CLM National: April 2019
News and verdicts that affect you from across the country.
By Phil Gusman
New Jersey Supreme Court Reverses Appellate Court Decision on the admission of medical testimony in jury trials, California’s hit-and-run bill gains momentum after a widow’s testimony changes minds, and, in Washington, a determination is made on when the 30-day clock for removal of cases to federal courts begins.
30-Day Removal Clock Commences on Party’s Receipt of Pleading
In Anderson v. State Farm Mutual Automobile Insurance Co., the U.S. Court of Appeals, 9th Circuit, examined the removal deadline set forth in 28 U.S.C. § 1446(b)(1). This case—involving an auto claim against State Farm—was filed in state court, and State Farm removed it to federal court. The issue before the 9th Circuit was whether State Farm timely removed the case to federal court. Service of the initial pleading was made upon State Farm through its statutorily designated agent for service on Feb. 9, 2015. State Farm received the forwarded complaint on Feb. 13 and removed the case on March 16. The court had to determine whether the 30-day removal clock began when service was made upon the agent, or upon receipt by State Farm. The court joined the 4th Circuit in holding that “receipt of an initial pleading by a statutorily designated agent does not begin the 30-day removal clock” under 28 U.S.C. § 1446(b)(1), and that it was instead actual receipt by State Farm.—From CLM Member Rachel A. Rubin
New Life Breathed Into Hit-and-Run Bill
Sometimes in the practice of law, lawyers see holes in statutes that promote bad results. There is a team of lawyers and members from the California Assembly working to make a change in a law that currently encourages people to leave the scene of a hit-and-run accident. AB 582 would change the culture of the “hit and run” mentality by establishing stronger penalties for those who flee. AB 582 is inspired by thousands across California who have suffered the loss of a loved one who has fallen victim to a hit and run. News reports indicate that the bill appeared headed for failure, but impassioned testimony from the widow of Gavin Gladding—a hit-and-run victim for whom the bill is named—changed minds at a March 19 hearing and momentum for its passage is growing. The story of the victims, their families, their friends, and the legislative loophole has become a passion project for positive change in California.—From CLM Member Jacob A. Gelegan
All Hail Number One
Colorado ranked as the number one state for hail losses in 2018, at least as far as State Farm is concerned. The insurer paid out more than $2.7 billion last year on over 280,000 auto and homeowners hail damage claims across the country. Of that total, $598 million was in Colorado, followed by $437 million in Texas, $329 million in Illinois, $170 million in Minnesota, and $88 million in Missouri. Last year, reporting on 2017 losses, State Farm said it paid out over $3 billion in hail losses across the country. Texas led the way that year with $610 million in auto and homeowners hail losses, followed by Illinois at $503 million, Minnesota at $342 million, Colorado at $271 million, and Missouri at $174 million.—From Managing Editor Phil Gusman
Supreme Court Clarifies Insurer’s Duty to Settle
In First Acceptance Ins. Co. of Georgia Inc. v. Hughes, the Georgia Supreme Court clarified when an insurer may be liable for bad faith in refusing to settle a claim within policy limits. In Hughes, the insured caused a multi-vehicle accident that injured five people. An attorney representing two of the individuals sent two letters to First Acceptance. One indicated that the insurer could settle the claims for the available policy limits, while the other requested the insurer provide certain policy-related information. Neither letter explicitly referenced the other, nor did either set a deadline to accept the policy-limits offer. First Acceptance did not respond to the letters before the offer was revoked. A jury ultimately awarded the plaintiffs $5.3 million. In upholding the trial court’s grant of summary judgment to the insurer on the follow-on bad-faith claim, the Supreme Court determined an insurer cannot be liable for an unequivocal offer demanding policy limits within a specified time period.—From Northeast Ohio Chapter Secretary Michael C. Brink
Medical Testimony Now Admissible in Jury Trials
In Rodriguez v. Walmart, the New Jersey Supreme Court held that the neurologist called as a witness may testify about symptom magnification and somatization as possible explanations for inconsistencies between objective medical evidence and the plaintiff’s subjective complaints of pain. The case overturned an Appellate Division decision, covered here in June 2017, that prohibited such testimony because neurologists would not be qualified to give such testimony and because such testimony would improperly impeach a plaintiff’s credibility. Admission of this type of testimony must be decided on a case-by-case basis. In Rodriguez, the subject was first raised by the plaintiff’s medical expert, who diagnosed the plaintiff based on the exclusion of all other causes, making testimony regarding symptom magnification and somatization relevant.—From CLM Member Tim Smith
No Recovery Where Insured Was Aware of Broker’s Dishonest Acts
On Feb. 26, 2019, Judge Ostrager of the New York Supreme Court ruled in Starr Ins. Holdings v. U.S. Specialty Ins. Co. that an insured’s knowledge of dishonest acts before the inception of a bond precluded recovery from the insurer thereon. The insured plaintiff was seeking to insure warranty contracts sold by the non-party broker from 2012 to 2014. In January 2014, the insurer defendant issued a fidelity bond to plaintiff. This bond insured the plaintiff against dishonest or fraudulent acts by an “employee.” In summer 2014, the broker collapsed and defaulted on its premiums. The plaintiff sent notice of loss in August 2014, but the defendant declined coverage, causing the plaintiff to sue for recovery. Depositions and documentary evidence showed that, in May 2013, the plaintiff determined that the broker had cash flow problems, and that the broker was commingling plaintiff’s claim funding and premiums. Therefore, the court found that the plaintiff’s documented knowledge of the broker’s dishonest acts terminated the bond upon inception, granting summary judgment to the defendant insurer.—From CLM Member Michael E. Kar