Around the Nation: October 2013
State news and updates from CLM state chairs, reps, and committees.
Carrier Liable for Actions of Agents
In Chicago Title Insurance Co. v. Washington State Office of the Insurance Commissioner, the Washington Supreme Court held that a title insurance company was liable for the illegal actions of an independent underwritten title company. Washington State Insurance Commissioner Mike Kreidler called the decision “a big win for consumers.” Although the issue before the court was illegal inducements in the contest of title insurance transactions, the decision has broader implications. Indeed, the official blog of the Office of the Insurance Commissioner stated that the decision “affirmed that insurers are liable for the illegal actions of their agents.”—From Washington State Chapter Co-Chair & Education Director Paul Rosner
Rim Fire Third-Largest in State History
On Aug. 17, the Rim Fire started and quickly became the third-largest wildfire in the state’s history and the largest ever in Yosemite National Park. The fire, still burning at press time, charred more than 257,000 acres of land, leaving terrible devastation in its path. At one point, the fire threatened about 2,000 homes. The fire also threatened the O’Shaughnessy Dam and reservoir in the Hetch Hetchy Valley, which supplies water for the San Francisco Bay Area. Fortunately, though there have been nine injuries and 112 buildings destroyed, there have been no human fatalities attributed to the fire.
Due to the fire’s magnitude, heavy smoke blanketed a vast area, including Lake Tahoe and Reno over 100 miles away. The cause has been determined to be a hunter who “allowed an illegal fire to escape,” according to the U.S. Forest Service. Damage is currently estimated at a staggering cost of more than $100 million—not including hidden expenses such as environmental, health, and smoke damage claims, which directly impact victims and insurers alike.—From CLM Fellow David Brien, EFI Global
Flooding Takes Over
For years, the city of Boulder has predicted catastrophic consequences if its creeks were to flood. Fate struck this year when a low-pressure system stalled in the Midwest and Colorado began to see unprecedented flooding over several days. Flood conditions spread across 17 counties where nearly 17,500 homes were damaged; 1,500 homes were destroyed; and 11,700 people were ordered evacuated, according to emergency management officials. The entire city of Lyons, just north of Boulder, was subject to evacuation by the Air National Guard under a warning that conditions may prevent recovery attempts. Crude oil from damaged tanks spilled into the flooded South Platte River. At one point, over 1,250 people were unaccounted for—the number fluctuated as flooding increased and stranded residents were able to re-establish communication with family, friends, or authorities.
To aid in covering the massive affected area, FEMA provided two 80-person search and rescue teams to help with operations. Economic damages are estimated at more than $2 billion, according to EQECAT. If you would like to help, the CLM Colorado chapter asks that you please consider donating to the American Red Cross disaster relief efforts in Colorado and Community Food Share.—From Colorado State Chapter Member Mark Neider
Unpermitted Use Exclusion Upheld
In Schmucker v. Kurzenberger, a father was driving his daughter and a friend to get something to eat. During the trip, the father lost control of the vehicle when his daughter suddenly grabbed the steering wheel without his permission. The vehicle hit a ditch, became airborne, and rolled over several times, killing the friend. The plaintiff filed a wrongful death and personal injury action against the defendant, later amending the complaint to add the insurer. Summary judgment in the insurer’s favor was affirmed due to an unpermitted use exclusion.—From Ohio State Chapter Member Edward R. Goldman
Asbestos Dust on Clothes and Duty to Warn
In Georgia Pacific v. Farrar, Maryland’s highest court ruled that there was no duty owed in 1968-69 by the defendant to warn the plaintiff about the danger of exposure to asbestos-containing dust brought home on her grandfather’s work clothes. The court held that no duty to warn existed given the limited knowledge—prior to the adoption of OSHA regulations in 1972—regarding the danger to household members from asbestos-containing dust brought into the home, the inability to give warnings directly to household members, and the inability for any such warnings at the time to have any practical effect.—From Maryland State Chapter Member Ben Whetzel
Unfair Settlement Practices
In Rivera v. Commerce Insurance Co., the plaintiff was seriously injured when his vehicle collided head-on with a dump truck operated by Commerce’s insured. After settling with the insurer on the eve of the trial for the full policy limit, the plaintiff brought a c. 93A claim alleging that the insurer engaged in unfair claim settlement practices. The trial court awarded the plaintiff treble damages but did not award tort-related litigation expenses incurred in the underlying action. The Massachusetts Appeals Court reasoned that the expenses incurred in the underlying action were the foreseeable consequences of the insurer’s unfair or deceptive act or practice. The court held that the appropriate measure of actual damages under c. 93A includes any reasonable tort-related expenses and disbursements caused by the insurer’s bad-faith delay in settling the claim.—From Massachusetts State Chapter Member Michelle Byers
No Quid Pro Quo in Ethics Complaint
In re Pocaro, the New Jersey Supreme Court adopted the Disciplinary Review Board’s (DRB) recommendation to censure an attorney for attempting to have a client withdraw an ethics complaint in return for the attorney not filing a defamation suit against the client arising out of a disqualification motion in another action. The DRB found that the attorney violated RPC 8.4(d) and A.C.P.E. Opinion 721, which prohibits the conditioning of an agreement on the withdrawal of a grievance, citing that attorney discipline is not a private cause of action or private remedy for misconduct that can be negotiated between an attorney and the aggrieved party as the discipline process furthers public, not private, interests.—From New Jersey State Chapter Co-Chair Karen Painter Randall