Expert Witness–Testing for Legal Sufficiency

EXPERT WITNESSES & JUDICIAL EPISTEMOLOGY

The Texas Supreme Court recently wrote a case which surely contains the most important discussion of thinking about expert witnesses it–or any other court anywhere, for that matter–has set forth for many years. Houston Unlimited, Inc. Metal Processing, [Defendant-Petitioner] v. Mel Acres Ranch [Plaintiff -Respondent], 57 Tex. Sup. Ct. J. 1223m 2014 WL 4116810 (August 22, 2014.)* It is not only a discourse on juridical epistemology; it is also a how-to manual for both judges and advocating lawyers.  I will discuss details in another post (or other blogs). For now, here, I shall quote one of its most important observations:

“Experts who testify on behalf of parties to a lawsuit are subject to biases and potential abuses that are not always present outside the courtroom, and the courtroom itself may afford a veneer of credibility not present in other contexts. Legal sufficiency review requires courts to ensure that a jury that relies on an expert’s opinion has heard factual evidence that demonstrates that the opinion is not conclusory on its face.”Houston Unlimited, Inc. Metal Processing, [Defendant-Petitioner] v. Mel Acres Ranch

*This opinion can be found on the Court’s website. It is easily locatable.

**As shall be shown elsewhere, the wording is a bit misleading and could have been done more accurately from a semantic point of view.

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BitTorrent

I am basically a tolerant, liberty-oriented, and liberal-minded person.  I was delighted to see female priests in the Episcopal church; gay clergy is fine with me; and I have no objection to a Lesbian archbishop.  I even now, under the improbably influence of Brent Cooper, a lawyer in Dallas (who-da thunk it), welcome the prospect of trying a case in front of a jury of  “Millennials”–all including purple haired maidens, women with multiple tattoos in vivid color, and men wearing baseball caps on backward.

In addition, in opposition to all the Yellow Dogs I know–and that’s a lot–I think that most insurance companies, most of the time, are reasonable entities trying to reach a reasonable result that is more or less consistent with the applicable contract of insurance. Similarly, I think that most lawyers–more than 65%–try to obtain a semblance of justice, even in contested matters, even if many of them are far, far, less than perfect or even marvelously good, relatively speaking, in their non-lawyering lives.

It is therefore a personal deficiency of mine–granted one I nonetheless love, honor, and obey–to not just delight but take considerable joy in observing a truly wicked lawyer–an evil one!–washed over by a tide of condemnation. Hearing about a come a uppence is not nearly so pleasurable as “watching”–if only in the imagination–not only a fall from a high place but also a long, trudging  trip on bare feet in the cold, cold rain on gravel roads on the way to the farthest away dumpy house of misery producing, sustaining, and worsening incarceration.

I have gone to confession on this point in which I take pride many times during and since my youth, yet (I do not really try to repent.)  Following vengeance upon the profoundly and deserving unworthy is one of life’s pleasures, like warm cornbread, especially when  you have no role in executing it. (In the current age of massive statin consumption, be careful not to eat too much of it.) Oddly enough, I would defend these wretches in court if s/he have the money* or were a close and beloved relative, like my brothers, my wife, and my children, even if broke.  I’m sure my father would have done it for one or all of us. Even the worse get a defense in the civilized secular world; besides, we have not burned witches in several centuries.

(*The liberality and tolerance I have proclaimed for myself gives out here.  I cannot see how the idea of  pro bono applies since that phrase means “for the good,” and I see no good in this defense.)

Now I finally get to the point.

There is a syndicate of lawyers who are way down there, not far from the lowest of the low.  Part of this is that they inflict suffering on large groups, and will go further if they can. What they do is to acquire copyrights “governing” poor pornography.  They then utilize it to blackmail weak citizens who have downloaded some of their junk.  They do this by finding out who these poor devils are by cyber investigations and then extort money from them, by use of our sacred courts, in exchange for silence.  Usually these victimized ninnies pay what sounds like relative sums, $4500 plus-or-minus, to get out from under. 

There have been at least dozens of these lawsuits around the country using boilerplate Complaints and then settling quickly.  At last various people have represented the populace and triggered genuine court action.

When the courts realized what was going on, they reacted vigorously to some extent with money sanctions and orders requiring what is in effect restitution.  In addition they have required recuperates to report to the courts all other courts where they have been trying to ruin the system and a sizable number of people.  (How does one explain to his wife where the $4500 went when its disappearances cancels the to NYC to see, hear, and sit in the stands for this and then that?)

Thank you Lord, the knights of justice are on the move.  In addition to the foregoing the judges are going to the relevant ethics committees of state bars, to U.S.Attorneys, to state attorney general, and to the FBI. Maybe they should also be going to the right groups that are influential so the “antiquated” provisions of the law of copyright can be discarded.

One of the leading cases is Ingenuity 13 LLC v. John Doe, 2013 WL 1898633 (C.D. Cal., May 6, 2013), Otis Wright, J., and its follower is AF Holdings, LLC v. John Does, 12-1445-9 (JNE/FLN)(D. Minn. Nov. 6, 2013), Franklin Noel, M.J. Judge’s Wright’s opinion contains marvelous charts, maps, and photographs of the “Punks of the Prenda,”–Prenda being the odious law firm of–the central filthy pigs–being led to the slaughters of disgrace, disbarment and imprisonment.  The Minnesota case is far more brief and lacks the visuals.  However, it dealt with five–REPEAT 5!–of these satanically sinful cases.  My first hope regarding the Pythons of Prenda is that they not even have enough money to hire capable defense counsel, not even Harvard’s best.

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On the Rhetoric of the Ridiculous

Overdoing rhetoric in briefs, motions, pleadings, etc., is poor, tasteless, and below-grade “C” lawyering. There has recently been direct and unequivocal explicit support for this obviously true proposition.  Perhaps the pronouncement of the 6th Circuit will encourage those who do not realize that stridency of semantics, as opposed to restrained assertion and calm clear argument, is almost never a good idea. Let the ideas produce the desired effect; if they don’t do the job, try a different approach if possible. 

Never resort to the crude bluster, cliche-ridden, the always overdone language of the pool-hall loudmouth. Grade C lawyers at this point might say that such a position is absurd.  Such lawyers still would not have learned the lesson.—MSQ

An illustration of this point is to be found in a recent insurance case.  Barbara Bennett et al v. State Farm Mutual Automobile Insurance Company, No. 13-3047, 2013 WL 5312398 (6th Cir. September 24, 2013)

In this case, Ms. Bennett was struck by an automobile as she was walking her dog. As a result of this accident she ended up in the car–not next to on the roadway, not standing next to the car, and not under the car.

She argued that she “occupied” the car under the State Farm policy.  The District Judge held that State Farm’s defense was correct: she did not “occupy” the auto, since she was not in it.  State Farm called Bennett’s position “ridiculous” and did it on the first page of their brief.

The court criticized this linguistic behavior for four reasons: first, where the language was in the brief, second because it was worded as it was; third because State Farm’s argument was fairly obviously invalid; and fourth because State Farm was wrong.

With regards to points #1 and #2 the court, quoting another opinion from which  it wrote its opinion: “There are good reasons not to call an opponent’s argument ‘ridiculous,’ which is what State Farm calls Barbara Bennett’s principal argument here. The reasons include “civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief, and that even when  the record supports an extreme modified, ‘the better practice is usually to say out the facts and let the court reach its own conclusion.’ Big Dipper Entm’t, L.L.C. v. City of Warren, 641 F.3d 715, 719 (6th Cir. 2011).”  Trying to, in some sense, compel opinions by the use of “battle-station” rhetoric is ill-advise.*

With regard to the third point,  the court criticized State Farm’s argument.  It argued that coverage analyses proceeded on the basis of how whole types of policies are interpreted: auto policies for example, and the “occupy” language of those types of policies. The court informed State Farm that contracts of insurance are to be interpreted one at a time and not as whole classes. That a court has decided a similar-looking policy in the way the insurer wants it interpreted does not bind a court, even itself.  Nor is the “type of” versus “this language for this situation” valid reasoning.

State Farm also tried to argue that only someone who has an “intrinsic relationship” with a car can be said to “occupy” it, and hence the court ought to be examining whether Ms. Bennett has such a relationship with the car that struck her. Instead, the court observed, there was an authority in Ohio, where this suit was brought, that the intrinsic relationship test was one of several that can be applied “‘where a  gray area exists concerning whether a person was an occupant of a vehicle and thus entitled to coverage. In this case, however, the policy marks out its zone of coverage in primary colors. The policy terms therefore control.”

On this ground, the court reversed the district court and entered judgment in favor of Bennett. And it did this without remanding.

One can wonder about the decision. Oddly enough the court does not include a quote from the policy. That is unusual but not really interesting as to the court’s reasoning. More interesting is the fact that the court does not give a specific argument–perhaps based on a hypothetical–supporting the proposition that being in a car entails the proposition that one is occupying the car.

It also clearly, though impliedly, rejects the idea that the term “on” in this situation is ambiguous. It seems to me that one can be on a car, e.g., on top of a car, without actually occupying the car. The man that washes, waxes, and cleans out my car every Saturday, does not occupy my car all the way through its work. He stands next to the car while is washing it; he climbs up on it to wax the top and gets in it to clean out the interior in various ways. It is plausible to say that only for the third part of the operation does he occupy the car.

Although the following example–nor anything like it–should ever be found in a brief (or anything like it), except as taken from a transcript of testimony. One can easily imagine a couple denying that they occupied the car while having sex on the front hood of the car (or even the roof), but “admitting” that they occupied the car when they did so in, for example, the back seat.

Perhaps–just perhaps–the court is impliedly suggesting that Bennett was occupying the car because she did have an intrinsic relationship with it. After all, she suffered further injuries as a result of being placed in the car–injuries that she would not have received had she not been knocked up onto the car.  I suppose one could argue that if one has been put onto something it occupies it.  One can easily have subscribed to this argument if the word is “into,” not “onto.”

One might oneself not be convinced by the court’s reasoning.  Consider the dog belonging to the 2012 candidate the Republican Party recently ran for president.  It did not occupy the family car when he was attached to the roof of the car as they all drove to Canada for a vacation.  The disclosure of this fact caused a furor. Obviously, part of the general population agreed: the dog did not occupy the car. In some respects, although certainly not in other very important respects, Bennett and the dog share properties.

*I tried “battle” rhetoric first long ago in the presentation of an argument to the 8th Circuit.  It was a covenant not to compete for the case with federal jurisdiction on grounds of diversity.  I had tried the case and lost. Anyway, I opened by informing the court that “This case is one of national significance.”  The head of one of the judges almost jerked up, and he immediately and a bit disdainfully asked, “How? Why?”  My answer had to do with the lack of case authority on how to interpret a “Uniform” act that had been passed in the relevant state.  I actually thought that a specialized uniform act, used in various ways around the country but enacted only here and there, made the matter then at hand one of national significance.  My clients loved it, but. . . . 

 I suppose  I must confess that my address there was not the last time I did that, though all the (few others, I hope and believe) were somehow triggered by a mysterious outside source, and therefore have been instances of unintended rhetorical idiocy so that  I am not really responsible.

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“Madam. Are you certain today?” [Sketch I]

There is a species of questions with respect to which witnesses (including expert witnesses) must be extra-careful. The category questions certainty. Often the question takes a simple and explicit form. The witness has said something clearly and straightforwardly, whereupon deposing counsel says to the witness:

Q. Are you certain of that?

Many answers are susceptible to this question.  It’s one of those questions where examining counsel does not really care what answer is given. Look at two alternatives:

A#1:  Yes.  I’m certain of that.

This answer will make the witness look arrogant, and it will subject her to impeachment later on at trial.  The impeachment will be presenting a whole group of situations that make the witness have to admit that she is not certain.

It was dark, wasn’t it, true?

You said the man you saw was about 5’6″, how tall is the woman sitting at the next table?

You didn’t have on your sunglasses, did you, even though it was noon in Austin on August 17th, true? 

[And so on and on and on.]

Now look at A#2:

A#2.  No, I am not certain.

Of course, then on direct examination at trial, or in settlement arguments, where the witness may not even be present, the side of the examining counsel will attack the witness for not really having trustworthy testimony.

How/z about this:

A#3. Yes, though not quite completely certain.  No one could be.

Much better.  Maybe best.  What is examining counsel going to ask next? All the choices I can think of sound intrusive, too perfective, even absurd.

Quinn on Answering Another really good way to deal with this problem is to challenge the question.  There are a number of ways to do this.  I will call them QWs after “Questions by Witness.” Try QW#1:  What do you mean by “certain”? Capable counsel might ask this question in response: Q#2  What do you mean by “certain”?  Ways to deal with this second question is to say: A. The term “certain” can be used in a variety of different ways. And the discussion will go on for a while. The witness can look like she’s avoiding giving a reasonable answer. So consider trying these.

A#(i).  I think so.A#(ii). It depends on what one means by “certain.”A#(iii). Well, it’s an empirical matter, not like mathematics, so no reasonable person can be absolutely certain. Given that caveat/limitation/caution, yes, I’m certain.A#(iv).  Certainty is a psychological state.  It has nothing to do with justified true belief.  I have the latter three.

Personally, I like A#(iii).  The witness looks reasonable and it is very difficult to challenge the idea that no one can be absolutely certain about purely empirical matters.

I like A#(iv) too but it’s complicated. Still, probably most people will agree with it.

I have heard “idiot” lawyers try this one:

Q. Are you certain?A. Yes. Q. Are you absolutely certain?

The lawyer has dug a deep hole for himself.

A. There is no such thing.A. Only a dogmatist fool would ever say something like that about this kind of matter.A. I don’t understand the difference between “certainty” and “absolute certainty,” althoughI’m certain you must think there is.

Quinn’s First Comment: This lawyer should get an award from “the local” of “Questionable Dumb Bell.”

A questioning lawyer may object on the grounds that the answer is not responsive, and try to get another answer. Protecting lawyers should argue against this. Here’s one way: “Yes it is. Move on.”Here’s another way. “Please explain your objection. Why isn’t what she said responsive?”  Protecting counsel might consider trying “another” way first and then go to the first way second.

Quinn’s Second Comment:  A witness should be prepared for this kind of question.

Quinn’s Third Comment: Try this. Without saying anything as a preference: “I am certain, though not completely certain.”

Quinn’s Fourth Comment: Try using responsive questions:

Q. What do you mean by ‘certain’?

This may generate a responsive question:

Q. What do you think the ‘word’ means?

A. There are so many meanings, Tell me what you are thinking.

And so forth.

Quinn’s Fifth Comment: Try to shift the discussion to the meaning of “sure.”

Q. Well, OK, you are not certain about X because you view if the world is that one can not really be      certain about anything.  Of course, lots of people would disagree with that.  You know that don’t you?

A. I think so. And lots of people say that sort of thing.

Q. You not willing to say that you know that people disagree with you>

A. Knowledge and certainty are not the same things.

Q. OK. Let’s try it this way.  Are you sure about what you have said?

Elaboration on Quinn’s Comment: Above all, the witness should say something like this, “I’m not sure what the difference is between being sure and being certain.  I’m not sure how to talk about this, and I’m not certain how your question works.  Please give your definitions.”

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The Insurance Appraisal Process–Part I

Insurance Adjustment and Appraisals

Part I There are two types of appraisals. Those performed by one person, e.g., that of artworks, the value of the real estate, etc.  The others are performed by perfectly stable committees as to size, e.g., those consisting of X number of persons all through the process, and usually there is an odd number. Then there are less than stable committees as to size; those expand if the first member cannot reach a decision. Insurance appraisals are of the last type. They start with two members and then expand to three members of the two original members who cannot reach a solution or do not do so over a reasonable period of time.

One purpose of the appraisal is to reach a solution as to the size of the insured’s damages and the amount the insurance company shall pay.  It is designed and intended to shorten the length of time arguing over disputed amounts both with respect to probability and its amounts.  At least, in theory, the language of the clause explicitly states that the amount of recovery is THE issue. Courts and litigant-participants don’t always either realize.  Or maybe they know it, but just ignore it.  This is a fact I shall ignore in this set of posts. 

In order to discuss appraisal in a meaningful way, it is necessary to have the contractual provision clearly in mind. It is a standard provision included in (at least virtually) all first-party property insurance policies unless deleted.  It is currently found in the ISO “form” property policies, and it has been there for several generations, whether residential or commercial. 

Appraisal clauses are to be found in insurance contracts all over the world and are not restricted to first-party property insurance.  It generally applies to first-party insurance of all types, including for intangible “objects” and/or “processes.”  They are found in the “Conditions” section of the ISO policies.

The ISO language, entitled “Appraisal [,]” is as follows:  

If we and you disagree on . . . the amount of the loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

Pay its chosen appraiser; andBear the other expenses of the appraisal and umpire equally.If there is an appraisal, we will still retain our right to deny the claim.

Appraisal clauses are enforceable by legal process under a variety of circumstances, usually when an umpire (“Ump”) has decided the issue. It is extremely difficult to avoid the enforcement of an appraisal by judicial process; it very rarely ever happens, although it should happen more often when a principle of sound adjustment appraisal has been violated by one or more of those doing the appraising. Almost always these violations are connected with Umps.  (I will return to this topic.)  Appraisal clauses are enforceable under a great many circumstances, and the finality that often goes with them is quite often enforced. Dividing up the clause and thinking about it step-by-step might be a good idea. The propositions shall be entitled “P,” and numbered, e.g., “P#76”, to create a fictional number for illustration. Some of the following are explicit requirements found right on the surface.  Others are just under the explicit wording:

P#1.    There must be a written demand for an appraisal of the loss.P#2.    There must be evaluations of the amount of the loss by each of the appraisers.P#3.    There is no reason why the appraisers may not try to reach an agreement on their own. The probability of reaching an agreement is increased by there being separate thinking and cooperative mutual discussions and dedication.  An appraisal is not intended to be adversarial advocacy. P#4.    Each appraiser nominated by either side must be competent.P#5.    Each appraiser nominated by either side must be impartial.P#6.    Together with the appraisers “will select” and appoint [or attempt to appoint] an umpire.P#7.    If they cannot do so, either party may request that an umpire be appointed by a judge of a court of jurisdiction.P#8.    Each of the appraisers shall, separately, state [presumably in writing] both the value of the property and [the] amount of loss.P#9.    If their statements are not in agreement [or if they fail to agree otherwise], they will submit their differences to the umpire.P#10.    If two of the three agree then that agreement is the result and it is binding. I now turn to an analysis of the propositions and express opinions. [For obvious reasons, the ump will be one of the two.] The propositions, unamended and unsupplemented, are to be found in virtually all property policies. Of course, they can be changed by agreement, and they can even be eliminated, but both of these are very rare, and they never happen at all in smaller policies. There are some variations, and one will be discussed later.

Part II will be mostly concerned with analyses of the forgoing “Big Ten.”

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Cyber-Insurance & “Established Insurance” Compared–PART #2

All insurance involves the transfer of risk(s).  One party (or one group of parties) obtains value protection from losing–in some matter–something valuable.  This loss can come about in a variety of ways:  a ring is stolen, a key is permanently “misplaced,” a whole set goes now the sewer, a building burns down, a person sustains a bodily injury from a doctor who operated on the wrong wrist, a medical bill that has to be paid, a debtor hasn’t paid a bill, and so forth.  Not all protections from risks are insurance; the use of a security interest, for example, in the loan transaction, illustrates this point. Not everyone who has some sort of transactional assurance of little to no loss has insurance.  Interestingly in England, some of what are uniformly called “insurance policies” in America are sometimes called “assurance policies,” and what is called “insurance companies” in the United States can be called “assurance companies” or “assurance syndicates” in the U.K.  Some might say that surety agreements are not insurance, but that would be a mistake.

The same will be true of cyber-insurance: if a bank makes a mistake; customers’ identities are stolen; the customers sustain actual damages then the bank may be liable and be obligated damages. Some cyber insurance policies may cover the loss.  The bank’s customers may be insureds, or the bank may be the insured.  If only the bank is the only insured, the policy is probably a liability policy or contains a relevant part.  (Sometimes policies are “packages,” and so contain several different kinds of insurance.)

Many liability policies are “occurrence” policies, while others are “claims made” policies.  Each one of these cyber-liabilities will have an enormous effect on what is covered and what is not.

Many policies include a duty incumbent on the insurer to defend the insured in case the insured is a defendant in litigation.  Today, the cost of defense eats up the amount of coverage reduces the monetary size of the policy; and sometimes it does not.

It would be surprising if most cyber-liability insurance policies were not “claims made” type policies, and it is very likely that the policies will be designed so that defense costs eat up and thereby reduce the amount of insurance available to pay the actual loss inflicted on the person claiming a compensable loss.

(A key part of the insurance vocabulary for this distinction is “duty to defend” and “duty to indemnify.  The second of the two duties isn’t exactly what it says it is, but the use of the phrase “duty to indemnity” is more than100 years old.  It was right then but not now.)

A number of tort cases have been brought against different kinds of parties for permitting identity theft. At least usually, these cases are lost because the plaintiffs, those whose identity was stolen, have not sustained actual material losses  Mental anguish without some “genuine injury” (usually physical but sometimes economic only) is not counted as actionable losses.  See Stephen J. Rancourt, Hacking, Theft, and Corporate Negligence: Making the Case for Mandatory Encryption of Personal Information, 18 Tex.  Wesleyan Law Rev. 183, Section II (2011) (helpful list of identity theft cases lost with none won).  See Hammond v. The Bank of New York Mellon Corp., 210 WL 2643307 (S.D. N.Y. 2010). (containing a long list of influential cases where theft of identity cases dismissed since not actual damages).

Most insurance depends upon and requires fortuity.   Most events, the occurrence are not fortuitous, from the point of view of the insured,  are not insurable.  Arson is not insurable if the policyholder starts a fire in his own building.  If I throw my keys down into the sewer, the values of the keys are not insurable.  If A deliberately burns down the building of B, A’s third-party liability carrier may not cover B’s loss, but B’s first-party insurance may.  It might very well, however, pay A’s defense costs.

These points illustrate the difference between most third-party insurance, on the one hand, and first-party insurance on the other.  A’s liability insurance is third-party insurance, whereas B’s insurance on his stuff, his cash under the bed, or health coverage on himself is first-party insurance.

Not all insurance requires fortuity.  This coverage is very narrow, indeed tiny.  Life insurance usually covers some types of suicide.  The type in question is suicide which occurs sometime after the commencement of the policy.  That period is usually two years.  I cannot think of an analogy in cyber insurance[cm_simple_footnote id=”1″].  Of course, life insurance itself will be involved in cyber-insurance arrangements, but it will probably be the same there and then as it is here and now.

Most liability insurance is linked to torts; most cyber-liability insurance is already and/or will be like that.   Some current policies are linked to breach of contract; creditors insurance is like that.  Some policies that cover breaches of contract are included in “mostly-tort-based” liability policies, but not always.  The opposite is also true; there are “mostly-contract-based” policies, and some of them include a few covered torts.

Also arising out of contracts, there are sometimes tort liabilities.  Breaches of the duty of good faith and fair dealing found in all contracts are sometimes considered torts.  If A breaches a contract with B and then breaches the contract, but by the breach physically injures B or injures C in some way or another, there may be a tort between A and C.  There will probably be coverages like this, although cyber- liability insurers will exclude as much as they can of these configurations, or try to pass them off on other insurers, such as standard liability insurance available today.

Most of the torts existing now will, as is, or as adjusted, will be spread across the “cyber-field.”  (I am ignoring damages caused to physical objects or the human body (a form of a physical object, since they are now covered).  Here are at least some examples of tort theories that will be transposed across the “physical” or “real” world to the “cyber” or “virtual” world.

Negligence:  This is the failure of an insured  to do what a normal and prudent person would do under the circumstances or fail to conduct himself in accordance with the standard of care that is generally accepted given the situation  (What counts as damages, what is compensable under insurance policies, and how the size of covered damages are calculated may all be different.)

Defamation Invasion of privacyInterference with contractInterference with the economic positionstrict liability (necessary adaptations replacing the requirement of there being liability only if a physical object–like a toaster–is at least part of the so-called proximate cause)nuisancefraudmisrepresentationerrors and omissions type torts (These are really a kind of negligence, at least usually.  But they are specialized): lawyersaccountantsbrokers of various sortsthird party managers, administrators, and/or quasi-agents (Some insurance adjusters are like this.)designers of codes, etc.encryptions, etcfirewalls and similar devicessimilar safety measuressimplicity

intellectual-property torts: wrongful use, wrongful acquisition, wrongful imitation, etc.  Imagine using computer hacking to obtain a patented plan for something, then destroying the owner’s plan, and then putting the plan to one’s own use and the list goes on for a long time.

No doubt the reader will have noticed that the concept of negligence is a complex and widespread type of concept across all of human behavior and covers an enormous range of possible damages.  The reader may think of anything s/he can which causes damages to someone other than the “actor,” or some related parties, and negligence will exist in cyber-law and cyber-insurance law.  Not all kinds of injuries and therefore not all kinds of damage will be.  This is one place where there may be a whole variety of alterations needed and provided.

In terms of adjusting, altering, changing, and revising cyber-insurance, first-party coverage will be treated and work much the same way.  It will still, almost certainly turn on the insured having a property interest–or something like it–in that which is insured.

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Cyber-Insurance aka E-Commerce Insurance–Part #1

This is the first “chapter” in a string of blogs focusing on cyber insurance.  This one will concern the look of “yesterday’s” policies–the ones used for a long, long time–and the look of a branch of “tomorrow’s, that is, the cyber policies.  Actually, the two groups will look remarkably alike in the organization.  When you think about it, “Really?  How could it be otherwise?”

The next chapter will concern some aspects of substantive similarity.  Other blogs will list and very briefly sketch some of the currently available policies. Somewhere along the way, there will be some definitions and some explorations or explanations of such. Most significantly, there will be chapters discussing the contents of a few actual cyber insurance policies.

There are not many meaningful, focused, or informative publications about cyber insurance.  (That is the name-phrase that will be used here; it has mostly replaced the term “E-Commerce.”) Most available writings are really ads of some sort for somebody some are attorney firms publicizing themselves and conjecturing about the future, and there are some panel discussions which would probably interest almost no one really interested in the nature of the type of insurance.  Another category of the prevailing literature is the pieces written at law firms.  Much of this is a law firm advertising its services, though sometimes that is combined with guesswork or speculations about how cyber-insurance will develop. There are a few specimen policies issued by some of the best insurance companies, but they do not provide meaningful discussion.  A book published on this topic, and it is the only one so far as I can see, is by George S. Sutcliffe entitled E-Commerce and Internet Risks, Laws, Loss Control, and Insurance (Standard Publishing Corporation, 2001).  It has a helpful essay, which includes far too many diverse topics. The appendices, however, have a glossary, a summary of some policies, and some specimen policies.  So far as I can tell, this is the sourcebook. No doubt, one of the reasons for the absence of a detailed study of the dimensions of cyber-insurance is that there are almost no–or even no–reported cases involving coverage disputes. (I, for example, have yet to find one such case on Westlaw; and law reviews have no informative discussions of the matter. This is not to say that there are no cyber cases–for example, cyber tort cases–that are without hints.  Several large law firm members have told me that their firms each have a dozen or so cases, but they also say that none are in or close to litigation. There is also one (“Westlaw-‘reported'”) case involving identity theft in which a bank offered, among other things free identity theft insurance up to $25,000.00 to its customers as part of a remedy following an identity theft incident.  Alas, the plaintiff class rejected the offer.  Hammond v. Bank of N.Y. Mellon Corp., 2010 WL 2643307 (S.D.N.Y., June 25, 2010).  (Of course, one can see why–if a plaintiff thought s/he might be at the door of big damages–would reject a $25k settlement.) So far as I can tell,  in all court-decided cases (thus not including settlements, if any) involving identity theft, the plaintiffs have lost.  For a survey and discussion of these cases, see Stephen J. Rancourt, Hacking, Theft, and Corporate Negligence: Making the Case for Mandatory Encryption of Personal Information, 18 Tex.Wesleyan Review 184, 187-199 (Winter, 2011).  There is a very recent case in which the plaintiff had not yet experienced a loss, but for that reason only, could still proceed if their injuries were not entirely speculative and not off in the far distant further.  This matter is called a matter of “Standing” under federal court jurisprudence. In re SONY GAMING NETWORKS AND CUSTOMER ATA SECURITY BREACH LITIGATION, _____ F.Supp. ____ (S.D.Cal. 2012)(2012 WL 4849054).  Most of the case was dismissed on other grounds, but an actual already existing injury is not an iron-clad requirement for a right to proceed, at least under some circumstances. Now, before I turn to the analysis of policies and make conjectures, aka guesses, as to what their difficult sections might mean, I start with a few fundamentals for the insurance novice. These come from general insurance sources and therefore are not special when it comes to cyber insurance.  At one basic level, insurance is insurance, and so are some other contracts e.g., bonds and ancient bottom try arrangements. So let’s begin. Virtually all primary insurance contracts have roughly the same form.  Excess and umbrella policies do not necessarily, but they often incorporate significant, if not all, provisions found in the primary policy.  Contracts of reinsurance, although they are contracts of insurance, do not follow the same formula. Here, in broad strokes, is a sketch of common sections.  Often different principal sections are identified by the names I use here and by roman numerals. I. Declaration Page (or Sheet).  This part includes the name(s) of the actual insurer and the name(s) of the policyholders. Often it sets forth the premium, the name of the intermediary, policy limits, etc.  Sometimes they have charts or columns, and the policy includes that which is checked off.  The deductible is specified or set up, as is co-insurance if any. Other named insureds may be named elsewhere. II. Insuring Agreement.  This part sets forth what is insured, i.e., a particular vehicle, a particular building, physical objects, one or more banquets, particular weddings, works of art, and so forth.

These agreements are usually for liability (3rd party coverage) or for things, e.g., belonging to the insured (1st party coverage.)  The agreements usually do not recite a fundamental principle of insurance and that is fortuity.  This is an axiom.  Deliberately caused injuries or damages are not covered; arson is not covered; physically smashing something up deliberately, e.g., a computer, fraud, and so forth.  Intentional acts are covered, so long as the loss was not.  There is insurance for those driving too fast, but not if they deliberately run over or smash into something. Sometimes insurance policies offer both liability and first-party insurance, often covering the physical property.  Sometimes the first party insurance may cover abstract properties, and this is true in the area of cyber insurance, in addition to business loss and trade credit insurances.  Bottomry was like this 3000+ years ago. III. Definitions.  There is usually an indication that there are definitions to be found in the policy: quotation marks, bold lettering, italics, etc.  Sometimes there are only a few definitions; sometimes, as in many cyber policies, the number is much larger than most current policies.  Often, at least to the layperson, the definitions are obscure.  (This is not necessarily a matter of great consequence, since definitions in engineering malpractice policies are also quite difficult for the layperson–so much so that expert witnesses often have to be used for the benefit of the jury.) IV,  Exclusions,  This sets forth what the insurance contract does not cover.  Of course, there are exclusions quietly built into the Insurance Agreement, but this is generally not recognized.  The list of exclusions can be relatively short, or it can be quite long, as it is in most cyber insurance policies, specially packaged policies. Policyholders have to prove that they meet the requirements of the relevant Insurance Agreements. Carriers have the burden of proof regarding exclusions; the burden shifts back to the insureds when there are exceptions to the exclusions.  The content of many exclusions in cyber-insurance policies is likely to be substantially different since there will be few or no tangible objects or situations to exclude. (None like this: “We do not exclude the damages caused by your pets eating your bushes.”) V. Conditions.  They have usually conditioned precedents and there are a few conditions subsequent. Among the best known of conditions are the insured’s duty to cooperate in the adjustment process and their duty of remediating losses, that is, using reasonable efforts to keep those losses from getting worse (e.g., things like storm-damaged buildings) from getting any worse. Some requirements, which are listed in the “Conditions” section, are no conditions at all but covenants, i.e., promises. Timely notice of covered events is often not really a condition but a covenant, i.e., promise.  The requirement of cooperation may be like that. Remediation is perhaps not a condition or a promise irrespective of what the policy says, and so forth.  It is not completely determined what contractual requirements are actually conditions and which are not.  Nevertheless, some other common obligations usually classified as conditions are these: subrogation rights, some features of contract termination, some features of cancellation, assignment, the status of other insurance, and more.  Arguments about what is a condition precedent (or subsequent) versus what is a “mere” promise, are not uncommon, and the truth is not determined by the name of the section.  Just because something is found in a section entitled “Condition” does not mean that it is a condition. VII. Endorsements.  There can be all sorts of endorsements:  adding insuring agreements, cutting them, deleting or adding exclusions, adding or subtracting named insureds from the list, adding insured objects, things, or whatever, and much more. For standard policies, there are closets full of standardized endorsements. In large innovative industries, there will be negotiated policies, but not for long.  Purely negotiated policies make profitable underwriting nearly impossible. VIII. Miscellaneous.  A whole variety of things can fit here. This simple list gives one a beginning idea, at least, as to how insurance policies are divided up. The ordered list of entries is not intended to name the order of parts of the policy. Often, for example, the definitions section comes between the Insuring Agreement Section and the Exclusions Section. It also needs to be remembered that some policies are “package” policies, meaning that they provide several different types of insurance all at once, in the same contract.  First and Third Party insurance often appear like this, e.g., in auto insurance, in homeowners insurance, and indifferent large policies. Usually, the differences are easy to recognize.  There is no reason to think that cyber-insurance policies (that is, contracts) will be much different in form.  Rough versions of similar forms run back hundreds of years. 

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The Prudent Expert Witness: Agreements and Performances, #1

I do some expert witness work, so this blog entry contains some experience-based remarks about retainer agreements and some aspects of expert witness performance.

I have not used formal retainer agreements much.  Usually, they have been in the “back of the envelope” form, or they have been oral.  Part of the reason for this is that a good deal of my work has come from, or through, people I know; lots of it comes from lawyers and clients (sometimes theirs and sometimes mine). From time to time, I dictate what I want and have them send me an email, and that seems to work well, but it leaves out important matters, I will set forth presently. A few times my informality has been a bad idea. As a result, I have repented (more or less). So, I will discuss here what belongs in a form agreement for expert services, as I see it. I will also discuss some of what I regard as, features of sound performance. Sometimes, at least, matters of sound performance can be included in the retainer agreement. The following are lessons based on issues I have had to learn the hard way.

Lesson One:  Get a clear description of the scope of the assignment and then change the scope, both outwardly and inwardly, if and when it changes, appears to be changing, or someone relevant thinks it should change.

Lesson Two:  Find out what experienced experts are charging in “your” area and start there. Warn of probable changes which should be expected over time. Often lawyers resist paying you more than they are billing. This is probably a reasonable idea with which to cooperate, at least most of the time, but only if their fees are reasonably high.  Charitable expert witnessing is to be avoided, although one may have expert witness duties arising out of justice itself.

Lesson Three: Make sure the retainer is both reasonable and sufficient. Consider making the retainer amount stay ahead of the payment of bills. (My retainer is $X; it must stay at $X at all times.” This agreement is frequently not possible—or at least too difficult–to arrange. 

Lesson Four:  Insist that the bills be paid on time. A way to do this is:  “If I have not received a check within 30 days of my billing you, I will perform no further work until paid In full up to that point.”  Often, I cannot make this happen.  Sometimes I try to get paid on a quicker temporal schedule.  That seldom works.

Lesson Five: Try to get their client or the lawyers themselves to pay all out-of-town expenses.  Sometimes one can get this and sometimes not.

Lesson Six: Try to get people to come and see you.  They will want to do this anyway if your office is in an attractive city.Exception:  You really want to go there.  Sometimes the taking of a spouse is a good thing for mostly non-professional reasons.

Lesson Seven: Expect corporations to pay you faster than people and people faster than insurance companies.

Lesson Eight: Consult with the lawyers about the contents of your reports, etc.  Do not let them assist you with prose, except with problems of prose: spelling, grammar, etc.   Let the lawyer assist you by stating facts you have missed, not understood, and/or not appreciated.  Don’t always believe them.  Confirm everything yourself.  Do not accept the lawyer’s intense use of colorful language even if you believe it.  You are a reporter and a historian, not an advocate.  This one has been very hard for me and I was kicked out of a case by the judge once for making this mistake.

Lesson Nine: Always remember that experts’ opinions take an “If-then” form.  It should never take a “This is ‘It'” form.  Undisputed facts are exceptions.  Obvious and undeniable facts are another.

Lesson Ten:  It is law-school-level truth that expert witnesses are not permitted to testify about the law.  Don’t bet on it.  For one thing, if you are testifying about some industry practices, you may have to refer to the law by talking about what is generally understood to be the law.

Virtually all of these “Lessons” have, not only practical implications but can—in various ways—be set forth, to some extent, in retainer letters. On this matter, tact and restraint are required.             

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Creations and Insertions into Existing Contracts Part II

In my last post on insurance law, I discussed the idea that it is not possible to create formerly non-existing clauses or coverages in an already existing policy, i.e., insurance contracts.  I wrote on only what is all, or virtually all, the problem, namely, when the insured criticized for having tried to (or having blundered into) perform such a creation. Here in Part II, I turn to the insurer. The other day, in a deposition, I was asked whether I had ever heard of the axiom that “Insurers cannot create coverage in their policies.”  I said that I had never heard of that axiom applied to insurers and that, in any case, the axiom would depend on what the word “creation” meant and what the invoked idea was.  She, the taker of the deposition, looked at me with a combination of astonishment and contempt.  In and of itself, that combination was not a matter of concern–of any consequence, really. 

One cannot have real new or unrecognized ideas without the rigid-minded or the uninformed to hold you in contempt, and it does not matter when I am right or when I am wrong. Those who do not believe in the value of innovation are pretty much all like that, and this is especially true in the law. Besides, very few cases consider insurers and their “power” to create new provisions in their own contracts of insurance.—MSQ

Of course, an insurer may not create new coverage in an already existing policy if it is injurious to the insured.  The paradigm is simple.  Suppose an insurer provides coverage A, B, and C to its insured in a given contract.  Now suppose that absent any dispute over coverage, the insurer decided for some reason that it “really” only offered coverage A and B.  In other words, it deleted coverage C from the policy. This would actually be creating new coverage, namely: A & B & ~C.  Of course, these combinations are groups–sets, as it were–but that makes no difference.  There is such a thing as creation by elimination.  In a painting, the deletion of a figure creates a new painting, and–in any case–it is a creation.  Just as the real objection to creation-by-insurer is based on the fact that the insurer gets hurt, the objection to this anti-creationism is that the insured gets hurt.  Now, consider the opposite.  What if the insurer created coverage that was to the benefit of the insured?  It is doubtful that the insured would object.   Of course, an Anti-Creationist could still say that these things cannot be done according to the fundamental principles.  Of course, this proposition is false.  Parties can agree to changes in contracts, and the benefited party may be considered cooperating–and almost certainly would be–or that party might have waived any objection s/he might have. Now, why might an insurer do this?  There are lots of reasons, some questionable and some not.  I shall mention only one reason, and that one is not subtle and perfectly acceptable.  Consider an insurer, that noticed another insurer using the same policy, was excluding something, and that insurer researched the case law on the subject and found that there were two cases supporting the actions of the other insurers.  Suppose the insurer in question looked at the language of the contract and said to itself, we are not sure what to do here. We did not intend not to insure this; we intended to insure it. We “the underwriting department,” together with senior executives, do not care that this is a standard policy used elsewhere in the industry. Hence, straight forward we will consider it covered. We should go back and get the six (6) cases we “fouled up,” and make them conform to our view.  It seems to me that this is a paradigm of policy coverage creation.

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Lawyers, Election Law, Jurisprudence, and Proper Governance

ELECTION LAW, GOVERNANCE, AND DEMOCRACY

Factions and therefore political parties are something that acutely concerned many of the “Founding Persons,” of our republic e.g., both Washington and Madison, among many others. 

Political parties are a paradox. At the same time, they are both required for large democracies and a threat to them. 

In elections, the applicable law must be followed–something all reasonable lawyers and most other citizens know. 

One wonders if parties and political figures alike have a moral obligation–all republics and all democracies include moral or ethical obligations as to political conduct as part of their constitutive structures–to conduct elections in accordance with other principles as well election laws.  —MSQ

Suppose it is within the law for a candidate to actually or impliedly threaten opposing candidates and those who support them with jail (prison) terms simply for their opposing him/her. Most of us would agree that this is not an acceptable way conduct political campaigns in a republic or democracy. It seems to me that knowledge of this is especially true of lawyers. 

Now, what about the following statement, whether clearly and explicitly made or clearly implied:

“If I do not win this election, I will refuse to leave office and simply take over. Votes cast be damned.” —MSQ

It might be within free political speech to say such things, but is it within the sound jurisprudence of election law?

Wouldn’t ethical principles forbid this kind of threat and negativity?

Does it not undermine fundamental principles of both democracy and the principles which make a country a republic?

Does it not disrespect the country and its essence as well as its constitution?

Does it not remind historically oriented lawyers of “Natural Law,” something which was guiding principles of the foundation of our republic?

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PEOPLE OF THE STATE OF NEW YORK v. DONALD J. TRUMP (2024)

TESTIMONY OF A WOMAN NAMED “STORMY” — AN UNEXPLORED THEME: THE SIZE OF TRUMP’S PENIS MAY MATTER

Mr. Trump is charged in a criminal case of falsifying some business records of his company. This is a felony-level crimes charged in New York are, roughly speaking, this:  one falsifies business records in furtherance of a criminal purpose, including covering it up. Mr. Trump is charged with having committed a crime by falsifying records in order to cover up sexual activities which occurred years earlier. The previous activity was at least one sexual encounter with a “queen” of pornographic presentation. This was not a crime. What was a crime was to try and win an election by covering it up, i.e., lying about the affair?

The prosecutor is presenting 30+ acts of falsification of records, some of them involving checks signed by Mr. Trump.

Now, Mr. Trump has denied that this sexual encounter (or sex acts) ever occurred. Stormy Daniels, the Porn Queen has asserted under oath that it did happen. She has testified to the occurrence of one such event in the trial that is occurring in the Spring of 2024. She did this several times during the week of May 5, 2024, including May 9th.

Ms. Daniels testified in considerable detail about her encounter with Mr. Trump. One interesting fact is that it was not a long encounter on the evening it happened – in and out, quickly, as one might say.  

Ms. Daniels was paid a considerable sum of money to keep her quiet about the encounter during the runup to the 2016 election. The sum paid to her was well in excess of $100,000.00. In other words, Mr. Trump was buying her silence about an event which he has asserted never occurred. Mr. Trump utilized the services of Michael Cohen, who sometimes functioned as Mr. Trump’s lawyer, but who, says the prosecution, was not functioning as a lawyer in connection with the Stormy Daniels “affair.” Delivering a sack of money – no matter as to its form is not necessarily the function of a lawyer. Indeed, if it involves a criminal activity, it is likely not going to be a lawyer’s function precisely because it may be a crime. Lawyers try to avoid such activity, and they certainly do not send invoice regarding it.

Technically, the criminal event which generated this prosecution – Mr. Trump making and covering up hush money payments for having had sexual intercourse with Ms. Daniels – need not have actually happened in order for the jury to find Mr. Trump guilty of the felonious crime of falsifying business records, regarding – even indirectly – Mr. Trump’s having had sex with Ms. Daniels makes winning more likely.

Now, Ms. Daniels testified in considerable detail about the sexual encounter, including intimate details of what Mr. Trump was wearing when she came into the hotel room they used – his special pair of luxury pajamas – how he smelled, and so forth.

It is a well-established principle of trial jurisprudence and technique, and obvious wisdom that it is prudent and important for the plaintiff to have a witness testify truthfully and in detail as to the details of an event, if one wants the decider of facts (the jury) to believe an event took place and what it was like.  The wisdom of practical reason dictates that it is imprudent to fail to do so. This is exactly what lawyers for the State of New York have done.

The defendant’s counsel eventually moved to exclude this testimony since they claimed it was not relevant to the criminal charge, and that it made their client “look bad,” and was overly prejudicial. In addition, they, and the defendant himself, complained to the public that Mr. Trump was being treated unfairly. Moreover, Mr. Trump and his defense team have whined about the power of the evidence, although they did not go further, except that the judge should not have admitted into the evidence before the jury.  (Wait! Mr. Trump has asserted repeatedly outside the courthouse – or outside the court room anyway – that the event never happened, in other words, that Ms. Daniels is mistaken about what she is saying or that she is lying).

Mr. Trump’s view is erroneous: She says X; he says not-X, and her assertion “feels” more plausible if she testifies in detail and therefore less convincing if she restricts her testimony. He and his lawyers can squawk all they want to but that does not affect the legal soundness of what the plaintiff-prosecutors are pursuing. The State of New York bears the burden of proof. It seems to me that if Ms. Daniels can testify “helpfully” as to the size and shape of his penis on the basis of what she saw or what the defendant asserted to her it would probably be the prosecutor’s duty to submit her personal knowledge on this matter to the jury. Of course, Mr. Trump has the opportunity to impeach her by authoritative cross in testimony or physical evidence.

The defendant Mr. Trump has moved twice for a mistrial. Details about the scene of the sex appears to be the reason for the motions. The likelihood that these motions would be granted is zero, or close to it.

The defendant is claiming that the fact that Ms. Daniels has acted contrary to a non-disclosure agreement regarding her speaking out about the incident entitles Mr. Trump to a mistrial or to a dismissal of the prosecution’s case. This posture is false and the idea absurd. If Ms. Daniels has breached a contract requiring silence, Mr. Trump’s remedy is an action for breach of contract and not a jury and then court finding of not-guilty to a felony. Having breached a contract does not make the testimony of the breaching party false.

If it entitles the defendant to anything, it is a question in cross examination. “Isn’t a fact that you are trying to get more money out of Mr. Trump, when you have already been paid a substantial sum.” She might reply to this question as follows: “Since I signed that non-disclosure agreement, I have been insulted, harassed, ridiculed, and economically assaulted many times my Mr. Trump and his cronies, confederates, minions, and operatives since the nondisclosure document was signed. The contract covered only what happened before the contract was formed, and Mr. Trump has waived any right to complain he might have had.  I am seeking money for having told the truth. In addition, I am here today based upon a demand (subpoena) from the State of New York.” And there is yet more to be said along these lines.

Quinn’s Comment: Perhaps the prosecutors are the ones who should be saying at least some of this.

Furthermore, there is another species of personal knowledge which would have been easy to introduce which is based on physical sight, if any. That evidence pertains to the size and shape of his penis. A capable prosecutor, if Ms. Daniels could testify reliably, would be inclined to introduce it. If she testified “Yes. I saw it. The lights were on well enough to notice it. Indeed, it was obvious he wanted me to notice it.” My next question would be, “What did you see?” She might say, “It was much smaller than I thought it would be given and the ‘Alpha Male’ way he presents himself”. “What, if anything did you recognize from your sense of touch?” She might say this, “Nothing. Very ordinary, and not really very hard. In addition, the whole thing, penetration to ejaculation went very quickly.”

This line of testimony vividly pictures the encounter Mr. Trump says never happened. Of course, in theory, the event need not have actually happened for Mr. Trump to authorize Ms. Daniel receiving well more than $100,000 to keep he silent 10 years or more the encounter took place.

Mr. Trump’s lawyers and commutators on broadcasts from “Fox News” are claiming that any such testimony is not relevant to the indictment. This is nonsense. Mr. Trump claims no such event ever took place and therefore contends that he could not have made misrepresentations in New York business records. Well, the fact is that if evidence can be provided that Mr. Trump was present at and participated in a short erotic “meeting” with Ms. Daniels, then his defense falls apart or is, at least, refuted in key ways.

So, what lay open to defense counsel to say about the encounter in cross examination? Of course, their client denies that it ever happened. Most every question about what actually happened would suggest or entail Mr. Trump’s physical presence, something he denies.

Undoubtedly, defense counsel considered developing the idea that Mr. Daniels was with to the wrong man. “Are you certain that the man you had sex with was actually the real Donald Trump. After all, you had never actually met him. Certainly, you wanted this person to be Mr. Trump. You claim you wanted him to give you a job on his TV show, true?” “Well, you are claiming that after 10 years you are certain it was Mr. Trump, correct? [Ms. Daniels must answer ‘Yes.”] “But in the intervening 10 years – not to mention years before that – you have had sex with many different men, true?”

There is a prima facie rule governing cross examination, “Never ask a question to which you do not know the answer.”  But notice: this is only a prima facie rule. That tactical advice does not apply in this case. Examining counsel need not care how the question is answered. If she says, “No,” the chances are that she will not be believed, and her general credibility will be undermined. But if she says “Yes,” then the reliability of what she asserts (or implies), “It was definitely he. No doubt about it.” This answer too is damaging to Ms. Daniels’ credibility, especially since she is testifying under oath.

It was unproductive, I think, for defense counsel to try to prove that Ms. Daniels “hates” their client and is speaking solely from that perspective. The word “hate” is a very powerful word, but it’s meaning is often unclear and sometimes implausible.  At the same time, other phrases may not work either. What about “dislikes,” or “is disgusted by,” or “is contemptuous of him.” See below.

There is one exception to this line of questioning, “So, Ms. Daniels, you admit that you have observed a large number of penises.” Her answer might be this, “Yes. I am an adult film actor – what used to be called an ‘actress.’ Many men acting in such movies must show themselves naked from at least the waste down, though complete nakedness is also common. These men often show themselves engaging in self-administered masturbation, something often called ‘jacking off.’ Of course, there are cooperative forms of this activity that also appears in many adult films. And various acts of having sex of various standard kinds are also often involved, just as one was between Mr. Trump and me.”

These questions might not be “askable,” by the defense on “cross,” given Ms. Daniels’ testimony of May 9, 2024. Under cross examination then she said that the sex act between them went quickly. This does not sound like genuine physical intimacy. An experienced observer might say to him or herself, “That’s awfully fast. What was going on? No wonder he says not such encounter happened.” Many women might be disturbed by the high speed of the physical encounter. Many men would feel a bit of shame for such a poor performance. Whether that speed was a typical incident of premature ejaculation is not something to which Ms. Daniels could testify since she has not had repeated sexual intercourse with Mr. Trump.

One might conjecture that it was the speed of the intercourse which led to Mr. Trump’s big-money desire to keep information about the encounter swept under the rug. Knowing this truth – if that’s what it is – might cost Mr. Trump more than a few votes among males, as well as females.

So how should the defendant’s cross examination have ended? The defense liked the “motivated from hate” question: “Isn’t it a fact, Ms. Daniels, that you passionately hate Donald here?” “You have called him some filthy, derogatory names, haven’t you?” “You would like to see him destroyed, true?” Or at least denied the presidency? “And sent to prison, right?” “So, you think the jury should believe you, even though you intensely want to make our client suffer, yes?”

The trouble for the defense approach is that strong negative emotions do not necessarily destroy objectivity, especially if there is something positive just as important, for example, the love of truth and an embracing of justice. No doubt the prosecutors explained this to Ms. Daniels several times. This is a fallacy that defense counsel makes too often, forgetting that real cross examination in both civil and criminal cases, is not the same one sees in movie or TV performances.

When should the last statement by defense counsel be “No further questions.” It’s hard to know. Context is important. Defense examination as to the encounter may not be over yet. If there is a redirect examination, the defense will have another opportunity to cross examine. And the defense has not started putting on its case yet, so Mr. Trump may testify himself. If he testifies himself, he will face cross examination. Many court watchers hope he will do so. “Won’t that be a hoot,” one said to me this very morning.

Not every aspect of every battle must be or even can be won. All good military generals know this. Napoleon learned it the hard way, as did Hitler. Mr. Trump hates to lose even an unneeded component of some pointless battles, even one’s he imprudently started.

Mr. Trump’s current fight may be his Stalingrad, and most of us know how that one came out, especially if he decides to testify himself.

Extraordinarily prideful people often see themselves as “All Powerful and Therefore Indestructible.” Of course, this idea makes one think he is a god, or is actually God Almighty.  Mr. Trump might do well to remember that excessive pride causes very hard falls.

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PART ONE: SPECIFICATION OF FRAMEWORK:

THERE IS A CONTRACT OF INSURANCE (“CI”), AND ANOTHER, SEPARATE CONTRACT (“SC”) ARGUABLY MADE-PART OF (OR INCORPORATED INTO) CI IN WHOLE OR IN PART.

HOW DOES ONE DETERMINE (KNOW) WHETHER SC HAS BEEN MADE PART OF CI, AND IF IT HAS, HOW IS SC TO BE INTERPRETED AND THEREFORE HOW ARE CI AND SC TO BE INTERPRETED TOGETHER?

ExxonMobil Corp. v. National Union Insurance Company and Starr Indemnity and Liability Insurance Company, 21-0936[672 S.W.3d 415] (Tex. April 14, 2023).

Executive Summary

This executive summary addresses the legal intricacies involved when external contracts are integrated into insurance policies, particularly highlighted by a case involving ExxonMobil. ExxonMobil was designated as an “additional insured” in several liability insurance policies due to a service agreement with Savage Refinery Services, which required Savage to secure liability insurance covering its employees and specifically named ExxonMobil as an additional insured. The dispute centered on whether the details of their service agreement were effectively incorporated into the insurance policies, a matter complicated by the policies not explicitly reflecting the terms of the agreement. The Texas Supreme Court’s decision in this case underscored the foundational principles of contract interpretation within the insurance sector: the policy’s text must be the starting point for interpretation, and external documents should only influence this interpretation when the policy explicitly permits this integration. This ruling is pivotal, affirming adherence to traditional contract interpretation methods while addressing complexities introduced by external agreements in modern insurance practices. The court emphasized that contract terms should be interpreted based on the “original” document into which there has been an insertion when there is a clear and intended incorporation of the external documents, a contra or something else. This case not only resolved the dispute regarding the scope of coverage under ExxonMobil’s policies but also – at least impliedly set a significant legal precedent on the integration of external contracts – or other documents into insurance policies, reinforcing the need for clear and explicit terms to guide both policyholders and insurers in understanding their rights and obligations under the law.

Preface

When can a contract, not part of a contract of insurance, or insurance policy, be correctly understood as part of – or inherent in – that policy and be correctly interpreted accordingly, though restrictively?  (This sort of incorporation can be accomplished in whole or in part. I am assuming (1) that the “incorporation,” under discussion was accomplished intentionally by the parties to the CI, (2) that there was no objection made by anyone with an interest in the matter at the time of the incorporation,

This problem is most likely to arise in situations involving policies which huge policy limits and concern individual, specialized commercial insurance policies.

The insurance contracts in this case were liability policies – Comprehensive General Liability Insurance, and similar contracts or policies, to be more exact. (Keep in mind that the words “insurance policy” in this – and similar insurance contexts – mean, at least roughly speaking, one of two things:  (1) It is virtually (almost) a synonym for the phrase “insurance contract,” or, that the phrases “contract of insurance” and “insurance policy” (IP) mean the same thing; or (2) the phrase insurance policy names a document which is used in the commercial context of selling and buying insurance.  This second meaning might name a document which summarizes parts of the contract of insurance which are not provided the policyholder at least at first. Thus, an insurance policy might set forth the substance of the contract in simple, “non-legalese” terms, found in various ways in ordinary English discourse, whereas the contract itself is longer – sometimes – more difficult for non-lawyers or non-insurance professionals, e.g., underwriters, to understand. One can see how this kind of arrangement might work during the process of the policy holder’s purchasing the contract. Thus, a document titled or named “[Something]Policy” might provide the policyholder to-be with information which might help induce sale and purchase. Naturally, if the “policy”-version of the deal is false as a summary of the contract, there may well be breach of contract, fraud, violations of the Texas Deceptive Trade Practices Act, or similar other-state violations, and so forth, especially if the “lack of fit” between the “policy” and the “contract” cause injury to the policyholder. (Notice that the term “policyholder” is an often-used phrase in ordinary discourse which identifies the “holder” as a party to a contract of insurance). (Thus, probably, an additional insured (“AI”) designated by the partiers to the contract is usually not called a policyholder, even if that AI is a third-party beneficiary of the contract and have rights flowing from the existence of the contract and “its” status either “under” it or simply as a result its existence).

 (Of course, the vocabulary could work just the reverse, so the insurance contract summarizes the policy (or parts of it). I do not think I have ever actually observed or even read about such an arrangement.)

(The reader should be aware that the ordinary language used in the business of insurance is not, for the most part, filled with rigorously defined and fixed terminology. It is often “language as used” in “everyday discourse” in the insurance industry. To repeat, that language is not a rigorous semantical system like that characteristic of mathematics, physics, some types of engineering, and some parts of even philosophy.)  Then again, often contracts of insurance and/or insurance policies contain explicit definitions – sometimes long lists of them – and they are sometimes applied and enforced in legal proceedings. Those explicit definitions are often more applicable to policyholders (insureds). On many occasions, I have witnessed insurers try to and/or successfully seek to have courts declare that parties to contract, such as contracts of insurance, are expected to know and understand the contents of the contract.

The oddity of contract formation based upon a policy with the actual contract being supplied later is not under discussion in the case under review. I am not discussing incorporating the “policy” into the “contract.” In theory, that could be a problem in contract law or a problem as to good versus bad faith in contract formation, but that is an essay for a different context. What is true in this case is that ExxonMobil was an “additional insured” in the contracts in controversy.

The case under discussion in this essay, ExxonMobil, concerns the incorporation of a “Service Agreement” between two businesses into several insurance policies, but for the sake of simplicity the incorporations can be regarded as the same thing. This is a very rare situation, conceptually speaking and from an empirical point of view. (The personal injury damages were an unusually large recovery for an accidental injury case, though not unheard of recently.)

A Quinn Comment: This is as good a place as any herein to observe that the idea of incorporating one contract into another is not like placing a package of paper in a box – it’s not like stuffing a turkey in preparation for Thanksgiving dinner. It need not even be regarded as making the document with external origin part of the contract of insurance. It is more like giving that document a special legal status, namely its usability in interpreting the contract of insurance, not only in routine matters but in quite radical ones. Endowing an external document with that sort of status creates an important exception the usual and accepted rules of contract interpretation, in accordance with which the meanings of contracts “stand on their own two feet,” as it were, along with the rest of the contract terms and are thus interpreted by what is contained within the contract itself and nothing else. This is certainly the accepted rule for interpreting contracts of insurance, as the court in this case points out.

As rarified as the insurance-related facts in this case were, the reasoning of the unanimous Texas Supreme Court is orthodox, broad, and provides accepted legal observations and arguments as to the sound interpretation of insurance contracts, as well as – impliedly – others.  Its discussion of contract interpretation will be used and cited for many years. Thus, this case is a valuable source for precedential (or precedent locating/identifying) purposes in connection with insurance contract interpretation. The court sees its conclusion, ruling, and opinion, in part, based upon a “string” of cases and decisions where each of them depends on the one (or ones) before it, thereby providing an attractive line of reasoning where law of the relatively “distant” past matters for sound and convincing legal reasoning in the present.

(It is worth noting for academic purposes, that the “Incorporation Into Contract Rule” applies to many sorts of contracts and not just contracts of insurance.)

The opinion discussed here is probably the last in a series of Texas appellate court cases arising out of two severe – ghastly – personal burn injuries inflicted on two different workers. The injuries resulted from a single occurrence – a refinery fire – that happen, in 2013, and the personal cases that arose out of it were resolved several    years before the insurance cases were decided. (As is sometimes said, “The wheels of justice rotate most slowly when insurance litigation is involved.”)

ExxonMobil paid a huge sum, $24M, which was part of the damages owed the two injured workers. The insurers had denied coverage, so ExxonMobil paid, and then sued some of its insurers, NU and Star, for wrongfully denying coverage. The insurance cases dragged on for a decade. 

The reader must keep in mind the fact that there are two separate insurance companies involved. First, National Union Fire Insurance Company of Pittsburgh Pennsylvania Company (‘NU’s), an AIG company was (1) the insurer providing a routine Comprehensive General Liability (CGL) primary policy, but it had also (2) issued an umbrella policy which was functioning as, at least, something like an excess policy. (NU is part of the AIG group.) Second, Starr Indemnity and Liability Insurance Company (“Starr”) had underwritten another umbrella policy. It had a rather odd title for a case of this kind and had some unusual usages in the commercial marketplace. The name and characteristics and different uses of the Starr policy made no difference in this case. Both liability policies under which coverage had been denied were functioning as umbrella policies, according to the court.

Starr apparently had some doubts about the court’s opinion but its hesitancy about accepting the court’s opinion is not described or explored in this opinion. Thus, the opinion itself suggested that there might have to be at least one more decision and opinion. The matter got resolved, however, by settlement in early 2024, so that the odyssey of the insurance case of  ExxonMobil Corp. v. National Union Insurance Company and Starr Indemnity and Liability Insurance Company, 21-0936[672 SW3d 415]  (Tex. April 14, 2023). S.W.3d 415] (Tex. April 14, 2023) has come to an end, or so it appears. (The case in which the final matter was decided was in the very intermediate appellate court that the Supreme Court reversed. After the settlement agreement was recorded, the appeal in that was dropped.

PART TWO: A Short Discussion of Part of the Case.

ExxonMobil (Exxon), a large petroleum corporation, retained an independent contractor to render it services at Exxon’s Baytown, Texas refinery. The vendor’s name was Savage Refinery Services (“Savage”), an unfortunate name under the circumstances.

The service agreement contained roughly the following language, as set forth in the Court’s opinion:

“Savage promised to obtain at least a minimum stated amount of liability insurance for its employees and to name Exxon as an ‘additional insured.’” (Emphasis added.)

According to the opinion, Savage carried out its promises. NU underwrote two of them, and a third policy was underwritten by Starr.

As already noted, the key event was two horrible workplace burn injuries of Savage employees caused by the same occurrence. NU’s primary CGL policy paid policy limits, but coverage under the other policies was denied. It appears that there was a Workers Compensation policy issued by another carrier. Its existence and the carrier’s performance were not relevant to this case.

Since NU and Starr denied coverage under their umbrella carriers, Exxon paid the liability which the insurers denied, since – both carriers said – the injuries were not with Exxon’s coverage. This amount was approximately $24 million, Exxon paid the damages itself, and then sued the carriers to recover what it paid.

(There is a purely rhetorical point that might be mentioned here, and a business point that must be raised. First, the court states that ExxonMobil paid the $24M “out of its own pocket.” That strikes me as an unfortunate and ontological misleading use of language. Individuals, and some animals, have pockets, inanimate objects do not. Corporate, and similar entities do not. Second, a cynical minded anti-insurer (and/or anti-capitalist) ideologue might assert that the insurers were simply averse to paying such a large sum for injuries to only two injuries. I do not hold such views, since I believe that most insurers most of the time try to pay claims in conformity with their contractual obligations, subject to their legal rights as business entities. I say this sincerely and with resolve, though I recognize that insurance companies in some way associated with AIG have – or have had – a widespread reputation for being at best compulsively frugal about paying claims or paying them anywhere near accurately. (This reputation is not restricted to insureds and intermediaries but includes – or has included – at least some other insurers.) In any case, in this case I am skeptical that the insurers conducted their claim handling in good faith. This is true even though it was liability policies that were at issue, and Texas does not apply the law of the common law of insurer bad faith to the claims handling process for liability policies.

Further Discussion of the Case Itself

ExxonMobil is a major player in the oil and gas industry. One of its facilities is now, and has been for many years, a refinery in Baytown, Texas. Exxon had an independent contractor, by the name of Savage Refinery Services, to do work at this plant. As is customary, the two companies had a “Service Agreement.” Part of the agreement pertained to insurance matters. Much of what I say about the Exxon-Savage arrangement comes from the Supreme Court’s opinion.

Here is part of what it said, as set forth according to the Supreme Court opinion:

“Savage promised to obtain at least a minimum stated amount of liability insurance for its employees and to name Exxon as an additional insured.i”

Obviously, Savage was seeking a way to obtain tort protection for its employees in case of a workplace disaster where, if it supplied insurance for employee injuries, it would be restricted to workers compensation insurance, whereas if Exxon provided liability insurance covering the employees, it would not be restricted to workers comp. (That involved a different insured as is not relevant to this decision).

A Quinn Commentary: This is as good a place as any to discuss “umbrella policies.” Many terms in insurance markets are on the flexible and/or vague “side.” Many such elements of industry jargon have confusing categorizations. The word (or phrase) “umbrella policy” is like that. Usually, that term suggests that an umbrella policy sits on top of another policy (or policies), but the coverage(s) found in it are broader than those found in the lower-level policy. That’s why it’s called an “umbrella.”  It is this broader reach that distinguishes an umbrella policy from being an excess policy. To say that one policy is excess of another is to say that its coverages are the same – or pretty much the same – as the coverages found in the policy or policies underneath it, and/or the primary policies. (Sometimes there is a stack of excess policies and the underwriter of the policy which is the 5th (or the X layer up, for example), will tie that policy to the immediately layer beneath it – e.g., the 4th layer excess policy – and that policy’s coverages are not identical to the primary policy). Arguably, an excess policy that does not have all the coverages that the primary policy has (or that has added on a few “extras” is not really an “excess policy,” though it may come close). Obviously, it is not an umbrella policy since it does not have coverages not found in the primary policy. Given the somewhat rough definitions I have laid out, if, what is usually called an “excess policy” contains at least one coverage not found a policy below it that policy would technically be an “umbrella policy.”  I am inclined to think that what I have very briefly laid out is sufficiently rare, that this technologically correct name (and description) would simply be ignored in professional discourse. I do not think I have ever seen such a thing.

What I have seen, however, is an insurance policy referred to as an umbrella policy which is actually a primary policy. Why would anyone with knowledge and experience create this confusion? Underwriter ignorance is one explanation. A desire to create the impression that the policy called an umbrella policy should not be treated as an ordinary, routine primary policy. An underwriter might think that such a policy might be interpreted in favor of the issuing insure. Now let us return to the particulars of the ExxonMobil v. NU & Starr case.

In 2013, there was a terrible industrial accident. At least two Savage employees suffered terrible burn injuries, and their damages were approximately $24M. The NU primary policy paid its policy limits, but both the umbrella policies denied coverage entirely. Exxon paid the unpaid millions and sought recovery from NU and Starr.

It was proceeding in part on the basis of the Service Agreement it had with Savage pursuant to which Exxon was an additional injured on Savage policies. The reason they denied coverage was that the coverage was specified in and only for the Service Agreement and not in all (and therefore not for) the other relevant insurance policies in this case, i.e., the ones in dispute in this case. The position of the carriers was that if the alleged coverage was not set forth in in each policy, it did not exist. The rest of the carriers’ argument was simple. The alleged coverage and other insurance matters were to be found in the Service Agreement, but it was not in the policy. It is easy to see what will happen next. (There were four injuries, but only two of them were relevant in this case.)

The Court’s short, unanimous, 11-page opinion made abbreviated refutation of this sophistry. In essence, the Court pointed out that for more than a century, there has been a string of cases holding that if a contract other than the insurance policy clearly fits within the contract of insurance, the courts are obligated to recognize its presence and influence on the policy. The fit must be so manifest that its presence was intended by the parties. And then, how is the “inserted” contract to be interpreted? Its meaning must be clearly determined by the meaning of the terms of the contract insurance into which the insertion was made.

Justice Young, writing the court states this: The long line of cases cited herein, and others, “reflect three basic principles for interpreting the meaning of an insurance policy: (1) we begin with the text of the policy at issue; (2) we refer to extrinsic documents only if that policy clearly requires doing so; and (3) we refer to such extrinsic documents only to the extent of the incorporation and no further. Any venture beyond the four corners of an insurance policy must be carefully limited to the scope of that policy’s clearly authorized reference.” See pp. 5-6 of the Opinion.

Another Quinn Comment: Notice the presence and use of the word ‘incorporation’.

Justice Young also observes that the insurers and the court of appeals make a deadly error of their analysis of the concept, idea, word, and use of the word “coverage.” They seem to think that since the umbrella policy makes it clear that that it contained no coverage other than what was to be found in the primary policy, the insured could not have a right to payments under that policy above the policy limits of the primary policy. Their position is absurd, Justice Young implies, because there is a fundamental difference between “coverage,” a term that applies to risk of injury, and “policy limits,” a term that refers amounts for which the carrier may be libel, assuming that there is coverage. Obviously, Justice Young points out graciously, these are quite distinct concepts.

On this basis at least the Texas Supreme Court reversed the court beneath it.

Justice Young and the court are absolutely correct that the concept of “coverage” and the concept of “policy limits” are different concepts, and that the term “coverage” applies to what is at risk, e.g., what events, etc.  However, once can see why an insurer might make the mistake made here by the carriers.  In common industry parlance, players refer to risk exposures that are above policy limits as not being covered. Here is a locution that is used, “Jones policy has been used in full. Policy totals are gone. Therefore, there is no coverage.” Of course, given the correct, more rigorous use of the term “coverage” a player who says this is making a mistake. But as I have pointed out, the ordinary use of language in the marketplace is not rigorous. The use of language “sloshes” around a good deal. Still, the court’s observations are correct. What might be a better way to handle this situation? Maybe, even though the court’s mode of reasoning is sound. Why not assert that the term “coverage” when used in insurance commercial language is ambiguous. If it is – and it certainly is – then its meaning is to be interpreted in favor of the insured. (Technically the way the idea of ambiguity is concerned the reasoning is more complicated than I just laid out, but a simple version is all that is needed here.)

Quinn’s Final Comment

This is a splendid opinion – well reasoned and correct. There might be one criticism. When Justice Young is discussing the incorporation of the ExxonMobil-Savage Service Agreement into the umbrella policies what he says sounds ambiguous. On the one hand, he makes it sound like the whole of the Service Agreement becomes part of the policy, but that only part of it can be used in deciding the case, namely the substance of it which the contract of insurance permits. On the other hand, he makes it sound like only part of the Service Agreement became part of the insurance contract, namely that part which can be used in making the court’s decision. Justice Young makes it clear that thinking about how to use a document sucked into or incorporated into the insurance contract is a two-step process. (Notice that the idea of incorporation is being used in this discussion).

First, a determination must be made as to whether the contract of insurance clearly authorizes the incorporation of the candidate for insertion, in this case, the Service Agreement.

Second, there must be a determination as to (a) which parts of the incorporated contract are to be considered, (b) how this is to be done, and (c) to what end, i.e., to what result. All three of these inquiries are to be determined by the substance of the contract of insurance into which the outside, external document has been drawn or inserted.

A Last Quinn Comment: the idea of a three-dimensional inquiry is mine. Justice Young names only two. He makes no reference to (c). Nevertheless, they are probably equivalent.

In this opinion the court does not make it clear that documents other than contracts may be the type of document which can be incorporated. Of course, the answer is “Yes,” and this very topic is not needed for the logic of the opinion to succeed. Nevertheless, if this important opinion were to have the kind of precedential value it deserves and which the economy may need for a variety of different reasons, an explicit line or two in the opinion would have been helpful.

Also, the principles set forth in this opinion and the other recent precedential opinions regarding the incorporation of one contract into another apply only to insurance policies. However, might the same principles (or variations on them) apply to any two (or more) types of contracts? (Or if not “any,” then “most,” “many,” or “some.”)?

Although it is not a matter of any consequence for the decision in this case, but Justice Evan Young is a person of very conservative judicial or as-a-matter-of-law orientation. That political fact made no difference in this decision in this case. This this decision was substantially in favor of the insured, something which many liberal lawyers are inclined to think is the opposite of a conservative, judicial ideology. At the same time, this was an inter business type of case. At the same time conservative business organizations penned and published an opposite point of view. Liberal lawyer might point out that this opinion is not likely to have any (or much) impact on insurance case decisions where the insured is an individual person).

A Quinn Question, Though Not a Comment. To what extent does the logic of the decision in this make it true that its conclusion applied to contracts other than contract of insurance, i.e, insurance policies.

The Court’s Line of Authority    

I shall discuss this line in chronological order, the order in which the Court listed the. Justice Young made it clear that the most recent cases were the most important to the Court’s reasoning. This line of authority is among the court’s arguments for its ultimate decision, so I shall follow straight through. I shall “tack on” a couple of cases that are even earlier than where the Court begins sketching its line of authority and one from a court of appeals. 

The first case in the line of cases upon which the court relies is Stoddard v. East Texas Fire Insurance Co, 1 S.W. 906 (Tex. 30 November 1886), is a very interesting case from a historical standpoint, namely the nature of warranties “imposed” on policyholders by insurers, as early as the Eighteenth Century. Their use was still alive, if not well, in 1886. 

Goddard’s business sustained a fire loss. There was no suggestion the fire was by set by Goddard or that Goddard had done anything amiss in presenting the claim, since there were sufficient records in Goddard’s control that were handed over to the insurer to get an accurate value as to the property destroyed.  

The problem in the case was that there was an endorsement added on to th 

Perhaps something is significant about the opinion of the First Circuit Court of Appeals Opinion. The Supreme Court was contemptuous of the opinion it reversed. Perhaps it should be sketched, “just for the historical record.” This may be done in another later Blog article. For now, the only important fact about the underlying decision is that the case as to the Starr defendant was settled there, before the entire case was dismissed – it having been reversed. 

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Can Opposing Counsel Manipulate a Liability Insurer Where Crime Is Involved?

Mother (“M”), then 43, and Daughter (“D”), then 21, each pleaded guilty to criminal mischief in Maine after having several auto collisions in quick succession in a cemetery.

At first, at least, D was thought to have deliberately run into M’s car in order to prevent her mother from leaving the premises, since she, that is, M, was dead drunk. Later M changed the story. M’s second story was that her daughter had run into her because her, that is D’s, foot got stuck somehow on/in/with/etc. D’s accelerator. Nothing has been reported about how M happened to know this, if—indeed—she did.

According to the first story M deliberately ran into D, after D ran into her.  How many times this kept happening is not discussed in the media, and neither is how a relatively simple collision broke up at least several tombstones. (A photograph in the local paper is not clear how much breakage there was rather than mere turnings over, but the amount of the damages the cemetery sought suggests was least one actual destruction. (“Destruction” here refers to tomb stones and the like and not to bodies buried.)

The press stories are full of silences.  D and M were apparently at the cemetery because, it is said, D’s father (“F”) was buried there. There is, however, no discussion of the relationship between M and F before F’s demise.

Press stories stated that appear right after the two guilty pleas were entered,  insurance money was paid to the cemetery for damages M and D had caused its property. Upon the payment of the $25,000 insurance money, the cemetery dismissed its case that was seeking a tort recovery of  $35,000±. Interestingly, the settlement closed the case before M and D were served.

With regard to insurance, nothing has been said to the public about how many insurers were involved. One for M and another for D? Or was there just one that insured them both?

What is said is that M and D each had their own criminal defense attorney. Why? We shall see. So, Why did the Carrier(s) Pay?

I am assuming, without knowing, that there was but one carrier for both of them.  I’ll come back to that assumption.

Of course, it could be that the insurer didn’t want to spend any more money fooling around with the case. That could easily cost more than $25K.  That’s reasonable insurance company thinking, except for one thing. The drivers were charged with crimes—possibly even felonies since criminal mischief just by itself is a misdemeanor, but aggravated criminal mischief is a felony.

Frequently, insurers are hesitant, to say the least, to pay claims where charges of crimes are involved—drunk driving is an exception.

Here is my speculation as to what might have happened.  D’s foot did not get tangled up with the accelerator in her car somehow. I have heard this story a number of times, and I believe it’s bullshit. That account is very unlikely to be true. Accelerators are flat levers and the foot is on top. If it gets underneath it, the driver just draws his foot toward him to end the problem, if there is one.D ran into M quite deliberately, I suspect. The reason she did this doesn’t matter: Mommy was drunk? She cursed the father D loved dearly? M called D a worthless little bitch? None of these matters, of course. D ran into M deliberately– quite intentionally. (I must conceive that the punishment of M does not make it clear how M felt about F.)

Nothing is said in the press about why M thereafter ran into D.  Assume the implausible: M’s story about D’s tangle with the accelerator was true. Why would M there after run into D quite deliberately? Well, she might think D hit her deliberately and responded accordingly. But then, M is guilty of aggravated criminal mischief though D would not necessarily be of that or the weaker charge, mere mischief. But both pleaded guilty to the lesser charge.

So, here’s what happened, I think. D deliberately ran into M, and it pissed mommy off so badly that she rammed her daughter back. There may have been more than two collisions.  They may have happened several times. At first, both M and D were charged with aggravated criminal mischief, but a deal was struck.

An insurance claim was made, and the insurer explained why it would be denied unless a “clearer” explanation was provided.

Since D was guilty of aggravated criminal mischief and she was facing up to 5 years in the pokey, where it can get very chilly, indeed. D must keep her mouth shut. The mother tells a different story. “I don’t care what my daughter said first, she wouldn’t run into me intentionally, she’s a good girl. And besides, she said that she could get her foot loose from the pedal.”

And M might continue this way, “The truth is, we were both a little tipsy.” So long as the daughter doesn’t speak, the insurer is stuck.  What we have then is two drunken driving cases, both on private property, and insurers paid for those accidents. Some of the collisions are accidents, the insurer might say to itself.

The real problem would be M’s running into D.  Granted she was drunk, but even drunken people can form deliberate intent and go forward. The key then is to get the charges—and any chance of any other charges—reduced to misdemeanors—and that’s all criminal mischief is, so long as there is no aggravation element.

And this is where having two lawyers come in.  If both of them are trying cases, they might get split into two cases.  Each lawyer will argue that the other person broke up the gravestones, if—indeed—either of them did.

Better all, including DA and Judge, agree, to reduce the charges from aggravated criminal mischief and do two guilty pleas at the same time. The DA even said part of the state’s problem was proving who did which damage. (This is probably not so. Proof of property damage is required, but if it were provable that each did some, then. . . . See why there are two criminal defense counsel?)One small sliver of evidence supports my speculation—or something like it—and that is because D got a slightly more severe sentence than M did. (It’s a good idea to wonder about how the doctrine of “direct physical loss” might fit into the stories.)

M’s punishment was 180 days in the slammer, all suspended, and one year of probation. The probation banned her from entering the cemetery without getting permission from the judge, in effect, functioning as a cemetery warden. (No doubt the judge would, on individual occasions, have asked the cemetery association manager whether M’s coming on the grounds was OK with the association.) M also had to pay a $100 fine, though D didn’t.

D’s punishment was 180 days in the can, all suspended, and one year of “administrative release,” during which she would have to perform 50 hours of community service work, all to be done during the first 10 months of the year period. Granted D didn’t have to pay the fine M did, but she might have regarded 50 hours of community service as more severe, that a hundred bucks. I certainly would. The sentences and the insurance payment were all made in October 2014.  So far as D’s sentence is concerned that means she has 50 hours of service to perform starting right then.

So from the point of view of the liability carrier, what probably happened?

A plan was constructed amongst the criminal defense lawyers. This deal was constructed by two officers of the court, the DA, an elected official, and a  judge, also an official of the state, and a private lawyer. The substance of the deal is quite simple:  M and D would get their wrists slapped, and the cemetery would get a little money, possibly a bit more than it actually needed to fix the rocks, but not much.  All this happened, of course, without the carriers’ (or, carrier’s) actual participation or consent.

Tell me, good reader, was justice served? Was democracy or representative government undermined? Is the question made any easier, if the insurer(s) knew what was going on, and implicitly consented to it, so long as its name was kept out of the deal?

Of course, it is a virtual certainty that counsel for the insurance company was involved in some way. Perhaps she/he did not participate in drawing up written agreements around the crime and the punishment. Nevertheless, insurance counsel would probably been involved in advising the insurer.

From a philosophical standpoint, it does not matter in the slightest that only a few dollars were involved in the arrangement. 

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Lawyers and the Aging Process

To leave or To Not Leave? That Is a Question

Some activities—some jobs—become outgrown as time passes.  If you don’t play superb baseball by age eighteen, you are not going to the “pros.” The same goes for football; if you’re not great when you’re a senior in high school, you’re not going to play in the NFL.  The opposite may be true for some of the arts.  Many novelists do not achieve glory until later, say, upon the publication of a later novel–Penelope Fitzgerald did not publish her first novel until she was 58, more or less.

Still, other activities can last a lifetime; some composers are like this.  More than a few of them were prodigies and their work lasted a lifetime.  Mozart was like this, although he died young. A few activities do not really begin until later in life.  For most wisdom comes with age, although wisdom itself is a matter of degree–like quality in art.

The practice of law is not a single activity.  Lawyers do many different kinds of things. They do many different kinds of marketing, aka, client recruiting.  In addition, the practice of law is a social game; this may require (or, impose) all sorts of different virtues, and traits of character, not to mention skill sets.  All of these may change over time for individual lawyers. One lawyer might start off as a back-room research geek and later be involved in something quite different.

Something all lawyers directly dealing with clients need is a capacity for excellent, deliberative—practical–reasoning, and that requires wisdom.  Now for a really important fact, wisdom requires knowledge, depth, and experience.

The vast majority of the young do not have this quality–I certainly didn’t. With good luck and, more importantly, some attention to its acquisition—wisdom grows naturally over time.  This means that lawyers who are aging may have gotten better, certainly as regards consulting, counseling, planning, advising, comforting, and so forth.

Some lawyers, who are desirous of “taking over” pieces of practice, parts of a law firm, and /orthe allegiance of clients and other lawyers, bypass this fact, where it is possible for them to do so, for example, when they are not subordinates. Quite predictably some aging lawyers are the victims of these maneuvers. It may be a satisfying fact worth remembering that more people—including more lawyers—fail at rising by grabbing than succeed. The media presents only the stories of those who enter the stratosphere of immense success. The rest of the narratives are boring and discouraging.

This is often not true with clients, even potential clients. Many of them recognize that those who have aged may not talk or think quite as quickly as those who are young, but they often think much more deeply and comprehensively. However, a lawyer’s making sure that he has the same level of loyalty from the client that the client has from him may take both special attention and skill on the part of an aging lawyer.

An additional problem for such a lawyer who represents organizations is that as younger executives rise, they tend to want the company to be represented by lawyers they match up with in various ways, one of which is age. “Out with the old and in with the new,” as some say.  As the aging executives in their corporations move on, up, or out, external counsel may be skirted, at least, by the younger managers.

It may be useful to think of the practice of the law as a mansion with many rooms.  It may be a good idea for some lawyers to continue lawyering by doing different sorts of things than they have done for years on end.  Significantly, since the various rooms are all part of the same dwelling—or, at least, attached to it–many things from one room can be moved to another, although “the new” that’s already there takes some getting used to, and new furnishings may have to be acquired.  Such selections, repairs, and refurbishings will take time, effort, and some new education. All these will cost money.

If you’ve had it and you want out, go. If you don’t want to walk away from the law, don’t. If you wish to keep going, do it. If you also want more golf or more beach life, integrate what you want.  There is nothing new in what I’m saying.  It runs back to the great Roman lawyer* and rhetorician, Cicero. (He was also a political figure (alas), a philosopher, and a superb writer. He wrote on pretty much this topic.)

Currently, there are helpful—even inspiring—books on the subject. One of them is MASTERING THE ARE OF QUITTING by Peg Strep and Alan Bernstein and another is UNRETIREMENT: HOW BABY BOOMERS ARE CHANGING THE WAY WE THINK ABOUT WORK, COMMUNITY, AND THE GOOD LIFE by Chris Farrell.  Neither is only about lawyers and the legal profession, but both apply, and each is helpful.

The most striking piece I have read  recently was in a special section of the December 1, 2014, WALL STREET JOURNAL entitled “Encore.” The main article was entitled “Why Everything You [[‘]Know[‘] or Think You Know]” About Aging Is Probably Wrong.”  Anne Tergesen was the author. She has surveyed a number of current psychological and similar studies—and interviewed some of the authors—all about getting older. Here are her six (6) general propositions, granted changed by me a little bit:

Depression is not more prevalent in old age. Many older people are happier than ever and enjoy the aging process.

Cognitive decline in the grasp of thought, and reasoning is not inevitable, though “road runner” speeds may slow abit.  Speed, order, depth, and coherence need have nothing to do with each other, setting aside special diseases. (Test results to the contrary are inadvertently designed to favor youth since they are uniformly linked to speed.) New skills can and should be acquired.

Old workers are not less productive. There is virtually no relationship between age and job performance. Older workers are in some ways better than younger because aging brings moreprudence and will to avoid an error.

Loneliness is not more likely amongst the elderly, even if old friends are incapacitated or passed on. As the great Jewish rabbi David Volpe puts it, change involves loss but in loss, there is an opportunity for the new, and this observation applies to the aging, as well as younger people.

Creativity does not decline with age.

Exercise, is highly correlated with a fundamental good, to wit: health,  need not decline with aging and need not usually fall below prudent levels.

Of course, these truths are limited by accidents, and diseases, together with uneducated or perverse wills, they apply to most of the relevant population.

Does each of these apply to age lawyers—aging lawyers of youth (65-75), more mature older lawyers (75-85), and lawyers who are ancient? You bet! (You already know how you would bet on ancient gold doubloons. They are still gold, and they will be gold for a while yet.)

Anne, the author,  seems to be suggesting that those who are aging may be best served by finding new things to do. She suggests quilt making.  I like that idea for philosophical reasons, but my conception of “best changes” includes bricolage developments, and they are like her previous” suggestion but will also include “the new,” so the old and the new will be stitched together somehow. (One problem with her suggestion, however, has to do with coordination. I, for example, am manually clumsy. Should I make quilt-making a new vocation? Think for moment about the extent to which prolonged frustration might undermine a sense of happiness.

Lawyers can take over new things to do by developing new practice areas and thereby keep a bit of the old.  Hard driving litigators advise clients on. . . . . In-house counsel take up defending juvenile misdemeanor and criminalcases. Criminal trial lawyers might become specialists in elder law.

Specialists in estates and trusts work to take up immigration problems.  And so forth for pages and pages.

At the same time, not everything is to be recommended. Judging the article by the magazine’s cover, it looks like the ABA is promoting new careers for lawyers which I would not recommend. The mag is the 12/14 issue of ABA JOURNAL; the article is Lauren Etter’s piece “The Lawyers of Reality TV.” On the cover, the headline reads, “As reality shows proliferate, so do opportunities for lawyers working behind the scenes.”  Give me a break. Truth is one thing; creative suggestions are another; bullshit is stilla third. Anything to publish the magazine.

Of course, some lawyers want to quit completely. And some of them have wanted to do so for years. This essay is not for them. But the two books I’ve recommended might be.  One of them says that becoming a shop owner is rewarding, and lots of baby-boomers who are retiring are “turned on” by the idea and enjoying it.

Me? I’d first have to learn how to market stuff.  I’ve never done that in my entire life.  Legal work has always been handed to me. If I were to start a business after learning marketing,  I think its focus would be strange teas, oddball antiques, and old books—all jumbled together.

I also have a real liking for the study of art forgeries, and other deception, but I can’t think of how to extend that passion to a vocation. Analogously, most old people are not “born” counterfeiters.

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Legal Malpractice–Proving Damages In Big Cases–Expert Testimony

Complex Oil Well Deals—High Prestige Texas Law FirmErrs

 Several companies were involved in oil & gas interest acquisitions and ultimately drilling.  The deals were substantial—1000s of acres, for example.  Things didn’t go well for various reasons and property interests changed hands as the companies separated.  In one of these transactions company A was to assign a set of interests, “‡”,  to company B.

There was an error, and the interests were assigned to a subsidiary of B. After additional difficulties, this time with the finance and economics of some drilling, B attempted to transfer ‡ to Patriot Exploration, the plaintiff-appellee in this case.  But it did not sign the revised and correct assignment, perhaps because it couldn’t effectively do that, since it did not own the property, its subsidiary did.  (It looks likely  that something had gone wrong with those companies.)

In the case report, the problem is called the “Title Gap.”  Thompson & Knight LLP* v. Patriot Exploration, LLC**, 444 SW3d 157 (Tex. App.—Dallas, 2014). Believe me! The facts are much more detailed in the opinion than here, where I am just “glancing” at the facts to illustrate a related but different point. [*Defendant and Appellant. **Plaintiff and Appellee.]

The law firm that, as it were, made the mistake, Thompson & Knight, an old, well-known, renowned Dallas law firm discovered its error, and tried to correct it by drafting a correct assignment document, but left the case because of the conflict of interest its error had created between it and its client Patriot. T & K settled in part with Patriot, but not totally.  (The court’s opinion does not say how the partial settlement worked.  I conjecture it involved Patriot’s litigation and similar or related costs in getting the error fixed.]

T & K Patriot had intended to sell the assets involved, but the sale was 5 months after the date Patriot wanted.  It sold the asset for $5.5M± but claimed it lost $960T± as the result of T & K’s error.  The firm stipulated it malpractice liability, but asserted that its error did not cause Patriot damages, or, in any case,that Patriot could not prove that it did.  Patriot prevailed in the District Court—the trial court—in a judge-tried case that concerned only damages.

The Court of Appeals, however, reversed the lower court. The basis of the reversal was the court’s conclusion that the expert testimony did not support the plaintiff’s claims, both as to (a)whether the law firm’s error caused Patriot’s loss and as to (b) the amount of damages to be awarded, if any.

The testimony of Patriot’s expert was shot full of errors. Here are at least some of them. The expert testified  

1.     that the purchaser of the assert would have paid substantially more when the sale was originally intended than it paid 5 months later, but there was only 1 potential purchaser, and it did not concede that it would have paid more;

2.     that he has a model for calculating the correct prices but could not defend the model;

3.     that the sale prices could be analyzed by attending to the fact that Patriot acquired the assert at issue in a complex of facts arising out of a lawsuit;

4.     that he could predict reasonably what the return of future production would be, though he did not know this, given the existing history of related production, e.g., drilling costs;

5.    that he could accurately predict the relevant revenue of the purchaser, and therefore what he would have paid, even though hemerely assumed how many wells would be drilled, when there was no evidence as to what the number would be;

6.     in such a way that he has assumed that the oil and gas would be ready for market immediately upon production;

7.     assuming that the price of the petroleum to be drilled could be calculated relying on the price of the spot market;

8.     in such a way that his testimony was inconsistent with that of a disinterested witness;

9.     based upon as assumption this client, Patriot, instructed him to make;

10. and more.

This is a very long list of errors for an expert witness to be charged with having committed. Moreover, the expert would not have had to commit all these errors for his testimony to be rejected.

Interestingly, courts around the country are appearing to demand more and more out of expert witnesses appearing for a plaintiff in legal malpractice cases, and other service-based malpractice cases as well.  I have argued for a while that (i) legal malpractice cases are complicated to win, but that (ii) large cases were still promising, partly because big cases are complex and multi-faceted so more errors may get made.   I’m right about (i), for sure, but given the way courts are thinking about expert witnesses in legal malpractice cases today, I’m not sure I’m right about (ii).  Complexity and complicatedness are multidimensional configurations. My hesitancy arises from a very simple truth:  Complex events rarely result from single and/or simple causes. (The principle applies to non-occurrence events as well as overt events.) Complex causes involving complicated human behavior(s) and dependent economics–and not just like causes like physical defects–are very difficult for reliable expert testimony. This case is a paradigm of complicated behaviors, complex results, and economic/financialresults.

It is easy to see why expert witnessing for the defendant is easier than doing it for the plaintiff.  All the defense expert must do is undermine the theories of the plaintiff’s expert.  To some extent and under some circumstances the work of the expert witness for a plaintiff is more interesting than that of the defense expert.  S/he may do the inventive and creative work.  Then again, consider what happened to the plaintiff’s expert witness in this case.

I am not suggesting that I think the Court of Appeals is wrong in its observations in this case.  The testimony of the plaintiff’s expert was a disaster; at least it looks like it. Maybe I’m wrong.  Maybe the Texas Supreme Court will reverse the court of appeals and uphold the trial judge.  I doubt it.  See my blog dated November 18, 2014, entitled “Expert Witnesses & Judicial Epistemology.”  It is about another very recent legal malpractice case decided by the Texas Supreme Court regarding the evaluation of damages, and the expert testimony, in that case, is not nearly as bad as it is in this case.  

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Quinn Quotes

Variations can be small, or they can be large. No total variation can be both small and large at the same time. If one thing is totally a variation on another, then no part of the second will be something other than a variation on the first. (This is probably an analytic truth too, even in the post modern age, though the classical examples are easy: “All bachelors are unmarried male adults,” may not be.  This is another example of the influence of the power of social change.~Michael Sean Quinn, PhD, JD, CPCU, Etc.Tweet

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Michael Sean Quinn, PhD, JD, CPCU, Etc*., is available as an expert witness in insurance disputes and other litigation matters. Contact