07/31/03 MURPHY v NEW YORK CENTRAL MUT. FIRE INS. CO.
New York State Supreme Court, Appellate Division, Third Department
Questions of Fact Raised as to Reasonableness of Insured’s Delay in Providing Notice of SUM Claim
Court considered whether plaintiff, who was involved in an accident in June 1998, provided timely notice of her supplementary uninsured motorist (SUM) claim when she first notified her carrier in September 1999. There was evidence that plaintiff did not seek medical attention on the date of the accident, but began experiencing physical problems within a few days, including tingling in her arm and a facial droop. She eventually sought medical attention and, in November 1998, an MRI revealed bone spurs with herniated discs at three levels. In her affidavit, plaintiff stated that her medical providers did not, at that time, indicate her problems were related to the accident. Plaintiff further stated that she did not miss any time from work because of the accident until August 1999. A doctor who examined her in May 1999 opined that she had no disability. In late August 1999, her condition deteriorated significantly resulting in her physician characterizing her as totally disabled. She commenced a lawsuit against the driver of the other vehicle in September 1999 and three days later notified her carrier of the SUM claim. Court held that an insured must give notice of a SUM claim within a reasonable period of time after the insured knew, or should have known, there would be the need for such a claim. “[T]he standard contemplates elasticity and a case-by-case inquiry as to whether the timeliness of the notice was reasonable, taking all of the circumstances into account”. Where a protracted delay in giving notice has occurred, the burden rests upon the insured to “tender sufficient admissible evidence to raise a question of fact as to the reasonableness of the delay”. Here, the court found evidence sufficient to raise a factual issue as to whether, prior to August 1999, she was reasonably aware that she had sustained a “serious injury” that was causally related to the accident.
Across Borders
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07/31/03 SCHOFIELD v SMITH
Wisconsin Court of Appeals
After Hunting Accident, Potential Insurance Coverage under Auto Policies, but Not under Business Owner's Policies
Plaintiff was injured when he took a local bar owner deer hunting and the bar owner’s gun discharged while he was unloading the gun in the vehicle. The Court found that the local bar owner had the potential for insurance coverage under his auto policy since he could have been in “use” of a vehicle as he unloaded his gun before putting the gun in the vehicle. The Court also rejected the idea, however, that the local bar owner’s business owner’s policy extended to taking hunting trips with patrons as he was not providing tavern services while deer hunting.
Robert E. Cooper and S. Michael Pack, Christian Small LLP, Birmingham, AL
07/30/03 QBE INS. CO. v P&F CONTAINER SERVICES INC.
New Jersey Appellate Division
Availability of Truck's Use in Interstate Commerce Triggers MCS-90 Endorsement
The leased vehicle’s availability for use in the motor carrier’s interstate trucking operation triggers Board jurisdiction and liability coverage under the MCS-90 endorsement required by federal regulation. If the trip itself involved interstate commerce, that also triggers coverage. If the trip did not involve interstate commerce, that fact may be evidence of the limited terms of the lease, even though the intrastate trip would not necessarily remove the vehicle from the Board’s regulatory jurisdiction.
07/25/03 NEUHARD v TRAVELERS INS. CO.
Pennsylvania Superior Court
Arbitration Provision for UM Claims Does Not Apply to UIM Claims
Neuhard was a passenger in an automobile owned and operated by Brandi Tracy when Tracy’s vehicle was truck by a vehicle owned and operated by Randy Cholewa. Neuhard obtained $13,500 of the $15,000 coverage under Cholewa’s liability policy. He also collected the policy limit of $15,000 from Tracy pursuant to an UIM claim. He then sought UIM benefits under the policy issued by Travelers to his parents. The trial court granted Neuhard’s petition to arbitrate his claims. Travelers appealed, arguing the trial court erred because there was an absence of an agreement to arbitrate such claim under the policy. Although the policy provided that either party may make a written demand for arbitration of UM claims, it did not state that such provision applied to UIM claims. Because the policy did not treat UM and UIM claims indistinguishably throughout the policy, there was an ambiguity where one is mentioned and the other is not. Because Travelers chose to omit UIM claims from the title of the arbitration provision, the provision did not apply to UIM claims. The trial court thus erred by ordering arbitration.
Bruce D. Celebrezze and Joseph Pelochino, Celebrezze & Wesley, San Francisco, CA
07/25/03 WILLIAMS v HORACE MANN INS. CO.
Ohio Court of Appeals
In Determining UIM Coverage, Focus is on At-Fault Driver’s Vehicle and Not Insured’s Vehicle
The insured appealed the entry of summary judgment against her on her complaint for UIM benefits under her policy with Horace Mann arising out of an accident in which an underinsured driver of a dump truck struck a vehicle she was driving. The insured was in the course of employment at the time of the accident and was driving a vehicle furnished to her by the Miami Valley RTA. The trial court awarded summary judgment on the basis that the policy excepted from UIM coverage any vehicle “furnished for the regular use of you.” The Court of Appeals reversed because the trial court erroneously focused on the vehicle the insured was driving rather than the vehicle of the driver who struck her. There was no indication the dump truck which struck the insured was furnished for her regular use.
Bruce D. Celebrezze and Joseph Pelochino, Celebrezze & Wesley, San Francisco, CA
07/25/03 CLARK v CHUBB GROUP OF INS. COS. ET AL.
Sixth Circuit (applying Ohio law)
Prompt-Notice and Subrogation Clauses Are Preconditions to UM/UIM Coverage Even Where Such Coverage Arises as a Matter of Law
The insured was involved in an automobile accident in 1994. He was an employee of Clark Rubber, which was insured under three different policies by Federal: a business auto policy, a CGL policy, and an excess liability policy. The insured settled with the other participant in the accident and the participant’s automobile insurer for the limits of his policy. In exchange, the insured released the participant and his insurer of all liability arising out of the accident. Federal did not receive notice of the accident or the insured’s UM/UIM claim until 2000. Each of the policies contained clauses that required the insured to notify Federal in case of an accident and that gave Federal subrogation rights. The court found that the insureds had breached the prompt-notice and subrogation provisions in Federal’s CGL policy, holding that the provisions are valid and enforceable preconditions to an insured’s duty to provide underinsured motorist coverage even where UM/UIM coverage arises as a matter of law.
Bruce D. Celebrezze and Joseph Pelochino, Celebrezze & Wesley, San Francisco, CA
07/22/04 MARIE Y. v GENERAL STAR INDEMNITY
California Court of Appeal
Insurance Company Has No Duty to Indemnify Dentist for Sexual Misconduct
A judgment was entered in the district court in favor of Marie Y. against General Star Indemnity Company for breach of an insurance contract (but not bad faith). The insurance policy at issue is a “Dentist’s Professional Liability Policy” issued to Dr. Mark Phipps. Liability of General Star is predicated on the company’s refusal to defend or indemnify Phipps in an action for damages brought by Marie Y. for the sexual misconduct of Phipps. The California Third District Appellate Court concluded that General Star breached its duty to defend Dr. David Phipps on sexual misconduct claims, but that General Star never had a duty to indemnify Phipps, and, indeed indemnification is barred by California Insurance Code section 533. Consequently, the court reversed judgment and remanded the trial court to award Marie Y. damages only for the amount of reasonable attorneys’ fees and costs incurred by Phipps in defending Marie Y.’s action.
Edward B. Ruff, III and
Michael Hayes, Pretzel & Stouffer, Chartered, Chicago, IL
07/18/03 MARSHALL v WEISS
Kansas Supreme Court
Court Finds Insurer Free to Offer Excess Limits Insurance with Limited Retroactivity
The Weisses filed suit against Dr. Marshall following the delivery of a severely brain damaged child. Dr. Marshall was insured by KaMMCO starting in 1989 and through the time of the lawsuit. Following the suit, Dr. Marshall applied to his insurer for coverage in excess of his primary policy limits. The excess coverage was purchased, however the insurer refused to provide the funds for the Weiss litigation. The insurer argued that there was no retroactive coverage. Upon review, the Court concluded that the legislature did not contemplate professional liability coverage when it enacted the Kansas Health Care Provider Insurance Act. Therefore, the Court held the Act did not apply to excess limits liability coverage. Furthermore, the Court found that the statute did "not require excess limits liability insurance to be issued as a pure claims made policy without the limitations of a retroactive period." Finally, the Court concluded that public policy encourages the freedom to contract, and does not protect those who do not read their contracts, and therefore the insurer was free to offer excess limits professional liability insurance on a claims-made basis with limited retroactivity.
Tom Hanekamp and Natalie Kijurna, Tressler, Soderstrom, Maloney & Priess, Chicago, IL
07/17/03 ALLSTATE INS. CO. v LOMBARDI
Unites States District Court for the Eastern District of Pennsylvania
An Assault by Psychotic Insured Did Not Constitute Occurrence That Would Trigger Coverage under a Homeowners Policy
Homeowner insurer sought declaratory judgment that it was not responsible for defending or indemnifying the insured in a state court action for damages resulting from an assault on the victim by the insured. The complaint provided that the insured “wantonly, recklessly and with malicious intent to injure plaintiff, and with an absolute disregard for the health, safety and welfare of plaintiff,” “savagely attacked, assaulted and battered” the victim. The court held that, despite the insured suffering from psychotic delusions, the insured’s assault upon the victim does not constitute an “occurrence” under the Policy because, from the insured’s perspective, the assault and the injuries resulting therefrom were intentional and not accidental, therefore, the policy did not provide coverage for the insured’s acts.
Bruce Celebrezze and Hank Brier, Celebrezze & Wesley, San Francisco, CA
07/17/03 JIM BARNA LOG SYSTEMS MIDWEST, INC. v GENERAL CAS. INS. CO. OF WISCONSIN
Appeals Court of Indiana
CGL Policy Does Not Cover Faulty Workmanship, Only Consequential Damages The insured contractor hired a subcontractor to construct a log house purchased by the plaintiffs in the underlying case. The insured sought defense from its commercial general liability insurer in the underlying action, and the insurer denied coverage. The court held that the commercial general liability policy did not cover faulty workmanship, but rather covered faulty workmanship that caused an accident. An accident is “an unexpected happening without intention or design.” The insured’s negligent hiring was not an “accident” under the policy because the act of hiring was intentional. The court also held that coverage was excluded by the CGL Policy, which “exclude[s] insurance coverage for damages to the [insured’s] product or work when such damages are confined to the product or work and caused by the product or work, or any part thereof. It is only damage to other property arising out of [insured’s] product or work which would be covered.” The court further held that the policy did not cover charges of conversion or fraud because conversion and fraud require an intentional act and such an act is not “an unexpected happening without intention or design.”
Bruce Celebrezze and Hank Brier, Celebrezze & Wesley, San Francisco, CA
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Text of Reported Decisions
MURPHY v NEW YORK CENTRAL MUT. FIRE INS. CO.
Lahtinen, J.
Appeal from an order of the Supreme Court (Connor, J.), entered August 5, 2002 in Ulster County, which denied defendant's motion for summary judgment dismissing the complaint.
The issue in the current appeal is whether plaintiff provided timely notice to defendant of a claim under her supplementary uninsured motorist (hereinafter SUM) coverage. Plaintiff's accident occurred in June 1998 and she first notified defendant, her insurance carrier, of a SUM claim in September 1999. Defendant disclaimed coverage upon the ground that it had not been given notice "as soon as practicable" and, following a settlement of the action against the driver of the other vehicle involved in the accident for the limits of his policy, plaintiff commenced this declaratory judgment action. Defendant's motion for summary judgment was denied and this appeal ensued.
An insured must give notice of a SUM claim within a reasonable period of time after the insured knew, or should have known, there would be the need for such a claim (see Matter of Nationwide Ins. Enter. [Leavy], 268 AD2d 661, 662 [2000]). "[T]he standard contemplates elasticity and a case-by-case inquiry as to whether the timeliness of the notice was reasonable, taking all of the circumstances into account" (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 494 [1999]). Where a protracted delay in giving notice has occurred, the burden rests upon the insured to "tender sufficient admissible evidence to raise a question of fact as to the reasonableness of the delay" (Unwin v New York Cent. Mut. Fire Ins. Co., 268 AD2d 669, 670-671 [2002]).
Here, there is evidence in the record reflecting that plaintiff did not seek medical attention on the date of the accident. Within a few days, however, she began experiencing some physical problems, including tingling in her arm and a facial droop. She eventually sought medical attention and, in November 1998, an MRI revealed bone spurs with herniated discs at C4-5, C5-6 and C6-7. In her affidavit, plaintiff states that her medical providers did not, at that time, indicate that her problems were related to the accident. Plaintiff further states that she did not miss any time from work because of the accident until August 1999. A doctor who examined her in May 1999 opined that she had no disability. Plaintiff relates that her first contact with an attorney regarding the accident occurred in June 1999, and the visit was motivated by her concern that the no-fault carrier might stop payments for chiropractic care. In late August 1999, her condition reportedly deteriorated significantly resulting in her physician characterizing her as totally disabled. She commenced a lawsuit against the driver of the other vehicle on September 10, 1999 and three days later notified defendant of the SUM claim. We find the evidence sufficient to raise a factual issue as to whether, prior to August 1999, she was reasonably aware that she had sustained a "serious injury" that was causally related to the accident of June 1998. Accordingly, Supreme Court correctly denied defendant's motion for summary judgment (see Medina v State Farm Mut. Auto. Ins. Co., 303 AD2d 987 [2003]; Matter of Nationwide Ins. Enter. [Leavy], supra; Matter of Nationwide Ins. Co. [Brown-Young], 265 AD2d 918 [1999]).
Finally, we decline plaintiff's request that, despite the absence of a cross motion before Supreme Court or cross appeal here, we exercise our power to search the record and grant her summary judgment (see Falsitta v Metropolitan Life Ins. Co., 279 AD2d 879, 881 [2001]). Indeed, review of the record reveals conflicting evidence on key issues and, thus, summary judgment is not appropriate.
Mercure, J.P., Peters, Carpinello and Mugglin, JJ., concur.
ORDERED that the order is affirmed, with costs.
