Reinsurance Law Blog

Reinsurance Law Blog

California says companies can be liable for 2nd hand asbestos injuries

Posted in New Case, New Law

Companies can be liable to household members injured by asbestos carried home by workers, according to the California Supreme Court. In Kessner v. Superior Court, the determined that there is liability to household members injured by exposure to asbestos carried home by workers:

Does an employer that uses asbestos in the workplace have a duty of care to protect employees’ household members from exposure to asbestos through off-site contact with employees who carry asbestos fibers on their work clothing, tools, vehicles, or persons? How, if at all, does this duty differ when the plaintiff states a claim for premises liability rather than general negligence? If an employer or premises owner has such a duty, is that duty limited to immediate family members or to members of the employee‘s household? Or does the duty extend to visitors, guests, or other persons with whom the employee may come into contact? We hold that the duty of employers and premises owners to exercise ordinary care in their use of asbestos includes preventing exposure to asbestos carried by the bodies and clothing of on – site workers. Where it is reasonably foreseeable that workers, their clothing, or personal effects will act as vectors carrying asbestos from the premises to household members, employers have a duty to take reasonable care to prevent this means of transmission. This duty also applies to premises owners who use asbestos on their property, subject to any exceptions and affirmative defense s generally applicable to premises owners, such as the rules of contractor liability. Importantly, we hold that this duty extends only to members of a worker‘s household. Because the duty is premised on the foreseeability of both the regularity and intensity of contact that occurs in a worker‘s home, it does not extend beyond this circumscribed category of potential plaintiffs.

 

UM coverage on vehicle involved in the accident is primary — Arkansas App.

Posted in Contractual Liability, Vehicle

In Southern Farm Bureau Casualty Insurance Co. v. Shelter Mutual Insurance Co., 2016 Ark. App. 563, Roberson was injured while driving a car insured by Shelter.  Roberson had UM coverage through Southern Farm Bureau (Farm Bureau).  Shelter paid Roberson’s claim and argued that either Farm Bureau was liable for the damages under its “other insurance” clause or the damages should be pro rated between the two insurance companies, since both policies claimed to be excess over other collectible insurance.  Farm Bureau claimed that primary coverage follows the vehicle and not the person. Farm Bureau supported its argument with Arkansas statutes which required automobile liability insurance on the vehicle involved in the accident to be primary.

Under a standard automobile policy, primary liability is generally placed on the insurer of the owner of the automobile involved, and the policy providing the nonownership coverage is secondary. Farm Bureau argued that the issue of primacy is determined by who insured the vehicle actually involved in the accident.

The trial court found both policies provided coverage and ordered Farm Bureau to reimburse Shelter $3,000 — half of what it paid the insured. The appellate court reversed, finding Shelter liable for the entire amount.

Shelter claimed the statutes cited by Farm Bureau did not apply to UM, and therefore the policies’ terms applied to make each insurer liable on a pro rata basis. But in Shelter Mutual Insurance Company v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000), Shelter had argued (and the appellate court agreed) that, in the context of underinsured-motorist coverage, the “primary” coverage is that provided for the automobile in which the insured was riding.

Coverage on vehicles involved in an accident is primary unless specifically stated by the legislature. As such, there is no coverage under the Farm Bureau policy for the claim. The Shelter policy provides that if a UM claim is also “covered” by another policy, its coverage is secondary. Roberson’s claim is not covered under Farm Bureau’s policy because he was injured in a nonowned auto that had primary coverage. Moreover, the UM claim was settled for less than Shelter’s limits and, therefore, Shelter’s was the only policy applicable to Roberson’s claim.

Injury occurring during rodeo event subject to athletic participation exclusion — MD Fla.

Posted in Duty to Defend

In Volusia County Cattlemen’s Association v. Western World Insurance Company; Case No: 6:15-cv-1239 (MD Fla), Desiree Cicero was participating in a cash grab event at the Cattlemen’s rodeo.  The event involved grabbing cash off of bulls running around in the arena.  Cicero was hurt and sued the Association.  The Association sought a defense and coverage from its insurer, Western World.  Western World said there was no coverage based on the Rodeo Participation exclusion and the athletic exclusion.  The trial court granted summary judgment to Western World based on its athletic exclusion.

The Athletic Exclusion provides: “This insurance does not apply to any claim arising from practicing for or participating in any event of a sporting or athletic nature.”

Defendant cites a four-part test that lays out the requirements for proving that a sports or athletic exclusion applies: (1) “the event in which the person was injured was a contest or exhibition;” (2) “the contest or exhibition was of an athletic or sports nature;” (3) “the contest or exhibition was sponsored by the named insured;” and (4) “the injured person was practicing for or participating in the contest or exhibition at the time of the injury.”

The court said that the event fell within the dictionary definition of “sport” and it didn’t matter if pulling money off of bulls was not a typical sport like baseball or track.

“[T]he cash grab undoubtedly qualifies as an event of a sporting or athletic nature. Participants in the cash grab physically exerted themselves by attempting to grab cash that was attached to free-roaming bulls. This activity was engaged in for the pleasure of the competition and as a type of game or amusement.”

The court rejected the claim that any physical exertion would make an activity a sporting activity.

Summary judgment was granted to the insurer and against the policyholder.

Hospital lien superior to insurance company’s contractual subrogation rights — Oklahoma

Posted in New Case

In Morton v. Watson, 2016 OK CIV APP 71, Morton settled her lawsuit against Watson arising out of a car wreck.  After fees, there was about $150,000 to be divided between the hospital (which had recorded a lien for over $240,000), Morton, and her health insurance company, Blue Cross.  The trial court gave all the money to the hospital and Blue Cross appealed.  The Court of Civil Appeals affirmed.  The statutory hospital lien was applied.  Blue Cross claimed its contractual subrogation lien had priority over the hospital lien, because its lien was effective either at the time the policy began or at the time it began making payments of claims arising out of the accident, and thus Blue Cross’s rights had priority in time.

Insurer’s “Your Health Care Benefit Program” document states only that Insurer has a lien in any settlement; it does not give any indication of when its subrogation lien arose or became effective, other than the indication that the lien existed when there was a settlement with a tortfeasor. Insurer has not presented its contract of insurance and we therefore are unable to determine whether it expressed an indication of the effective date of the lien. The record presented does not establish an effective date for Insurer’s subrogation lien apart from the date of existence of any settlement. The settlement in this case occurred well after Hospital had properly recorded its lien.

The hospital lien statute says the hospital lien is inferior to the attorney lien.  As a result, a hospital lien is impliedly superior to other liens. The  Insurer has presented no evidence establishing that its lien was effective at any time before the date of the settlement, which was after Hospital recorded its lien. And the record includes no evidence establishing the priority of the liens at issue here apart from the indication in §43 that the Legislature intended hospital liens to be inferior only to attorney’s liens. On the limited record presented here, we find the trial court correctly determined Hospital’s lien has priority.

Injury is either within the products completed work hazard or it isn’t — it cannot be both in order to increase limits. Alabama law

Posted in Contractual Liability

In Pharmacists Mutual Insurance Company v. Advanced Specialty Pharmacy, Advanced provided a tainted IV product which caused patient infections.  Pharmacists was Advanced’s insurer, and put $4 million into an interpleader fund to be divided among the claimants.  The claimants and Advanced claimed Pharmacists’ limits were $7 million and the trial court agreed on summary judgment.  But the Alabama Supreme Court reversed, finding Pharmacists’ limits were $4 million.

Pharmacists issued 2 policies to Advanced — a business owners policy and an umbrella policy. The business-owners policy had a “general aggregate
limit” of $3 million, a “products/completed work hazard aggregate limit” of $2 million, and an “each occurrence limit”of $1 million. The excess policy had an “each occurrence limit” of $1 million, a “general aggregate limit” of $1 million, and a “products/completed work hazard aggregate limit” of $1 million.

The claimants argued that their claims included both professional negligence and products liability. Thus, the claimants alleged that — in addition to the $4 million general aggregate limits ($3 million under the business-owners policy and $1 million under the excess policy – for their negligence claims)they were entitled to the products/completed-work-hazard aggregate limits of $2 million under the business-owners policy and $1 million under the excess policy (for their products liability claims).  The trial court said Pharmacists’ general aggregate limits and its products/completed work hazards limits were not mutually exclusive, and ruled that Pharmacists’ liability under the policies was $7M.

In order for the products/completed-work hazard aggregate limit to apply to limit Pharmacists Mutual’s liability under Coverage L, there must be: (1) damages (2) based on a bodily injury and (3) the bodily injury must be “included in the ‘products/completed work hazard.'”

Under the definition of “products hazard,” why the product caused a bodily injury is inconsequential; it is only consequential that it did cause a bodily injury. Once it is determined that a bodily injury has been caused by a “products hazard,” the products/completed-work-hazard aggregate limit alone applies to limit Pharmacists Mutual’s liability for damages arising out of that bodily injury.

* * * * *

[T]he [trial] court determined that the claimants’ bodily injuries are, at the same time, both “included in the ‘products/completed work hazard’ and not “included in the ‘products/completed work hazard.'” The [trial] court reached this conclusion by determining that the claimants’ bodily injuries were caused by multiple, separate, and distinct occurrences.

The Alabama Supreme Court found the conclusion untenable, stating:

The [trial] court’s conclusion is contrary to the plain language of the business-owners policy. Specifically, the plain language of the business-owners policy is clear that a bodily injury is either “included in the ‘products/completed work hazard,'” or it is not. A bodily injury cannot simultaneously be and not be “included in the ‘products/completed work hazard.'”

Pharmacists’ liability was $4M under the policy.

Reinsurance is discoverable as insurance agreements in initial disclosures, W.D. Tennessee

Posted in Contractual Liability

In First Horizon Nat’l Corp., v. Houston Cas. Comp., 2016 WL 5869580, 2:15-cv-2235 (W.D. Tenn. Oct. 5, 2016), the issue was whether the plaintiff insured was entitled to discovery of the defendant insurers’ reinsurance agreements and communications relating to them.  Federal Rule of Civil Procedure 26(a)(1) requires a party to produce with its initial disclosures, “any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.” The court previously held that reinsurance agreements are “insurance agreements under Rule 26(a)(1)(A)(iv)” which should be produced in initial disclosures.  There was no need to show relevance, and the agreements were discoverable.

Communications between the reinsurer and insurance companies may or may not be discoverable, however. Relevance is the touchstone for discovery of those inter-insurance communications.

 

Misrepresentations in personal property valuation voids entire policy 8th Circuit, Missouri

Posted in Contractual Liability

In Neidenbach v. Amica Mutual Insurance Company, the personal property coverage in plaintiff’s  Neidenbach’s homeowner’s policy was void under the policy’s “Concealment of Fraud” provision because the plaintiffs intentionally misrepresented the value of their personal property in their proof of loss; the misrepresentation voided the entire policy, including the portions covering loss of their dwelling.

The policyholders had a fire and claimed over $250,000 in personal property lost.  But the year before, the policyholders had filed for bankruptcy and claimed $7,000 in personal property.  It was admitted that the policyholders had not accumulated $250,000 in the year before the fire.  On a motion for summary judgment, the district court concluded that no reasonable jury would be able to reconcile the difference between the value of the personal property the Neidenbachs reported as lost in the fire and the value of personal property they reported in their bankruptcy petition a year earlier. Accordingly, the court determined that the insurance policy was void as a matter of law, and granted summary judgment to Amica on the Neidenbachs’ claims.

“[I]n the absence of contrary proof,” a verified bankruptcy petition is assumed to be “a true and accurate representation of [the petitioner’s] personal property.” Liberty Mut. Fire Ins. Co. v. Scott, 486 F.3d 418, 423 (8th Cir. 2007).

The claim that the bankruptcy and the insurance valuations were garage sale vs actual cash value was insufficient to show why the valuations were so different.  And, the claim that they were entitled to limits didn’t cut it, either, as there was no evidence that the policyholders used the insurance limits to value their loss. The misrepresentations on the Proof of Loss were material because an accurate inventory of the property destroyed by the fire was necessary for Amica to make a coverage determination.

The Eighth Circuit asked the parties to address whether the misrepresentations as to the value of the personal property necessarily voided coverage for the dwelling.

[U]nder Missouri law, where an insured breaches an insurance policy by committing a misrepresentation as to one class of coverage, such misrepresentation may void the entire policy, even if the policy would otherwise be severable.

And, another 8th Circuit case said that misrepresentations as to one coverage would void all coverage.  Patterson v. State Auto. Mut. Ins. Co., 105
F.3d 1251, 1253 (8th Cir. 1997).  The dissent points out that there are Missouri cases that do not void all coverage for misrepresentation under one coverage.

Owned vehicle exclusion, underinsured motorist coverage, 8th Circuit, Missouri law

Posted in Contractual Liability, Vehicle

Walker v. Progressive Direct Ins. Co.

Steve Walker died in a motorcycle accident. After his widow settled against the tortfeasor for policy limits of $25,000, she sought underinsured motorist coverage UIM under two Progressive Auto Policies insuring the Walkers’ six other cars. The trial court granted Progressive’s motion for summary judgment, concluding that the policies’ “owned vehicle” exclusion barred UIM coverage because Steve did not purchase UIM coverage under a separate policy insuring his motorcycle. The Eighth Circuit affirmed.

The two Progressive policies provided UIM coverage for each of the six named vehicles. The policies’ “owned vehicle” exclusion (“OVE”) is common in auto liability policies. The Supreme Court of Missouri has noted the exclusion’s purpose: “one cannot simply buy a policy of insurance on one vehicle and then argue that the policy covers other vehicles that the insured also owns but chose not to insure.” Dutton v. American Family Mut. Ins. Co., 454 S.W.3d 319, 323 (Mo. banc 2015). Here, Steve Walker separately insured his motorcycle without UIM coverage.

* * * *

[T]he Progressive policies’ owned vehicle exclusion “simply and unambiguously precludes coverage for damages sustained while the insured is occupying a vehicle he owns that is not included on the polic[ies’] declarations page.”

Thus, summary judgment was proper.  This case follows another recent case from Missouri on UIM and owned vehicle exclusions, Maxam v. American Family, blogged at here.

Non Signatory Defendants can compel Arbitration — 8th Circuit Arkansas

Posted in New Case

In Robinson v. EOR-ARK, LLC, the Eighth Circuit said that a non-signatory defendant may enforce an arbitration agreement signed by the plaintiff’s decedent.  Recently, Missouri held that a wrongful death action was not preempted by an arbitration clause and the heirs were not bound by the arbitration agreement signed by the decedent.

Under Arkansas law, “a nonsignatory may compel a signatory to arbitrate claims in limited circumstances.” PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592-5-F.3d 830, 834 & n.3(8thCir. 2010). One such circumstance “relies on agency and related principles to allow a nonsignatory to compel arbitration when, as a result of the nonsignatory’s close relationship with a signatory, a failure to do so would eviscerate the arbitration agreement.

Since the actions complained of were all related to the signatories actions, the Defendants who did not sign the arbitration agreement could force arbitration.  There was no discussion as to whether the plaintiff was bound by the decedent’s signature, and the plaintiff apparently did not claim the arbitration agreement was otherwise unenforceable.

 

Wrongful Death action not preempted by Arbitration agreement — Missouri

Posted in New Case

In Granger vs. Rent-A-Center, Inc., Granger sued Rent-A-Center (RAC) for the wrongful death of his father, (Johnson) who was killed by a former employee of RAC.  The former RAC employee Eric Patton, “posed”as an employee of RAC, used his RAC identification, apparent authority, and previous in-home relationship with Johnson to gain entry into Johnson’s home. Patton then robbed, assaulted, and beat Johnson. Johnson later died.

RAC moved for a stay and arbitration.  The trial court found that Granger cannot be compelled to arbitrate his claims because his wrongful death claim is separate and distinct from any cause of action that belonged to the decedent, and Granger is not bound by any agreements signed by Johnson.  The appellate court affirmed.

Missouri had determined that an arbitration agreement signed by a decedent does not apply to decedent’s heirs in a wrongful death claim, because a wrongful death claim is not a derivative claim but an independent action separate and apart from the deceased’s claims. (See, Lawrence v. Beverly Manor, 273 S.W.3d 525, 527 (Mo. banc 2009)). Since Grangers had no arbitration agreement with RAC, he was not required to arbitrate his claim.

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