News Is Lead Paint a Pollutant? That Depends on Who, and Where, You Ask March 25, 2016 < Back Share to: While Total Pollution exclusions have generally been applied broadly, insurers must be cognizant of a fascinating conflict between different state’s jurisprudence. This conflict involves the question of whether lead or lead based products and by-products are considered “pollutants” under a total pollution exclusion. This conflict was highlighted recently when the Georgia Supreme Court found that a policy’s pollution exclusion applied to an injury that resulted from the ingestion of lead-based paint. In Georgia Farm Bureau Mut. Ins. Co. v. Smith, 2016 Ga. LEXIS 245 (Ga. Mar. 21, 2016), a minor tenant was injured due to ingestion of lead-based paint chips. The plaintiff insurer moved to disclaim coverage based on the policy’s pollution exclusion. Following the insurer’s victory at the trial level, the Georgia Court of Appeals reversed, claiming that lead-based paint was not a “pollutant” as defined under the policy because it wasn’t specifically mentioned in the exclusion. The Georgia Supreme Court noted that the pollution exclusion was not limited to environmental harms and that the exclusion needs to be evaluated by its terms in accordance with Georgia law. Additionally, the court referenced a prior Georgia case, Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E.2d 90 (2008), where the court found that the pollution exclusion applied to a claim related to carbon monoxide poisoning despite carbon monoxide poisoning not being explicitly mentioned as a pollutant. Using the same analysis, the Supreme Court held for the insurer, declaring lead based paint to be a pollutant for the purposes of the pollution exclusion. Notably, New York courts take the opposite stance. The case of Westview Associates v. Guar. Nat. Ins. Co., 95 N.Y.2d 334, 338, 740 N.E.2d 220, 222 (2000) concerned essentially identical facts as Georgia Farm Bureau, in that a minor suffered bodily injury due to the ingestion of lead-based paint chips. The New York Court of Appeals, equivalent in stature to the Georgia Supreme Court, held that the lead-based paint chips did not constitute a pollutant. The Court of Appeals reasoned that, if lead-based paint chips were meant to be excluded by the policy, as the insurer claimed, then they would have been specifically mentioned in the exclusion. Since they were not, the court ruled that the issue constituted an ambiguity in the policy and interpreted it against the insurer. The key difference between each states approach resides in their respective analytical framework. Georgia courts have a history of enforcing pollution exclusions without requiring the pollutants to be explicitly named in the policy—taking a common sense view of what is regarded as a pollutant. By contrast, New York plays by the card, requiring more specificity. This decision, once again, calls upon Underwriters to develop wording with enough breadth to carve-out the risks they are unwilling to embrace. What works in Georgia may not work elsewhere. Insurers have to be cognizant of where a given action is being litigated and where a given policy is issued. Thanks to Joshua Gornitsky for his contribution to this post. For more information, please email Dennis M. Wade at dwade@wcmlaw.com . Previous Next Contact

News Texas Justice -- Lloyd's Must Pay for Billionaire Criminal's Defense. January 29, 2010 < Back Share to: A Carribbean knighthood. Ownership of cricket teams. A fleet of private jets. Texas billionaire Allen Stanford claimed that these things came from his worth ethic and natural abillities. That may be true, if you consider that his worth ethic and natural abilities were sired to criminal undertakings. Stanford and his company are accused of defrauding investors in excess of $8 billion dollars. Criminal indictments and civil lawsuits have resulted. Unfortunately, it appears that Lloyd's insured Stanford and his company at the relevant times. And now, a Texas judge has ruled that Lloyd's must pay for the defense of Stanford and his group in the pending SEC and crminal cases. Hopefully, Lloyd's won't end up spending billions in legal fees, but tens of millions seems like a reasonable estimate. If you would like more information about this post, please ctontact Bob Cosgrove http://www.insurancejournal.com/news/national/2010/01/27/106889.htm http://pdf.wcmlaw.com/pdf/PendergestDecision.pdf Previous Next Contact

News Turnabout Is Fair Play? Does Twombly Apply to Affirmative Defenses? (NJ) July 24, 2013 < Back Share to: Folks are familiar with Twombly, the United States Supreme Court decision that makes it clear that federal court plaintiffs must plead their cases with specific particularity to provide full notice of the claims in order to survive a motion to dismiss. The question is – does Twombly apply to affirmative defenses or counterclaims? There is no binding nationwide federal precedent that answers that question and different trial courts have come up with different answers; for example, New York courts have held that Twombly does apply to counterclaims and affirmative defenses. In one of the more recent decisions from NJ, Signature Bank v. Check-X-Change, LLC, District Court Judge Esther Sallas was forced to address the issue when Signature moved to dismiss Check-X-Change’s counterclaim and strike its affirmative defenses. Judge Sallas ruled against Signature and held that Twombly (under Third Circuit precedent) only applies to complaints and not the responses thereto. Underscoring her reasoning was the notion that “substantial issues of fact and law are properly viewed only after the opportunity for discovery.” Although Signature is a positive developments for NJ (and possibly all Third Circuit (including PA)) defendants, the issue is something to be wary of. Form denials and rote pleadings may be going the way of the dodo bird and fact based and specific pleadings may be the wave of the future as federal courts (in the age of the sequester) attempt to keep cases out of the system. For more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com . Previous Next Contact

News Eating 10 Cans Of Tuna Fish Each Week For 2 1/2 Years Not Unreasonable October 24, 2011 < Back Share to: In [i]Porrazzo v. Bumble Bee Foods, et.al.[/i] (S.D.N.Y. 10-CV-4367) plaintiff sued defendants in strict product liability after being diagnosed with mercury poisoning. Plaintiff ate 10 cans of tune fish per week for a period of two and a half years, and had a blood mercury level more than twice the recommended limit. One of plaintiff’s claims was that the tuna fish was not fit for the ordinary purposes for which tuna fish was intended. Defendants moved to dismiss, arguing that a diet consisting of nearly 1500 cans, or over 500 pounds, of tuna in thirty-three months was not the intended use of the product, and was unreasonable as a matte of law. The court disagreed. The court held that what was “reasonable” was best left to a jury to decide. The court emphasized that such a decision, the reasonableness of plaintiff’s diet, was not proper for a motion to dismiss. The case had several other issues regarding the propriety of plaintiff’s complaint, but most of the objections were rejected because of the status of the case, i.e. motion to dismiss. The court noted that the claims might not survive a motion for summary judgment or trial. The lesson to take from this case is what one person believes is reasonable may differ from another, and thus the question is a quintessential “question of fact” for a jury. If you would like further information about this post, please contact David Tavella at dtavella@wcmlaw.com . Previous Next Contact

News Eight Corners and Ongoing Damages Rules Prevent Disclaimer in Environmental Damages Case July 10, 2017 < Back Share to: The duty to defend can be triggered where there is a lack of specificity in a complaint. In USA Environment LP v. American Int’l Speciality Lines Ins. Co., the Southern District of Texas recently rejected an insurer’s denial of coverage to insureds that transported millions of gallons of hazardous waste materials to what was later designated a superfund site. The “potentially responsible parties” (PRPs) identified by the EPA sued hundreds of companies involved with the Suprefund site, including the insureds who filed a separate action seeking coverage. The insurer issued policies to the insureds from 2003 to 2014, and denied coverage under waste disposal site and auto exclusions. The Court observed that the policies issued after 2011 had deleted the waste disposal site exclusion, and created an exception to the applicable pollution exclusion. The underlying complaint filed by the PRPs did not specify when the releases of pollutants occurred or the years the insureds’ services were performed, but did note the insureds transported different kinds of hazardous materials over the course of many years. The complaint further alleged the release of hazardous materials was ongoing. Accordingly, the Court held coverage was triggered because it was possible damages occurred during a policy issued after 2011. Similarly, the Court held the allegations in the complaint were too vague to conclude all the hazardous materials were transported by the insureds in an “auto,” as defined by the policy. As a result, some of the property damage alleged may not have arisen from the use of an auto, and the Court ruled the duty to defend was triggered. When in a four or eight corners jurisdiction, an insurer is generally beholden to the allegations in a complaint, no matter how vague. If these allegations potentially fall within coverage, under the liberal standard embraced by courts across the nation, the duty to defend is likely triggered. As with any general rule, there are exceptions and aggressive positions can be warranted. However, particularly in high value cases, an aggressive position should be weighed against the certainty of litigation and its potential result. Thanks to Chris Soverow for his contribution to this post.       Previous Next Contact

News Insurer Has Duty to Defend Allegations of Negligence, Despite Insured’s Admission of Intentional Conduct in Criminal Proceedings. May 10, 2012 < Back Share to: In Am. Auto. Ins. Co. v. Sec. Income Planners & Co., a federal district court in New York recently held that the American Auto Insurance Company had the duty to defend negligence claims against Security Income Planners & Co., LLC, despite plea allocution by the insured’s president and CFO where he admitted to intentional conduct. American Auto insured Security Income under a life insurance agents errors and omissions policy, which included a “Commingling, Misappropriation or Conversion” exclusion, as well as an “Improper Personal Profit” exclusion. After a criminal investigation, the president/CFO admitted he “engaged in a scheme constituting a systematic ongoing course of conduct with the intent to defraud ten or more people by false or fraudulent pretenses, representations or promises, and obtained property from one or more such persons.” With the assistance of a knowledgeable and clever attorney, several of the defrauded individulas brought an action against Security Income and the the president/CFO for unjust enrichment and misrepresentation, and later amended the complaint to include allegations of negligence, negligent training and supervision, and breach of fiduciary duty. American Auto denied coverage to Security Income based on the two policy exclusions noted above. A coverage battle ensued. The court rejected American Auto’s position, holding that the two exclusions did not apply to the negligent supervision claim against Security Income. The court reasoned that negligence and negligent supervision claims arising from fraudulent or intentional acts were not excluded by the policy’s “Comingling, Misappropration or Conversion” and “Improper Personal Profit” exclusions because the claim for negligent supervision did not allege Security Income comingled, misapprpriated, or converted any funds or gained any improper personal profit through its alleged negligent supervision. With regard to at least the duty to defend, insurers must realize that the actual facts are largely irrelevant. The allegations contained in the complaint, if assumed to be true, control the insurer’s duty to defend. If the principle -- and policy forms and exclusions – is worth defending, be prepared for lengthy litigation where a trial may be required to determine whether plaintiff’s allegations are true and the insurer’s duty to indemnify is triggered. http://web2.westlaw.com/find/default.wl?cite=2012+WL+957528&rs=WLW12.04&vr=2.0&rp=%2ffind%2fdefault.wl&sv=Split&fn=_top&mt=407 Thanks to Joe Fusco for this post. If you have any questions or comments, please email Paul at pclark@wcmlaw.com       Previous Next Contact

News When “An Insured” Excludes Coverage For All Insureds (PA) December 19, 2019 < Back Share to: Recently, in Carrasquillo, Individually and as Administratrix of the Estate of Rafael Santiago, Deceased v. Nancy Kelly and Nationwide Mutual Fire Insurance Company, the Superior Court of Pennsylvania considered whether Nationwide Mutual Fire Insurance Company (“Nationwide”) had a duty to defend and indemnify its insured, Nancy Kelly (“Kelly”) in an action involving the death of Anna Carrasquillo’s son, Rafael Santiago (“Santiago”). Santiago was staying at the home of (“N. Kelly”) when he was fatally shot inside of her home by James Kelly (“J. Kelly”). At the time of the shooting, J. Kelly and N. Kelly were insured under a homeowners’ insurance policy issued by Nationwide (“policy”). Ultimately J. Kelly pled guilty to criminal charges. Soon thereafter, Carrasquillo commenced a wrongful death and survival action (“Underlying Lawsuit”) against N. Kelly and J. Kelly. Simultaneously, Carrasquillo requested that Nationwide defend N. Kelly in the Underling Action. After Nationwide disclaimed coverage, Carrasquillo filed the instant declaratory judgment action seeking an order that the Policy provided coverage to N. Kelly for the allegations contained in the Underlying Lawsuit. Nationwide filed a motion for summary judgment, seeking an order that it had no duty to defend N. Kelly in the Underlying Lawsuit because the Policy’s intentional and criminal act exclusions barred coverage. Carrasquillo disagreed – arguing Carrasquillo’s complaint in the Underlying Lawsuit triggered coverage because the complaint sounded in negligence. The trial court denied Nationwide’s motion for summary judgment, effectively providing that Nationwide had a duty to defend, and potentially indemnify N. Kelly in the Underlying Lawsuit; subsequently, Nationwide appealed. On appeal, the Superior Court based its analysis on longstanding Pennsylvania case law regarding the interpretation of insurance policies, which the Court noted, is a question of law. The fundamental question on appeal was whether the trial court erred in determining that the Policy’s criminal act exclusion, which excludes coverage for, inter alia, bodily injury “caused by or resulting from an act or omission which is criminal in nature and committed by an insured” regardless of whether the insured is convicted of a crime, did not apply to bar coverage. Although the Court noted it was required to only consider the allegations contained in Underlying Lawsuit, the Court determined Carrasquillo “artfully pled” her complaint to avoid the Policy’s exclusions, as the complaint omitted any reference to J. Kelly’s criminal conviction and only alleged J. Kelly who had “dangerous propensities” “attacked . . . and fatally shot” Santiago. Accordingly, the Court held it was required to consider J. Kelly’s criminal conviction. In doing so, the Court determined that J. Kelly’s conviction triggered the criminal act exclusion, which automatically precluded coverage to J. Kelly. However, the pertinent question on appeal was whether the criminal act exclusion barred coverage to N. Kelly. The Policy’s criminal act exclusion excludes coverage for the criminal act of “an insured”, as opposed to exclusions excluding coverage to “the insured”. Based on the plain language of the Policy and precedential Pennsylvania law, the Court determined J. Kelly was “an insured” under the Policy and committed a criminal act, it held the criminal act exclusion also barred coverage to N. Kelly. Therefore, the Court reversed the trial court decision and granted Nationwide’s motion for summary judgment. Ultimately, this case is a reminder of the importance between exclusions that refer to “an insured” versus “the insured”. Thanks to Lauren Berenbaum for her contribution to this post. Please email Vincent F. Terrasi with any questions or comments. Previous Next Contact

News California Dreamin': Professional Athletes Flock to CA To File WC Claims April 6, 2010 < Back Share to: As the old saying goes, "it could only happen in California." California's workers compensation system apparently is the venue of choice for many professional athletes who sustain "work related" injuries during professional athletic activities. The typical injuries are orthopedic in nature and involve painful --and expensive-- joint replacements many years after the athletes have stopped playing their sport. The basis for California jurisdiction is easy to satisfy. The claimant need not have played for a California based team or be resident of the state; playing an isolated game in California will do the trick. The first few claims seeking workers compensation benefits for the permanent effects of concussion and closed head trauma are working their way through California's system. Although it has been decades since many of the claimants have played in a professional game, they seek life time benefits for the costs related to the care and treatment of what they contend is work related head trauma including dementia and brain damage. The battle lines have been drawn about which states can adjudicate these workers compensation claims and whether the claimants can medically establish that their injuries were caused by head trauma sustained decades ago. Right now the NFL is the primary target of these claims but other professional sporting organizations will surely follow close behind. Stay tuned in this high stakes and high profile litigation. If you have any questions about this post, please email Paul Clark at pclark@wcmlaw.com http://www.nytimes.com/2010/04/06/sports/football/06worker.html?ref=football Previous Next Contact

News The Devil Is in the Details… of the Lease (NY) April 9, 2020 < Back Share to: In settled law, an out-of-possession landlord is not responsible for any injuries which occur on its premises unless the landlord has retained control over the premises, and (i) has a duty imposed by law or statute, (ii) has a duty imposed pursuant to a contract; or (iii) takes up that duty through course of conduct. But this rule is not infallible. In Broughal v. Tae J. Kwon, the plaintiff was injured in a slip and fall on ice located on the walkway of a strip mall owned by defendant landlord. Plaintiff, in this case, was also the tenant/lessor of the premises, slipping on the icy sidewalk of his own business. In a summary judgment motion, the landlord established that the lease agreement held the tenant responsible for removing any snow and ice from the walkway where the accident occurred. Plaintiff never rebutted owner’s argument on this issue. The Second Department, however, found that the landlord failed to provide any evidence that they had no duty to maintain the drainage system, that they adequately maintained the drainage system, and/or that the drainage system was not the proximate cause of the slip and fall (a drainage malfunction could have prevented an accumulation of water which froze into ice). The Second Department agreed that landlord defendant failed to prove that the drainage system was not a possible cause of the ice on the sidewalk and found it to be an issue to be determined at trial. This case highlights an important element in applications for summary judgment under the guise that a lease agreement absolves a landlord from liability for injuries occurring on the premises. The Second Department does not look favorably to releasing a landlord from any liability, leaving an injured plaintiff with no recourse at law, simply because the lease language places the responsibility on the tenant for maintaining the premises free from snow and ice. If the landlord does not prove that his maintenance of the building was not the proximate cause of a slip and fall by keeping detailed maintenance records and performing regular check-ups on the premises, then he will need to prove the same trial. Thanks to Raymond Gonzalez for his contribution to this post. Please contact Vincent Terrasi with any questions or comments Previous Next Contact

News Contractor's $300 Site Safety Budget Leads Liability for Horrific Injury (NJ) May 30, 2019 < Back Share to: The New Jersey Appellate Court recently reviewed a trial court decision granting summary judgment in favor of defendants in Cortes v. Garrard. Plaintiff Alexander Cortes and his friend, Seth Patterson, both sixteen-years old, trespassed onto a construction site controlled by defendants Garrard Construction Group, Inc. and Holz and Henry, Inc. The teens took turns operating a forklift inside of a building that was being constructed, after finding that the keys were left in the forklift ignition. The building where Alex’s accident occurred was located within a shopping center in Sicklerville, and Seth testified that there was no caution tape or plywood behind any of the door frames in the entrance-ways when they entered the building. While, essentially, horsing around with the forklift, Alex's right leg to get caught between the forklift and a pillar resulting in serious injuries that required an above-the-knee amputation. Although the trial court granted defendants motions for summary judgment, holding that Alex failed to establish that the defendants knew, or had reason to know, that minors were likely to trespass onto the construction site, the appellate court reversed and remanded the decision following a review of the record. During discovery, defendant Garrard produced its safety manual. Under a sub-heading titles “Children and Construction,” the manual indicated that construction sites attract children, as children like to explore. Additionally, the manual went on to state that children should not be allowed on site during the day and that fences should be placed on site, equipment should be locked up, and “No Trespassing” signs should be placed in the area. Further, Garrard’s project manager testified that he knew that teenagers were not in school from June through early September and that he was aware the site was located in an active shopping center occupied by ongoing business. Most notably, Garrard’s Director of Construction stated that the project was valued between one and two million dollars, but Garrard’s safety budget was $300. Plaintiffs produced an expert that opined that defendants should have visited the site and conducted a Life/Safety Exposure Analysis (‘LSEA’) which is essential to the development of the project site security policy and plan. Further, he opined that had the keys not been left in the forklift ignition, Alex would not have suffered his catastrophic injury. The appellate court ruled that the site was on an active shopping center open to the public, and the location posed a greater risk of increased traffic by teenagers, which created an issue of fact as to the defendants' liability. As such, the Appellate Court reversed and remanded to the trial court for further proceedings. Thanks to Steve Kim for his contribution to this post. Please email Brian Gibbons with any questions.   Previous Next Contact

News Denial of Summary Judgment Motion on Undefined Policy Term did not Preclude Litigating the Term at Trial July 10, 2017 < Back Share to: In Windows v. Erie Ins. Exch., homeowners claimed coverage under their policy after raw sewage entered their home. The insurance company denied coverage based on a water damage exclusion that stated there was no coverage for damage caused by “water or sewage which backs up through the sewers and drains”. After the denial, the homeowners commenced the instant action. Ultimately, the insurance company filed for summary judgment seeking a declaration of no coverage based on the exclusion. The trial court denied the insurer’s motion on the basis that “backs up” was not defined. The insurer then filed a motion in limine seeking a ruling that the law of the case did not apply, and it should not be precluded from presenting evidence of its coverage defenses, i.e. the water damage exclusion barred coverage under the policy. The trial court also denied this motion stating the previous summary judgment order had already concluded that the water damage exclusion could not preclude coverage for the homeowners’ instant claim. As such, the denial of summary judgment established the law of the case. On appeal, the Superior Court reasoned that while the policy term “backs up” was ambiguous, and the trial court had correctly denied the insurer’s motion for summary judgment, the trial court had erred nonetheless by reading into the denial of summary judgment the legal conclusion that the insurer was precluded from further litigating the water damage exclusion. As such, the case was remanded. Accordingly, this case stands for the proposition that a denial of a summary judgment does not mean an insurer will be precluded from continuing to litigate its position that coverage does not apply, regardless of whether its reasons for disclaimer were included in a previously denied motion for summary judgment. Thanks to Colleen Hayes for her contribution to this post.               Previous Next Contact

News Getting What You Need in PA Bad Faith Law. September 29, 2017 < Back Share to: Yesterday, in the case of Matthew Rancosky, et al. v. Washington National Insurance, et al., the Pennsylvania Supreme Court ruled on what qualifies as insurer bad faith. In Rancosky, the decedent plaintiff purchased a cancer insurance policy as a supplement to her health insurance. Unfortunately, some 11 years after first purchasing this insurance, she was diagnosed with cancer. She battled cancer on and off for several years, but ultimately the insurer denied any additional benefits because of a mistake made by plaintiff's physician as to when her disability began. The insurer, despite having access to forms, never sought to rectify or clarify the mistake although it had access to the information and was advised of the mistake's existence. An §8371 PA bad faith claim was ultimately brought. The trial court found for the insurer, but the appellate court found for the plaintiff. The question before the PA Supreme Court was whether under the Terletsky standard, a PA bad faith claim still turns on evidence that (1) the defendant did not have a reasonable basis for denying benefits under the policy, and (2) that the defendant knew or recklessly disregarded its lack of a reasonable basis in denying the claim. The Supreme Court has answered that question in the affirmative. In answering that question, the Supreme Court made a few interesting observations. First, the Court noted that the first prong of the Terletsky test is an "objective inquiry into whether a reasonable insurer would have denied payment of the claim under the facts and circumstances presented." Second, in respect of the second prong of the Terletsky test (and the part of the opinion that will no doubt generate the most public comment), the Court held that "proof of an insurer's motive of self-interest or ill-will, while potentially probative of the second prong, is not a mandatory prerequisite to bad faith recovery." In other words, to prove the "reckless disregard" requirement, the insured need not prove almost intentional insurer misconduct. Third, and perhaps most significantly, and almost as an aside, the PA Supreme Court also noted that "mere negligence is insufficient for a finding of bad faith under Section 8371." This part of the opinion runs contrary to some recent federal case law that suggests that a bad faith claim can sound in mere negligence. To us, the decision is good news for the insurance world. While it might have been nice to have the PA Supreme Court hold that intentional misconduct is a condition precedent to a bad faith claim, reconfirmation of the Terletsky standard and a repudiation of the idea that mere negligence can give rise to a bad faith claim are good, solid developments. As the Rolling Stones sang, you can't always get what you want, but if you try sometimes, you might find, you get what you need. For more information about this post please e-mail Bob Cosgrove. Previous Next Contact