WYOMING TORT AND INSURANCE DEFENSE NEWSLETTER

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1 WYOMING TORT AND INSURANCE DEFENSE NEWSLETTER Brought to you as a service of Buchhammer & Kehl, P.C., Attorneys at Law Logan Avenue, P.O. Box 568, Cheyenne, Wyoming Telephone: (307) ; Telefax: (307) ; ISSUE II Successive Lawsuits. In Fuentes v. Jednat, Wyoming Supreme Court, Docket S (April 2, 2010), the Wyoming Supreme Court addressed consecutive lawsuits by a plaintiff. An intoxicated minor was involved in a motor vehicle accident with Fuentes. The intoxicated minor was originally from Pennsylvania, but had been sent by his parents(jednats) to Wyoming to live with his uncle (Lewis.) After the minor arrived in Jackson, the uncle gave the minor s parents a motor vehicle that was licensed and registered in Pennsylvania under Jednat s name, but the vehicle remained in Wyoming for the minor to drive. Fuentes filed suit against the minor and recovered compensatory and punitive damages. The judgment was paid. Fuentes then filed suit against the minor s parents (Jednats) and the uncle (Lewis) asserting negligent entrustment claims. The district court granted the Jednats motion for summary judgment and dismissed the uncle from the case after filing an affidavit of non-involvement. In addressing the issue, the Wyoming Supreme Court relied on the Restatement (Second) of Torts and the Restatement (Second) of Judgments and found that where a defendant fully pays a judgment for all of the plaintiff s damages, the plaintiff s claim is satisfied in full and there is no further claim for the same injury. The Court also relied on the Wyoming Comparative Fault statute, W.S , that provides that a party at fault is only required to pay for his proportionate share. In adopting the comparative fault statute, the jury must determine issues of proximate cause and allocate liability among the parties. The jury considers not only the negligence of the parties but all participants in the transaction producing the claim. In Fuentes action against the minor, she presented evidence on all of her injuries and damages and the jury determined her damages by awarding her a verdict. Fuentes failed to establish how the damages caused by the minor s parents and uncle was different from the damages resulting from the minor s accident. The Court went on to state that when a judgment includes a determination of the entirety of recoverable damages suffered by the plaintiff for an indivisible injury and provides for their recovery by the plaintiff against one or more defendants, payment of the full amount of recoverable damages constitutes a satisfaction of the plaintiff s rights against all tortfeasors legally responsible for the plaintiff s indivisible injury. The Court determined that any negligence of the parents or uncle that resulted in Fuentes injuries and damages were reduced to a judgment, and were satisfied, and she had collected all the damages available to her. Wrongful Death Personal Representative. In the matter of The Estate of Johnson, Wyoming Supreme Court, Docket S (May 18, 2010), the Wyoming Supreme Court drastically changed the procedure by which a wrongful death personal representative is appointed. Prior to the Johnson case, the personal

2 representative for a wrongful death case was appointed by the probate court and then the wrongful death lawsuit would be filed in the district court, whether state district court or federal district court. The Court in Johnson found that the personal representative must be appointed by the court where the wrongful death action is brought. As a practical matter, this will require plaintiff s counsel to file their wrongful death complaint along with a simultaneous petition for appointment of a personal representative. Unless a plaintiff s attorney is cautious, if the personal representative is appointed in the wrong court (i.e. probate court), the district court would lack jurisdiction over the wrongful death matter. Given Wyoming s short statute of limitations for wrongful death actions of two years, this may result in cases where wrongful death claims are not properly filed before the running of the statute of limitations. Life Insurance Recision. In Harper v. Fidelity and Guaranty Life Insurance Company, Wyoming Supreme Court, Docket S (June 29, 2010), the Court addressed recision in the context of life insurance. Harper took out a life insurance policy naming a beneficiary shortly before dying. Guaranty Life denied the claim, asserting Harper misrepresented health problems at the time he procured the policy. The insurance company asserted recision based on misrepresentation in that Harper failed to disclose a transient ischemic attack, a history of alcohol abuse, and significantly misrepresenting his body weight. The beneficiary claimed that the misrepresentations were not material. The Wyoming Supreme Court ruled that whether something is material is determined by asking whether a reasonably careful and intelligent person would have regarded the omitted facts as substantially increasing the chances of the events insured against, so as to cause rejection of the application. The Court stated that proof of materiality could come from testimony of underwriters or testimony from an insurer s employees. Here, Guaranty Life presented evidence that the omissions were material and that the policy would not have been written had it known the actual facts. The Court also ruled that the insurance company had no duty to investigate whether the representations by Harper were accurate. Insurance carriers can rely upon answers given by the applicant for insurance without independently investigating the facts. Failure to Insure a Vehicle does not Constitute a Cause of Action. The Wyoming Supreme Court in Sorensen v. State Farm Mutual Insurance Co., Docket S (July 20, 2010), addressed the issue of whether failure to maintain automobile insurance constituted a cause of action. Sorensen was a co-owner of a vehicle with Larramendy. Larramendy got into a motor vehicle accident with a vehicle driven by a State Farm insured. State Farm brought suit against Sorensen alleging she was liable because she failed to keep the vehicle insured as required under the Wyoming Financial Responsibility Law. On appeal, the Wyoming Supreme Court determined whether there was no cause of action for failing to maintain liability insurance. The Wyoming Supreme Court found that there was no contract between Sorensen and State Farm s insured giving rise to a duty to have insurance and, under the common law, there is no duty to maintain liability insurance. The Wyoming Financial Responsibility Law does not go so far as to impose a tort duty for violating the law. Tort Duties of Communication Centers. In Rice v. Collins Communications, Inc., et. al., Wyoming Supreme Court, Docket S (August 4, 2010), the Court addressed government liability as well as the liability of a communications center. A commercial building owned by Rice was damaged in a fire. Rice asserted claims against Collins Communications as well as certain governmental entities, none of which started the fire. Collins Communication provided the dispatching for the fire department

3 and due to an equipment malfunction, there was a delay in responding to the fire which allegedly resulted in significantly more damage. The Wyoming Supreme Court affirmed the summary judgment granted to the governmental entities holding that the operation of an emergency communication system was not a basis for liability under the Governmental Claims Act and, thus, they were immune from suit. In terms of Collins Communication, if one undertakes a duty and negligently performs the duty, there is liability. However, the Wyoming Supreme Court found that this legal principle was not applicable in the context of a private company doing business with a governmental entity. Collins Communication was providing services at the request of the county and therefore this rule of law would not apply, especially here, when the fire was not the responsibility of Collins Communication or the governmental entities. Workers Compensation - Detour and Frolic. In Shelest v. Wyoming Workers Compensation Division, Wyoming Supreme Court, Docket S (January 11, 2010), Shelest was employed by the State of Wyoming and he, a co-employee, and a supervisor, rode their motorcycles from Evanston to Rock Springs to attend work related training. After the training, they took the scenic route back, which was a less direct route. Shelest was involved in a motorcycle accident and sought workers compensation benefits. The Wyoming Supreme Court affirmed the denial of workers compensation benefits stating that a deviation from a business trip for personal reasons takes the employee outside the scope of employment until the employee returns to the route of the business trip. Therefore, there was no workers compensation coverage. Over the years, certain rules have been set forth in terms of whether or not an employee is covered while driving an automobile. Driving to and from work is not covered by workers compensation. Driving required by the employee s job, such as to a meeting, is covered, unless the employee is on a detour or frolic of his own. Employment At-Will. In Reynolds v. West Park Hospital District, Wyoming Supreme Court, Docket S (May 27, 2010), the issue of at-will employment was presented to the Wyoming Supreme Court. Reynolds had been employed by the West Park Hospital for many years and at the time she was hired, the employee manual provided that termination had to be based on cause. In 2003, Reynolds left her employment, and took a severance package that included releasing West Park Hospital from any and all claims. During this time period, the hospital adopted a new employee manual that converted all previous employees from the for cause standard for termination to at-will employment. No additional consideration was given to the employees. Reynolds was hired back into a new position, but was later fired. Reynolds contended that the modification of the manual from for cause to at-will employement was not valid because it was not supported by any consideration. The Wyoming Supreme Court found that Reynolds employment was atwill and no consideration was needed. She had left in 2003, releasing all claims, and was then rehired. When she was rehired, she was subject to the new manual that provided that her employment was at-will, and therefore she could be fired for any reason or no reason at all. Reformation of Insurance Policy. In Ohio Casualty Insurance Co. v. McMurry Construction, Wyoming Supreme Court, Docket S (May 4, 2010), the issue of reformation was addressed by the Wyoming Supreme Court. McMurry Construction had contracted to build two buildings and the project was to be insured for several million dollars. Ohio Casualty Insurance Co., wrote the insurance but due to a miscommunication between Ohio Casualty and McMurry Construction, the project was only insured for

4 one million dollars. During the course of construction, one of the buildings collapsed and the loss exceeded the one million dollar policy limit. McMurry Construction sought to have the insurance policy reformed on the basis that the insurance was to have higher limits. In addressing the issue of reformation, the Wyoming Supreme Court stated that reformation is an equitable remedy and can be used only when a mistake occurs in the drafting of the instrument and the mistake was common to both parties. Here, Ohio Casualty did not intend to insure the project for several million dollars, so there was not a mistake common to both parties. Therefore, reformation was not available as a remedy. Independent Contractors. The issue of independent contractors was raised in Singer v. New Tech Engineering, Wyoming Supreme Court, Docket S (March 22, 2010). Singer suffered injuries working on an oil rig owned by Caza Drilling. Singer sued New Tech Engineering, which was a company that hired safety coaches to provide safety services on oil rigs. On this particular rig, New Tech hired a man named Harrington. Singer sued New Tech claiming that Harrington was New Tech s employee and New Tech claimed that Harrington was an independent contractor. The significance of the distinction is that an employer is responsible for the alleged negligence of an employee occurring within the scope and course of employment. However, if a person hires an independent contractor, they are not responsible for the negligence of the independent contractor. Following a long discussion, the Court ultimately focused its analysis on who had the right to control Harrington. New Tech did not supervise Harrington or provide him with tools, instructional materials, or training. Because Harrington was not under the control of New Tech, there was no employer-employee relationship and Harrington was properly classified as an independent contractor. As such, New Tech Engineering would not be responsible for the alleged negligence of Harrington. Seat Belts on School Buses. A new law was recently enacted in Wyoming that if the law requires an individual on a school bus to wear a seat belt, evidence of the failure of a person to wear a seat belt, or the failure to require an individual to wear a seat belt, is not admissible in a civil action. This statute follows Wyoming law that provides at W.S , that evidence of a person s failure to wear a seat belt as required under the law shall not be admissible in any civil action. Text Messages Prohibited. A recently passed Wyoming statute, effective July 1, 2010, prohibits the use of handheld electronic devices to send or receive text messages while driving a motor vehicle on any street or highway. Several Wyoming cities and towns have adopted handheld ordinances prohibiting the use of cellular telephones for any purpose while driving. Likewise, commercial drivers have been banned from sending or receiving text messages under 49 CFR Part , which bans texting by commercial drivers while operating commercial vehicles defined as a vehicle of a weight of 10,001 pounds or more, vehicles that transport more than eight passengers for compensation, vehicles transporting more than 15 passengers without compensation, and vehicles of any size transporting hazardous materials. Complaint Pleading Standards. Included in the last newsletter was a summary of two recent United States Supreme Court cases that have fundamentally changed the way in which plaintiffs must plead allegations. Because these cases are becoming more and more important in both federal court and state court litigation, we are again including that summary in this issue of the newsletter.

5 Those cases are Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct (2009). Rather than pleading vague and conclusory allegations in a complaint or a mere recitation of the elements of a cause of action, a complaint must have sufficient factual assertions to raise a right to relief above the speculative level. A court is not bound to accept as true legal conclusions framed as factual claims, and a court considering a motion to dismiss may disregard allegations that are mere conclusions. In determining a motion to dismiss, a court will examine the remaining well-plead factual allegations in determining whether the plaintiff has stated a cause of action. In cases filed in federal court, for a plaintiff to overcome a Rule 12 (b)(6) motion to dismiss, actual facts as opposed to conclusions must be plead and in effect will require plaintiff s counsel to plead the actual facts. These rulings will require plaintiff s counsel to show the evidence they have to support their allegations before being allowed to move forward with discovery. According to the United States Supreme Court, where a complaint pleads facts that are merely consistent with a defendant s liability, it stops short of the line between possibility and plausibility of entitlement to relief. Therefore, in cases where mere conclusions or causes of action are alleged without any supporting facts, those cases will be subject to a motion to dismiss in the federal courts. Common areas where such allegations arise are in claims of emotional distress; negligent hiring, training, supervision, and retention; punitive damages; and products liability. The extent to which Twombly and Iqbal will be applied in the state courts is not yet clear. However, as most state rules of procedure are identical to the Federal Rules of Civil Procedure the arguments raised in federal cases should be persuasive in the state courts. F i r m News. The firm of Buchhammer & Kehl, P.C., is A-V rated by Martindale-Hubbell and is the Wyoming Law Digest Revisors for Best s Directory of Recommended Insurance Attorneys. Buchhammer & Kehl. P.C. are members of: Defense Research Institute (DRI) Trucking Industry Defense Association (TIDA) Association for Defense Trial Attorneys (ADTA) Association for Transportation Law, Logistics and Policy Transportation Lawyers Association (TLA) Wyoming State Bar American Bar Association Our firm website, includes information about the firm and our practice, the current Wyoming Tort and Insurance Defense Newsletter, past issues of the Newsletter, and links to many insurance, legal, and litigation resources. Buchhammer & Kehl, P.C. has an extensive inhouse law library, electronic law library, Westlaw, and an electronic brief bank, which provide significant cost savings to clients when legal research and briefing is required. We also make extensive use of paralegals and associate attorneys in an effort to reduce client costs. For the year 2011, we will be maintaining our current billing rates and there will be no billing rate or cost increases.

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