them pay no matter what the evidence. One thing I couldn t help wondering was why the gasoline makers weren t subject to these kinds of lawsuits. After all, gasoline, not pigment, was the primary cause of elevated blood lead levels back in the day. When I mentioned this to David Rosner, a Columbia professor who has served as an expert witness for the plaintiffs, he reassured me. I think there might be a suit like that filed next week, he said. Copvright From the New York Times on the Web. The New York Times Company. Reprinted with Permission. Defense Comment wants to hear from you. Please send letters to the editor by to Stephen A. Schram at We reserve the right to edit letters chosen for publication. Spring 2008 Defense Comment 17

20 Indemnification Clauses in Construction Contracts New Legislation Closes One of Several Loopholes By Paul R. Cotter, Diepenbrock & Cotter, LLP How, in the name of God, is this all my fault? This was an actual question from a real client to a real lawyer. The answer was, It isn t your fault, but you still have to pay for it. The difficult and awkward task of explaining the unfortunate answer is familiar to thousands of lawyers whose clients are parties to construction contracts that contain express indemnity clauses. Developers and general contractors have, for many years, crafted their contractual forms to take maximum advantage of statutory and decisional law that allows them to obtain complete indemnity from their subcontractors for all damages for personal injuries or property damage. The indemnity obligation often exists even if the damages were caused in part by the developer/general contractor s own negligence, and even if the subcontractor was completely without fault. L eg i slat ion sig ned by Gover nor Schwarzenegger in 2005, and additional legislation signed in 2007, alters one segment of the spectrum of law in this area property damage claims against subcontractors in residential construction. Both pieces of legislation are explicitly nonretroactive. The result for the near term is the existence of three categories of legal approaches to express indemnity claims in residential construction defect litigation. Determining which law applies depends on the date when the contract containing the indemnity clause was made: Category One Contracts made on or before December 31, 2005; Category Two Contracts made on or between January 1, 2006 and December 31, 2007; or Category Three Contracts made on or after January 1, Lawyers representing parties to indemnity agreements in residential construction contracts will, for the next several years at least, need to pay close attention to the dates that those contracts were made. 1 Category 1 Contracts Entered Into On or Before December 31, 2005 All the old rules still apply to indemnity agreements made on or before December 31, The framework most-often used for analysis of express contractual indemnity provisions is found in MacDonald & Kruse, Inc. v. San Jose Steel (2 nd Dist., 1972) 29 Cal.App.3d 413. MacDonald established three categories of indemnification agreements: Type I Clauses: The indemnitor (usually a subcontractor) expressly promises to be responsible for liability resulting from the indemnitee s (usually developer or general contractor) negligence or fault. Type II Clauses: The indemnitor promises to be responsible for the indemnitee s liability arising from indemnitor s work, regardless of responsibility for negligence or how caused. If the indemnitee s negligence partially caused the damage, the indemnitee may only benefit from such clause if its negligence was passive and not active. Type III Clauses: The indemnitor promises to be responsible only for those liabilities that are caused solely by the indemnitor. The California Supreme Court, in Rossmoor Sanitation, Inc. v. Pylon Inc. (1975) 13 Cal.3d 622, largely upheld the MacDonald court s approach, requiring a characterization of the indemnitee s negligence as either active or passive when analyzing the effect of a Type II, or general indemnity clause. The Rossmoor Court admonished the courts to closely examine the circumstances of each individual case, and to pay special attention to contractual interpretation and the intent of the contracting parties. Rossmoor, 13 Cal.3d at 633. More recent cases have examined whether there must be a finding of negligence or fault on the part of the indemnitor before a contractual indemnity obligation may be triggered. In examining this question, it is Rossmoor s admonition to closely consider the contractual language and circumstances in each case that has led to the distinction in more recent cases between residential and commercial construction. The more recent cases place importance on the relative bargaining strength of subcontractors in commercial, rather than residential construction. The courts appear in many cases to perceive the existence of more contracting freedom and bargaining strength in the commercial context. These later decisions have also examined other factors, including whether imposing the Continued on page Defense Comment Spring 2008

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