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Injuries Archives

MISSOURI HIGH COURT CALCULATES UIM ATTACHMENT POINT

The Missouri Supreme Court in Swadley v. Shelter Mutual Insurance Co., 513 S.W.3d 355 (Mo. 2017) held that UIM coverage did not apply when the underinsured motorist had liability coverage limits greater than the insured's underinsured motorist limits. Previously, the Missouri Court of Appeals had explained the purpose of UIM coverage. "The purpose of underinsured motorist coverage is to provide insurance coverage for insureds who have been bodily injured by a negligent motorist whose own automobile liability insurance coverage is insufficient to pay for the injured person's actual damages." Wasson v. Shelter Mutual Insurance Co., 358 S.W. 3d 113, 117 (Mo. App. 2011).

MISSISSIPPI SUPREME COURT FINDS THAT LOSS OF CONSORTIUM CLAIMS ARE PART OF THE PER PERSON LIMITS FOR UIM COVERAGE

The Mississippi Supreme Court in Rylee v. Progressive Gulf Insurance Co., 2017 WL 949545 (Miss. Mar. 9, 2017) found that a UIM policy's "each person" limit applied not only to a husband's bodily injury claim, but also to the wife's loss of consortium claim, i.e., loss of consortium claims are part of the "each person" limit and are not afforded a separate "each person" limit. The court noted that on two separate prior occasions, the court had interpreted similar policy language and reached the same conclusion that to recover more than the "each person" limit for one person, there must be more than one person who sustained bodily injury during the accident. Citing State Farm Mutual Auto Insurance Co. v. Acosta, 479 S.2d 1089, 1090‑91 (1985) and Old Sec. Cas. Insurance v. Clemmer, 455 S.2d 781, 782 (Miss. 1984). Because the wife in the case at bar was not with her husband during the crash, her husband was the only person who sustained bodily injury in the accident. Therefore, the wife's loss of consortium claim fell under the "each person" policy limit available to the husband. The court also noted that the 5th Circuit Court of Appeals relied upon the Acosta decision when it rejected a similar claim. See, Reed v. State Farm Mutual Insurance, 784 F.2d 577, 578-79 (5th Cir. 1986).

INSURANCE COMPANY RELIANCE UPON IME REPORT TO SUPPORT RULE 12 B6 MOTION TO DISMISS IN BAD FAITH CASE DID NOT REQUIRE DISMISSAL

The South Dakota Supreme Court in Mordhorst v. Dakota Truck Underwriters and Risk Administrative Services 886 N.W.2d 322 (S.D 2016) recently found that a rule 12-B6 motion to dismiss was not appropriate in a worker's compensation bad faith case notwithstanding the insurer's reliance upon an IME report finding that the injured employee was not injured.

CALIFONIA COURT FINDS THAT SPECULATION UPON HOW AN EMPLOYEE WAS INJURED DID NOT GIVE RISE TO A POTEINTIAL FOR COVERAGE AS AN ADDITIONAL INSURED

The issue of whether a general contractor qualified as an additional insured under a sub contactor excess policy for a work related injury turned on whether there was evidence that the sub-contractor caused the claimants injuries according to the recent case of Advent Inc. v. National Union Fire Insurance Co. 6Cal AP 5th 443, 2016 WL7100489(6th Dist., December 6th 2016)

INSURANCE COMPANIES HAGGLING OVER RELEASE LANGUAGE CAN RESULT IN BAD FAITH LIABILITY

In Barickman v. Mercury Cas. Co., 2 Cal.App.5th 508, 206 Cal.Rptr.3d 699 (2d Dist. 2016), an insurance company's refusal to consent to additional release language which was designed to preserve the claimant's rights to receive criminal restitution from the insured tortfeasor caused the case not to settle and, as a result, it was found that the insurance company breached the implied covenant of good faith and fair dealing by not doing all that it could do within its power to effectuate the settlement.

THE LOUISIANA SUPREME COURT RECENTLY HELD THAT THE DUTY TO DEFEND IN LONG LEGACY DISEASE CASES SHOULD BE PRO RATED BETWEEN THE INSURANCE COMPANY AND THE INSURED IN SITUATIONS WHERE AN OCCURRENCE-BASED POLICIES PROVIDED COVERAGE FOR ONLY A PORTION

In Arceneanux, et al. v. Amstar Corp., et al., 299 So.3d 277, 2015-0588(La., 9/7/16), the Louisiana Supreme Court allocated the costs of defending long legacy disease claims between the insurer and insured based on a time-on-the-risk allocation model. Under existing Louisiana law, an insurer's duty to indemnify was to be prorated among insurance carriers based on a time-on-the-risk approach the insurance carriers that were on the risk during the period of exposure to the injurious conditions. While the law in Louisiana was settled regarding time-on-the-risk pro rata allocation applying to indemnification, there was no Louisiana precedent on whether the insurer's duty to defend could also be pro rated among the insurers and the insured during periods of self-insurance in long latency disease cases. The Court then adopted the time-on-risk method of allocation for defense costs, adopting the reasoning of the Sixth Circuit United States Court of Appeals in Ins. Co. of North America v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980), clarified on re'hrg 657 F.2nd 814 (6th Cir. 1981), cert denied, 454 U.S. 1109 (1981). The Louisiana Court found that the pro rata allocated scheme was an equitable system.

Is Advertising Injury In The Bag? United States Second Circuit Court Of Appeals Finds That The Sale Of Counterfeit Branded Goods Was Not Covered As Advertising Injury

In United States Fidelity & Guaranty Co. v. Fendi Adele S.R.I., 823 F.3d 146 (2nd Cir. 2016), the United States Court of Appeals held in favor of USF&G finding that USF&G's policy did not provide coverage for the legal liability of its insured for selling counterfeit handbags and other goods with counterfeit brand labels. The insured, Ashley Reed Trading, Inc., was in the business of purchasing and selling off-price branded handbags and other luxury goods. Ashley Reed was insured by USF&G under two liability policies for "advertising injury." Under the policies, "advertising injury" was defined by the policies as the act of "attracting the attention of others by any means for the purpose of seeking customers or supporters or increasing sales or business." The policies listed four advertising injury offenses which included the "use of another's advertising idea in your 'advertising,'" as well as "infringement of another's copyright, trade dress or slogan in your 'advertising.'"

Does a Parent Corporation Have Standing to Bring a Declaratory Judgment Action Against One of Its Subsidiaries Insurers? This question was recently answered by the California Court of Appeals.

The California Court of Appeals recently held in D.Cummins Corp. v. U.S. Fidelity & Guar. Co., 246 Cal.App.4th, 201 Cal.Rptr.3d 585 (1st Dist., 2016), that a parent corporation lacked standing to sue one of its subsidiary's insurers for declaratory relief. In this case, the parent corporation did not qualify as an insured under the subsidiary's liability policies. Therefore, the Court held that the parent company lacked standing to seek a declaratory judgment establishing the duties of the subsidiary's liability insurers to defend and indemnify for asbestos claims. The Court found that a mere practical interest in the outcome of a contractual dispute was not sufficient to establish standing. Under the Declaratory Judgment Act the plaintiff must show the existence of an "actual controversy" which required the court to evaluate the rights and duties that the plaintiff was asserting in making a standing determination. The Court found that the parent corporation's responsibility for the subsidiary's litigation strategy, which included making decisions about when to settle the personal injury actions, did not give the parent corporation sufficient direct in the subsidiary's liability policy to support jurisdiction. The California Declaratory Judgment Act gave discretion to the trial court in which the court could refuse to exercise the power granted by the Act in any case where the declaration or determination was not necessary or proper at the time under all of the circumstances presented. When the trial court declined jurisdiction under the Act, the trial court's decision would be viewed on an abuse of discretion standard.

In a Split Decision, the Colorado Supreme Court Recently Rejected an Actual Prejudice Standard in Determining Whether an Insured Violated the Policy's Consent No-Voluntary-Payments Clause When it Settled a Claim Without the Insurance Company's Permission

In Travelers' Property Cas. Co. of America v. Stresscon Corp., 370 P.3d 140 (Colo. 2016), the Colorado Supreme Court held that an insured contractor's settlement for a bodily injury claim that arose on a construction site where the subcontractor was working, without the insurance company's consent, violated the insurance policy's no-voluntary-payments clause and forfeited coverage as a matter of law irrespective of whether the insurer was able to prove that it was actually prejudiced by the settlement.

Requirement for pro rata allocation of defense costs among successive insurers

The California Third District Court of Appeals recently required pro rata allocation of defense costs among successive insurers. In Certain Underwriters at Lloyds, London v. Arch Specialty Ins. Co., 246 Cal.App.4th 418, 200 Cal.Rptr.3d 786 2016 WL 1436362 (3rd Dist. 2016), the Court reaffirmed California public policy as prohibiting enforcement of "escape" other insurance clauses in equitable contribution actions between successive primary insurers seeking to allocate the cost of defending construction defect litigation. Under existing law, each insurer was responsible for a pro rata share of defense costs notwithstanding the fact that one insurer's policy contained language in both the insuring agreement and the conditions section both stating that the insurer had a duty to defend only if no other insurance afforded a defense. The Court found that the placement of the escape language in the insuring agreement was not sufficient to differentiate the case from prior California precedent prohibiting the enforcement of escape other insurance clauses which appeared elsewhere in the insurance policy.

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