WI Supreme Court Rules Against Bars and Restaurants on COVID-19 Pandemic Financial Losses

WI Supreme Court Rules Against Bars and Restaurants on COVID-19 Pandemic Financial Losses

This article is a follow up to one I wrote on August 10, 2020 relating to potential insurance coverage for business losses due to the government shutdowns and restrictions for in-person dining during the COVID-19 pandemic. The first lawsuit on this issue was filed nearly two years ago.

One case finally made its way to the Wisconsin Supreme Court, and on June 1, 2022, the Court unanimously held that Society Insurance Company did not have to provide coverage for business interruption losses claimed by restaurants and bars due to government shutdowns and restrictions imposed on in-person dining. This case is Colectivo Coffee Roasters, Inc. v. Society Insurance, 2021AP463 (June 1, 2022).

In this lawsuit, the plaintiff and other bars and restaurants experienced substantial losses as a result of the COVID-19 pandemic and related government restrictions on in-person dining. The Supreme Court addressed the specific issue of whether those losses are covered by a property insurance policy issued by Society Insurance. Specifically, the questions are: (1) Whether a bar or restaurant’s inability to use its dining space for in-person dining because of the pandemic and related government restrictions constitutes a direct physical loss of or damage to its property under Society’s policy; and (2) Whether the presence of COVID-19 on a bar or restaurant’s property caused the bar or restaurant to suspend its operations, thereby entitling it to coverage under the policy’s contamination provision. The Supreme Court concluded that the answer to both questions is no, and ruled against the bars and restaurants.

The Wisconsin Supreme Court followed the majority of courts nationwide in holding that the presence of COVID-19 does not constitute a physical loss of or damage to property because it does not “alter the appearance, shape, color, structure, or other material dimensions of the property.”  The Court held that although the restaurants could not use their dining room for in-person dining for a period of time, “the dining room was still there, unharmed and it was not physically lost or damaged. Without such a harm, the policy’s business income and extra expense provisions do not apply.”

With respect to the civil authority provisions of the insurance policy, which the restaurant argued should apply based upon the government’s imposed shutdown, the Court ruled that the restaurant did not identify any physical loss or damage to its property or surrounding property such that the business income or extra expense coverage should apply.

Finally, the Court affirmed the ruling of no coverage under the contamination provision of the policy for three reasons. (1) The restaurant did not suspend its operations due to the presence of COVID-19, but did so based upon the Governor’s orders. (2) The Governor’s orders did not prohibit access to the restaurant’s property – they restricted how the property could be used. (3) The Governor’s orders did not prohibit the restaurant from producing its products – they prevented it only from serving its products for in-person dining.

This ruling by the Wisconsin Supreme Court marks a trend among state Supreme Courts in finding no business interruption coverage for alleged COVID-19 related losses, and also follows the well-established nationwide trend in the federal courts denying insurance coverage for these claims.

 

Can Amazon be Held Responsible for Defective Products Sold by Third Party Vendors?

Can Amazon be Held Responsible for Defective Products Sold by Third Party Vendors?

Amazon, the e-commerce giant, sells over 350 million products online, which includes millions of products from third-party vendors. More than 95 million Americans now have Amazon Prime memberships. What happens if someone gets seriously injured by using a defective product manufactured by a third-party vendor which Amazon sells on its website? Can Amazon be held liable? The short answer is YES.

There is very little regulation when third-party vendors place their products on Amazon. Amazon has argued that it is just the intermediary between buyers and its third-party sellers on Amazon’s marketplace, and therefore it should not be held liable for these defective products. Until recently, Amazon has won several lawsuits escaping liability for selling defective products. However, the tide is now shifting against Amazon. In 2020 a landmark case was decided in California, where a woman purchased a replacement battery for her laptop computer from Amazon. This battery was manufactured by a third-party vendor. After several months, the battery exploded, and the woman suffered third degree burns. The California Court of Appeals ruled that Amazon could be held liable for selling this defective product. In finding that Amazon may be held liable, the Court held that regardless of what role Amazon had – whether it was a retailer, distributor, or mere facilitator – it was pivotal in bringing the product to the consumer.

A similar result was decided in a Wisconsin federal court case in 2019 in the Western District of Wisconsin. (State Farm v. Amazon.com, Inc.)  In this case, a Chinese manufacturer functioning as a third-party and having no presence in the United States, sold a bathtub faucet adapter on Amazon. A month after a homeowner purchased the item, the adapter failed due to a defect and caused flooding to their home. The Court found that the Chinese manufacturer could be held liable but that it was not subject to a lawsuit because it had no presence in the United States. The Court then went on to analyze the potential liability of Amazon for selling the defective product. The Court held that Amazon could be strictly liable because it found that Amazon took on more than a peripheral role in putting the product into the stream of commerce. The Court focused on key facts about the manufacturer’s relationship with Amazon, such that Amazon provided payment processing for the manufacturer and guaranteed the purchases. It also highlighted that the manufacturer participated in Amazon’s Fulfillment By Amazon (FBA) Program pursuant to which Amazon stored the manufacturer’s products and fulfilled its orders. Amazon also required the manufacturer to register its products for sale and reserved the right to refuse registration. Finally, Amazon required the manufacturer to indemnify Amazon for any injury or property damage caused by the manufacturer’s products.

As shopping online becomes more and more prevalent compared to shopping at brick and mortar stores, the courts appear to be finding remedies for online buyers who purchase defective and dangerous products from third-party vendors. In response to these lawsuits and court holdings, Amazon has developed a new policy in 2021 where it will pay customers up to $1,000 for defective products sold on its marketplace by third-party merchants that cause property damage or personal injury. Amazon claims that 80% of its defective product claims are worth less than $1,000. Amazon states that it may pay higher than this amount if the manufacturer is nonresponsive or rejects a valid claim. This damage amount is clearly insufficient for serious injuries and damages can require litigation to obtain the full value from Amazon. Amazon still maintains its position that it is not legally liable for selling defective products. It does appear that the company is taking a proactive approach on this issue in order to potentially avoid further legislation and regulations that may make it more difficult for Amazon to sell third-party products online.

If you experience a defective product that causes serious damages and injuries, it is important to speak to an attorney in a timely manner in order to preserve any potential claims that you may have. If you have questions, please do not hesitate to reach out to one of our personal injury attorneys.

Go Buy An Umbrella

Go Buy An Umbrella

The above title is not encouraging you to buy something to protect you from the rain! It refers to purchasing an umbrella insurance policy to protect you and your family from liability claims, and to provide you with ample coverage for your losses due to injuries sustained in an auto accident. The typical cost for a $1,000,000 umbrella policy can be as little as $200 or $300 per year. This is a bargain for an additional $1,000,000 in protection.

As attorneys, not only do we represent clients, we also counsel them. One of my favorite topics to discuss with clients is having adequate insurance, including the purchase of “umbrella” coverage. This coverage refers to an extra layer of protection on top of your existing insurance coverage, of at least $1,000,000 or more, to protect you in case you have personal liability in an auto accident or under your homeowner’s policy. The umbrella policy you purchase should also include an endorsement to apply to your underinsured and uninsured motorist coverage on your automobile insurance policy. Some insurance companies may offer an umbrella policy you can purchase, and some may not. Some insurance companies may sell you an umbrella policy that applies to liability coverage only, for example, if you are at fault under your homeowner or auto policy. However, you need to consider being insured by a company that offers an umbrella policy that covers liability and has an endorsement to cover underinsured and uninsured motorist coverage in case you sustain serious injuries in an auto accident. You need to specifically ask for all three of these protections to have the best protection possible.

The reason for having an umbrella policy is to simply provide a significant increase in insurance coverage for a very low cost. In our practice, we see all types of auto accidents, and homeowner’s liability issues, and the first thing we ask our clients when they come to us is what type of insurance is available from the other party, and from our client. All too often we must tell our clients that the person who ran into them with their vehicle either had no insurance, or minimum insurance limits. We then look to our client’s insurance policy for potential additional coverage, and if they have low underinsured or low uninsured coverage there may be very little we can do to obtain compensation for our clients for their significant losses. Given the high cost of medical care, injured parties can easily sustain tens of thousands or hundreds of thousands of dollars in medical bills, in addition to significant wage loss and potential permanent disability preventing future earnings. If you have an umbrella policy of at least $1,000,000 that applies to liability and uninsured motorist coverage and underinsured motorist coverage, you will have a better chance of protecting yourself and obtaining full compensation for your injuries.

In summary, go buy an umbrella policy to protect yourself and your family. In order to give yourself full protection, you need to tell your insurance agent that you need the umbrella policy to cover (1) liability for home and auto, and (2) an endorsement so that the umbrella applies to your underinsured and uninsured automobile coverage. If you have any questions about an umbrella policy, please feel free to contact me and I will be happy to discuss it further with you.

 

What is Mediation and How Does it Work?

What is Mediation and How Does it Work?

Mediation is a private process for resolving disputes by which an independent mediator assists the parties in reaching a mutually satisfactory settlement. While the courts can require that some cases go to mediation, the process remains voluntary in that the parties are not required to come to an agreement.

Issues That are Typically Mediated

When a lawsuit is filed, it is common for courts to require the parties to engage in some form of informal dispute resolution to attempt to settle their case. The types of cases that are typically mediated include disputes involving personal injuries, business transactions, real estate, insurance, construction, breach of contract, as well as family law and custody disputes, to name a few. It should be noted that a case does not have to be in the court system or in litigation for mediation to be utilized or to be effective. Informal disputes between businesses, neighbors, or among people within a workplace could also benefit from voluntary mediation even without being in a lawsuit.

The Role of the Mediator

Mediators are typically attorneys and retired judges. The mediator will not decide the outcome of the case. The mediator is neutral, impartial and does not choose one side’s position over the other. The mediator’s job is to help the parties resolve their issues through a process that encourages each side to air their dispute, identify their strengths and weaknesses, and to address potential solutions to the problem that will be satisfactory to all sides. The primary goal of a mediation is for all parties to work out a solution they can live with. Nothing will be decided unless both parties agree to it. The mediator will assess the case, highlight the strengths and challenges of each side, point out the risk and expense associated with continuing with the dispute and having a trial, and the uncertainty of leaving it in the hands of a judge or a jury to decide the parties’ fate.

Typical Mediation Procedure

There are different methods for how mediations are conducted. Mediations often take place at a mediator’s office or at the office of one of the attorneys involved in the dispute. Many mediations that take place in the context of a lawsuit are conducted with the parties in separate rooms for the entire mediation. Each side presents a statement to the mediator about the dispute and how they would like it resolved. It is typical for the parties and their attorney to file written submissions to the mediator at least a week in advance of the mediation so that the mediator will be familiar with the issues involved in the dispute. The mediator will then go from one room to the other to discuss potential avenues for resolution with each party with the goal of reaching an agreement. The discussions the mediator has with each side in separate rooms are completely confidential and are not disclosed to the other side. If an agreement is reached, it will then be reduced to a written document that can be enforced in court. Mediations can last a few hours to a full day, or even longer, depending on the complexity of the issues and the number of parties involved.

Other styles of mediation involve the parties having a joint session where they are all in the same room for the entire mediation and the parties discuss potential ways to settle their issues with the mediator facilitating that discussion.

The Benefits of Mediation

Mediation has many benefits when compared to a dispute that works its way through the court system and all the way through a trial. These benefits include the following: (1) Everything said by the parties at mediation is confidential and is not admissible in court; (2) The parties can resolve their dispute privately without having to testify in open court; (3) The parties can avoid the costs of ongoing litigation expense and trial; (4) The parties have total control over the outcome of their own dispute, without having to take the risk of presenting their issues to a judge or jury who will ultimately decide the parties’ fate; and (5) Mediation can be conducted even before a lawsuit is filed, which can significantly shorten the timeframe in which the parties can resolve their dispute.

Attorney Richard H. Fuller at Anderson O’Brien not only represents parties at mediations, but he also conducts mediations as part of his civil litigation practice. If you have any questions about mediations, please do not hesitate to contact him.

 

Wisconsin’s Home Improvement Code Protects Homeowners When Remodeling

Wisconsin’s Home Improvement Code Protects Homeowners When Remodeling

There has been a significant increase in home remodeling projects since the pandemic began over a year ago, and many people choose to hire a contractor to assist them. Not all contractors provide written contracts with the details of the project, such as total costs, start and completion dates, and the type and quantity of materials to be used. The lack of a written agreement sometimes leads to disputes after the project begins and may lead to arguments about payment at the end of the project. Fortunately for homeowners, Wisconsin has the Home Improvement Practices administrative code sections which set forth requirements and penalties if contractors fail to follow the rules. These rules can be found in Chapter ATCP 110 of the Administrative Code. The rules require a contract, and all changes to that contract, to be in writing and signed by the contractor and the homeowner if (1) the contractor requires money up front, prior to completing the project, or (2) if the contractor solicits a homeowner’s business away from the contractor’s regular place of business, by mail or telephone, or with brochures or circulars delivered or left at someone’s home.

The requirements under the code are applicable if the project involves “Home Improvement” which the code defines as follows:

“Home improvement” means the remodeling, altering, repairing, painting, or modernizing of residential or non-commercial property, or the making of additions thereto, and includes, but is not limited to, the construction, installation, replacement, improvement, or repair of driveways, sidewalks, swimming pools, terraces, patios, landscaping, fences, porches, garages, basements and basement waterproofing, fire protection devices, heating and air conditioning equipment, water softeners, heaters and purifiers, wall-to-wall carpeting or attached or inlaid floor coverings, and other changes, repairs, or improvements made in or on, attached to, or forming a part of, the residential or non-commercial property. The term extends to the conversion of existing commercial structures into residential or non-commercial property. “Home improvement” does not include the construction of a new residence or the major renovation of an existing structure.

As you can see, home improvement is defined in very broad terms. You should note that it does not apply to construction of a new residence or the major renovation of an existing structure.

If a written contract is required under the code based on the circumstances described earlier, the contract must contain the following information:

  • The contractor’s name and address, and the name and address of the contractor’s sales representative or agent.
  • A description of the work to be done and the principal materials to be used. If the contractor promises to install specific products or materials, the contract must clearly describe those products or materials.
  • The total price, including finance charges. If the contract is for time and materials, it must clearly disclose the hourly labor charge.
  • The dates by which, or the time period within which, the contractor will begin and complete the work.
  • A description of any mortgage or security interest created in connection with the sale or financing of the home improvement.
  • All warranties that the contractor makes for labor, services, products or materials furnished in connection with the home improvement.
  • A description of every document incorporated in the home improvement contract.
  • Insurance coverage included in the home improvement contract, if any.

Additional provisions in the Home Improvement Code require the contractor to provide the customer with a written notice advising that the customer has a right to receive lien waivers. The code also requires that the contractor inform the customer of all building and construction permit requirements, and the contractor must refrain from starting work until the permits have been issued.

Should a contractor fail to comply with these code requirements, a homeowner has several potential remedies including the following:

  1. Cancel the contract;
  2. Demand return of any payments which the contractor has not yet earned;
  3. Demand delivery of all materials the homeowner already paid for;
  4. Demand an accounting of all payments that were made by the homeowner;
  5. The homeowner may be able to recover twice the amount of any damages they sustain as a result of the contractor’s violation of the Home Improvement Code;
  6. A homeowner may be able to recover actual attorneys’ fees that they incur in pursuing claims against the contractor for violations of this code.

If a homeowner is in a position where they believe they have sustained damages because a contractor failed to comply with the Home Improvement Code, it is advisable that they consult with a litigation attorney to discuss their options.

 

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