drones and the law

PLMProfessional Liability Magazine

Emerging developments, decisions, and defense strategies

September 2017www.GoldbergSegalla.com

Drones and the LawEmerging issues surrounding the use of drones by architects and engineers

A Goldberg Segalla PublicationAttorney Advertising

Back-to-School Checklist Policy areas all higher education institutions should revisit each fall

Q&ABrick-and-mortar ADA accessibility

Top 5The best out-of-the-way NYC restaurants to check out after a day at the office

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Professional Liability MattersYour online source for the latest news and updates impacting the professional liability community.

l Breaking News l Trends and Legal Developments l Regulations and Decisions l Best Practices Resources

At Professional Liability Matters, our attorney-first writers discuss a wide range of industries including finance, architecture and construction, real estate, medicine, law, and more.

Whether you’re an industry professional, insurer, or liability attorney, Professional Liability Matters has you covered.

www.ProfessionalLiabilityMatters.com

http://professionalliabilitymatters.com

September 2017 3

Table of Contents

Editors

Dove A. E. BurnsCo-Chair, Employment and Labor Practice Group

Brian R. BiggiePartner

Writers

Madeline S. BaioPartner

Eric S. CohenPartner

Matthew S. MarronePartner

Colleen M. MurphyPartner

Joseph A. OlivaPartner

Joanne J. RomeroAssociate

Kristin Klein WheatonPartner

Colin B. WillmottAssociate

Professional Liability MattersYour online source for the latest news and updates impacting the professional liability community.

l Breaking News l Trends and Legal Developments l Regulations and Decisions l Best Practices Resources

At Professional Liability Matters, our attorney-first writers discuss a wide range of industries including finance, architecture and construction, real estate, medicine, law, and more.

Whether you’re an industry professional, insurer, or liability attorney, Professional Liability Matters has you covered.

www.ProfessionalLiabilityMatters.com

Top Five Out-of-the-Way NYC Restaurants to Discuss Professional LiabilityJoe Oliva shares his favorite places to grab a bite after a day at the office.

Top 5

ADA AccessibilityIn the first of a two-part series, Madeline Baio examines ADA requirements for brick-and-mortar businesses.

Q&A

Lessons Learned From Wells Fargo’s ESI Discovery ErrorsBest practices for utilizing ESI during the discovery process.

Back-to-School Checklist: Is Your Institution Compliant?A rundown of the policy areas all higher education institutions should review at the start of each school year.

Insight

Drones and the LawEmerging issues surrounding the use of drones by architects and engineers, and recent FAA regulations regarding commercial drone use.

Spotlight

New Jersey State Bar Association Renews Efforts to Shorten Legal Malpractice Statute of Limitations Michael A. Saffer v. William H. Willoughby(Supreme Court of New Jersey, February 5, 1996)

Situational Acknowledgment in Conversation Can Establish Applicability of Prior Knowledge ExclusionDavid R. Farbstein, P.A. v. Westport Insurance Corporation(Southern District of Florida, August 9, 2017)

Case Notes

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Professional Liability Magazine4

More than 50 million Americans with disabilities are potential customers of retail businesses, restaurants, hotels, and other types of traditional brick and mortar public establishments. Those same 50 million Americans are also potential customers of web-based businesses. Since 1990, the American with Disabilities Act (ADA) has required businesses to remove barriers from older buildings, and to design and build new facilities to improve accessibility. Unsurprisingly, litigation has increased significantly in this area. There are extensive federal regulations on that topic but none, as of yet, that specifically address accessibility issues on the internet. Does that mean only brick-and-mortar establishments need to be ADA complaint? Not necessarily.

Here, in the first of a two-part Question & Answer series, Madeline Baio, partner in the firm’s Employment and Labor and Retail and Hospitality Practice Groups, answers several important questions about the ADA and how to keep your company’s brick-and-mortar establishments ADA compliant. Check back in the next issue of PLM when Madeline answers questions regarding website accessibility.

ADA AccessibilityFrom brick and mortar to the world wide web,is your business compliant?

Interview with Madeline S. Baio

Q&A

How does the ADA apply to service animals?

Under the ADA, a service animal is defined as a dog (or miniature horse) that has been individually trained to do work or perform tasks for an individual with a disability. The task(s) performed by the animal must be directly related to the person’s disability. Emotional support or therapy dogs are not considered service animals under the ADA because they have not been trained to perform a specific job or task, but rather, simply provide comfort by being with a person. If, however, a dog has been specially trained to sense the onset of an anxiety attack the dog may qualify as a service animal. Although the ADA requires restaurants, bars, and other places that serve food to allow service animals into their establishments, they are not required to allow service animals to be seated on chairs or fed at the table.

A:

Q:

September 2017 5

Q&A

What are some basic considerations that business establishments should keep in mind to stay compliant with ADA accessibility regulations in their physical locations?

Although the ADA regulations are very detailed and technical, a few recommendations include:

• Remove barriers to access in parking facilities by providing at least the minimum number of required disabled parking spaces. That number usually depends upon the total number of parking spaces provided in the parking facility.

• If an item extends more than four inches into a walkway, and is less than 80 inches above the route, eliminate it. The same is true for displays and other items inside the business.

• The route to the entrance of the business, and all routes inside the business — such as aisles in a retail store or the customer floor of a restaurant — should be clear from obstacles, trip hazards, and debris, and should provide a minimum width of three feet (36”) of clear travel space.

• Make sure wheelchair-accessible sales counters and checkout aisles are staffed during all business hours.

• At restaurants and other establishments with fixed seating, 5 percent must be accessible if readily achievable. Accessible seating should have a surface height of no more than 34 inches and no less than 28 inches above the floor. At least 27 inches of knee clearance must be provided between the floor and the underside of the table. There must be an accessible route to each table and a clear floor area of 30 inches by 48 inches provided at each seating location.

• Provide adequate maneuvering space for wheelchairs. If a 180-degree turn is needed to exit an area, than a 60-inch diameter turning space or a 36-inch-wide “T” is needed. The space for a “T” turn requires at least 36 inches of width for each segment of the “T” and it must fit within a 60-inch by 60-inch area.

• Make sure restrooms and fitting rooms are accessible by removing excess furniture or equipment, such as shelving, large trash cans, and chairs that take up required maneuvering space.

A:

Q:

Two-Part SeriesCheck back next month for part two — digital ADA requirements.


It’s that time of year again. The air starts to get a little cooler, the daylight starts to get a little shorter and students and faculty are heading back to school. The beginning of the academic year is always a great opportunity to examine and revise policies and roll out new training and initiatives. Here is a list of compliance areas

to check as the academic year begins.

Title IX – Equity in Programs and Sexual Assault and Sexual ViolenceA standard notice of nondiscrimination is required under the regulations and guidance issued by the federal government and should be distributed annually. In addition, the United States Department of Education Office for Civil Rights specifies that every institution must designate and identify its Title IX Coordinator and his/her contact information. There are requirements for conducting investigations, grievance/resolution procedures, and campus climate surveys, as well as information that should be provided to sexual assault survivors. Title IX also covers discrimination on the basis of sex in education programs and activities, including athletics (locker rooms, scheduling of games and practice times, academic services, and provision of medical and training facilities). Check to see if your state has regulations on this topic. New York, for example, has requirements under Education Law 129-A and 129-B that include very specific requirements for compliance.

Higher Education Opportunity ActThis federal statute has numerous ongoing requirements affecting several offices including financial aid, admissions, student services, registrar, and campus security. The HEOA requires information regarding cost and pricing of textbooks, emergency

plan information, drug and alcohol policies, and required disclosures — including a net price cost calculator, equity in athletics survey data, and transfer of credit policies. Students must be notified annually about a number of items under this statute. Accreditation agencies, like Middle States, have been tasked with monitoring compliance with these issues and may look at your institution’s website at the beginning of a compliance audit.

Financial Aid RegulationsThere are a host of federal and state regulations governing financial aid. Failure to abide by the detailed changing regulations can result in a finding that funds were improperly paid to an institution.

Website AccessibilityWebsite accessibility for individuals with disabilities includes not only the primary institution website, but also individual professor online learning accounts and software used in course instruction. The institution should ensure that the content posted by faculty is accessible and that students are properly notified how to seek a reasonable accommodation.

TrainingIn addition to required Title IX training, there should be training for harassment and discrimination, how to report conduct and/or file complaints, and on how to provide reasonable accommodations to students with disabilities.

These are just a few of the issues that should be on your institution’s checklist as the school year starts. Lack of compliance can lead to complaints, investigations, and audits by state or federal agencies, and increased legal defense costs for your institution.

By Kristin Klein Wheaton

Back to School Checklist:Is your Institution Compliant?

Insight

September 2017 7

Insight

Recently, during the course of electronic discovery, an attorney unintentionally produced confidential information, including social security numbers, names, and addresses of Wells Fargo’s clients. The incident has been well publicized because one of the lawyers for the opposing party unscrupulously disclosed the

information to The New York Times, creating a public relations fiasco for the attorney and her client.

This calls to mind two things: a meditation by Buddhist Monk Pema Chodron, in which she advises to breathe one’s troubles in and out with the altruistic thought that one is experiencing this hardship “so other’s don’t have to;” and the New York Rules of Professional Conduct, namely, Rule 1.1 (requiring that an attorney be competent and provide competent representation), Rule 1.6 (governing the protection and disclosure of confidential information) and Rule 5.3 (requiring that law firms adequately supervise non-lawyers doing work for them).

This is an all too real example of the potential dangers of ESI discovery, and the harsh consequences that result from human error. In this arena, attorneys must be particularly aware of their responsibilities pursuant to the ethical rules.

NYSBA Comment 8 to Rule 1.1, states:To maintain the requisite knowledge and skill, a lawyer should . . . (ii) keep abreast of the benefits and risks associated with technology the lawyer uses to provide services to clients or to store or transmit confidential information. . .

Even those well-versed in the software and ESI processes are not always prepared for the often unique variables introduced in each ESI search and production. We can only speculate as to what could have been done differently in the Wells Fargo case, but here are a few very basic suggestions which may have been helpful.

ESI Search Terms — ESI search terms should be broad enough to satisfy discovery obligations but narrow enough to limit the number of non-responsive documents that must be weeded out. Terms should be negotiated to ensure reasonableness and to avoid overbreadth.

Protective Order — Put in place a protective order with a claw-back provision permitting the parties to call back unintentionally disclosed, privileged or confidential information.

Redactions — Although vendor software permits you to mark documents as requiring redaction, the attorney is responsible for doing the redactions.

Universe of Production — Do not rely on the vendor to ensure that it is producing only documents that have been reviewed, marked responsive, marked with proper confidentiality designation and redacted if needed, and have not otherwise been marked privileged. Laboriously review as much of the document production page by page as possible.

While rapid technological advancement has given attorneys a new array of tools at their disposal for discovery, ultimately, the attorney is responsible protection and disclosure of confidential information. Practitioners should strategically use technology, and carefully implement tech-based litigation tactics used throughout the discovery process.

By Joanne J. Romero

Lessons Learned From Wells Fargo’s ESI Discovery Errors


By Colleen M. Murphy and Eric S. Cohen

As reported in Ames & Gough 2017 Architects & Engineers Professional Liability Insurance Market Survey, 19 of the leading A/E professional liability insurance companies — representing 80 percent of the overall U.S. market for this specialty coverage — state that their claims experience is steady or improving. Yet, as further reported, professional liability underwriters surveyed continue to monitor emerging exposures. These include, but are not limited to: expanded use of drones, the risk of cyber incidents and erosion of protections for design firms under economic loss doctrines.

This article explores some of the issues surrounding the use of drones by design professionals. Simply stated, a drone is an aircraft without a human pilot aboard. Drones are both vehicles and professional information-gathering tools. According to the Schinnerer Risk Management Blog, “The use of drones in the planning, design, and evaluation of the construction of a capital asset continues to evolve. Often, such usage is by inexperienced operators who lack both knowledge of, and respect for, the legal and practical aspects of drone use.”

Benefits of Drone Use by A/E ProfessionalsDrones are proving to be an invaluable tool for design professionals. Simply put in an article by the A/E ProNet Blog, “[T]hey offer a bird’s-eye view of construction sites. They provide breathtaking photographic opportunities for architects looking to showcase their work, and they’re fun to fly. However, while they may be intriguing tools for architects and engineers,

Spotlight

As commercial drone use continues to grow, architects and engineers must navigate a complicated legal landscape.

Drones and the LawEmerging issues surrounding the use of drones by architects and engineers, and recent FAA regulations regarding commercial drone use.

September 2017 9

drones open up the design firms that use them to many possibly unanticipated risks. These days, obtaining a drone is as simple as stopping at your local Walmart, but all drones are not created equal, nor are all drone pilots equally skilled and certified.”

On a more complex level, drones take measurements, offer an understanding of site topography, and provide practical, convenient, and in-depth information utilized by an increasing number of design professionals.

Common uses include: • Aerial surveys• Site evaluations• Site line evaluations• Topography• Evaluation of existing improvements• Construction monitoring and observation• Worksite surveillance• Project inspections• Monitoring for operation and maintenance

Although new risks continue to emerge, present risks include:

• Scope of work and standard of care implications. For example, if a drone inspection could have caught a defect in a component part of a bridge and the A/E professionals did not use a drone for inspection, will the A/E professional in the near future leave himself or herself open to a claim that he or she failed to meet the standard of care? In other words, will the use of drones become “industry standard?”

• Collected information becomes part of, or influences, design deliverables or services in a detrimental fashion.

• Property damage arising from the use of drones, to the property itself or the drone.

• Personal injury to employees and third parties.

• Trespassing, including a violation of air rights belonging to a third party.

• Invasion of privacy. For example, a drone inspection of a high-rise condominium under construction, captures images into the windows of the neighboring occupied apartment building.

• Copyright violations.

• Hacking. Indeed, with the increase exposure to cyber security, propriety information pertaining to the project-specific design and other proprietary information are exposed to risk each time another digital component is added to the performance of the design professional’s services.

Having introduced the reader to the traditional benefits and costs of drone use, the poignant question is thus: How can design professionals minimize both their insured and/or uninsured risk, while still benefiting from the upside of drone use?

Some user-friendly recommendations include: • Know and comply with all current federal, state, and

local regulations applicable to drone use. Design professionals are and will continue to be impacted by recent FAA regulations governing the commercial use of drones. Notably, just as the use and capabilities of drones continues to evolve and expand, so too do the regulations governing their use.

• Develop and follow best practice procedures for drone use, including best practices for privacy. Put procedures in writing, and require all applicable employees to read, sign off, and follow the policy. Update the protocol as necessary.

• Make certain, before a loss occurs, that you are adequately insured for the new and/or enhanced risks associated with commercial drone use.

(cont. on page 11)

Spotlight


Spotlight

As more and more engineers and architects utilize drones, what are some of the key insurance questions that need to be addressed? There’s no question that the use of drones is becoming far more widespread by design firms across the country. Whether an A/E firm decides to operate its own drone or use an outsourced service, it needs to make sure it has protection from potential liabilities associated with drone use. In an outsourcing situation, the design firm needs to stipulate contractually that the drone operator has appropriate insurance coverage in place and that the coverage is structured to provide protection for the design firm as well. This would include requiring the drone operator to carry liability insurance and add the design firm as an additional insured, and that the insurance policy include a waiver of subrogation in favor of the design firm. The drone operator should also provide a certificate of insurance evidencing coverage and these two important coverage extensions.

A/E firms that choose to operate their own drones need to make sure they have the required FAA licensing and registration, which is a prerequisite to obtaining insurance. They can get insurance coverage either under extensions to their commercial general liability (CGL) policy or by purchasing a standalone drone insurance policy. They should also make sure they have coverage for any privacy-related exposure that might arise as a result of drone use. It is likely the design firm will also be contractually required to provide their clients with additional insured status and a waiver of subrogation, both of which should be negotiated with the drone insurer/CGL insurer up front.

Does professional liability insurance coverage have a place in drone use coverage?Design firms also face exposures for professional liability claims arising from use of drones (e.g., inaccurate measurements or incomplete building surveys utilizing a drone). It is important that their professional liability insurance (PLI) cover such claims. Most PLI insurers have no exclusion for drone or aviation exposures. There are a few such insurers, those that offer a combined professional liability and pollution liability policy, that include a form of aviation exclusion in their policy form. Our experience is that, despite this wording, the intent of these PLI insurers is to prevent pollution claims arising from use of aircraft or drones, but there is no intent to prevent coverage for professional claims arising from the use of drones. In any event, it is worth checking your policy and asking your broker and insurer to clarify how coverage will apply.

What insurance coverage gaps are associated with drone use?While most design firm leaders focus on professional liability exposures, there is still a significant coverage gap that exists when a design firm operates its own drone. For example, what happens if the drone, during flight operations, crashes and causes bodily injury or property damage to a third-party (adjacent property owner, worker on the job site, driver on a local highway, etc.)? While bodily injury and property damage (along with economic loss) are covered under a PLI policy, the intent is for coverage to apply if such losses occur in the course of performing a professional service. Most insurers will argue that the act of controlling the drone is

Dan Knise is president and CEO of Ames & Gough, a specialty insurance brokerage and risk consulting firm. A widely respected expert in construction risk management issues, he works with several of the firm’s larger design and law firm clients and assists project owners with risk management, insurance, and surety issues. He joined Ames & Gough in 2005 after serving in a number of senior leadership roles in risk and insurance services, construction, and other sectors.

Dan Knise Talks Drone Coverage Options, Risks, and Trends

September 2017 11

Related Insurance Coverage ConsiderationAccording to David A. Erickson in Drones & Design/Construction Professionals: Opportunities and Obligation, “As both a ‘vehicle’ and professional information-gathering tool, UAVs carry a number of insurance concerns and needs. … [T]o the extent the collected information becomes part of, or influences design deliverables or services, professionals should confirm that such information is covered by an applicable liability policy.”

In assessing drone-related exposures and related insurance coverages, A/E firms need to consider the full range of risks that drone use represents. Claims for damages to third parties, such as bodily injury or property damage from drone crashes, as well as personal injury/invasion of privacy, may be addressed by special drone endorsements available under general liability policies or standalone drone insurance policies.

On the other hand, claims for professional errors or omissions that arise from using a drone are the purview of professional liability insurance. While most A/E professional liability insurance policies have no drone or aircraft exclusion, A/E firms should check with their broker or insurance company to ensure that any professional claims arising from the use of drones are covered. Note, however, that these policies do not provide coverage for all wrongful acts or omissions in the operation of a business by an A/E firm.

Spotlight

(cont. on page 12)

not a professional service and, therefore, there would be no coverage under the PLI policy for such claims.

What is the solution to closing a possible coverage gap?In most situations, the solution for this exposure is to take one of two additional action steps:

• Add coverage for use of a drone by endorsement to the design firm’s Commercial General Liability (CGL) policy; or

• Purchase a standalone drone liability policy.

Can you walk through these two solutions?If adding coverage to the CGL policy, keep in mind the standard CGL policy includes an exclusion for aviation exposures (including use of drones). The good news is that CGL insurers who typically write coverage for design firms will offer a drone endorsement, provided the insured fills out a questionnaire regarding the number of pilots, intended use, etc. There is often an additional annual premium of $500-1500 depending on these variables. Importantly, these CGL endorsements typically will also extend coverage to so-called “personal injury,” which can be important if someone on the ground sues the design firm for breach of privacy. The coverage however typically does not provide any protection for damage to the drone itself (so-called hull coverage) nor does coverage extend on up to the umbrella/excess liability policy. This means that most design firms going this route of adding coverage to the CGL policy will only have $1 million of liability coverage for use of a drone.

Many firms have instead opted to purchase standalone drone coverage from the aviation insurance marketplace. This coverage runs about $1,000-1,200 for a $1 million policy limit, and hull coverage for damage to the drone and it’s payload can be added for around $200 for each drone depending on the value of the hull/payload. Higher liability limits of $5 million or more are available at a cost. It is important to note that many of the standalone policies do not offer the personal injury coverage (i.e., invasion of privacy). It is also important to confirm that they will include, if requested, additional insureds and provide a waiver of subrogation (as mentioned earlier).


Spotlight

What is DXA Studio?DXA Studio is a boutique full-service architecture firm with an emphasis on personal client interaction. Our projects range from single and multi-family residential to commercial, institutional, and hotel buildings. We are a design-focused office that has had a tremendous amount of success with complex municipal approvals, including the New York City Department of Buildings, Landmarks Preservation Commission, and Board of Standards and Appeals.

Have you used drones as part of your work? For what purposes?Yes, we use drones to capture photos at various heights, which allows us to produce photorealistic renderings and convey the experience at each floor level of a building in any given direction.

How has the use of drones helped you with regard to design?Previously, we had to build a 3D model using information based on the site survey in limited areas near the site, than do some guesswork in terms of what was seen at each floor. Now, we are able to show our clients the views in presentations so they get a sense very early on what their prospective investors and buyers will see in the completed project.

What are some of the benefits of using drones?Aerial photos produced by drones provide an accurate and full 360-degree vision range for us. We get a

Drones In Design With Jordan Rogove

Recent FAA Regulations Pertaining to Commercial Drone UseThe U.S. Federal Aviation Authority (FAA) has been working on rules for commercial use of drones, with the most recent updates going into effect on August 29, 2016. The provisions of the new rules, which are formally known as “14 CFR Part 107 – Small Unmanned Aircraft Systems,” are intended to lessen risks to other aircraft as well as people and property on the ground. The rules do not address the privacy concerns associated with the use of drones. The rules fall under the sub-categories of “Operating Rules,” “Remote Pilot Certifications,” and “Waivers.” Highlights of the rules include:

• The rules apply to unmanned aircraft (drones) weighing less than 55 pounds on takeoff, including everything on board attached to the drone.

• No person may manipulate the flight controls of a drone unless the person has a remote pilot certificate with a small unmanned aircraft system (small UAS) rating, or that person is under the direct supervision of a Remote Pilot in Command who has the ability to immediately take direct control of the flight of the drone.

• No person may be a Remote Pilot in Command unless they have a remote pilot certificate.

• Operators must pass an aeronautical knowledge test and be screened by the Transportation Security Administration.

• The drone cannot be operated at night, nor can the drone be operated at twilight unless it has anti-collision lighting.

• The drone cannot be operated from a moving vehicle or aircraft.

• Visual line of sight requirements provide that the Remote Pilot in Command, the visual observer (if one is used), and the person manipulating the flight controls, must be able to see the drone throughout the entire flight.

• The drone cannot be operated over a person unless that person is directly participating in the operation of the drone, nor can the drone be operated under a covered structure.

(cont. on page 14)

September 2017 13

Spotlight

Jordan is a New York State Registered Architect, LEED Accredited Professional, and Co-Founder of DXA studio. His role includes leading the creative design process, managing the studio, and guiding projects through complex municipal approval processes. Over the course of Jordan’s 16-year career he has completed a tower that straddles Manhattan’s High Line, won design competitions for health-focused housing in Haiti and an arena for the New Jersey Devils, designed and fabricated scenic sets for television and stage, and designed and oversaw over 20 high-end residential and commercial projects in New York City.

better understanding of the context in which the project is located with a much more diverse viewpoint at all levels. This allows us to view the proposed design in its complete surroundings, simulating possible inside-out views from each height and orientation.

Conversely, what are some of the limitations or downside of using drones?Well, we had one drone fly off on its own and disappear after being told to return to home base. By design that early flight was devoid of sensitive or proprietary information such that the drone in that particular instance served mostly photographic purposes. However, had the technology on the drone contained propriety design information, its disappearance, however temporary, might have resulted in additional layers of problems and potential exposure. Thus, among the downsides to drone use is the potential for data breach or exposure of proprietary information to others. A separate limitation to drone use is the numerous FAA regulations, which presently govern their use and those which continue to be implemented which, for example, limit drones’ use near airports and other sensitive locations — mandating alternatives for those areas. There is always a concern that someone will get spooked when they see one flying around, so it’s important to make it obvious that the purpose of its use is benign.

What sort of concerns do you have in terms of liability when it comes to drone use?One step we take to partially mitigate/transfer some

liability is to ensure that the drone companies we hire have the proper licenses and insurance. We are also always cognizant of avoiding any infringements of privacy. Moreover, we ensure that the drones we use are loaded with software enabling us to track the drone even if it loses contact with its operator as well as confirming that the drone is enabled with software which insures against encryption or data breaches and its data can be deleted as necessary. Finally, we believe it is essential to retain drone operators who are fluent with the most current iteration of the local, state, and federal drone laws and regulations.

Do you feel that drones are worth the risk they might pose?Yes, at this point we feel comfortable using them, since the risks are minimal while the benefits are great. Our clients really gain a solid perspective of what’s being presented, and this helps us sell our designs very nicely.

How do you see the use of drones influencing the future of architecture?Google Earth fundamentally changed the way architects put context in their designs over the last 10 years, especially in a high-density city like New York. Drones take that to the next level, providing a more flexible and diverse perspective in much higher resolutions. We feel this will continue to enhance both the architects’ and the clients’ way of understanding projects for years to come in a positive manner.


Spotlight• There are airspace restrictions, but drone operation

is allowed in Class G airspace (formerly known as uncontrolled airspace), without air traffic control permission. On April 27, 2017, the FAA began publishing electronic maps of airports across the country detailing where and at what altitudes pilots of drones may succeed in gaining access to airspace other than Class G.

• The Remote Pilot in Command must perform a specified pre-flight safety check.

• The drone must not be operated in a careless or reckless manner so as to endanger the life or property of another.

• Nor may the drone be allowed to drop an object in a manner that creates an undue hazard to persons or property.

• The FAA may issue a waiver authorizing a deviation from any of the regulations if the FAA finds that the drone can safely be operated under the terms of the certificate waiver. Such deviations can include, for example, deviation from the rule permitting only daylight operation.

Drone Use’s Impact on InsuranceCommercial use of drones by A/E professionals is on the rise, and has been identified by underwriters of professional liability insurance for design professionals as an emerging risk. That stated, the use of drones has had a much larger impact on general liability coverage; these underwriters need to understand the exposure to properly cover the risk. A/E professionals can gain the benefits of drone use while minimizing the downside by keeping informed as to the associated risks, knowing and complying with the applicable regulations, creating and following best practices, and securing and confirming adequate insurance coverage for the associated risks.

Global Insurance ServicesWebinar Series

(continued from page 12)

Professional Liability Committee Chair,

2017-2018

Congratulations, Seth!

Global Insurance ServicesWebinar Series

Reading the digital version of Professional Liability Magazine? Click each webinar title to register!

Issues Arising Under Claims-Made PoliciesPresented by: Christian A. Cavallo | Tuesday, November 21

Emerging Risks for the Insurance Industry in 2018Presented by: Lawrence D. Mason and Jonathan L. Schwartz | Tuesday, December 12

Reservation of Rights Letters: Employing Best Practices and Avoiding PitfallsPresented by: Patrick B. Omilian | Tuesday, October 17

https://register.gotowebinar.com/register/7690741173297713665




New York City is not only an international insurance hub, it’s also known for some of the finest dining worldwide. Despite the fine dining options, when muddling through mediation or looking to forget your arbitration woes, New York has an array of quiet, out-of-the-way, neighborhood gems. These neighborhood haunts will

likely never be the subject litigation headlines but will provide a respite from the throes of litigation lows.

Wo HopWo Hop is not for the meek. It is located in Chinatown, in the basement of a building where navigating a steep staircase is your obstacle to enter. Let’s just say that if you are looking for white-glove service, this

is not your place. But, if you are looking for top-quality, inexpensive Chinese food to comfort you after your courtroom tribulations, you are home.

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Top 5

By Joseph A. Oliva

4 FrankLet’s be Frank, if you want the bells and whistles, this is not your Italian restaurant. It’s located in the East Village, a few short blocks away from McSorley’s, the oldest saloon in New York. Patrons are packed inside the

restaurant and gaze at the menu located on a chalkboard. It is loud and tight but the food will have you asking for more. Oh, and leave your credit cards at home — cash only please. So have a drink or two at McSorley’s to digest the day’s insurance insights and then head to Frank.

Sutton InnSutton Inn occupies the ground floor of an apartment building on a purely residential street. It offers a small bar, fireplace, and a quiet atmosphere where you can actually hear each other speak. The menu offers

seasonal fare, exquisitely prepared and served by some of the nicest people. Their homemade ice cream finishes off one of the best experiences in New York City. If you feel like you overpaid to settle at mediation earlier that day you will be happy to note, no tipping, everything is included in the price of the meal.

3Buenos AiresOne of the best unknown steakhouses in New York sits in a residential neighborhood. You will be greeted by tango music and photographs of Pope Francis and Evita, and enticed to sample a $120 bottle of wine that is not on the menu but is miraculously selling

for half the price. Ensure you order the skirt steak and the GREATEST appetizer in the world — fried provolone, served on a sizzling plate. Celebrate your courtroom victory, pop a bottle, and enjoy the cheese.

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TOP 5 Out-of-the-Way NYC Restaurants to Discuss Professional Liability

Noodle PuddingThe best restaurant in Brooklyn. One subway stop from Manhattan for those who are adventurous enough to cross the East River and dine where the Revolutionary War’s Battle of Long Island occurred. The

menu is Italian and the atmosphere is pure Brooklyn, name and all.

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Case Notes

IMPACT: If passed, the legislation would level the playing field for New Jersey legal malpractice actions.

— Matthew S. Marrone

New Jersey State Bar Association Renews Efforts to Shorten Legal Malpractice Statute of LimitationsMichael A. Saffer v. William H. Willoughby(Supreme Court of New Jersey, February 5, 1996)

New Jersey has long been perhaps the most challenging jurisdiction in the country to defend lawyers in legal malpractice cases. There are two primary reasons for this. The first is New Jersey’s unusually long statute of limitations — six years — that applies to non-medical professional liability matters. The second, and even more important reason, is the fee-shifting available to successful legal malpractice plaintiffs, by virtue of a court-created rule in the 1996 New Jersey Supreme Court decision in Saffer v. Willoughby, which held that a successful legal malpractice plaintiff may recover all attorney’s fees and costs incurred in the pursuit of the legal malpractice case. Notably, a successful lawyer defendant may not invoke the same benefit. The New Jersey State Bar Association, its counterparts at the county level, and a coalition of other professional organizations are once again urging lawmakers to rid lawyers of these onerous rules.

The bill was introduced at the beginning of the current legislative session, and is pending before the Assembly Judiciary Committee. Identical versions have been proposed in previous legislative sessions, but all have failed to gain traction. Most recently, in 2011, an identical version did pass through the Assembly Regulation Professions Committee in a 5-1 vote, but then stalled.

Like earlier versions, this bill would set a common statute of limitations for all professional malpractice

actions at two years — the same limitation currently in place for medical malpractice lawsuits and personal injury matters. Additionally, the bill would legislatively reverse Saffer fee-shifting, and mandate that all malpractice claims be governed by the American Rule, in which all parties generally are responsible for their own legal costs.

The state bar and other lobbying groups are urging passage of the bill, arguing that it will put all licensed professionals on the same footing as medical professionals, and will provide stability in the insurance marketplace. According to the state bar, there are 25 licensed insurance carriers in New Jersey, but only five which offer malpractice coverage. The bar also contends the base rate for coverage for lawyers in New Jersey is 49 percent higher than for lawyers in New York state, and 33 percent higher than for lawyers in Pennsylvania.

Opponents — including the New Jersey Association for Justice, whose members represent plaintiffs — contend that the bill puts professional interests over the interests of clients, and would have no measurable impact on the insurance marketplace.

Even though previous efforts to pass this bill have not been successful, the state bar has made the bill a priority, and has aggressively been lobbying legislators. Whether this bill meets a different fate from its predecessors remains to be seen.

September 2017 19

Case NotesSituational Acknowledgment In Conversation Can Establish Applicability of Prior Knowledge ExclusionDavid R. Farbstein, P.A. v. Westport Insurance Corporation(Southern District of Florida, August 9, 2017)

The coverage dispute arose when Caravan, Inc. began to sell property in March 2015. A mortgage on one of the properties Caravan sought to sell contained a pre-payment penalty. On March 30, 2015, Caravan retained David R. Farbstein to represent it in various sale negotiations and transactions, including the sale of the property with the early payment penalty.

Caravan wanted a deal in which the purchaser would assume the mortgage and Caravan would not pay the penalty on it. Unfortunately, at the time Caravan ultimately sold the property, these terms were not included in the deal. Nonetheless, Farbstein counseled Caravan to close on the deal.

After the closing on August 26, 2015, Farbstein completed and signed a renewal application for his legal professional liability policy with Westport Insurance Company. Farbstein answered “no” to whether any claims had been made or if he was aware of circumstances that might be the basis of a legal claim.

Caravan eventually filed a negligence claim against Farbstein. In the complaint, Caravan cited a conversation where Farbstein referenced the deal and the penalty Caravan paid as a result in the context of his errors and omissions policy. Westport denied coverage upon receiving the complaint citing the prior knowledge exclusion. In the resulting action, Farbstein presented extrinsic evidence indicating he could not have reasonably foreseen Caravan’s claim.

IMPACT: In affirming the insurer’s denial, the court held that it need only review the complaint as it contained the necessary facts to establish the applicability of the prior knowledge exclusion. Namely, Farbstein’s acknowledgment of the botched deal.

— Colin B. Willmott

PLMProfessional Liability Magazine

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