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.
Originally posted on 11/14/2013 @ 9:23 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:DEPOSITION – TREACHEROUS QUESTIONSFiduciary Duties: Lawyers (Attorneys)Legal Malpractice Case–Some Possible Deposition QuestionsHits: 11

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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.
Originally posted on 09/27/2013 @ 9:20 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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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.”
Originally posted on 09/03/2013 @ 2:46 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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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.”
Originally posted on 09/02/2013 @ 8:28 pmSeries NavigationThe Insurance Appraisal Process–Part II >>Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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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.
Originally posted on 03/22/2013 @ 4:31 pmSeries Navigation<< “Cyber Space” Insurance–Part ThreeCyber-Insurance aka E-Commerce Insurance–Part #1 >>Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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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. 
Originally posted on 03/21/2013 @ 10:02 pmSeries Navigation<< Cyber-Insurance & “Established Insurance” Compared–PART #2Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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The Prudent Expert Witness: Agreements and Performance, #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.

Alas, 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, 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 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. 

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.

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.”  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 practice, you may have to refer to the law by talking about what is generally understood about 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.             
Originally posted on 03/11/2013 @ 8:18 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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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.
Originally posted on 03/08/2013 @ 5:41 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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Lawyers, Election Law, Jurisprudence, and Proper Governance


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?
Originally posted on 09/25/2020 @ 5:20 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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Expert Witness–Testing for Legal Sufficiency


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.
Originally posted on 11/18/2014 @ 3:01 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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It’s difficult these days for a lawyer at a deposition to direct witnesses not to answer questions on the grounds that the question is flawed. The lawyer doing the deposing may insist on his/her question be answered by or at least addressed directly by the witness. Hence, it is a good idea where possible, e.g., where the witness is the lawyer’s client or an employee of the client, for the lawyer “defending” the witness to inform or educate a possible witness as to language problems hidden in questions. Of course, if this cannot be done, the consequences of tricky semantic traps can sometimes be cured by cross-examination at the deposition itself.

(1) An example: the word “fair“:

“Is it a fair statement to say ‘p’ to describe what you were doing?” (Of course, p will be concrete, at least to some degree).

I saw this recently in the deposition of an in-house counsel. The theme was whether the witness had answered several questions posed to him by the board of directors of the company for which the deponent was the general counsel.

The witness quite correctly did not fall into the trap. He said in response: “You’ve asked me several questions all at once. You asked me, in effect, ‘Did you do the following six things all at once on a given day when dealing with the board of directors. I simply can’t remember all those things being done all at once. Also, I’m not clear about the meaning of “fair.” If you want to know, is it true that I did the following six things on Thursday the 8th, then my answer would be I don’t remember. If you want to know whether my activities are accurately described by the various components of your list, then my answer will depend on precisely what you really asking.”‘

(2) Another example: the word “guesstimate.”

“Please give me your guesstimate as to what you said that afternoon.”

The defending lawyer objected on the grounds that the word was vague, messy, and unclear. The witness said, ‘Are you asking me to guess at something or estimate something? Those are two quite different ideas.’

The depositioner wanted a fight of some sort. She said “Give me your estimate of the degree to which you were understood by the members of the board.? The witness, I don’t know how to do that; besides your asking me to say what was going on in their heads.”

The lawyer taking the deposition said, “What’s you guess as to how much you were understood?” Again, the witness soundly replied, “You’re asking me to guess under oath where I swore to tell the truth? I’m not sure I have any real idea.” Deposing counsel tried again, “Ok. Give me you best guess. What’s your best guess.” The witness responded by saying, “I don’t think I’ve got one.”

Council still did not give up. She said, “Tell me, of any guess you had in mind, which one did you think was the most likely to be accurate.” Again, the witness was superb. He said, “I don’t have one.”

(3) A similar and related problem arises out of, “Please tell me your best recollection of what happened.”

Again this is a question that includes a trap. Better for the witness to say something like this: “I don’t have any clear recollection. All the choices I propose to myself have problems as I look back on the situation.”

Language can be tricky. It may include subtle zigs and zags. Witnesses need to pay attention to this if they can, and lawyers need to help their clients keep semantics in mind. Lawyers taking depositions need to keep in mind that simple language is usually the best route.–MSQ
Originally posted on 06/18/2022 @ 9:35 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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Fiduciary Duties: Lawyers (Attorneys)

Fiduciary Duties

A”Thumb Nail” Summary

The “fiduciary-ness” of the lawyer (L) to client (C) relationship is the “heart” of the relationship and “enables the client[s] to place unhesitating trust in the attorney’s ability to represent them effectively.”  All lawyers owe all their clients the highest fiduciary duties, assuming such duties  have different levels. For the insurance-specific matter, see the last line.Undivided loyalty. C: “Though shalt have no other clients on this matter but me, and you will have enough five my true interest. At the same time, you will not simply tell me what I want to hear and do what I say I want without some discussion, as needed by me.”  L: I will.Highest “trustability”: C must be able to trust L completely.Utmost fairness and good faith, indeed “most abundant good faith”Uberrima fides = integrity + carefully observing it and making sure, scrupulously, that it is    upheld at all times.Honesty and openness which are absolutely perfect:  “no concealment or deception [from C], however slight.” Not even a whiff of it. (Even trivialities? Even on matters absolutely unrelated to the representation? Technically, “Yes” and “Yes.”)L must place the C’s interests ahead of his/her own. (There is a profound paradox here. Guess what it is.6. Obviously, there is such a thing as actionable fiduciary malpractice–perhaps a contract claim too.Most errors of most lawyers are not breaches of fiduciary duties.Breaches of contract, even if they occur in bad faith, can be breaches of fiduciary duties.
Originally posted on 11/18/2014 @ 2:31 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
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Legal Malpractice Case–Some Possible Deposition Questions


I am a fan of  the use of leading questions, even in depositions. Some of the questions are treated herein as declarative sentences. That is designed to indicate that a lot can be done by tone and facial expression.

You did not do the best that a reasonable lawyer would do in this kind of case?

You don’t care what the answer is.  If L says No, the next question is, “Tell me how?” If the answer is Yes, stop.

You did not do the best you could?

If L says No, ask, “What did you not do?  What did you do poorly?  What did you not do that you should have?”  But, if L says Yes,  let it go.

You didn’t do all of what a reasonable lawyer in the same or similar case would do, did you?

If No, ask, “What all did you leave out?  List for me what you did not do which you think you should done.”  If Yes, leave it.

Your investigation of the case was not up to snuff, was it?

If Yes, stop.  If No, ask, “What all did you not do, that you think you should have?  What all did you not do, that you think a reasonable lawyer would have done?”

C did not tell you this or that, did she? And so on.

Your claims file does not report this.  It does not report that.

If Yes, the demand is “Show me”.

If No, move to a series of open questions.

You believe that C does not lie, don’t you?

If the answer is Yes, stop.  If the answer is I Do Not, ask for a complete list.

For each entry on the list, ask, “You don’t really know that, do you?”

If  L says I do, then ask “How?”  Ask again for more details about the basis.

You believe that C tells the truth, don’t you?

If Yes, stop.  If No, ask for a list—a compete list.  Ask about the empirical basis.

That’s not in your file, is it?

If Yes, it’s “Show me.”

You leave important stuff out of your file, true?

If No, give a list, maybe.

If Yes, there a variety of things to do, and maybe several can be done.

You know that all attorneys owe every one of its client’s fiduciary duties, true?       

If No, stop.  If Yes, ask for a definition.

You did not discharge all of your fiduciary duties to C, did you?

If No, stop.  If Yes, think about stopping.

If L asks for a definition– “So you don’t know the meaning of the word, do you?”

You don’t care what the answer is.  It’s clear that a Yes answer is a wonderful answer.  You may want to stop.  If it’s No, ask for a list, and then pursue the empirical foundations of the list.

You did not advise your client in a satisfactory way, true?

If C says you didn’t advise her as to X, she is lying, true? X was an important issue in the case wasn’t it? You didn’t discuss X with her at all, did you?


The next set of questions are sometimes a bit over done.  Nevertheless, you still often do not care what the answer is.  If who get what the witness takes to be a base hit for him, (1) always consider asking “How?”  (2) Also consider specifying some act in a general way—as a hypo if necessary—and then use a leading question to ask, “Is it not true that failing to do X is below the standard of care?  Or, “Is it not true that doing X is below the standard of care?

You did not take the deposition of Quinn, true?

No one did, true or false?

He was the expert for the opposite client, true?

You’ve said in you interrogatories that you thought you could get him disqualified, true? You didn’t try did you? Did you try?

You did not succeed, did you?

Your Motion on this matter was not up to snuff was it? Even the judge said that, correct?

You did not even spell his name correctly did you?

His last name is not “Quine, true?”

His middle name is not “Scum,” right?

His first name is not “Moncoile,” don’t you agree?

You can spell the English language, isn’t that right?

You had received Quinn’s report, had you not?

You are not an “idiot” are you?

You have a degree from the University of Phoenix, do you not? And a law degree from the American University of the Canary Islands, don’t you?

[And so on and so forth?]

You would agree, surely that the DRs [Texas Disciplinary Rules] are part of a manual for competent lawyer   work.

[The “You would agree. . .” could also be “You could agree,” or “You do agree,” or it could be “You agree. . .]

You would agree that the DR,s are fundamental principles of lawyering morality, true?

Do you agree that following the DRs is consistent in every way with providing a client with a vigorous?

Do you reject the idea that following the DRs cannot in and of itself constitute legal malpractice?

You would also agree that the Texas Lawyers Creed is also a set of guidelines or acceptable practice, wouldn’t you?

And the same is true for the ABA Model Rules isn’t it?

And so on. . . and on. . . and on. . . .
Originally posted on 11/17/2014 @ 10:15 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:DEPOSITION – TREACHEROUS QUESTIONSFiduciary Duties: Lawyers (Attorneys)Insurance Agent/Broker Malpractice in AlaskaHits: 11

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Insurance Agent/Broker Malpractice in Alaska


This was a malpractice suit against an agent/broker of the plaintiff in the trial court and appellant in the Supreme Court. Christianson v. Conrad-Houston Insurance, 318 P.3d 390 (Alaska 2014).  The key issue in this tangled case was when did the insure the customer-client of the insurance agent first have notice of the possible misconduct of his agent.

Short Summary

The case hinged on an Alaska statute of limitations. Todd Christianson (“Christianson”) and at least one of his several companies, Great Alaska Lawn and Landscaping, Inc., sued his insurance agent broker after losing two underlying insurance coverage cases and parts of the bodily injury tort case brought against Christianson-owned businesses that underlay the coverage cases companies. In the bodily injury case, Christianson prevailed in the trial court but the Alaska supreme court reversed and sent it back. The next two were insurance coverage suits initiated by insurers pursuing declaratory judgment suits. Christianson lost them both.  In this case, the fourth one against the insurance intermediary, Christian also lost.–MSQ

Longer Summary

Christianson was in the landscaping business.  During the relevant interval, he had three separate companies: (1) Great Alaska Lawn and Landscaping (“GALL”) formed in 1992 and involuntarily dissolved in 2002.  In that same year, (2) Christianson formed a new company and named it Titan Enterprises, a (3) Titan Topsoil having been formed earlier by him in 1995.  The three companies did roughly the same type of work.  The court refers to both the Titan companies as “Titan,” and Christianson owned each of them.

Keith Jones (Jones) suffered an above-the-knee amputation of his leg. AIG paid Jones’s worker compensation claim. He then sued Christianson, the owner of the businesses and the manufacturer of the equipment that injured him. His suit against Christianson was based on the allegation that he negligently altered the equipment making it dangerous, and lent it to the injured worker’s actual employer, one of them owned by Christianson. Consequently, the argument went, Christianson was a proximate cause of his injuries.

Jones lost that case in the trial court, but the judgment was reversed in the Supreme Court of Alaska. (Jones v. Christianson, 282 P.3d 316 (Alaska 2012).  Since each of the relevant insurers had denied coverage, even to provide a defense, Christianson was left to pay his own legal fees and exposed to paying the liability judgment.  As the court remarks, in this case, Christianson’s accumulated legal fees were substantial. Insurance Intermediary Case. In 2003,  Christianson contacted Mike Dennis (“Dennis”), an agent with Conrad-Houston Insurance (CHI),  seeking, Christianson said in a deposition, complete coverage for both Titans. CHI obtained three policies: workers comp from AIG, CGL from Great Divide  Insurance Company (Divide), and auto from Cascade National Insurance Company)(Cascade).

After losing the two coverage cases, Christianson filed the fourth suit in the sequence against his agent, Conrad-Hilton (CHI), for purchasing erroneous and insufficient policies.   Christianson lost his case in the district court, on statute of limitation grounds, and the Supreme Court affirmed. At the same time, however, the Supreme Court indicated that it concluded that the person servicing the insurance needs of the Christianson companies had failed to exercise due care by failing to purchase know policy requests. This case was decided 4-1, with one justice abating.

In June 2003, an employee of Titan, Keith Jones (“Jones”) sustained a serious bodily injury—an amputation above the knee on his right leg–from a hydro-mulcher aka hydroseeder (“seeder”).  AIG paid the “comp” claim.  In September 2004 Jones sued the manufacturer of the seeder, Bowie Industries, Inc. (“Bowie”), and Christianson.  In the suit, Jones pursued the regular causes of action against companies that allegedly have manufactured a defective product, and Christianson was alleged of “negligence in transferring the seeder to Titan, loaning a defective seeder to Titan, making modifications to the seeder that contributed to its defects, and failing to warn [him] of the inherent dangers involved in operating th[at] machinery.”

(The loan of the seeder involved Christianson lending a truck last registered to GALL.  Titan routinely operated its business out of the GALL entity, such as it was.  The reason for the loan, as opposed to a sale, was the apparent existence at the time of a federal tax lien.)

At some point, Christianson had filed a claim with Divide, and it issued a letter to Christianson.  The letter stated that the insurer was investigating the claim and that in the interim Christianson would have to pay his own defense costs, but that he would be reimbursed for reasonable fees and costs if there was coverage, but not otherwise.

The letter also quoted exclusions applying to bodily injuries to employees.  In addition, the letter stated that Divide was reserving all its rights. In March 2006, 18 months later, or so, Divide formally actually denied coverage and filed an action for declaratory judgment in federal court seeking a no-coverage judgment.  The fact that GALL seems to have owned the truck to which the seeder was attached was apparently significant. During that litigation, Divide took the deposition of CHI’s representative.  He basically said that he did not make any effort to determine who owned the relevant truck or make sure GALL was insured.  (Of course, that is a negligent omission and surely played a background role in the evaluation of CHI’s conduct.) In July 2007, the federal court declared that Titan and Christianson had no coverage.

During the same month, Christianson tendered his claim in Jones’s case to CHI, but it “declined the tender,” i.e.,  denied liability for Christianson’s claim.

Shortly thereafter, in October  Cascade, the auto carrier filed its own “dec” action, and in November, even a shorter period of time, it obtained a judgment of no coverage. Jones’s personal injury case was tried in February-March 2008.  Both Christianson and GALL prevailed.  The superior court directed a verdict for Christianson, and the jury returned a verdict for GALL.  However, this court reversed both judgments because of several errors by the judge below and sent the case back for another trial.  (With respect to Christianson, the reasoning of the judge below pertained to the corporate nature of GALL.)

Christianson sued CHI on August 6, 2008. “His complaint alleged that CHI and Dennis breached their professional duty of care in exposing him to the costs of litigation and the risk of an uninsured judgment and therefore caused him ‘to spend money in his own defense.” The allegation was that Christianson had to spend over $100,000 in defending the personal injury case and the insurers’ declaratory judgment cases. CHI denied liability and asserted that the period of limitation had begun more than three (3) years before this suit was filed.  It contended that at the end of October 2004, in other words, approximately 5 weeks after Divide’s letter of September 23rd.

In opposition to CHI’s motion for  summary judgment, Christianson argued that there was a fact issue “as to when he discovered the elements of his claim against CHI.” (No issue as to equitable tolling is to be found in the majority opinion, in contrast to that of the dissenter.)

The superior court focused on the date of the Divide letter,  September 24, 2004, and observed that it contained several important pieces of information.  First, it was necessary for Christianson to defend himself for a while since he likely needed to consult a lawyer. Divide in effect “disclaimed its duty to defend,” even though its policy contained the usual relevant language.  Second, the carrier quoted a significant exclusion regarding an injury to employees, and Christianson “was fully aware that [Jones] was Titan’s employee.  Thus, he was aware of the reasons upon which Divide would base its denial of coverage. At that point, saidCHI HI“it was evident that there were potential coverage gaps for “Christianson….” “A reasonable person in [Christianson’s] circumstances would have had enough information to alert him that he should begin an inquiry to protect his rights[,]” as the superior court put it.  In addition, there were Dennis’s statements in his deposition.  This would have indicated to a reasonable period that Cascade might well also deny coverage, though it had not happened yet.

The relevant statute of limitations (A.S. 09.10.053) is three years for malpractice cases. It begins to run when the last element in the cause of action was or should have been discovered by a reasonable person under the circumstances.  This time period can be measured from the point in time when a reasonable person would have commenced a reasonable inquiry, given the circumstances.   In Alaska, his is called “inquiry notice.”  In effect, Alaska’s laws governing the limitation period are through-and-through a “discovery rule,” as the supreme court” recognized in its opinion. See Gudenau v. Sweeney Ins. Inc., 736 P.2d 763 (Alaska 1987)

The supreme court takes it that in 2004 Christianson was aware that he was beginning to sustain losses for which he very much might not ever receive reimbursement.  Of course, he knew for certain he might lose more but did not prevent his cause of action against CHI from accruing.  The fact that he probably could not then the amount of his future losses is irrelevant.

After the supreme court discusses matters leading up to the superior court’s decision, it affirmed the judgment of that court in short order.  It had not erred in any of the following ways, given the facts, in this case, the doctrine of “inquiry notice” and Alaska law regarding the statute of limitations:

finding that Christianson was put on inquiry notice,finding that the September 23rd letter alerted Christianson that Divide would not pay for its defense,finding facts regarding Christianson’s good-faith belief that he was covered in the Jones lawsuit,failing to resolve the issue as to whether or not Christianson conducted a reasonable inquiry,not considering the bearing of public policy on the case, andfinding that equitable tolling would not excuse the untimeliness of Christianson’s lawsuit against CHI.

The dissenting opinion does not appear to dispute the facts set forth in the majority.  According to the dissenting Justice, the dissent is about the application of the discovery rule.  In the opinion of the dissenting Justice, “the statute of limitations did not begin to run until Great Divide formally disclaimed its duty to defend Christianson in March 2096 [at the earliest].

More particularly, the dissenting opinion sets forth the following errors in the superior court, citing a varietyof different kinds of Alaska cases and some from other jurisdictions:

The statute of limitations did not begin to run on September 24, 2004, because (1) Christianson had not yet suffered a definite injury attributable to CHI. Hence, that claim was not yet ripe. Jarvill v. Porky’s Equip., 180 P.3. 335, 340-41 (Alaska 2008). (2) Divide’s letter of 9/24 was not a definitive denial of coverage. (3) Divide’s letter of 9/24, given its language, did not effectively decline coverage. (4) Divide’s discussion of the employee exclusion in the policy did not constitute a denial of coverage.  (5) Many people do not have a well-informed knowledge of what exclusions mean and—in this context—a “murky and fact-sensitive” inquiry into what a reasonable period might realize and do is inconsistent with the clarity required for triggering the statute of limitations.

The doctrine of equitable tolling applies said the dissenting justice.  That principle provides that when a defendant has “more than one legal remedy available to him”  the statute is to be tolled. Its elements are these: “(1) pursuit of the initial remedy given defendant notice of plaintiff’s claim, (2) defendant’s ability to gather evidence is not prejudiced by the delay,  and (3) plaintiff acts reasonably and in good faith.” These conditions are met, says the dissenting opinion.  See Brannon v. Continental Cas. Co., 137 P.3d 280, 286 (Alaska).  Of course, the majority opinion rejects all of this.

Christianson’s disputes with the insurance companies satisfy the first element. The presentation of the claim to the insurers gave CHI notice of Christianson’s claim, and its opportunity to gather evidence would not be harmed by the delay permitted by equitable tolling. Finally, determinations regarding whether Christianson acted reasonably and in good faith are questions of fact and should not be granted without due empirical inquiry.

Some Observations When considered as a constellation or as a concatenation, these cases are an insurance litigation nightmare.

The supreme court’s opinion is a lengthy one.  It involves a considerable amount of the three forms of underlying litigation—a personal injury tort case,  two coverage declaratory judgment cases, and the cases against the insurance intermediary, two of which involved appeals.  A printed copy of the WestLawNext opinion and the dissent, double-column pages, is 44, including 6 pages of 133 footnotes—some quite lengthy and most listing and/or discussing precedent–and 21  headnotes.

The opinion of the supreme court in the underlying tort case was nearly as long and just as complicated as this case.  This is true even though it had 102 footnotes; the two opinions evened out since the underlying case had 36 headnotes and many more issues. Here is a list of the issues:  admission of evidence errors, problematic expert testimony, problems arising out of compliance with regulations of the Occupational Safety and Health Administration, and the post-sale duties of a manufacturer regarding informing customers of life-threatening dangers that exist in defective products, and the Alaska statute of repose.  Jones v. Bowie Industries & Christianson, 282 P.3d 316 (Alaska 2012).

The approach of the majority in this, the insurance intermediary case, is erroneous.  For one thing, it makes a number of decisions about Christianson’s knowledge and conduct that are factual matters, even though there had been little discovery about those relevant matters.  What did Christianson believe about the letter of September 24th, when did he believe it and why?

This is not a coverage case where the rule requires an insured to understand a policy as it may apply to the ostensible facts of a case.  It is only about the meaning of language in what is in effect a reservation of rights letter. The rule regarding insureds understanding their policies may not apply to reservation rights letters, even if they as quoted from the contract of insurance.  The context of a quote is significant.

Finally, Divide deferred any obligation to provide a defense until coverage as to its duty to indemnify. Doing this is an insurer error and the kind of error that imposes huge to impossible costs on most insureds.  If so, one wonders why that fundament principle appeared, at least, to have played no role in the deciding at least one of the dec actions.  In any case, Divide was making coverage decisions in the wrong order, failing to recognize that the duty defend is not established in the same way the duty to indemnify is, or both. Why should anything an insurer conveys to an insured is given the slightest attention, if the communiqué occurs within a time frame during which the insurer is making a hopeless error?

By the way, there is no indication in this case, or on the internet, as to the disposition of the underlying cause.  Nor is there any, I have found, that Todd Christianson is or has been in bankruptcy.

It may or may not be worth noticing that there was the fifth suit against a lender bank arising during the time of the Jones suits. It was after add not a suit underlying this case. In fact, they had nothing to do with each other See Christianson v. First National Bank of Alaska, 2012 WL 6062124 (Alaska 2012). Then again,  it is entertaining to wonder how the members of the supreme court feel about Christianson after his herd of cases was all gone, if indeed they really are.
Originally posted on 11/17/2014 @ 8:10 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:DEPOSITION – TREACHEROUS QUESTIONSFiduciary Duties: Lawyers (Attorneys)Legal Malpractice Case–Some Possible Deposition QuestionsHits: 11

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Fine Arts Auctions, Guarantors, and Insurance


Fine art should be insured in a variety of ways.  One mode of insurance is normal property insurance, e.g., insuring the object against fire.  Another is insurance against specialized thefts. Some of it is against losses sneaking up on buyers, sellers, and or middle-entities resulting from the object being looted, e.g., during World War II. (Maybe this is not actually a verb.)

Among the factors that can make such insurance unusual are the different parties that may need coverage. One of these is everyone in this case, of course, that is likely to want to be—or need to be–an insured.  If this sort of insurance follows the established principles of property insurance, only a person or entity with a property interest in the object insured can have insurance on that object, whether personal property or real estate. (Most art is personal property, though buildings are real estate and maybe some large, fixed sculptures might also be.)

Sometimes that rule is not enforced strictly, but approximations are usually demanded, even in odd cases. This could happen where there is a complicated loan or court judgment, especially where the entity that does not in the end actually have an ownership interest in the property but comes close, or, in any case, bought the policy and might therefore be the policyholder.

Under some circumstances, the insured may have investigated a state of affairs and approved someone to be a named insured, even though that person did not have a property interest. An underwriter might do this, or counsel might. This situation can arise , or it could happen by error.

Now in the situation of a fine art auction, the parties that may need, think they need, or be perceived as needed, might be (1) the actual seller, (2) the entity or person for whom the ostensible seller is acting, if any, the ostensible seller being the owner’s agent, (3) the bidder, who is the trader on the floor working for the seller, the owner, some fraction of these, or the buyer. (4) Maybe the buyer, whether he is to be the owner or is simply the future owner’s agent, and (5) the ultimate owner. In addition, (6) the auction house will probably want to be insured, as will the most interesting character in the ensemble and the least known, to wit:  the guarantors. if any.

Here is how the setup may look; for the sake of simplicity, I shall ignore the middle-entity agents and discuss only the seller, A, the house B, the buyer C, and the guarantors D. In any case,  A has agreed that a picture is sold, on a given night. The auctionhouse, B, has agreed, for the purposes of this hypo, to sell it, come what may. However, B has guaranteed A a specified amount. But what if the sale price comes in lower than B’s guarantee? Enter D.  They may stand in for B; they may pay on behalf of B, or they may reimburse B for what it has had to pay A. They might even be the actual buyer in the bushes, A’s former spouse who hates him.

The guarantors may have no problem if the auction house burns down. To be sure, A did not receive his return on the sale, but what B would have owed A has been wiped out in the A-B contract. It would contain an exclusionary clause. Consequently, the guarantors would owe nothing. This problem would be taken care of by fire insurance. upon which A would be an insured, along with others. A would probably have an obligation to provide this insurance.

An interesting situation would arise when the price of the purchase comes in below the guarantee of B to A.  Depending on the size of the amount B may owe, it may seek a bailout from its group of guarantors.  The guarantors are actually playing the role of a kind of insurer.  Along with its other role, it is B has guaranteed A a specified amount of money, and the guarantor group has guaranteed B that it will not itself have to make good on at least part of its guarantee. (A may have a similar guarantor that has guaranteed that A will gen at least a given price. Again, this is a form of insurance.)

I have no problem conceiving B and D as two or more insurers, at least one primary and at least one “re.” Others might be nervous about this; that is certainly not its conceptualization, at least concretely.

Consider the hypo X agrees to do something for Y that will earn a $100 for Y; X guarantees that amount; Y fails to perform, so X owes Y $100. This is a lot of money for X so it has gone to Z, and bought a promise from Z that it will step in and pay if this happens. The fine arts auction transactions are instances of this. Insurance is risk transfer, and what has happened in this hypo is that some of X’s risk has been transferred to Z.

This template may have been concretely exemplified in the recent sale of the 1950 Giacometti elongated bronze sculpture of a woman painted gold, in part, entitled “Chariot”.  Sotheby’s priced the piece at $104.3M, but the lone bidder bid and paid only a shade less than $101M. Assuming there was a guarantee running to the seller, this means that Sotheby’s (or somebody) owed $3.3M  to the seller and “change.” If there is a guarantee on this piece, and $0 deductible or risk-retention, $3.3M± is what the guarantors would have to pay.

There can be interesting differences.  B may estimate what its total sales are going to be on a given evening.  This might involve a whole list of different objects. Thus, it may have made a guarantee to A1, A2, A3, and so on, or a guarantee to one seller for several works of art.  It may be that the guarantors start owing money only when B’s estimate for the entire evening is above total sales. From the point of view of B, this may not make any difference if the various obligations have been calculated carefully. It will probably be fine with the guarantor since its owing money will probably decline very substantially if the appraisals areaccurate. Still, amounts may differ.

Thus things would be quite different if there was a whole set of Sotheby’s for all the sellers. In that case, the auction house might owe “Chariot’s” seller on the guarantee, but its loss there might be made to equal $0 by other sale prices.  Or maybe not, depending on the terms of Sotheby’s guarantee for its guarantor. 

(There is considerable media coverage of this sale. A 2014 issue of the NEW YORKER, for example, contains a long-ish history. For a shorter story, see Carol Vogel, “Thanks to Giacometti, Sotheby’s Hits Its Highest Total Even at Fall Opening,” NEW YORK TIMES, November 4, 2014. A photo of “Chariot” is easily findable at numerous locations on the Internet.)

 In either system, whether object by object or by a whole lot, the guarantors—to the extent they are insurers—will require B to suffer part of the loss.  It will demand this for its own protection since that will induce B to be more careful than it otherwise might be in its guarantee, regarding appraisals it accepts, and in the construction of its catalogs.  This is a species of moral hazard, and it will be dealt with simply by the use of deductibles or the use of self-insured retentions.

B itself might have several guarantors, that is, insurers, if the sum to be, in effect, insured is very large. It also seems likely that the guarantors will get their own insurance if they have quite large exposures.  In this situation, B might be considered a primary carrier insuring A, the guarantors a reinsurer, and the insurer of the guarantors if any, a retro-cessionaire. 

This third one could, in addition, maybe a different kind of carrier—a primary carrier, even—for one of the other entities in the ensemble, perhaps even by means of the same package policy. Of course, so might B and D.

In theory, it could even be a liability carrier for at least one of them in the same policy.  But that is a different topic.
Originally posted on 11/10/2014 @ 6:24 pmMichael Sean Quinn, PhD, JD, CPCU, Etc. (530)One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.
Read more from the same author:DEPOSITION – TREACHEROUS QUESTIONSFiduciary Duties: Lawyers (Attorneys)Legal Malpractice Case–Some Possible Deposition QuestionsHits: 11

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Quinn Quotes

Asserting a proposition one believes in a certain situation and asserting its opposition in a substantively different situation, is not necessarily inconsistent. Neither one, taken alone or together, entails advocacy.~Michael Sean Quinn, PhD, JD, CPCU, Etc.Tweet

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