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Additional Insureds

Equilon Enterprises, LLC v. Great American Alliance Insurance Company (Washington Court of Appeals, Apr. 3, 2006) (Unpublished)

Ruling: A wholesale distributor of fuel had contracted with a supplier of fuel to buy the fuel and distribute it to various service stations. As part of the contract, the wholesaler was required to indemnify the supplier against all claims arising out of an injury or damage caused by or happening in connection with the wholesaler’s sale or use of the seller’s products. The wholesaler had the seller added as an additional insured on its commercial general liability policy.

The additional insured endorsement included the seller as an insured “only with respect to liability arising out of [wholesaler’s] operations or premises owned by or rented to [wholesaler].” The court, in reaching its decision that there was a duty to defend, reviewed how various courts interpreted the “arising out of” language. The court “liberally” constructed the language and noted that the additional insured endorsement would cover any of the wholesaler’s operations under its contract with the seller.

Auto—Uninsured/Underinsured Motorist Coverage

Sherry v. Financial Indemnity Co. (Washington Court of Appeals, Apr. 4, 2006)

Ruling: A pedestrian, who was injured by an uninsured motorist, applied for a confirmation of an arbitration award of his uninsured motorist claim against his automobile insurer. The insurer sought, as an offset, the amount the insurer had advanced under personal injury protection insurance. The court held that the insurer was not entitled to reimbursement because the insured was not fully compensated as a result of a deduction for his comparative fault.

Bad Faith

Lincoln Property Co., N.C. Inc. v.

The Travelers Indemnity Co. (California Court of Appeals, 1st District, Mar. 20, 2006)

Ruling: On this appeal, the court held that an insured may not bring separate actions against its insurer for breaching its obligation to defend and claim against the insured for breach of implied covenant of good faith and fair dealing in the handling of the claims. The court reasoned that the two claims involved a breach of the same primary right.

Duty to Defend

Lundell v. Merced Mutual Insurance (California Court of Appeals, 5th District, Mar. 28, 2006) (Unpublished)

Ruling: The insureds, dairy farmers, had sold their farm and were sued by the purchasers who alleged that the facility was not ready for “Grade A” approval for occupation. The insured tendered the defense of the action to their homeowner’s insurer, who denied coverage. The court held there was an issue of fact as to whether the insurer had duty to defend because the court “cannot say with certainty, on undisputed evidence presented by [the insurer] that the [insured’s] action did not seek recovery for property damage caused by an occurrence.”

Limits of Insurance

Swan v. Farmers Insurance Exchange (Colorado Court of Appeals, Division III, April 20, 2006)

Ruling: The insureds’ minor son was involved in a vehicle-pedestrian accident that resulted in injuries to two sisters — one sister died the other was seriously injured. The policy provided $100,000 per person and $300,000 per occurrence limits. The insureds settled the case for $300,000, the insurer paying $200,000 (the per person liability limits), and the insureds paid the remaining $100,000 from their own funds. Subsequently, the insureds sued the insurer for failure to pay the entire settlement amount because the deceased sister’s parents’ claim for wrongful death qualified as an additional “person” under the policy, which triggered another $100,000 per person liability limit.

On appeal, the Colorado Court of Appeals disagreed and held that the parents of the deceased sister are not a “person” within the meaning of the policy to be entitled to an additional “each person” limit. In that regard, the policy language was significant because it provided that the maximum bodily injury benefit for “each person” was the “maximum for bodily injury sustained by one person in any occurrence.”

Miscellaneous

Premera v. Kreidler (Washington Court of Appeals, Apr. 4, 2006)

Ruling: At issue on this appeal was whether the disapproval by the Insurance Commissioner of the insurer’s proposal to convert to a for-profit from a non-profit health insurance status was proper. The court held that the Commissioner did not err in assessing the benefits of the insurer’s proposal and in rejecting its conversion plan on the grounds that the plan as a whole was unfair and unreasonable to subscribers, not in the public interest, and likely to be hazardous or prejudicial to the insurance-buying public.

Farmer v. Allstate Insurance Co. (California 9th Circuit Court, Mar. 14, 2006) (Unpublished)

Ruling: The Allstate insureds were sued for an alleged molestation that occurred at their licensed day care center. The court held that the Allstate Deluxe Homeowners Policy, including its Home Day Care Endorsement, did not cover the injuries sustained by the claimant. The court noted that the policy excludes coverage for injuries resulting from or arising out of the alleged molestation, even if the actor’s negligence contributed to the injuries.

Nautilus Insurance Co. v. Worldwide Aeros Corpo. (California 9th Circuit Court, Mar. 16, 2006) (Unpublished)

Ruling: The insured had been sued in an underlying tort action. The policy issued by the insurer provided coverage to claims arising out of “manufacturing exposure only.” The court held that the language of the endorsement limiting coverage to manufacturing exposure is clear and does not encompass the loss in this case. The court refused to apply the doctrines of implied waiver and estoppel.

Workers Compensation

Magee v. Thompson Creek Mining Co. (Idah, Mar. 20, 2006)

Ruling: In this workers compensation case, the plaintiff was injured while working in an oil field. One of the issues on this appeal was whether the injured plaintiff/worker was entitled to receive certain continuing medical care. The court affirmed the Commissions’ finding that the injections and therapy received by the plaintiff were not reasonable and no longer necessary.

Goldberg Segalla LLP is a best practices law firm with offices in Buffalo, Rochester, Albany, White Plains and New York. Kevin T. Merriman, a partner with the firm, compiled this information, Copyright 2006 Goldberg Segalla LLP. All rights reserved.


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