Reinsurance Law Blog

Reinsurance Law Blog

No Underinsured Motorist Coverage Where Tortfeasor Policy Limits Exceed Insured’s Policy Limits; Missouri (8th Circuit)

Posted in Contractual Liability, New Case

AMCO Ins. Co. v. Williams, arose from a fatal car crash. The insured’s estate sought underinsured (UIM) motorist coverage after recovering the tortfeasor’s policy limits. The claim was denied. The insured sought summary judgment establishing coverage.

The insurer claimed there was no coverage because the tortfeasor’s vehicle was not underinsured. The insured said the policy was ambiguous. Judgment for the insurer was proper because the bodily injury liability limits for the tortfeasor’s vehicle was greater than the insured’s policy’s UIM liability limit. The policy was not ambiguous when interpreted as a whole.

No Duty to Indemnify Breach of Implied Warranty of Habitability Claims – 7th Circuit, Illinois

Posted in New Case

Allied Prop. & Cas. Ins. Co. v. Metro N. Condo. Ass’n., arose when Allied’s insured improperly installed windows on Metro’s property. Metro sued the insured for breach of the implied warranty of habitability. Metro and the insured entered into a settlement agreement assigning Metro the right to the insured’s insurance proceeds.

Allied sought a declaratory judgment that it was not required to cover the settlement losses because the policy excluded the cost of repairing the insured’s defective work and contractual damages.

Judgement for Allied was proper because breach of the implied warranty of habitability claims are contractual and not covered under the policy. Allied was only liable for damages stemming from a covered claim. The settlement damages were not covered under the policy, thus Allied had no duty to indemnify its insured.

Metro also lacked standing to sue on behalf of individual condo owners for personal property damage because each owner’s property was affected differently and the damage was not to the common elements.

Law Firm Has “No Case” in Contract Automatic Renewal Dispute – 7th Circuit, Illinois

Posted in New Case

Cafferty, Clobes, Merriweather & Sprengel, L.L.P. v. XO Comm’ns. Srvs, L.L.C., arose from an automatic contract renewal clause. The contract was to renew annually unless Cafferty notified XO at least 30 days before expiration. Failure to provide notice would result in a termination fee. XO noted the renewal policy in each monthly billing statement. Cafferty failed to give notice, refused to pay the termination fee and filed a case against XO for consumer law violations.

Cafferty filed two amended complaints. Both proved insufficient. Cafferty sought to file a third amended complaint. Cafferty’s request was denied. Judgment for XO was proper because Cafferty did not use its options to be heard by the court and it was unlikely amending would cure the defects. Thus, the trial court’s decision to deny Cafferty’s Motion to File a Third Amended Complaint was proper.

No Coverage Where Insured was Pilot in Fatal Plane Crash – 10th Circuit, Colorado

Posted in New Case

U.S. Specialty Ins. Co. v. Earley arose from a fatal plane crash. The plane was converted to add a second seat with limited controls for flight instruction. The insured was in the front seat during the crash.

The insurer claimed there was no coverage because the insured was the pilot at the time of the crash. Judgment for the insurer was proper because there was no coverage if the plane was operated in flight by someone other than the named pilot. The insured was not listed as a named pilot, but had access to all controls and instrument necessary to control the plane from the front seat.

Insurance company has standing to enforce arbitration against claimant — 9th Circuit California

Posted in Contractual Liability, New Case

Allied Professionals Insurance Company, v. Anglesey,

When Allied denied Dr. Anglesey coverage for a malpractice claim made by the Gutierrezes, the doctor and the claimants settled, with an agreement not to execute against Anglesey, and apparently, an assignment of Anglesey’s claims against Allied to the Gutierrezes.  Allied sued the doctor and claimants, seeking (1) declaratory relief as to the rights and duties it owed to each of the Defendants; (2) rescission of the applicable insurance policies; and (3) compulsory arbitration of the claims related to the policies or Dr. Anglesey’s alleged malpractice. The trial court dismissed Allied’s lawsuit, saying Allied lacked standing.  The Ninth Circuit reversed.

For an insurer to have Article III standing to pursue a declaratory judgment that a policy was not in effect, the insurer need only “allege it was threatened with injury by virtue of being held to an invalid policy.” Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222 n.2 (9th Cir. 1998) (en banc). In addition, an insurer has standing to seek declaratory relief in a coverage dispute with its insured.

Because Allied had standing to bring claims for declaratory relief and rescission against Anglesey, Allied also had standing to seek to compel Anglesey to arbitrate those two claims.  The impending settlement among the defendants gave Allied standing to sue the claimants.  Allied could compel the claimants to arbitrate.  The case was improperly dismissed, so it was sent back to the trial court.

Bad faith claim for failure to pay workers compensation benefits may proceed — Oklahoma

Posted in Insurance Bad Faith, New Case

In Meeks v. Guarantee Insurance Co., 2017 OK 17,  the employee sued the insurer for bad faith refusal to timely comply with several orders of the Workers’ Compensation Court awarding employee temporary total disability benefits after insurer–without good cause–withheld employee’s benefits on twenty-six separate occasions. The insurer moved for dismissal, asserting employee failed to obtain a certification order from the Workers’ Compensation Court–a jurisdictional prerequisite for commencing a bad-faith action in district court. The District Court granted insurer’s motion and the Supreme Court reversed and remanded the case.

This appeal was retained to reiterate the proper application of this Court’s decision in Summers v. Zurich Am. Ins. Co., 2009 OK 33, 213 P.3d 565, to monetary awards–although paid–not provided as ordered. Today, this Court reemphasizes that an order of the Workers’ Compensation Court (WCC) that clearly identifies previously ordered benefits and finds that insurer failed to demonstrate good cause for its delay in, or noncompliance with, providing court ordered benefits satisfies the certification requirements delineated in Summers. Because the certification requirements were met here, employee may proceed in district court on his bad-faith claim against insurer for insurer’s alleged bad faith refusal to provide temporary total disability benefits as ordered by the WCC.

WCC assessed penalties for Insurer’s late payment of prior TTD awards. However, the WCC denied certification under section 42(A) “due to respondent’s carrier paying said penalty requested by claimant, prior to the hearing today.”  The Oklahoma Supreme Court explained there are two  alternative categories for certification: 1) failure to pay an award, or 2) failure to provide benefits as ordered. The insurer bears the burden to demonstrate why benefits were not provided as ordered.  The certification procedures for an insurer’s unpaid, late payment of, or outright refusal to pay a final monetary benefit award still owing are two fold: employee must (1) first utilize the mechanism provided in section 42(A)1 of the Workers’ Compensation Act and (2) have the award certified for enforcement as a judgment of the district court pursuant to Rule 582 of the Workers’ Compensation Court rules. Section 42(A) only applies when there is a dollar amount still owing, and does not apply to bad faith claims.

So, just as an outright refusal to pay a monetary award is beyond the purview of section 42(A), a wilful or intentional refusal to provide benefits as ordered is beyond the statutory remedies found in the Workers’ Compensation Act. Id. Resultantly, an insurer’s bad-faith conduct in complying with any benefits awarded to an injured employee lies in tort and will be judged by the same standard applicable to the bad-faith conduct by any other insurer.

The Supreme Court concluded:

¶18 Although the June 26, 2014 WCC Order denied employee’s section 42(A) request for certification as employer had paid the penalties prior to the hearing, that order satisfied the second recognized certification category under Summers–benefits not provided as ordered. This Court holds that the June 26, 2014 WCC Order, finding Insurer in violation on twenty-six (26) separate occasions in its duty to comply with previously authorized TTD benefits absent good cause, satisfies the certification prerequisites for commencing a bad-faith action in district court.

¶19 Having found that Meeks satisfied the certification requirements of Summers, this Court holds that the district court erred in granting Insurer’s motion to dismiss in lieu of answer. Barring Meeks from pursuing a bad-faith claim against Insurer for Insurer’s crafty gamesmanship clearly violates Summers and the policy rational underlying the Oklahoma Workers’ Compensation Act.

Summary judgment on governmental immunity properly denied where City did not provide proof of no insurance — Arkansas

Posted in immunity

In City of Little Rock v. Yang, Yang sued the City for mishandling a 911 call.  City claimed immunity. But City did not offer evidence it had no insurance.  Governmental immunity is only available under Arkansas law if there is no insurance.  Also, if the claim exceeds the insurance limits, there is immunity.  The denial of summary judgment was proper.

Indoor Air Pollution exclusion ok, not violative of state law — Oklahoma

Posted in Contractual Liability

In Siloam Springs Hotel v. Century Surety, 2017 OK 14, the issue was whether an exclusion for injury from indoor air was enforceable.  Apparently, some guests were injured from carbon monoxide at the hotel.  The insurance company did not cover the resulting claims based on the Indoor Air Exclusion, which stated the policy does not apply to:

“Bodily injury”, “property damage”, or “personal and advertising injury” arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating pathogenic or allergen qualities or characteristics of indoor air regardless of cause.

Most Oklahoma cases invalidating exclusions based on public policy are cases involving compulsory automobile insurance and uninsured motorist coverage required by statute.

[T]here is no public policy articulated by the Oklahoma statutes that is violated by an air quality exclusion in a liability insurance policy, regardless of what air quality events the exclusion might exempt. Oklahoma has no compulsory liability insurance law requiring liability insurance be maintained for air quality issues, nor is there any law explicitly prohibiting such an exclusion.

Thus, the public policy of the State of Oklahoma does not prohibit enforcement of the Indoor Air Exclusion.

Employee injured in stairwell after clocking out still entitled to workers compensation — Oklahoma

Posted in Workers Compensation

In Brown v. Claims Management Resources Inc., claimant was injured when he fell down the stairs at work, after he had clocked out. The claim had been denied on the grounds the injury was not within the course and scope of employment, and was not a compensable injury. The Oklahoma Supreme Court reversed. Because the employer owned the building, the stairwell wasn’t “adjacent to his employer’s place of business, but on the premises itself.” Further, the fact that Claimant had clocked out for the day does not mean his injury was outside the course and scope of employment. The exception under 85A O.S. Supp. 2013 §2(13)(c) does not apply until the employee leaves the premises, and Claimant had not yet left the premises of his employer when he was injured in the interior stairwell. Thus, the Claimant was within the course and scope of employment when the injury occurred.

Further, the injury was “compensable”. Employer argued the injury was not compensable because it occurred when employment services were not being performed.

At issue in this cause is whether the definition of “employment services” encompasses something more than the literal performance of specific assigned tasks, and includes other necessities of employment specified by the employer. We think that it does.

Claimant was assigned a workstation that he could only reach by elevator or stairwell.

“[Claimant] was required, upon reporting to work on the premises, to clock in and proceed to his work station just as he was required to clock out and leave it. By clocking out and exiting his second floor work station, Claimant was complying with his employers’ instructions and therefore was still performing employment services at the time of his injury. He was performing a duty that he was required to perform.”

No coverage under builders risk policy for damage to the existing structure — 10th Circuit Colorado

Posted in Contractual Liability, Duty to Defend, Insurance Bad Faith

In Gerald H. Phipps, Inc. v. Travelers Property Casualty, the Tenth Circuit affirmed summary judgment to Travelers Property Casualty on a builders’ risk policy.  The policy covered the builder’s work on the property, not the property itself.  So, when water damaged the property while roof work was being performed by the policyholder, Phipps, there was no coverage because the policyholder’s work was not damaged.  Rather the damage was to the building, and not the work.

The policy provides that Travelers “will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.” The policy defines “Covered Property” as “Builders’ Risk.” The policy then defines “Builders’ Risk” as

Property described in the Declarations under “Builders’ Risk” owned by [GHP] or for which [GHP is] legally liable consisting of:
a. Buildings or structures including temporary structures while being constructed, erected or fabricated at the “job site”;
b. Property that will become a permanent part of the buildings or structures at the “job site”:
(1) While in transit to the “job site” or temporary storage location;
(2) While at the “job site” or at a temporary storage location.

Critically, the policy expressly provides that “‘Builders’ Risk’ does not include . . . [b]uildings or structures that existed at the ‘job site’ prior to the inception of th[e] policy.”