Insurance Claims And Issues

Florida Reimbursement of UNCOVERED Defense Expenses: WHEN?

In June's Seminar at the Orange County Bar Association in Orlando, Florida, "Survey of Insurance Issues EVERYONE Should Know,"  one of my topics was an Overview including Recent Cases. One of those cases was decided by a Florida Appellate Court within the past year, and it represents pretty well-established  Florida law as to when reimbursement of defense expenses may be available to a liability insurer which defends its policyholders: 

Florida allows a liability insurer to claim reimbursement of certain uncovered defense expenses, such as where (1) the liability insurance company "timely and expressly" reserved a right to later ask for reimbursement of the liability insurance company's defense costs incurred in defending clearly uncovered claims, (2) the policyholder clearly accepted the insurance carrier's offer of a defense in the face of such a right, and (3) a court determines that there was never any duty to defend the uncovered claims.  Jim Black & Assoc's, Inc. v. Transcontinental Ins. Co., 932 So. 2d 516, 517 (Fla. 2d DCA 2006.)

Please Read The Disclaimer.

No Coverage, No Bad Faith Cases.

     On April 5, 2007 the Colorado Court of Appeals joined the nearly unanimous view that where there is no Insurance Coverage, there is no Bad Faith, at least where the Bad Faith Claim is based on the existence of Coverage in the first place:

The pleadings reveal that these claims [of bad faith breach of an insurance contract, and breach of contract] were based on Hartford's refusal to defend and indemnify.  Because we have determined that Hartford had no duty to defend or indemnify, summary judgment was properly entered on these claims in favor of Hartford.

See page 11 of the Court's official Opinion in James Miller & Magnum Plastics, Inc. v. Hartford Casualty Insurance Co. (Colo. Ct. App., Div. I, Case No. 05CA2412, Decided April 5, 2007).

                                                     Please Read The Disclaimer.

 

Liability Insurance Policies and Defense Under a Reservation of Rights.

    It is neither a breach of the Liability Insurance Contract nor Third Party Bad Faith, for the Liability Insurance Company to defend under a Reservation of Rights and also file a Declaratory Judgment Action, it was recently held in Download State_Auto_Property_Casualty_Insurance_Co. v. Stillwell Masonry Co. (M.D. Ala. Case No. 3.06.CV.435, Opinion Filed December 22, 2006).pdf.    Although that case involved "a Series I Contractor's Policy" and Alabama Insurance Law, it is consistent with the vast majority of decisions in jurisdictions across the United States under similar circumstances involving all types of Liability Insurance Policies which provide a duty to defend.
 

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

   

Four Corners vs. Facts Too.

    The duty to defend under a policy of liability insurance is determined by two tests in this country.  One is to compare the four corners of the compaint filed against the insured with the four corners of the insurance policy.  The other test is to also consider the facts known to the liability insurance company outside of  or "extrinsic to" the four corners of the underlying complaint and compare those, too, with the four corners of the insurance policy.  Some courts apply both tests. 

    Both tests were very recently applied under Minnesota law by the Federal Eighth Circuit Court of Appeals in Download travelers_property_casualty_co. v. General Casualty Insurance Cos. (8th Cir. Case No. 05-3863 Opinion Filed October 13, 2006)..pdf.   The person claiming Insurance Coverage there, namely a duty to defend him, is a Mr. Paine, who is a golf professional and a member at all times of the Professional Golfers' Association of America ("PGA").  A student allegedly injured in a phys-ed class sued the golf professional for negligence.  Regent Insurance, which has changed its name to General Casualty, issued a liability policy to the PGA which insures Mr. Paine.  Before the final round in the appellate court, the trial judge took pains to consider many links of Minnesota Insurance Law.  The District Court also fairly considered pertinent facts along the way, i.e., the facts and lay of the land known and presented to the liability insurance company.

    In a long opinion, the Eighth  Circuit reviewed the tour of Minnesota Insurance Law taken by the District Judge and pronounced the District Judge's decision as a master.  That Federal Appellate Court affirmed the Federal Trial Court's entry of summary judgment for the liability insurance company, "finding it had no duty to defend".  One Circuit Judge dissented, thereby perhaps either lending credibility to the commonly held but unsupported belief that every golf outing has a kibitzer, or providing support to the less widely held but totally supportable belief that Insurance Coverage Questions are not always as straight of a shot as they may seem to be.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

   

 

Defend or Ignore: Is Tender required or is Knowledge enough?

    Under liability insurance policies, insurance companies ordinarily owe their policyholders a duty to defend them against covered lawsuits.  Insurance companies issuing liablity policies containing standard defense provisions even have a duty to defend additional insureds, i.e., people, corporations, and entities that may not have paid a premium penny for the coverage.

    Some courts hold that when such a liability insurance company "knows" of a lawsuit against one of its insureds (whether policyholders or additional insureds), regardless of where the carrier's knowledge comes from, then that carrier likely has a duty to defend.  Other courts hold that a "tender" of the defense to the insurance company by the insured is required in order for such a liability insurance carrier to have a duty to defend that lawsuit.

    The differences and considerations involved in both of these points of view are discussed in a brand-new case arising under Texas state law and filed in the Fifth Circuit Court of Appeals.  In an opinion filed last Friday, September 29, 2006, Crocker v. National Union Fire Insurance Co. (5th Cir. No. 05-50813 Opinon Filed September 29, 2006) the Fifth Circuit panel reflected that Texas state law was changing on this issue.  The Federal appellate court was confronted with these questions, it wrote (see page 24 of the slipsheet opinion and access the opinion on the Fifth Circuit web site at Fifth Circuit public web site ):

            Does an insurer have any right or duty to defend a covered suit against an additional insured with whom it has no direct relationship and who, knowing of the suit, has not expressly or impliedly requested a defense?  If the insurer knows of the covered suit, what duty, if any, does it have to notify a sued additional insured (who does not know of the coverage) of the applicable coverage?  What duty, if any, does a sued additional insured have in such a situation?
            As to none of these related questions of law does there appear to be any controlling Texas Supreme Court precedent.

Having taken note of these confronting questions, the Fifth Circuit panel certified questions based upon them, to the Texas Supreme Court for answers.  Further updates on these issues will be posted as they become available.  It is a certainty that more cases will be filed raising these issues, and that future courts will be addressing these and related issues.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.