Insurance Law Report focuses on developments in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.
Below are the articles for the September issue. To view, click on the appropriate title and you will be brought to the full version of the article below.
Kentucky Supreme Court Affirms Bad Faith And Punitive Damages Award Against Insurer Which Defended And Settled Claim Against Its Insureds
The Supreme Court of Kentucky held that an insurer’s defense and settlement of a claim against its insured does not preclude the insured’s bad faith claim and affirmed an award against an insurer for causing emotional distress to its policyholder, finding as a matter of first impression that the insured was not required to present expert medical proof to support the emotional distress claim. Indiana Ins. Co. v. Demetre, 2017 WL 3635500 (Ky. Aug. 24, 2017).
A policyholder sued its insurer for breach of contract, violation of the Kentucky Unfair Claims Settlement Practices Act and violation of the Kentucky Consumer Protection Act in connection with the insurer’s handling of a claim related to property damage allegedly caused by pollution from the insured’s property. The insurer defended and ultimately settled the claim, but a jury found that the insurer’s handling of the claim over a three-year period was in bad faith, and awarded emotional distress and punitive damages. The insured presented testimony of his emotional distress about the litigation and possible bankruptcy and that he was forced to hire his own defense attorney. No medical testimony was offered to support the emotional distress claim. The jury found that the insurer’s claim practices violated statutory law and breached its duties of good faith and fair dealing and awarded damages for emotional distress and punitive damages. The Court of Appeals affirmed, and the insurer appealed.
The Kentucky Supreme Court affirmed, finding that the insurer’s decision to defend the insured under a reservation of rights and ultimately to settle on his behalf did not preclude the insured’s bad faith claim where there was evidence of a prolonged continuation of a meritless coverage dispute and the insurer pursued a declaratory judgment action for a full year after learning that the claims against the insured were likely not legitimate. Further, as a matter of first impression, the Supreme Court ruled the insured was not required to present expert medical or scientific proof to support the claim for emotional distress where it found the insured’s testimony that he suffered from daily stress wondering what would happen to his family due to a potentially uninsured exposure was clear and satisfactory proof to support the jury award.
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Florida Supreme Court Finds Insurer Liable For Plaintiff’s Attorneys’ Fees And Costs Based On Ambiguity In Policy’s “Additional Payments” Provision
The Florida Supreme Court recently held that an insurer is liable for a plaintiff’s attorneys’ fees and costs awarded pursuant to Florida’s offer of judgment statute due to an ambiguity in the “Additional Payments” provision of the insured’s policy. GEICO v. Macedo, 2017 WL 2981812 (Fla. Jul. 13, 2017).
The plaintiff sued the insured for damages resulting from an automobile collision and served the insured with a proposal for settlement. The proposal for settlement was not accepted, and the case went to trial. The jury returned a verdict in favor of the plaintiff in an amount that triggered the plaintiff’s entitlement to reasonable attorneys’ fees and costs incurred after the date the proposal for settlement was served. After the plaintiff joined the insurer, the trial court held the insured and the insurer jointly and severally liable for the plaintiff’s reasonable attorneys’ fees and costs. The insurer argued that the policy did not cover the plaintiff’s attorneys’ fees and costs because the “Additional Payments” provision of the policy covered only “costs” which do not include attorneys’ fees and because such costs are recoverable only when they are incurred at the insurer’s “request.” A Florida appellate court affirmed, and the insurer appealed.
The Florida Supreme Court affirmed, finding the policy ambiguous because it referenced “legal expenses” in addition to “costs.” In addition, the Florida Supreme Court held that the phrase regarding an insurer’s “request” is also ambiguous given that the insurer controlled the litigation strategy and that the insured was required to cooperate with the insurer under other terms of the policy. Thus, because of the ambiguity regarding whether the “Additional Payments” provision of the policy provided coverage for the plaintiff’s attorneys’ fees and costs, the Supreme Court construed the policy in favor of coverage for attorneys’ fees and costs awarded against the insured and the insurer.
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South Carolina Supreme Court Reaffirms Prior Opinion Invalidating Inadequate Reservation Of Rights Letter
After a much anticipated rehearing, the South Carolina Supreme Court upheld its prior decision that an insurer failed adequately to reserve the right to contest coverage with specificity and failed to request an allocated verdict in the underlying litigation. Harleysville Grp. Ins. v. Heritage Communities, Inc., 803 S.E.2d 288 (S.C. 2017).
The Supreme Court previously held, among other things, that insurers’ reservation of rights letters must place insureds on notice of the specific grounds on which insurers may contest coverage, and that insurers must request allocated verdicts in underlying actions in order to later preserve the right to contest coverage of portions of a verdict. Harleysville Grp. Ins. v. Heritage Communities, Inc., No. 2013-001281, 2013-001291, 2017 WL 105021 (S.C. Jan. 11, 2017), opinion superseded on reh'g, 803 S.E.2d 288 (S.C. 2017). The Court reheard the case and issued an opinion that generally reiterated its prior opinion. The Court, however, did add analysis of why a property owners’ association, which was not a party to the insurance contract, had standing to challenge the sufficiency of a reservation of rights letter. The Court noted that, while strangers to insurance contracts typically lack standing to challenge insurance contracts, the unique facts of the case granted the property owners’ association standing. Specifically, it noted that the insured was now defunct and failed to make an appearance, the property owners’ association shared a common interest with the insured in maintaining insurance coverage, and, accordingly, the property owners’ association should be allowed to “stand in the shoes” of the insured.
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Mississippi Supreme Court Determines Excess “Other Insurance” Provision Applies Over Pro Rata “Other Insurance” Provision
The Mississippi Supreme Court recently addressed competing “other insurance” clauses in liability policies. Continental Cas. Co. v. Allstate Prop. & Cas. Ins. Co., 2017 WL 3641284, (Miss. Aug. 24, 2017). An auto policy’s “other insurance” clause stated: “If more than one policy applies on a primary basis to an accident involving your insured auto, we will bear our proportionate share with other collectible liability insurance.” A vessel policy’s “other insurance” clause stated that “[i]f there is any other available insurance that would apply in the absence of this policy, this insurance shall apply as excess over the other insurance....”
The injured party’s claim settled with each insurer contributing equal amounts. The vessel insurer sued the auto insurer seeking a declaratory judgment that its policy is excess to the auto policy and had no obligation until exhaustion of the auto policy and to recover defense costs incurred after tendering the claim to the auto insurer. The auto insurer argued the competing policies should apply pro rata based on limits on which basis it had overpaid. The trial court awarded summary judgment to the auto insurer. The vessel insurer appealed.
The auto insurer argued (1) the terms of the vessel liability insurance policy are ambiguous; (2) the “other insurance” clauses in the competing policies are in conflict and therefore require a pro rata apportionment; and (3) the policies did not insure the same property for the same risk. The Mississippi Supreme Court found the vessel liability policy not ambiguous and that the “other insurance” clauses do not conflict because one is an excess clause and the other is a pro rata clause.
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Fifth Circuit Finds Mississippi Law Recognizing Claim Against Agent For Negligent Procurement Of Insurance Extends Only To Insureds
The U.S. Fifth Circuit Court of Appeals affirmed summary judgment in favor of a property insurer and an agent on claims the insurer and agent negligently failed to secure a sufficient amount of insurance. Emerald Coast Finest Produce Co. v. Alterra Am. Ins. Co., 864 F.3d 394 (5th Cir. 2017).
A warehouse lease required the lessee to provide and maintain fire and extended coverage property insurance for the leased premises equal to “100% of the replacement value of the building.” The lessee represented to its insurance agent certain replacement values, and insurance was placed accordingly. A fire substantially damaged the building, and the property insurer’s adjuster determined that the replacement value of the building far exceeded the limits obtained. The lessor sued the agent for negligently failing to determine the actual replacement-cost value before placing coverage and for failing to procure the required replacement-cost coverage. The lessor also asserted a negligence claim against the insurer for failing to determine the actual replacement cost of the warehouse and for respondeat superior liability for the agent’s negligence. The district court granted summary judgment to all defendants.
On appeal, the Fifth Circuit acknowledged Mississippi law recognizing claims for negligent procurement of insurance but noted that the Mississippi cases discussing an agent’s negligence in procuring insurance have done so only for a duty owed to the insured. The lessor argued it was a third-party beneficiary to the insurance contract, and was therefore owed a more general duty. The Fifth Circuit held that because, at best, the policy is the source of any promise to the lessor as a third-party beneficiary, nothing in the policy such as the amount of coverage could be a breach of an already existing obligation. It ultimately found no authority under Mississippi law supporting the lessor’s claims against the agent and insurer, and affirmed the trial court’s grant of summary judgment.
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Fourth Circuit Upholds Denial Of Insurer’s Motion To Compel Arbitration Under Virginia Law
The U.S. Fourth Circuit Court of Appeals, applying Virginia law, held an arbitration agreement contained in a putative insurance contract to be invalid. Minnieland Private Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co., Inc., 867 F.3d 449 (4th Cir. 2017).
An insured entered into a putative insurance contract in Virginia. A dispute arose over a sharp increase in the premium charged, and the insured filed suit. The insurer sought to compel arbitration under an arbitration agreement contained in the contract, and the insured asserted a Virginia statute that prohibits clauses that deprive Virginia courts of jurisdiction over actions against insurers. The trial court invalidated the arbitration clause.
On appeal, the insurer argued that the arbitration clause did not deprive Virginia courts of jurisdiction because the arbitration clause included an antecedent delegation provision that left the question of arbitrability for the arbitrator to decide. The Fourth Circuit noted that a federal court will analyze challenges to arbitration agreements only if that challenge is focused on the antecedent delegation provision. It further noted that the insured successfully challenged the provision because the insured challenged the enforceability of “any” arbitration provision in the putative insurance contract, which necessarily included the delegation provision. Furthermore, the Fourth Circuit found that the delegation provision is unenforceable to the extent it grants an arbitrator, rather than a Virginia court, the power to determine whether the putative insurance contract in fact constitutes an insurance contract, and therefore is subject to Virginia insurance law. Accordingly, the court upheld the trial court’s determination that the arbitration provision violated Virginia law.
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Sixth Circuit Affirms “Occurrence” Is Based On Number Of “Causes,” Not “Effects,” Under Kentucky Law
The U.S. Sixth Circuit Court of Appeals followed the “cause” approach of determining the number of occurrences, and affirmed a district court ruling that an insurer was liable to pay only a single per occurrence policy limit towards a verdict against its insured where it deemed multiple injuries to be the result of one occurrence. Evanston Ins. Co. v. Hous. Auth. of Somerset, 867 F.3d 653 (6th Cir. 2017).
The insured housing authority was a member of a self-insurance fund which held a general liability policy providing $1 million in coverage “per occurrence” for bodily injury and property damage claims subject to a $2 million aggregate limit. The housing authority was sued following an incident in which a tree fell on the housing authority’s property resulting in the death of a pregnant woman and her unborn child and severe injury to another tenant. A jury found the insured liable for failing to maintain the area around the tree and returned a multi-million dollar verdict. The insurer denied coverage for the full amount of the judgment, arguing coverage was capped at $1 million because the injuries resulted from a single occurrence. The insurer filed a declaratory judgment action, and the district court held in its favor. The insured appealed.
The Sixth Circuit affirmed, finding that the incident constituted a single occurrence despite multiple injuries. The court stated that when determining how many occurrences are in play, the analysis focuses on the number of causes, not the number of resulting injuries, signaling Kentucky’s adherence to the “cause approach.”
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North Carolina Appellate Court Holds Personal Liability Policy Does Not Cover Claims Of Negligent Supervision When Minors Committed Vandalism
The North Carolina Court of Appeals held that intentional acts of minors causing property damage preclude coverage for claims of negligent supervision asserted against the minors’ parents. Plum Properties, LLC v. N. Carolina Farm Bureau Mut. Ins. Co., Inc., 802 S.E.2d 173, 177 (N.C. Ct. App. 2017).
Minors vandalized a number of homes, and the owners made claims against the minors and against the parents of the minors for negligent supervision. The parents had homeowners’ policies that included as insureds relatives of the named insureds but contained an exclusion of coverage for intentional injury or damage. The trial court granted summary judgment for the insurer, finding coverage for all damages excluded due to the exclusion.
The North Carolina Court of Appeals affirmed, rejecting the argument that because the parents were only alleged to be negligent in the supervision of their children, the vandalism constituted an “occurrence” as applied to the parents. The court concluded that because the minors both intended to inflict property damage and qualified as insureds, coverage for all claims stemming from the vandalism were excluded, including the claims for negligent supervision against the parents.
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Florida Appellate Court Holds Insureds Not Barred From Filing Suit By Failing To Comply With Policy Conditions After Denied Claim Is Re-Opened
A Florida appellate court recently held that when an insurer unequivocally denied a claim and the insureds submitted a request for reconsideration, the insureds’ subsequent failure to comply with policy conditions does not bar them from filing a breach of contract lawsuit. Castro v. Homeowners Choice Prop. & Cas. Co., 2017 WL 3614102 (Fla. 2d DCA Aug. 23, 2017).
Homeowners submitted a claim to their homeowners’ insurer for damage to their property allegedly caused by sinkhole activity. The insurer denied coverage for the claim based on the policy’s earth movement exclusion after determining there was no evidence of sinkhole activity. Four years later, the insureds provided an engineering report that concluded their property was damaged by sinkhole activity and requested reconsideration of the denial. The insurer re-opened the claim and requested that the insureds submit to an examination under oath, provide a sworn proof of loss and provide all documentation from their engineer. The insureds instead sued for breach of contract without complying with the insurer’s requests. The insurer moved for summary judgment, arguing that the insureds’ refusal to comply with the policy’s conditions precedent to filing suit was a breach of the contract that precluded recovery under the policy. The insureds argued the insurer waived compliance with the conditions precedent to filing suit when it unequivocally denied coverage. The trial court entered summary judgment in favor of the insurer. The insureds appealed.
The appellate court reversed, finding that when the insurer denied the claim, it foreclosed its right to later assert the insureds’ failure to comply with the policy’s conditions precedent. It held that when an insurer investigates a claim of loss and denies coverage because it concludes a covered loss has not occurred, the insurer cannot assert the insured’s failure thereafter to comply with the policy’s conditions precedent to filing suit.
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Florida Appellate Court Holds Providing Statutorily Required Written Notice Of Potential Bad Faith Claim During Appraisal Process Is Permissible
A Florida appellate court recently held that statutory written notice of a potential bad-faith claim through a Civil Remedy Notice of Insurer Violations (“CRN”) may be filed prior to completion of the appraisal process, and doing so satisfies the statutory notice requirement, a pre-requisite to bringing a bad-faith lawsuit in Florida. Landers v. State Farm Fla. Ins. Co., 2017 WL 3443077 (Fla. 5th DCA Aug. 11, 2017).
A homeowner sustained a sinkhole loss, and the insured and insurer did not agree on the method of repair. The insured agreed to make repairs consistent with the insurer’s repair plan, although the insured thought more extensive repairs were required. After the repairs were completed, the insured’s home continued to sustain damage, and the insured claimed he could not live in the home. The insured filed a CRN contending that the insurer acted in bad faith when adjusting the claim by underpaying the claim. The insurer demanded appraisal, and the insured brought a breach of contract lawsuit against the insurer. The insurer filed a motion to compel appraisal, which the trial court granted. Upon receiving an appraisal award in excess of policy limits, the insured brought a bad-faith lawsuit against the insurer, alleging that the insurer delayed and underestimated the claim. The insurer moved for summary judgment, arguing there was no contractual amount due or damages owed because appraisal, a condition precedent to payment, had not been fulfilled. Accordingly, the insurer asserted that the CRN was not valid and, therefore, the insured could not sustain a bad-faith claim. The trial court granted summary judgment in favor of the insurer, and the insured appealed.
The appellate court reversed and remanded, holding that filing a CRN before the appraisal process is complete and damages are determined does not render the CRN a legal nullity. The appellate court noted that there are three prerequisites to filing a bad-faith action: (1) determination of the insurer’s liability; (2) determination of the extent of the insured’s damages; and (3) the insured providing the insurer 60 days’ written notice of the bad-faith claim through a CRN. The appellate court found that the favorable appraisal award satisfied the first two pre-requisites. The appellate court found that the statutory notice requirement provides no time limitation for when a CRN may be filed and does not require a final determination of coverage and damages before one is filed, and that there is thus no statutory requirement preventing an insured from providing notice before there is a determination of liability or damages.
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Texas Court Holds Insurer’s Right To Appraisal Not Waived Even Though Claim Was Initially Denied
A Houston Court of Appeals considered whether an insurer’s denial of a claim waived its right to later invoke appraisal, and held that the right to invoke appraisal continued after the denial and that the timely payment of the appraisal award precluded the insured’s contractual and extra-contractual causes of action as a matter of law. Ron Pounds v. Liberty Lloyds of Texas Insurance Company, 2017 WL 3270980 (Tex.App.—Hous. [14th Dist.], Aug. 1, 2017). This decision is significant in that it appears to be the first state court decision where no waiver was found even though the insurer initially denied the claim in full.
A property insurer denied a claim, and the insured sued the insurer for breach of contract, violations of the Texas Insurance Code and violations of the Texas Deceptive Trade Practices Act. The insurer filed an answer that included a reservation of its right to demand appraisal. Following an unsuccessful mediation, the insurer invoked the policy’s appraisal clause to determine the amount of loss. However, the insured refused to designate an appraiser, contending that the insurer had waived the right to invoke appraisal by initially denying the claim in full. The trial court subsequently compelled the insured’s participation in appraisal, during which designated appraisers agreed on the amount of loss, which was timely paid by the insurer. The carrier then moved for summary judgment on the grounds that timely payment of the appraisal award precluded the insured’s recovery on both contractual and extra-contractual claims. The trial court granted the motion.
On appeal, the insured argued that the trial court abused its discretion in compelling appraisal because the insurer’s initial denial waived that right under the policy. The appellate court noted that the insurer’s denial of the claim, standing alone, was not sufficient to establish waiver and that the circumstances surrounding the denial did not demonstrate an intentional relinquishment of the rights to appraisal. The court further noted that the policy guarded against implied waiver by requiring that “waiver[s] or change[s]” to the policy be in writing and that the declination letter asked that the insured submit any questions or concerns regarding the claim, which indicated an impasse had not yet been reached. The court also pointed out that the insurer reserved the right to invoke appraisal within its answer. Finally, because the insured possessed the right to invoke appraisal himself at any time during the claims process, the court held the insured could not establish he was prejudiced by the carrier’s invocation sufficient to prove waiver of the appraisal provision.
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Florida Appellate Court Finds Insurer Cannot Assert Coverage Defense Due To Failure To Comply With Florida Claims Administration Statute
A Florida appellate court recently held that an insurer could not assert a defense to a claim for coverage when it failed to comply with the Florida Claims Administration Statute. GEICO Gen. Ins. Co. v. Mukamal, 2017 WL 3611593 (Fla. 3d DCA Aug. 23, 2017).
The underlying plaintiffs sued a putative insured for the wrongful death of their son resulting from an automobile accident. The insurer defended reserving rights because the putative insured was not listed as a driver under the insurance policy. While the insurer was defending the underlying lawsuit, the putative insured absconded. The insurer issued several other reservation of rights letters based upon the putative insured’s failure to cooperate. The insurer continued to defend the putative insured for years throughout the underlying lawsuit. After a final judgment was entered against the putative insured, the insurer sought to deny coverage based on the putative insured’s breach of cooperation. The underlying plaintiffs and the court-appointed receiver for the putative insured sued the insurer for bad faith and for a declaration of coverage. The trial court granted summary judgment on the coverage issues in favor of the underlying plaintiffs and court-appointed receiver, finding the insurer could not deny coverage as a matter of law due to its failure to comply with the Florida Claims Administration Statute. The insurer appealed.
The appellate court affirmed, finding that the insurer was precluded as a matter of law from denying coverage due to its failure to comply with the requirements of the Claims Administration Statute. The appellate court analyzed the three options available to the insurer under the statute after properly reserving its rights to deny coverage based upon a particular coverage defense: 1) refuse to defend the insured; 2) obtain a non-waiver agreement from the insured; or 3) retain independent, mutually agreeable counsel to represent the insured. Applying the plain and unambiguous language of the Florida Claims Administration Statute, the appellate court found that the insurer failed to comply with all three, thereby precluding the insurer’s ability to assert the breach of cooperation coverage defense.
The concurring opinion acknowledged that the options under the statute left the insurer open to potential bad faith given the putative insured’s abscondment and the inability to obtain his agreement to a non-waiver agreement, which appeared contrary to the intent of the statute to protect both the insured and insurer. The concurring opinion invited the Florida Legislature to review and to amend the statute to reflect the legislative intent.
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Federal Court In Georgia Holds Insurer Did Not Properly Reserve Right To Recoup Defense Costs Because Reservation Of Rights Was Not Based On Complaint
A federal court in Georgia recently held that an insurer’s reservation of rights did not adequately reserve the insurer’s right to recoup defense costs even if there had been no duty to defend because the reservation of rights was not based upon allegations in a complaint. Evanston Ins. Co. v. Sandersville R.R. Co., 2017 WL 3166730 (M.D. Ga. Jul. 25, 2017).
Upon receiving notice of a claim and demand made against the insured, an insurer reserved its right to deny coverage and to recoup defense costs if it established it “owe[d] no coverage.” A lawsuit was subsequently filed against the insured, and after the insured exhausted its self-insured retention, it tendered the lawsuit to the insurer. The insurer supplemented its reservation of rights letter, which was nearly identical to the first reservation of rights and did not address the complaint’s allegations. The insurer filed this declaratory judgment action seeking a determination that the policy did not cover the lawsuit against its insured and that it was entitled to recoup defense costs paid. After the insured settled the underlying lawsuit with no contribution from the insurer, both parties filed cross-motions for summary judgment in the declaratory judgment action. The district court granted the insurer’s motion, in part, holding that the insurer had no duty to indemnify the insured and no further duty to defend. However, the district court denied recoupment of defense costs because the parties failed to address whether the insurer had a duty to defend solely based upon the allegations of the underlying complaint.
The insurer again moved for summary judgment as to its duty to defend and its entitlement to recoup defense costs. In denying the insurer’s motion for summary judgment, the court held that although coverage for the claim was ultimately excluded, the insurer had not shown as a matter of law that it did not owe a duty to defend based upon the allegations of the complaint. The court further held that even assuming the insurer had no duty to defend, the insurer’s reservation of rights letters were ineffective to entitle the insurer any right to recoup defense costs because they did not fairly inform the insured of the bases for the insurer’s position as they did not mention the underlying complaint’s allegations.
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Tennessee Court Finds Coverage Not Available For Voluntary Payments
A Tennessee district court granted summary judgment to an insurer on a breach of contract and statutory bad-faith claim where it found the insurer was not required to indemnify the insured for voluntary payments made to a third party for a covered loss prior to judgment of liability. Dark Horse Express, LLC v. Lancer Ins. Co., 2017 WL 3977692 (M.D. Tenn. Sept. 11, 2017).
The insured, a transport company, entered into a carrier transportation agreement with a third party to transport goods. The carrier was insured under a motor carrier policy which included a cargo endorsement that provided coverage for loss of cargo while in the insured’s control. During transport, the carrier lost control of the cargo from which a portion was stolen. The buyer refused to accept the goods, and the insured tendered a claim to its insurer. The insurer recovered a portion of the full value of the cargo at auction, which it paid to the owner of the goods. The insured paid the balance, and demanded the insurer reimburse it, less the recovered auctioned amount. The insurer denied the claim on the basis that there was no obligation under the policy to pay the cargo claim until legal liability was established by a court. The insured argued that it was entitled to coverage because it would be legally liable for cargo loss by the terms of its carrier contract with the third party and under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §1407, and therefore a judgment was not necessary to trigger coverage.
Coverage litigation ensued, and the insured and insurer filed cross-motions for summary judgment. The court disagreed that the language of the cargo endorsement required the insured’s legal liability to be determined by a judgment. It found that the de facto strict liability for lost cargo imposed under the Carmack Amendment did not circumvent the policy’s requirements for coverage, and thus the insurer was not required to indemnify the insured for the voluntary payments made by the insured to the third party barring a judgment.
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Federal Court In South Carolina Holds Breach Of Contract And Bad-Faith Claims Against Insurer To Be Time-Barred
A federal court in South Carolina recently found a claim for breach of contract and bad-faith denial of insurance benefits brought against an insurer to be time-bared despite the insurer only recently having closed the claim file. Lowcountry Block LLC v. Cincinnati Ins. Companies, 2017 WL 3278878 (D. S.C. Aug. 1, 2017).
Metal molds were stolen from an insured’s business, and the insured made a claim to its insurer. Roughly three years later, upon the expiration of the statute of limitations for both claims for breach of contract and bad faith, the insurer closed its claim file. After the claim file was closed, the insured sued the insurer for breach of contract and bad-faith denial of insurance benefits. The insurer moved to dismiss the complaint, arguing that the causes of action were time-barred by the three-year statute of limitations. The court agreed, noting that the complaint only alleged the date of loss and the date on which the insurer closed the claim file. The court rejected the insured’s argument that causes of action for breach of contract and bad faith only accrued when a claim file is closed because, under South Carolina law, the accrual date of causes of action is not delayed until the full scope of consequential damages is known. The court held that the cause of action for breach of contract and bad-faith denial of insurance benefits accrues on the date of loss, more than three years prior to the filing of the lawsuit, and the cause of action was thus time-barred.
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