Source: https://www.onebane.com/louisiana-insurance-law-newsletter-july-2017/
Timestamp: 2019-04-24 03:58:36+00:00

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Want a good laugh? Take a look—yes, an insurance coverage case—at Allstate Ins. Co. v. Walton, an August 10, 2004 Indiana federal court decision. There, the homeowners’ insurer was relying upon a business-pursuits exclusion. An exception to the exclusion was the providing of day-care services for a relative of an insured. Plaintiffs argued that the exception was met because the claimant cared for and the insured had a common ancestor, King Richard II, Plantagenet, who reigned in 12th century England. The case made Randy Maniloff’s recent Coverage Opinions newsletter. For a hearty chuckle, it’s worth a read.
On a different note, two things. Some of you have my Louisiana Insurance Coverage Law handbook. If you do not have a copy, you may wish to quickly call because the handbook has been accepted for publishing, and plans are to have the handbook published in the very near future.
Also, going forward, there will be some trimming of our readership. Current clients do not have to worry. And good friends of the firm need not be concerned. But to ensure placement on our readership list, feel free to email or call.
As always, thanks for your continued patronage and friendship.
In Old Republic Life Insurance Company v. Transwood, 2016-0552 (6/2/17), an occupational-accident insurer, Old Republic, sued companies allegedly responsible for an accident badly injuring its insured, who died after the accident. The defendants filed an exception of no right of action, arguing that Old Republic had no subrogation rights to pursue. The Old Republic policy did not contain a “subrogation” provision, but did contain a provision titled “Right of Recovery,” under which the insurer could recover payments made from its insured.
Affirming the trial court’s granting of the exception, the Louisiana First Circuit Court of Appeal finds that the insurer had no subrogation rights to pursue. First, the court found there was no legal subrogation under the Civil Code because the insurer and the alleged tortfeasor were not bound with each other for the same debt. Second, the court found that the Old Republic policy contained a reimbursement clause, which gave the insurer only a right of reimbursement against its insured, rather than a subrogation clause, which allowed the insurer to “step into the shoes” of its insured.
The trial court found that a homeowners’ insurer was arbitrary and capricious in failing to pay roofing damage, and awarded a statutory penalty and attorneys’ fees. Because the amount of the unpaid roofing damage was $16,081, the trial court awarded under La. R.S. 22:1973 a penalty of $32,162, double the amount of the actual damage, and $12,864 in attorneys’ fees.
Reversing the trial court’s judgment awarding the penalty and attorneys’ fees, the Louisiana Fifth Circuit Court of Appeal correctly finds that under R.S. 22:1973, the court can award as a statutory penalty only two times the damages that actually resulted from the insurer’s bad faith or $5,000, whichever is greater. Here, there were no damages caused by the insurer’s bad faith, and the trial court erroneously doubled the amount of damages that were not timely paid, not any amount in other damages actually caused by the insurer’s failure to make timely payment. However, under La. R.S. 22:1892(B), which requires a penalty of 50 percent of the amount that was arbitrarily not paid, the court awarded the plaintiff a penalty of $8,040.
Further, the court reversed the attorneys’ fees award because there was no evidence introduced in the trial court to justify the amount of that award, and remanded this issue to the trial court for an evidentiary hearing. Williams v. Security Plan Fire Insurance Company, 738 900 (5/31/17).
In a car-accident case, plaintiff settled with the liability insurer and its tortfeasor insured, and sued his UM insurer, GEICO. Before settling with the liability insurer, plaintiff did not get the consent of his UM insurer. GEICO contended that under Georgia law (but not Louisiana law), the insured’s failure to obtain the approval of the UM insurer to the settlement defeated his UM claim; that Georgia law applied; and that it was entitled to a legal determination of which state’s law applied before making an unconditional tender of UM benefits, as required under Louisiana law.
On summary judgment, the trial court found that GEICO was in bad faith for not making an unconditional tender. But the Louisiana Fourth Circuit Court of Appeal reverses, finding that the UM insurer’s decision to first obtain a ruling on the choice-of-law issue was reasonable and thus that GEICO’s decision not to make an unconditional tender was not arbitrary. Jones v. Government Employees Insurance Company, 2012-11958 (6/14/17).
In a lengthy decision, a New York court of appeals finds that in an additional insured endorsement, the wording “caused, in whole or in part, by” refers to “proximate cause” or “legal cause,” rather than “but for” causation. In 2004, the ISO began using the “caused by” wording in additional-insured endorsements, replacing the “arising out of” wording, to require that the named insured’s fault be a legal cause of the damages before the additional insured would have coverage under the endorsement. Here, the named insured was not at fault, and an additional insured was solely at fault. Note that, because of the facts of the case, the court did not squarely address the situation of whether the additional insured has coverage for its negligence if the named insured was also at fault. Courts are divided on that issue. Burlington Insurance Company v. NYC Transit Authority , 2017-WL-2427300 (6/6/17).
A typical additional-insured endorsement covers the additional insured, but only for damages “caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf in the performance of your ongoing operations.” Do the words “you” and “your” refer to the named insured, or the additional insured? In Employer Mutual Cas. Co. v. Shivam Trading, 5:16-58 (5/16/17), a Georgia federal district court finds that the words apply only to the named insured.
The 2013 ISO earth movement exclusion in property insurance policies excludes damage “regardless of any cause or event that contributes concurrently or in any sequence to the ‘loss'” caused directly or indirectly by earthquake; any earth sinking, rising or shifting; landslide, or mine subsidence. In Erie Insurance Property and Casualty Company v. Chaber , 16-0490 (6/1/17), soil and rock slid down a hill, damaging the plaintiffs’ shop. The property insurer denied coverage because of the policy’s earth movement exclusion. The plaintiff insureds argued that improper excavation of the hillside, rather than natural causes, caused the slide; and that the exclusion did not unambiguously exclude damages for manmade causes. The lower court found the exclusion was ambiguous. Reversing, the West Virginia Supreme Court of Appeals finds that the exclusion is not ambiguous and applies, regardless of whether the event was triggered by natural forces or negligent excavation.
But if Earth Movement, as described in 5.a. through 5.d. above results in fire, explosion, sprinkler leakage, volcanic action, or building glass breakage, we will pay for the “loss” or damage caused by such perils.

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