"Member of Household"; minor; auto policy Oklahoma law

In Shelter Mutual Insurance Co. v. American Hallmark Insurance Co., 2014 OK CIV APP 66, Faulkner, a minor, caused an accident while driving a car insured by Shelter. Shelter paid the damages and sought pro rata contribution from another insurer, Liberty.  Shelter claimed that Faulkner was a member of Liberty's insured's (Boyd's) household at the time of the accident.  But Faulkner was not living at the same house as Boyd (his great grandmother) when the accident occurred -- but Faulkner's mother was living with Boyd.  The Liberty policy stated it would provide liability coverage for "non-owned auto[s]" for any "family member." "Family member" was defined as "a person related to [the named insured] by blood, marriage or adoption who is a resident of [the named insured's] household. This includes a ward or foster child."

Just because Faulkner's mother had custody of him, did not mean that Faulkner was residing in the household.  The undisputed evidence showed that at the time of the accident, Faulkner was NOT residing in the Boyd household.  Whether a minor could have more than one residence was not decided.  Summary judgment for Liberty was affirmed. 

Coverage denied in zip code case

There are only a handful of decisions addressing whether a commercial general liability (CGL) policy provides coverage for lawsuits brought against retailers allegedly collecting their customers’ ZIP code information. Thus, when a decision is issued in this area, particularly a decision denying coverage, it is noteworthy.

National Law review has an article on a recent case.

ERISA, supplemental life coverage, dismissal reversed, 8th Cir. Missouri

In Silva v. Metropolitan Life Insurance Co., Abel, Silva's son, applied for a life insurance policy from work, and had money withheld from his paycheck for the policy.  When Abel died, the claim was denied because it was claimed he failed to offer proof of insurability.  There was no evidence of any health problems which would have precluded coverage of Abel. Summary judgment was granted to Defendants. Silva v. Metropolitan Life Ins. Co., 912 F. Supp. 2d 781, 787 (E.D. Mo. 2012).

The 8th Circuit found factual issues which required reversal of summary judgment.  It also found that Silva's claim against the employer could go forward under an equitable theory of surcharge.  Silva could claim waiver and equitable estoppel against the insurer on remand.

 

 

 

Builders Risk policy covered claim for pumps 10th Cir

In Glacier v. Travelers, Glacier contacted to build a new waste water pumping facility. Its pumps and wells were damaged and Travelers denied the claim. Glacier filed suit claiming the Travelers’ Builders Risk policy covered the claim. The trial court found coverage and a jury awarded Glacier $9,000. Travelers’ summary judgment was granted as to Glacier’s bad faith claim. Everybody appealed and the Tenth Circuit affirmed.

First, the Tenth Circuit found that the original wells/pumps “were temporary structures constituting covered property”. Second the Tenth Circuit found the heavy rains could constitute an “occurrence” under the policy. Travelers also claimed the pumps failed for lack of maintenance- a non covered loss. Since the evidence showed the pumps required repairs, the Court rejected this claim.

Finally, Travelers claim that the soils report caused the damage was not supported by evidence. The relevant policy clause covered costs necessary to redo the work already done. The ordinary and accepted sense of the policy terms limited coverage to connection to work previously done. The policy did not cover the expense of a new design and the costs to implement that design.  As to the bad faith claim, Glacier argued the claim was not timely processed, noting that it, not Travelers initiated some of the claim processing communications.  Glacier cited no authority that the insurance company must request information before the insured provides it or risk a finding of bad faith, and the Tenth Circuit refused to adopt such a rule.
 

Seepage vs. Leakage exclusion, mold 8th Cir.

In Syfco v Encompass Indemnity , a broken shower drain pipe caused damage to a basement.  Encompass said the policy did not cover losses "[c]aused by continuous or repeated seepage over a period of weeks, months or years, of water . . . [f]rom within or around any plumbing fixtures, including but not limited to shower stalls[.]"  Syfco (the insured) claimed the policy distinguished between water damage caused by seepage and water damage caused by leakage. Although both forms of damage were excluded under the additional coverage for mold remediation, the policy's primary coverage only excluded damage caused by seepage. Summary judgment to Encompass was reversed by the 8th Circuit.

The policy used both the terms "seepage" and "leakage" to refer to damage caused by the flow of water. The use of these two different terms to describe the flow of water indicates they had different meanings. In addition, the mold exclusion only applied to the removal of the mold itself, not to the repair of the property otherwise insured.  Summary judgment was reversed, and the case was remanded.

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Faulty Workmanship not covered under CGL policy 8th Cir Arkansas

In J-McDaniel Construction Co v. Mid-Continent Casualty Company, J-McDaniel Construction settled a lawsuit arising from a subcontractors's faulty workmanship during construction of an Arkansas home. J-McDaniel sought coverage for the damages to be paid in the settlement from Mid-Continent Casualty Co. under its Commercial General Liability Insurance (CGL) policy. Mid-Continent denied coverage, asserting that the terms of the policy did not include faulty workmanship or subcontractor negligence. J-McDaniel sued, alleging that Mid-Continent breached the insurance contract. The district court (Judge Brian Miller) found that the policy excluded coverage for subcontractor negligence and that under Arkansas law the CGL policy did not cover faulty workmanship. The Eighth Circuit affirmed. 

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Claim exaggeration is misrepresentation and claim was properly denied. 8th Cir, Missouri

This is the second time around for Young v. Allstate.  After a fire in their garage, the Youngs submitted a claim to Allstate. Allstate denied the Youngs’ insurance claim on the ground that the Youngs misrepresented material facts regarding their losses, in part by claiming loss to items that were not damaged.   Summary judgment for Allstate was reversed. Young v. Allstate Ins. Co., 685 F.3d 782, 786–87 (8th Cir. 2012). A jury then found for Allstate, and the Youngs appeal, claiming error in jury instructions.

Mrs. Young admitted that the initial inventory exaggerated the value of several items, but the Youngs both denied that they had intentionally overstated the claim to Allstate. In the previous appeal, the 8th Circuit ruled that knowledge of the contents of a document that contains false information does not necessarily establish an intent to deceive.  There were genuine issues of fact about whether the Youngs really were ignorant of what was lost in the fire at the time of their interviews with Allstate, or whether they revised the inventory only after realizing that they had been caught making intentional misrepresentations.

But, as noted, after the first appeal, there was a trial where the jury ruled in favor of Allstate.  There were two instructions on material misrepresentations.  The Youngs claimed that was one too many.  But the 8th Circuit ruled that repetitive instructions were not prejudicial.  Youngs assert that instruction 16 allowed the jury to find for Allstate on its affirmative defense of fraudulent misrepresentation without making the required finding that the Youngs intended to deceive Allstate. The Youngs claimed that intent that the insurer rely on a representation, is not the same as intent to deceive. But the 8th Circuit disagreed, citing Missouri cases.  The instruction required Allstate to show that the Youngs intended for the insurance company to rely on the representation about the amount and value of the property lost in the fire. Thus it was appropriate and the jury verdict for Allstate was affirmed.

 

Good faith and admiralty claims

New York Marine & General Ins. v. Continental Cement Company, was an action to determine coverage for a sunken barge where the insurer denied coverage on the ground the insured had failed to disclose the condition of the barge as required by the insured's duty to exercise the utmost good faith. The district court did not err in determining that the doctrine of utmost good faith is such a judicially established federal admiralty rule that it applied to this maritime insurance dispute rather than Missouri state law; defendant waived its appeal of the denial of its motion for judgment as a matter of law on the insurer's utmost good faith defense by failing to file a post-verdict motion under Rule 50(b) after the district court denied its Rule 50(a) motion; assuming defendant did not waive its challenge to the jury instruction on the defense of utmost good faith, the instruction adequately and fairly presented the issues, including the question of whether the undisclosed facts were material to calculation of the risk and the terms of the coverage.

Notice / prejudice rule - claims made policy 8th Cir

In George K. Baum & Company v. Twin City Fire Insurance Co.  there were choice of law issues.  But ultimately, the appellate court held that despite the fact the trial court should have used New York rather than Missouri law, the outcome was correct because the policy was ambiguous.  Baum had promptly notified Twin City of an IRS investigation, but failed to tell Twin City of two derivative lawsuits for nearly two years.  Twin City claimed the notice was too late, even though it was not prejudiced.  Under NY law, this would be enough to avoid the policy.  But Missouri required prejudice to avoid the policy. 

The parties presented two competing readings of the insurance policy’s notice requirement. According to Twin City, the policy requires Baum to provide prompt notice not only of the IRS investigation and the potential for related civil liability, but also of each lawsuit ultimately filed. Baum asserts the timely notice provision is simply inapplicable to liabilities, such as the derivatives litigation, arising from the same underlying conduct as an earlier, timely notified claim.
 

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Federal Flood Insurance -- failure to submit proof of loss form precludes coverage -- Federal law

In McCarty v. Southern Farm Bureau Casualty and in Stoner v. Southern Farm Bureau Casualty,  the issue was whether the failure of the insureds to file a proof of loss as required under the Federal Flood Insurance Program precluded coverage.  The 8th Circuit held it did.

In McCarty, the district court concluded strict compliance with the proof of loss requirement was not necessary, reasoning Farm Bureau waived the requirement by accepting  McCarty’s signature on the non-waiver agreement.  The Eighth Circuit reversed.  “When people seek benefits from a taxpayer-funded program, it is fair to require them to fill out the correct form.”

Similarly, in Stoner, Mrs. Stoner’s failure to complete and submit the proof of loss form precludes coverage as a matter of federal statutory, regulatory, and common law