Coverage Pointers - Volume V, No. 4
08/25/03 MATTER OF LIBERTY MUT.
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.
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.
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.
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.
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.
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.
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.
Donna L. Burden
Jody E. Briandi
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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).
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
[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
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.