Jones Brothers Inc. v. Whitlock, et al. (Ark. May 4, 2005)
Prime contractor liable for workers’ compensation benefits owed to employee of uninsured subcontractor: The Supreme Court of Arkansas interpreted Arkansas Code Ãƒ‚Ã‚Â§11-9-402(a) before its amendment in 2005 by Act 1917 to require the direct approach, rather than the chain approach, to determine which contractor on a job site is responsible for payment of workers’ compensation benefits to injured employees of uninsured subcontractors.
The court rejected Jones Brothers’ argument that the claimant must rise up the chain of subcontractors before seeking benefits directly from Jones. The court recognized, however, that the statute’s 2005 amendment “was intended to change significantly prime contractor liability when a chain of subcontractors is involved,” suggesting that the chain approach will be required for uninsured injuries occurring after the effective date of the 2005 amendment.
Haydel v. State Farm Insurance Co., et al. (La. App., First Circuit, May 5, 2006)
Insured’s son not covered under UM/UIM policy; not relative residing with insured: Insured claimed benefits under his State Farm uninsured motorist policy for coverage for his son’s death as a passenger in an auto.
State Farm disclaimed, arguing that insured’s son did not “primarily” reside within the insured’s household at the time of the accident as required by the policy provisions.
The court found the insured’s son was not a “relative” under the policy language (“a person related to you or your spouse . . . who resides primarily with you”) because the insured testified that his son resided with his mother for “most” of the school year and spent “70 percent” of his time in his mother’s household. The son’s mother, who testified she had sole custody of the son, confirmed the insured’s testimony.
Combetta v. Ordoyne, Jr., et al. (La. App., First Circuit, May 5, 2006)
Settlement with some but not all claimants eligible for coverage under UM/UIM policy not bad faith: Louisiana law requires insurers to pay any undisputed amount of an insured’s claim within thirty days after receipt of satisfactory proof of loss. LSA-R.S. 22:658(A)(1). After a delay of sixty days, an insurer is deemed to have breached its duties to its insured. LSA-R.S. 22:1220(B)(5).
Plaintiff claimed State Farm’s payment of remaining policy limits to him after satisfying claims of two other insureds was improper and insufficient given the nature of his injuries and medical bills.
The court found that State Farm did not act in bad faith vis-Ãƒƒ -vis plaintiff because it had not received proof of the nature or extent of any of plaintiff’s injuries at the time it paid the first two claimants. Further, the court found State Farm would have violated Louisiana law had it waited to receive plaintiff’s proof of loss prior to paying the claims it received prior to plaintiff’s proof.
St. Paul Surplus Lines Insurance Company v. Halliburton Energy Services Inc. (5th Cir. April 10, 2006)
Halliburton contractually required to indemnify well owner and its insurer pursuant to contract indemnity provision: Oil and gas property owner contracted with Falcon to drill a well off the coast of Louisiana. The Drilling Contract included and indemnity provision requiring owner to hold Falcon harmless for personal injury claims asserted against Falcon by Owner’s employees or invitees. Falcon contracted with Hal-liburton for performance of some of the drilling services. Their service contract required Halliburton to indemnify Owner and its invitees, including Falcon, against claims by Halliburton employees.
A Halliburton employee was injured when the barge capsized. Falcon settled the claim and sought reimbursement from Owner. Owner and its insurer (St. Paul) demanded that Halliburton pay the settlement sum on behalf of Owner to Falcon. Halliburton refused and St. Paul filed suit.
The court upheld the contract’s indemnity provision and found that Halliburton was required to reimburse Owner and St. Paul for the indemnity they had already paid to Falcon.
Fremin v. Cabral (La. App., 5th Cir., March 28, 2006)
Allegations of self-defense in responsive pleadings brings claim potentially within coverage: The court held that the Cabrals’ homeowner insurance carrier was not entitled to summary judgment in a suit arising from a dispute with a neighbor that allegedly became violent. The expected or intended acts exclusion in the Cabrals’ policy included an exception for bodily injury resulting from use of reasonable force by the insureds to protect persons or property. Despite that the allegations in the petition did not allege the Cabrals acted in self-defense, the court found that the answer and reconventional demand filed by the Cabrals must be considered in deciding whether a material issue of fact remains. Because the reconventional demand’s narrative asserted the Cabrals acted in self-defense, summary judgment releasing the insurer from any duty to defend or indemnify was inappropriate.
State Farm Mutual Automobile Insurance Company v. US Agencies LLC (La. App., 1st Cir., March 24, 2006)
Policy insuring driver of temporary substitute vehicle primary: The court found that the Louisiana statute requiring auto insurers to provide primary coverage for temporary substitute vehicles “as defined in the applicable insurance policy” was mandatory and applied to the insurer despite the absence of any definition of temporary substitute vehicle in the subject policies. The drivers’, and not the vehicles’ owners’, policies, therefore, provided primary coverage.
Evanston Insurance Company v. Atofina Petrochemicals Inc. (Texas May 5, 2006)
Business owner not covered for own negligent acts under independent contractor’s excess insurance coverage: Atofina Petrochemicals Inc. hired independent contractor Triple S to perform maintenance and construction work at Atofina’s oil refinery. Triple S’s employee was killed at the Atofina facility while performing work pursuant to the agreement.
The indemnity agreement between the parties required Triple S to indemnify Atofina against personal injuries and property losses sustained during performance of the
contract, unless caused by Atofina’s concurrent or sole negligence.
Triple S obtained primary and excess insurance policies that added Atofina as an additional insured pursuant to the definition in the primary policy.
The court held that, due to the primary policy’s specific exclusion for coverage for Atofina’s sole negligence, the excess policy could not be interpreted to cover Atofina’s sole negligence.
Rice v. HC Beck Ltd. (Texas App., Fort Worth, April 6, 2006) (Unpublished)
Exclusive remedy provision of workers’ compensation law not applicable: The Court of Appeals of Texas, Fort Worth, found that the exclusive remedy provisions of Texas Workers’ Compensation Law did not apply to a general contractor because the evidence submitted in support of the contractor’s motion for summary judgment did not establish that the contractor provided workers’ compensation insurance to its subcontractor’s injured employee. There, the owner of the job had purchased an Owner Controlled Insurance Program that provided individual workers’ compensation policies to each enrolled contractor. Both the contractor and the subcontractor were issued their own workers’ compensation policies under the OCIP.
The subcontractor’s injured employee applied for, and received, workers’ compensation benefits pursuant to the workers’ compensation policy issued to his employer and then filed a negligence suit against the general contractor. The general contractor contended it was immune from suit, alleging it had
“provided” workers’ compensation insurance to the injured worker via the owner’s OCIP.
The court denied the general contractor’s motion for summary judgment because it had not provided the workers’ comp insurance, notwithstanding that the contractor required the subcontractor to provided such insurance.
This recurring feature examining insurance coverage decisions was compiled by the New York-based law firm of Goldberg Segalla LLP and edited by Kevin T. Merriman. Merriman can be reached at [email protected]