Around the Nation: August 2013

State news and updates from CLM state chairs, reps, and committees.

By Bevrlee J. Lips


Bad Faith and Duty to Cooperate

In John Staples v. Allstate Ins. Co., the Washington Supreme Court held that summary judgment in favor of the insurer should not have been granted—there were genuine issues of material fact—in a “duty to cooperate” case. The insured had reported a theft of tools to police, saying they were taken from his work truck and were worth $15,000. When the insured reported the loss to Allstate, he said the tools were for personal use and were worth $20,000 to $25,000. Allstate requested documentation and asked for an EUO (for which there was a requirement in the policy). The insured was slow in providing documentation and conditioned appearing for his EUO on Allstate’s agreement to extend contractual time to file suit. Allstate was unwilling to extend the time and denied the claim. The insured sued for bad faith, and Allstate defended based on lack of cooperation.

The Supreme Court held the need for an EUO must be material and reasonable. An insurer does not have an absolute right to an EUO, regardless of the language in its policy, and an insurer must show what additional information it hopes to uncover in an EUO that it cannot obtain from other sources. The court’s remarks suggest unsworn interviews may suffice and also held that the insurer must demonstrate actual prejudice before it can deny a claim based on lack of cooperation.—From Washington State Chapter Co-Chair Jacquelyn A. Beatty



Intentions Versus Negligence

In Royal Paper Stock Co. v. Robinson, the Franklin County Court of Appeals affirmed summary judgment for a homeowners’ policy insurer. The insureds trespassed into a paper stock warehouse and set fire to small pieces of paper that they wanted to put out with a fire extinguisher. They left the area and subsequently discovered that the small fire had become a big one. The insurer intervened in the liability case against them and won a “no coverage” judgment as a matter of law because they set the fire intentionally, even if they didn’t intend to burn down the building. The court stated that “the fact that they may have been negligent in failing to fully extinguish the fires they created does not negate the connection of cause and effect between the original fire and the subsequent acts.” It, thus, met the terms of the policy exclusion “Personal Liability . . . [does] not apply to bodily injury or property damage: a. caused by the intentional or purposeful acts of any insured, including conduct that would reasonably be expected to result in bodily injury to any person or property damage to any property.”—From Ohio State Chapter Member Edward R. Goldman



Proof of Use and Connection

In Greer v. Ace Hardware Corp., the Oregon Court of Appeals made it clear that manufacturers and distributors that have been sued for asbestos-related claims should be aware that a defendant’s motion for summary judgment will be allowed if the plaintiff is unable to prove his or her specific use of the defendant’s products. At the very least, a plaintiff must be able to identify the specific type of product the defendant manufactured or distributed that caused the plaintiff’s injuries.—From Oregon State Chapter Co-Chair Jack Levy



PIP and UM Limitations on Recovery

In Travco Insurance Company v. Crystal Williams, the Maryland Court of Appeals, responding to questions of law certified by the local federal court, held that the state’s insurance statute requires that an insurer reduce benefits payable to an insured under uninsured motorist (UM) and personal injury protection (PIP) coverage by the amount of any workers’ compensation benefits paid to the insured and which have not been reimbursed. Additionally, the court addressed the treatment of “write-downs” of medical bills as workers’ compensation benefits. If the applicable workers’ compensation law treats write-downs as benefits and the benefits have not been reimbursed, then such benefits are to be deducted from the benefits payable to the insured.—From Maryland State Chapter Co-Chair Susan Smith



Not Your Brother’s Keeper on the Slopes

In Angland v. Mountain Creek Resort Inc., the New Jersey Supreme Court considered the issue of whether the statutory standard of care under the New Jersey Ski Act governed claims made between skiers.

In Angland, the plaintiff died from injuries sustained after a collision with a snowboarder. The plaintiff’s estate then filed suit against Mountain Creek Resort Inc., the ski slope operator, and the snowboarder, claiming that they failed to comply with the Ski Act’s statutory duty of care. The snowboarder moved for summary judgment arguing that the negligence standard of care did not apply, but the common law recklessness standard did, and he was entitled to summary judgment because there was no evidence that his conduct was reckless. Conversely, the plaintiff contended that the Ski Act did apply to the snowboarder.

The trial court and appellate division both held that the Ski Act applied to claims between skiers. On appeal, the New Jersey Supreme Court held that the Ski Act was intended to address duties and responsibilities between ski area operators and skiers and did not apply to the claims made between skiers.
—From New Jersey State Chapter Co-Chair Karen Painter Randall



Chapter 93A Claims Separate from Wrongful Death

In Klairmont v. Gansboro Restaurant Inc., the plaintiffs were the parents of a restaurant patron who suffered a fatal head injury after falling down a staircase at the defendants’ restaurant. The stairway was in violation of the Massachusetts building code for nearly 20 years. The plaintiffs asserted claims for wrongful death and violation of Mass. Gen. Laws c. 93A. The jury found that the defendants were negligent but that the negligence was not a substantial factor in causing the decedent’s death, thus returning a verdict for the defendants. The trial judge reserved the 93A claim for decision by the court and found the defendants liable due to their willful and prolonged building code violations.

On appeal, the Supreme Judicial Court ruled that the judge could disregard the jury’s findings with respect to 93A. Significantly, the court also ruled that 93A claims are substantively akin to types of torts within the scope of the Massachusetts survival statute, allowing the plaintiffs to prevail on their 93A claim as separate from their wrongful-death claim.—From Massachusetts State Co-Chair James Campbell

Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

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