Oklahoma Insurance Lawyer & Attorney : Stauffer Graves & Nathan Law Firm

Yaffe v. Great American, Case No. 06-7057 (10th Cir. 8/27/07);
www.ca10.uscourts.gov/opinions/06/06-7057.pdf

This case involved a dispute between an insured, Yaffe, and its excess carrier, Great American.  As a result of an explosion at Yaffe’s scrapyard in Muskogee, Oklahoma. Yaffe incurred  $1,785,986.89 in liability on claims by numerous parties. Yaffe had two insurance policies – a  commercial general-liability policy issued by ACE with limits of $1,000,000 per occurrence; and a commercial umbrella policy issued by Great American with limits of $25,000,000.  The ACE policy, however, had a per claim deductible, rather than a per occurrence deductible.  Since most of the claims were under $10,000, ACE paid just under $500,000 of Yaffe’s total liability of over $1,785,000.  Yaffe wanted Great American to pay the difference between what Yaffe paid out in claims and the ACE policy limits – about $785,000.  Great American claimed it had no liability because the ACE policy had not been exhausted.  The trial court granted summary judgment to Great American, holding that the Great American policy is unambiguous and that Great American is only liable after the ACE policy is exhausted. The Tenth Circuit reversed, finding that the Great American policy was ambiguous.  The Tenth Circuit refused, however, to grant summary judgment to Yaffe, since Great American had not had an opportunity to respond to Yaffe’s motion for summary judgment in the trial court. 

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In Adair Group Inc. v. St. Paul Fire and Marine Insurance Co., the court determined the meaning of an "event" in a CGL policy. In the policy, an "event" was defined, in part, as an "accident." Adair claimed the policy covered claims resulting from "[t]he unanticipated failure of some of Adair's subcontractors to perform their work in a workmanlike manner." Both the trial court and the Court of Appeals disagreed, finding that such a claim was a breach of contract, and was not an accident or covered event under the policy. It did not matter if it was the subcontractors or the insured who failed to perform as required. The court concluded that "the deficient performance of Adair's subcontractors is not in itself an event triggering application of the insurance policy" and therefore, summary judgment was proper.

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