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United Fire & Casualty Co. v. Keely & Sons, Inc. Ill. App. May 2, 2008Commercial policy does not provide coverage to policyholder for claims of spoliation of evidence. A policyholder was sued when employees were injured after falling from an I-beam. Claims and cross-claims against the policyholder for spoliation were added when it was discovered the policyholder disposed of the I-beam. The insurer sought a judicial declaration that the policy provided no coverage for claims of spoliation of evidence. Finding in favor of the insurer, the appellate court held that the spoliation claims fell within the policy’s property damage exclusion for “personal property in the care, custody, or control of the insured.”

McDaniel v. Daly Ct. of App. of Ohio, May 2, 2008Granddaughter’s intermittent residence with grandparents raises question of fact as to coverage under homeowner’s policy. The policyholder was insured under a homeowner’s policy which excluded coverage for ‘bodily injury’ sustained by a resident relative. The policyholder’s daughter would routinely stay at the home when she had custody of the policyholder’s granddaughter. The custody of the grandchild was shared between the mother and father. When the policyholder’s daughter did not have custody of the child, she would stay with various friends. A lawsuit arose subsequent to the policyholder’s dog biting the granddaughter. Given that existence of facts suggesting the daughter resided with the policyholder, the court held that it was a question of fact as to whether the granddaughter qualified as a resident relative, eliminating coverage under the policy.

Bullock v. AIU Ins. Co. Miss., May 8, 2008Statute of Limitations begins to run on claimant’s tortious breach of contract action against employer and workers’ compensation carrier once a final decision is made concerning the amount and duration of benefits. The court addressed the issue of whether the statute of limitations on an injured party’s claim for tortious breach of contract against its employer and its employer’s workers’ compensation carrier began to run when the workers’ compensation judge rendered an initial determination that the employer and the carrier were liable to the injured party for benefits, where the determination was not appealed. The court held that the statute of limitations did not begin to run, since the initial determination did not set the amount or duration of benefits to be paid or specify any other matter, and, therefore, did not constitute a “final” decision.

Lee v. New Hersey Skylands Insurance Co. N.J. App., May 6, 2008Policyholder waived right to collect UIM benefits where she settled action against other driver without notifying insurer. A policyholder injured in a two car motor vehicle accident sought underinsured motorist (UIM) benefits from his personal auto insurer. Without prior notice of his intentions to the insurer, the policyholder settled the action against the tortfeasor for the limits of his policy. Two weeks after settling, the policyholder made a demand for UIM beneifits. The appellate court dismissed the UIM claim, holding that the insurer was prejudiced by the loss of the right to pursue the underinsured tortfeasor for sums in excess of his liability limits.

Ottolaine v. State Farm Insurance Co. N.J. App., May 6, 2008Insurers right to trial after rejection of arbitrators’ findings limited to question of damages. A policyholder injured in an automobile accident sought uninsured motorist (UM) benefits from his personal auto insurer. Pursuant to the UM provisions in the policy, the claim was first submitted for adjudication before a panel of arbitrators. The insurer rejected the arbitrators’ decision and requested a trial de novo as to both liability and damages. The appellate court held that the insurer’s right to a trial de novo is limited to the amount of damages and does not include arbitrators’ liability findings.

Kollman v. National Union Fire Ins. Co. of Pittsburgh (unpublished) Dist. Ct. of Or., April 21, 2008Insurer not allowed to assert consent-to-settle provision as affirmative defense when it refused to defend and indemnify. In the underlying lawsuit, plaintiff was awarded a $40 million dollar judgment against policyholder. During the course of that lawsuit, insurer declined to offer a defense and indemnity to policyholder. Plaintiff commenced a subrogation action against insurer for payment after plaintiff and insured settled the underlying lawsuit. In answering plaintiff’s complaint, insurer asserted a defense claiming that the underlying lawsuit was settled without written consent and thus there was no coverage. Plaintiff moved to strike that affirmative defense claiming that it had no basis in law or fact. District court agreed with plaintiff and struck insurer’s consent-to-settle affirmative defense on the basis that insurer waived its rights to assert such a defense by not defending insured in underlying lawsuit.

American and Foreign Insurance Co. v. Jerry’s Sport Center, Inc. Pa. App., May 5, 2008Insurer not entitled to reimbursement of defense costs where it undertook defense pursuant to a reservation of rights and later found it did not owe a duty. An insurer undertook the defense of a policyholder pursuant to a full reservation of rights which included the right to seek reimbursement of defense costs in the event it was determined the insurer had no duty to defend. After it was judicially determined in a declaratory judgment action that the insurer had no duty to defend, the insurer sought reimbursement of the defense costs. In ruling in favor of the policyholder, the appellate court held that permitting reimbursement of defense costs expended by an insurer exercising its right to defend potentially covered claims prior to a court’s determination of no coverage would result in retroactive erosion of duty to defend.

The information for Case Watch is provided by the law firm of Goldberg Segalla LLP (www.goldbergsegalla.com). Editors are Richard J. Cohen, Daniel W. Gerber and Sarah J. Delaney.


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