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

In Leprino Foods Company v. Factory Mutual Insurance Company,  (10th Circuit 2011)  Leprino stored millions of pounds of cheese in a warehouse (Gress). The cheese became tainted by damaged fruit containers stored near the cheese. Leprino sued Gress and Gress settled with Leprino for $2.4 million. Leprino also made a claim to their insurance company, Factory Mutual. Factory Mutual denied the claim relying on the policy’s Exclusion Clause and Leprino sued Factory Mutual for breach of contract. The District Court found that Leprino had adequately proved that the damages were covered and not excluded under the policy’s Exclusion Clause. The Court awarded judgment for the full amount of the loss, $14 million, plus prejudgment interest, totaling $23 million. Factory Mutual appealed stating that the insurance claim amount should be offset by the settlement amount obtained from Gress. The Tenth Circuit Court found that the judgment should be offset by the settlement amount from Gress, but ordered that the attorney’s fees and costs in obtaining that settlement must be shouldered by Factory Mutual reasoning that, “...if an insurer wrongfully denies coverage, even in good faith, it must pay its proper share of expenses incurred by the insured in recovering from a third party when the benefits of the recovery also inure to the insurer.” Louisville & Jefferson Cnty. Metro. Sewer Dist. v. Travelers Ins. Co. 753 F.2d 533 (6th Cir. 1985). The court also held that any evidence introduced in a trial must have some probative value, if it does not, it must be excluded under Rule 402 of the Federal Rules of Evidence.
 

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In Wilson v. State Farm Mutual Automobile Insurance Company, No. 3:10-CV-256-H, 2011 WL 2378190 [2011 U.S. Dist. LEXIS 63430] (W.D. Ky., June 15, 2011), the United States District Court for the Western District of Kentucky ruled that an insurance carrier did not act in "bad faith" by delaying payment of a settlement pending its determination of Medicare's reimbursable conditional payment amount.

In Wilson, the plaintiff filed an uninsured motorist claim which the insurer agreed to settle for the policy limits. However, the insurer delayed tendering payment until after it obtained Medicare's reimbursable conditional payment amount. The plaintiff sued the insurer claiming that the insurer's delay in paying the settlement violated Kentucky's bad faith law. For the reasons more fully discussed below, the court found that the insurer's actions did not constitute bad faith under Kentucky law.

Read about it here

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Brendan Johnson was killed when a vehicle driven by Mark Royal collided with his Chevrolet Cavalier, which he was driving. At the time of the accident, neither Johnson's nor Royal's vehicle was covered by an automobile insurance policy. Johnson was residing with Addrea Stewart, his mother, when the accident occurred. Stewart owned a Ford Explorer, which was insured by American Family Mutual Insurance Company and provided uninsured motorist coverage with policy limits of $100,000 per person/$300,000 per occurrence. Stewart sought Uninsured Motorist ("UM") coverage benefits for the death of her son, Johnson, under the UM provisions of the policy covering her Explorer. American Family filed a motion for summary judgment contending that Johnson was not an insured person under Stewart's policy, relying primarily on a "named driver exclusion" ("NDE") endorsement. The NDE was added to Stewart's policy after its original issuance due to the termination of coverage for Johnson and for his vehicle. The exclusion was in effect on the date of the accident and read as follows:

    This policy does not apply under any of the coverages to any vehicle in the care, custody or control of, or while operated by Brendan Johnson. . . . . All other terms, agreement, conditions and provisions remain unchanged.

Stewart opposed the granting of summary judgment, claiming that she was the injured "insured person" making a claim under her own policy. She claimed that she, as a named insured, was covered under the UM coverage of the policy for wrongful death damages with respect to the death of any person as to whom she is entitled to bring a wrongful death claim; in this case Johnson. The trial court relied on the NDE endorsement, finding the Stewart policy did not apply to any of the coverages if Johnson was driving, and granted summary judgment in favor of American Family. Stewart appealed.

Division One holds: While courts will enforce an NDE when it clearly excludes coverage when any named excluded person is driving, the language of the NDE section here is not effective, by itself, to bar a claim as to UM coverage. Nevertheless, the trial court obtained the right result in the case because the record shows that Johnson owned his own vehicle and thus could not qualify under the policy as an insured person, and because the "bodily injury" was sustained by Johnson, who was not an "insured person." Because Stewart did not suffer the bodily injury herself, as required under the policy, and Johnson was not an "insured person," Stewart could not recover under UM coverage for Johnson's death. The judgment is affirmed.

Stewart v. American Family

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Arthur L. Been, who was sentenced in 2007 to serve concurrent terms for assault with a dangerous weapon, malicious injury/destruction of property, obstructing a police officer, and public intoxication following an altercation at a bar. He sued the bar, claiming if he hadn't been drunk, he wouldn't be in jail.  Summary judgment to the bar affirmed.

BEEN v. MK ENTERPRISE, INC.; 2011 OK CIV APP 70

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