New Page 1
08/25/03
MATTER OF LIBERTY MUT.
INS. CO. v GUERRIER
New York State Supreme Court,
Appellate Division, Second Department
Uninsured Motorist Claim Stayed
for Carrier’s Failure to Prove Policy Cancelled or Terminated under NC Law
Liberty Mutual made a
prima facie showing that the subject vehicle was insured by Integon at the
time of the accident by submitting the certification of the official custodian
of records for the North Carolina Department of Transportation, Division of
Motor Vehicles. The burden was then on Integon to prove that the vehicle was not
insured at the time of the accident. Although, under the law of North Carolina,
Integon was not required to show notification to the Division of Motor Vehicles
of the alleged nonrenewal of the auto policy as a condition precedent to
effective termination of the policy, Integon failed to offer probative evidence
sufficient to rebut Liberty Mutual’s prima facie case and to prove that
the insurance contract was validly terminated prior to the date of the accident.
Thus, arbitration of the UM claim was properly stayed.
Visit the
HOT CASES
section of the Federation of Defense and Corporate Counsel website for cases
covering a broad range of legal issues from other jurisdictions.
08/27/03
WOLSCHLAGER v FIDELITY NATIONAL TITLE INS. CO.
California Court of Appeal
Arbitration Compelled by Title
Insurance Policy
Wolschlager purchased a
title insurance policy from Fidelity National on the basis of a preliminary
report he received and approved. The preliminary report did not state that the
policy he would receive contained an arbitration clause; however, the policy he
received after the close of escrow did in fact have one. When defendant denied
plaintiff’s subsequent claim, plaintiff filed suit and the defendant petitioned
to compel arbitration. The court was presented with the question of whether an
arbitration clause found in a title insurance policy, which policy is
incorporated by reference into the preliminary report, binds an insured who sees
neither the policy nor the arbitration clause prior to approving the preliminary
report. The court held that because the preliminary report sufficiently
incorporated the arbitration clause by reference, the plaintiff is bound by the
agreement to arbitrate.
Dan Mawhinney,
Thompson & Bowie, LLP,
Portland, ME
08/26/03
INTERSTATE GOURMET COFFEE ROASTERS, INC.
v SEACO INS. CO.
Massachusetts Appeals Court
“Giving Coffee the Finger” or
“Determining ACV’s a Grind”
When employee’s ground
finger led to destruction of processed coffee ready to be packaged, property
damage claim was tendered by coffee company to insurer. In assessing the actual
value of the coffee to Interstate at the date of the loss, under the “broad
evidence rule,” and strictly construing the undefined term “actual cash value”
against the insurer, the judge was entitled to take into account that (1) the
coffee was ready for sale, but for packaging, at the point it was contaminated;
(2) there was evidence that Interstate's average selling price for the
custom-blended coffee in October, 1997, was $5.56 per pound; (3) no evidence was
presented as to the wholesale cost of the raw coffee beans at the date of the
loss, only evidence as to the amount Interstate originally paid for the coffee;
and (4) Interstate had added value to the coffee over the course of production.
08/26/03:
JESSEN v
HARTFORD CASUALTY & SURETY COMPANY
California Court of Appeal
Former Coverage Counsel May be
Disqualified from Handling Coverage Issues against Same Carrier
Court considers the
“subject” of a representation as including information material to the
evaluation, prosecution, settlement or accomplishment of the litigation or
transaction given its specific legal and factual issues. Thus, successive
representations will be “substantially related” when the evidence before the
trial court supports a rational conclusion that information material to the
evaluation, prosecution, settlement or accomplishment of the former
representation given its factual and legal issues is also material to the
evaluation, prosecution, settlement or accomplishment of the current
representation given its factual and legal issues. When ruling upon a
disqualification motion in a successive representation case, the trial court
must first identify where the attorney’s former representation placed the
attorney with respect to the prior client. If the court determines that the
placement was direct and personal, this facet of Ahmanson is settled as a matter
of law in favor of disqualification and the only remaining question is whether
there is a connection between the two successive representations, a study that
may not include an “inquiry into the actual state of the lawyer’s knowledge”
acquired during the lawyers’ representation of the former client. However, if
the court determines the former attorney was not placed in a direct, personal
relationship with the former client, the court must assess whether the attorney
was positioned during the first representation so as to make it likely the
attorney acquired confidential information relevant to the current
representation, given the similarities or lack of similarities between the two.
08/22/03
SPRATLEY v STATE
FARM
Utah Supreme Court
Tripartite Relationship
Considered: Former State Farm Staff Counsel May Represent Former Employees
against Carrier, With Certain Limitations
Spratley and Pearce
represented State Farm and its insureds for many years and owe lawyers’ duties
of confidentiality to those former clients. Nevertheless, the court held they
may disclose State Farm’s client confidences as reasonably necessary to make a
claim against State Farm. The court reversed the trial court's order insofar as
it prohibited disclosures that would be reasonably necessary to Spratley and
Pearce’s claims against State Farm, and affirmed the portion of the order that
required Spratley and Pearce to obtain the permission of any clients other than
State Farm if Spratley and Pearce wish to use those clients' confidences in
their suit against State Farm. Because Utah Rule of Professional Conduct 1.16(d)
provides that lawyers may retain copies of a former client’s file at their own
expense after returning the original file to the client, the court revised the
trial court’s order requiring return of confidential documents to State Farm to
apply to original documents. The court reversed the trial court’s order
disqualifying Humphreys and Christensen & Jensen from representing Spratley and
Pearce in this case because, although Humphreys may have become privy to State
Farm’s confidential communications with Spratley and Pearce, the remedy of
disqualification is inappropriate. Former in-house counsel must be free to
employ legal counsel in cases against their former employers and an order of
disqualification in this case would prevent Spratley and Pearce from receiving
effective legal counsel because any attorney they hired who received enough
information to prosecute the suit would be similarly disqualified.
08/22/03
LUXTON v US
Eighth Circuit (applying
Minnesota law)
Government Own Life (Insurance)
Government had a right to
all life insurance policy proceeds under collateral agreements signed by
plaintiff's decedent, and the government was not limited to the cash surrender
value of the policies; under Minnesota law, assignments granted the IRS an
interest in the policy proceeds superior to that of named beneficiaries.
08/20/03
MILLER v SUPERIOR
SHIPYARD AND FABRICATION
Louisiana Court of Appeal,
First Circuit
“Additional-Insured” Status
Arising Out of Vicarious Liability Claim Properly Granted in Accordance With
Plain Language of Policy Endorsement
Superior Shipyard and
Fabrications, Inc. (Superior), its commercial general liability insurer,
Lexington Insurance Company (Lexington), other insurers, and T.T.C Illinois,
Inc. (T.T.C.) were sued in a pedestrian-vehicular accident. T.T.C. contracted
with Superior to provide payroll and benefit processing services and other
administrative functions. The contract between T.T.C. and Superior required
Superior to provide comprehensive liability insurance and name T.T.C. as an
additional named insured under the policy. The Louisiana Court of Appeal
affirmed the district court’s holding granting “additional-insured” status to
the defendant pursuant to an endorsement in the Lexington policy, thereby
requiring Lexington to provide T.T.C. with a defense and to reimburse attorney’s
fees and expenses. The endorsement provided that, if required by contract, a
person, firm or organization is included as an additional insured, but only with
respect to operations performed by the named insured or to acts or omissions of
the named insured in connection with the named insured’s operations. The court
of appeal found that the additional-insured coverage arose out of the
allegations made by plaintiff that T.T.C. was vicariously liable for the
Superior’s negligence, and thus, the specific requirement of the endorsement
extending additional-insured status to claims arising out of Superior’s acts or
omissions in connection with its operations was met.
Bruce Celebrezze and Teresa
Hu, Celebrezze & Wesley, San Francisco, CA
Hurwitz & Fine, P.C. is a full-service law
firm
providing legal services throughout the State of New York.
Newsletter Editor
Kevin T. Merriman
[email protected]
Insurance Coverage Team
Dan D. Kohane, Team Leader
[email protected]
Michael F. Perley
Kevin T. Merriman
Phyllis A. Hafner
Audrey A. Barr
Fire, First Party & Subrogation
Team
James D. Gauthier, Team Leader
[email protected]
Donna
L. Burden
Andrea
Schillaci
Jody E.
Briandi
©
COPYRIGHT 2003 Hurwitz & Fine, P.C., ALL RIGHTS RESERVED
Text of
Reported Decisions
MATTER OF LIBERTY MUT.
INS. CO. v GUERRIER
In a
proceeding pursuant to CPLR article 75 to
permanently stay arbitration of an uninsured motorist claim, Integon Indemnity
Corp. appeals from an order of the Supreme Court, Westchester County (Friedman,
J.H.O.), dated February
18, 2002, which, after a hearing, granted the petition and permanently stayed
the arbitration. The appeal brings up for review so much of an order of the same
court dated June 5, 2002, as, upon reargument,
adhered to the original determination (see CPLR
5517[b]).
ORDERED that the appeal from the order dated February 18, 2002, is dismissed,
without costs or disbursements, as that order was superseded by the order dated
June 5, 2002, made upon reargument; and it is
further,
ORDERED that the order dated June 5, 2002, is affirmed insofar as reviewed,
without costs or disbursements.
On
August 16, 1997, the respondent, Jean Guerrier, a
pedestrian on Pennsylvania Avenue in Kings County, was struck by a motor vehicle
driven by North Carolina resident Shauntu
Duron Hamilton and registered to North Carolina
resident Angela D. Hamilton. Guerrier filed a demand
for arbitration of an uninsured motorist claim pursuant to an automobile
insurance policy issued by the petitioner, Liberty Mutual Insurance Company
(hereinafter Liberty Mutual). Liberty Mutual commenced this proceeding to stay
the arbitration, alleging that the Hamilton vehicle was insured by the appellant
Integon Indemnity Corp. (hereinafter Integon) at the time of the accident.
Integon opposed the petition, alleging that the insurance policy on the Hamilton
vehicle was canceled for nonrenewal effective June 15, 1997, and that the
vehicle was not covered by an Integon insurance policy on the date of the
accident, August 16, 1997. After a hearing, the Supreme Court granted the
petition and permanently stayed the arbitration, finding that Integon did not
submit evidence at the hearing sufficient to prove cancellation of the insurance
policy in June 1997, and concluding that Integon was the liability carrier on
the Hamilton vehicle on the date of the accident. Upon granting
Integon's motion for reargument,
the Supreme Court adhered to its prior determination, stating that the prior
determination was based upon the laws of the State of North Carolina.
The
Supreme Court properly concluded that the laws of North Carolina were
controlling (see Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309;
Matter of Allstate Ins. Co., 81 NY2d 219; Matter of Integon Ins. Co. v
Garcia, 281 AD2d 480; Matter of Eagle Ins. Co. v Singletary, 279 AD2d
56). Applying the "grouping of contacts" analysis to the issue, North Carolina
was the place where the insurance contract was made, the insured was domiciled,
and the vehicle was registered (see AIU Ins. Co.
v Avis Rent a Car Sys., 289 AD2d 346; Matter of Integon Ins. Co. v
Garcia, supra).
At
the hearing, Liberty Mutual made a prima facie showing that the Hamilton vehicle
was insured by Integon at the time of the accident by submitting the
certification of the official custodian of records for the North Carolina
Department of Transportation, Division of Motor Vehicles (hereinafter the
Division of Motor Vehicles) (see Matter of Lumbermens
Mut. Cas.
Co.
v Quintero,
AD2d
[2d Dept, May 27, 2003]; Matter of State Farm Ins. Co. v
Vanblarcom, 226 AD2d 732; Matter of Eagle Ins. Co. v
Tichman, 185 AD2d 884).
Thereafter, the burden was on Integon to prove that the vehicle was not insured
at the time of the accident (see Matter of State Farm Ins. Co. v
Vanblarcom, supra; Matter of Eagle Ins. Co. v
Tichman, supra). Although, under the law of
North Carolina, Integon was not required to show notification to the Division of
Motor Vehicles of the alleged nonrenewal of Hamilton's auto insurance policy as
a condition precedent to effective termination of the policy (see
Allstate Ins. Co. v McCrae, 325 NC 411, 384 SE2d 1), Integon failed to offer
probative evidence sufficient to rebut the petitioner's prima facie case and to
prove that the insurance contract was validly terminated prior to the date of
the accident (see Matter of Lumbermens
Mut. Cas.
Co. v Quintero, supra). Thus, the Supreme Court properly stayed arbitration
of the claim for uninsured motorist benefits on the ground that the vehicle was
insured by Integon on the date of the accident.
KRAUSMAN,
J.P., TOWNES, CRANE and MASTRO,
JJ.,
concur.
