On November 8, 2013, the Fifth Circuit Court of Appeals affirmed a $3.2 million jury award in favor of Kipp Flores Architects, L.L.C. ("KFA") against Hallmark Design Homes, L.P. (“Hallmark”), in a copyright infringement action. The jury in the U.S. District Court in Houston found that Hallmark infringed KFA's copyrights by constructing hundreds of houses from KFA’s architectural plans without purchasing the plans for each house as required. KFA alleged that Hallmark obtained copies of certain of its copyrighted architectural designs pursuant to a license from KFA allowing Hallmark to build one home based upon each design. According to KFA, the agreement expressly provided that additional licenses for additional units could be purchased, but Hallmark failed to pay the additional license fees in connection with its reuse of the licensed plans. The jury returned a verdict compensating KFA for the amount of profits that Hallmark earned from the sales of the homes in question that were built based upon KFA’s architectural plans. The appellate court rejected Hallmark's arguments that the evidence was insufficient to support a jury finding of “substantial similarity” and concluded that the matter had been well tried at the district court.
This is a reminder for all architects and design professionals to take care in ensuring that they do not copy or otherwise infringe another professional's copyrighted designs. It also creates an incentive for design professionals to take steps to register their designs with the U.S. Copyright Office to ensure that their hard work is not being copied and used without appropriate compensation.
For more information on professional liability matters contact attorney Nathan Fennessy at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
Legal updates, news and commentary from Preti Flaherty's Professional Services Attorneys
Gas on the Fire: First Circuit's Homeowner's Insurance Carrier Decision After a "Conflagration"
Tuesday, November 19, 2013
"It seems self-evident that a story which involves throwing gasoline on a smoldering fire is unlikely to have a happy ending. That is true here, but the parties to this appeal have sifted through the embers and identified what some might regard as an oxymoron: an interesting insurance coverage question." - Vermont Mutual Insurance Company v. Andrew Zamsky
In a decision issued on October 9, 2013, the First Circuit Court of Appeals ruled that a homeowner’s insurance carrier owed a duty to defend and indemnify its insured against personal injury claims arising from an accident occurring on uninsured property owned by the carrier’s policyholder. In Vermont Mutual Insurance Company v. Andrew Zamsky, the defendant, Andrew Zamsky, was an insured under three homeowner’s policies issued to his parents by Vermont Mutual. The three policies, on three different properties owned by Zamsky’s parents, required Vermont Mutual to defend and indemnify all insured persons for claims for “bodily injury” caused by a covered “occurrence.” Zamsky’s parents also owned a fourth property that was not insured. Unfortunately, the injury occurred on the uninsured property.
One evening in the fall of 2008, Zamsky, his girlfriend, and several of their friends drove to the uninsured property and decided to make an outdoor fire. One of the friends retrieved a portable fire pit from a shed on the property, and they placed it on a deck attached to the house. They tried to start a fire, but the wood was damp and would not stay lit. Another friend then grabbed a container of gasoline and poured it on the fire. As the First Circuit explained, the “consequent conflagration set at least three of the assembled persons aflame.” One of them, Zamsky’s girlfriend, was badly burned. She eventually sued, asserting “a golconda of negligent acts and omissions.” Vermont Mutual provided Zamsky with a defense to the litigation under a reservation of rights but, while that case was still pending, filed a declaratory judgment (“DJ”) action in Massachusetts Federal Court, seeking a determination that it was not required to defend or indemnify Zamsky under the policies.
In the DJ action, Vermont Mutual relied on an “uninsured location” exclusion of the policies, which excluded coverage for any injury “arising out of a premises” owned by an insured, but that was not itself an “insured location.” Vermont Mutual argued that, because the injury had occurred on the uninsured property, it was not required to either defend or indemnify Zamsky.
The First Circuit rejected Vermont Mutual’s argument. The Court found that the “arising out of a premises” language was ambiguous, and it interpreted that provision to mean “arising out of a condition of a premises.” Although the injury occurred on the uninsured property, it had not resulted from a “condition” of the uninsured property. Because the injury resulted from events that occurred on the property, and not from any condition of the uninsured property itself, the Court held that the exclusion did not apply and that Vermont Mutual owed a duty to defend and indemnify Zamsky.
For more information on professional liability matters contact attorney Greg Moffett at 601-410-1500 or a member of Preti Flaherty's professional liability group.
In a decision issued on October 9, 2013, the First Circuit Court of Appeals ruled that a homeowner’s insurance carrier owed a duty to defend and indemnify its insured against personal injury claims arising from an accident occurring on uninsured property owned by the carrier’s policyholder. In Vermont Mutual Insurance Company v. Andrew Zamsky, the defendant, Andrew Zamsky, was an insured under three homeowner’s policies issued to his parents by Vermont Mutual. The three policies, on three different properties owned by Zamsky’s parents, required Vermont Mutual to defend and indemnify all insured persons for claims for “bodily injury” caused by a covered “occurrence.” Zamsky’s parents also owned a fourth property that was not insured. Unfortunately, the injury occurred on the uninsured property.
One evening in the fall of 2008, Zamsky, his girlfriend, and several of their friends drove to the uninsured property and decided to make an outdoor fire. One of the friends retrieved a portable fire pit from a shed on the property, and they placed it on a deck attached to the house. They tried to start a fire, but the wood was damp and would not stay lit. Another friend then grabbed a container of gasoline and poured it on the fire. As the First Circuit explained, the “consequent conflagration set at least three of the assembled persons aflame.” One of them, Zamsky’s girlfriend, was badly burned. She eventually sued, asserting “a golconda of negligent acts and omissions.” Vermont Mutual provided Zamsky with a defense to the litigation under a reservation of rights but, while that case was still pending, filed a declaratory judgment (“DJ”) action in Massachusetts Federal Court, seeking a determination that it was not required to defend or indemnify Zamsky under the policies.
In the DJ action, Vermont Mutual relied on an “uninsured location” exclusion of the policies, which excluded coverage for any injury “arising out of a premises” owned by an insured, but that was not itself an “insured location.” Vermont Mutual argued that, because the injury had occurred on the uninsured property, it was not required to either defend or indemnify Zamsky.
The First Circuit rejected Vermont Mutual’s argument. The Court found that the “arising out of a premises” language was ambiguous, and it interpreted that provision to mean “arising out of a condition of a premises.” Although the injury occurred on the uninsured property, it had not resulted from a “condition” of the uninsured property. Because the injury resulted from events that occurred on the property, and not from any condition of the uninsured property itself, the Court held that the exclusion did not apply and that Vermont Mutual owed a duty to defend and indemnify Zamsky.
For more information on professional liability matters contact attorney Greg Moffett at 601-410-1500 or a member of Preti Flaherty's professional liability group.
Knowingly Operating Under a Conflict is Not Dishonest Conduct – NH Supreme Court
Monday, November 4, 2013
In Appeal of David Stacy, 164 N.H. 706 (March 29, 2013), the New Hampshire Supreme Court appears to have split a very fine hair concerning a lawyer’s actions while subject to a known conflict of interest. While the distinction drawn by the Court prevented a claimant from draining funds from the Public Protection Fund, it may spawn coverage litigation and raise questions about professional discipline that the Court failed to anticipate.
An earlier case before the Court set the stage for this ruling. In Wyatt’s Case, 159 N.H. 285 (2009), the Court suspended an attorney for knowingly operating under a conflict of interest when he simultaneously represented the conservatorship estate of the petitioner, and the petitioner. The petitioner made a claim against the attorney for the fees paid him during the period of the conflict, and then subsequently sought reimbursement from the Fund for the balance of the unrecovered fees and costs.
The Court noted that the Rule creating the Fund is consistent with the ABA’s Model Rule, pursuant to which public protection funds generally reimburse losses caused by the dishonest conduct of lawyers. The Court found “dishonest conduct” meant wrongful acts in the nature of theft or embezzlement of money, or the wrongful taking or conversion of money, property, or other things of value. The Court found, however, that “knowledge of a conflict of interest is not the equivalent of knowingly dishonest conduct,” and ruled that Wyatt’s actions were not conversion. In so ruling, the Court protected the Fund and made it more difficult to recover against lawyers, but did it open up other questions?
For example, in making the precise distinction it did, the opinion could make for more confusion in coverage questions. When is knowing conduct that involves a conflict going to be covered? Equally important, how will the Attorney Discipline Office apply this standard in future claims of unethical behavior? Only time will tell if the Appeal of Stacy is the last word on Attorney Wyatt’s actions, or the first of many decisions examining the consequences of knowingly operating under a conflict.
For more information on professional liability matters, contact attorney Bill Saturley at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
An earlier case before the Court set the stage for this ruling. In Wyatt’s Case, 159 N.H. 285 (2009), the Court suspended an attorney for knowingly operating under a conflict of interest when he simultaneously represented the conservatorship estate of the petitioner, and the petitioner. The petitioner made a claim against the attorney for the fees paid him during the period of the conflict, and then subsequently sought reimbursement from the Fund for the balance of the unrecovered fees and costs.
The Court noted that the Rule creating the Fund is consistent with the ABA’s Model Rule, pursuant to which public protection funds generally reimburse losses caused by the dishonest conduct of lawyers. The Court found “dishonest conduct” meant wrongful acts in the nature of theft or embezzlement of money, or the wrongful taking or conversion of money, property, or other things of value. The Court found, however, that “knowledge of a conflict of interest is not the equivalent of knowingly dishonest conduct,” and ruled that Wyatt’s actions were not conversion. In so ruling, the Court protected the Fund and made it more difficult to recover against lawyers, but did it open up other questions?
For example, in making the precise distinction it did, the opinion could make for more confusion in coverage questions. When is knowing conduct that involves a conflict going to be covered? Equally important, how will the Attorney Discipline Office apply this standard in future claims of unethical behavior? Only time will tell if the Appeal of Stacy is the last word on Attorney Wyatt’s actions, or the first of many decisions examining the consequences of knowingly operating under a conflict.
For more information on professional liability matters, contact attorney Bill Saturley at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
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