Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In United Fire & Casualty v. Boulder Plaza, the 10th Circuit wades into some weighty yet somewhat obscure coverage issues dealing with builders, contractors, subcontractors and the indemnity agreements between them. 

The subcontractor was insured with United Fire (UFC); and the general contractor was an additional insured for imputed liability arising out of the ongoing operations of the subcontractor.  The floors the subcontractor put in were bad, apparently because of excessive moisture in the concrete below them.  Owners sued the builder who general contractor who sued the subcontractor.  And of course there were various cross claims, counterclaims, etc.  Subcontractor was eventually exonerated in these cases. The general contractor wanted UFC to defend it in the claims.  When UFC declined, a declaratory judgment action was filed, and UFC was granted summary judgment which the 10th Circuit affirmed (but on different grounds).

First, Colorado law applies the 4 corner rule to duty to defend claims, looking at the 4 corners of the complaint.  Second, under occurrence policies, coverage is only triggered when a third party suffers actual damage within the policy period. The occurrence is when the damage happens, not when the negligent act occurs.  The underlying complaint alleged the subcontractor's work was complete before the damage occurred, and therefore, the damage did not arise out of "ongoing operations" and there was no coverage. The CGL policy was not a performance bond and did not cover completed operations.

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In Blakely v. USAA, the Blakelys, (Homeowners) sued USAA after a fire damaged their home.  USAA had paid the Homeowners nearly $100,000 for the loss.  Dissatisfied, the Homeowners invoked the appraisal provision and were awarded nearly $200,000 more.  Homeowners then sued USAA for breach of contract, bad faith, and intentional infliction of emotional distress.  USAA sought summary judgment on the breach of contract and bad faith claims.  It was granted, and the court also dismissed the bad faith claim.  The Tenth Circuit affirmed the dismissal of the breach of contract and intentional infliction of emotional distress claims but reversed the dismissal of the bad faith claim. 

The breach of contract claim was properly dismissed because by paying all amounts awarded under the appraisal, USAA had fulfilled its contractual obligations to Homeowners.  The intentional infliction of emotional distress claim was properly dismissed because the conduct complained of was not outrageous enough. But the bad faith claim was dismissed as frivolous.  It was not raised in summary judgment motions.  Because the Tenth Circuit did not think the bad faith claim was frivolous, this part of the trial court’s decision was reversed.
 

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There have been some recent unpublished cases of interest which discuss landowner liability, including landlord liability to third parties for conditions on the property.  Here is a summary of some of the main points of these unreported decisions.  

An absentee landlord in Oklahoma generally cannot be held liable as the keeper or harborer of its tenant’s pets. Hampton v. Hammons, 1987 OK 77, 743 P.2d 1053; Eastin v. Aggarwal, 2009 OK CIV APP 67, 218 P.3d 523; Bishop v. Carroll, 1994 OK CIV APP 37, 872 P.2d 407.

A property owner owes a licensee a duty to exercise reasonable care to disclose to him the existence of dangerous defects known to the owner, but unlikely to be discovered by the licensee. To an invitee, an owner owes the additional duty of exercising reasonable care to keep the premises in a reasonably safe condition for the reception of the visitor, but the owner need not remove known but obvious hazards. Pickens v. Tulsa Metropolitan Ministry, 1997 OK 152, 951 P.2d 1079, 1084. In other words, a landowner owes to an invitee, as well as to a licensee, a duty to protect him from conditions which are in the nature of hidden dangers, traps, snares and the like.” “A landowner has no duty to protect a business invitee from open and obvious dangers.” McKinney, 1993 OK 88 at 9, 855 P.2d 602 at 604.

A “hidden danger” within the terms of the rule governing the liability of an owner or occupant of the premises “need not be totally or partially obscured from vision or withdrawn from sight; the phrase is used to describe a condition presenting a deceptively innocent appearance of safety `which cloaks a reality of danger.’ Pickens, 1997 OK 152 at 10, 951 P.2d at 1084 (quoting Rogers v. Hennessee, 1979 OK 138, 3, 602 P.2d 1033, 1034). See also Jack Healey Linen Serv. Co. v. Travis, 1967 OK 213, 8, 434 P.2d 924, 927. In Julian v. Secured Investment Advisors, 2003 OK CIV APP 81, 23, 77 P.3d 604, 608, this Court noted:

The Oklahoma Supreme Court has stated that “the characteristic of an item as being observable . . . cannot, by itself, require that item to be declared as a matter of law an open and obvious danger.” Zagal v. Truckstops Corp. of America, 1997 OK 75, 9, 948 P.2d 273, 275. Instead, “[a]ll of the circumstances must be examined to determine whether a particular condition is open and obvious to the plaintiff or not.” Id. (citing Brown v. Nicholson, 1997 OK 32, 8, 935 P.2d 319, 322).

The general rule is that the right of possession and control over leased premises is a fundamental requirement for ascribing liability to a landlord for injury suffered on those leased premises, but the general rule does not apply where the leased premises are open to the public. See Schlender v. Andy Jansen Co., 1962 OK 156, 0, 380 P.2d 523 (Syllabus 3); Price v. MacThwaite Oil & Gas Co., 1936 OK 562, 0, 61 P.2d 177 (Syllabus 2).

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Regional Air v. Canal Insurance involved a property damage claim between an insurer (Canal) and an insured (Regional).  It went to appraisal and the Regional was awarded about $44,000.  But, Regional felt it was owed more and went to federal court.  Ultimately, the federal court found the appraisal ok, but a jury awarded Regional an additional $12,000 in storage costs.  The question became who was the prevailing party since the prevailing party gets attorneys fees. 

The trial court erred in entering judgment for only $12,000; the judgment should have been for the full amount awarded -- the $44,000 plus the $12,000.  This clearly makes the insured the prevailing party because it was more than the written settlement amount offered by Canal. 

The trial court erred in finding that Regional was not entitled to attorneys fees.  The notice of the loss was sufficient to satisfy the proof of loss requirement.  In addition, the statute, 36 Okla. Stat. § 3629, mandates attorneys fees to the prevailing party.  Thus, the case was remanded to the trial court to determine attorneys fees. 

Regional was not entitled to interest on the judgment, however.  Regional was only entitled to interest on the verdict -- the amount awarded by the jury, not the amount awarded under the appraisal process because that was what the statute provides. 

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