Claims And Issues

Competing Notices of Corporate Rep Depostions: CONTINUED.

This continues a post begun here on Monday, April 25, 2011.

   In Diamond State Insurance Co. v. His House, Inc., Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Discovery Order, Filed Jan. 18, 2011) PUBLIC ACCESS also published as 2011 WL 146837 (S.D. Fla. January 18, 2011), a United States Magistrate Judge was confronted with competing Rule 30(b)(6) Notice of Deposition of Corporate Representatives. One Notice was served on behalf of a Policyholder-Defendant.  The other Notice was served on behalf of a Liability Insurance Company-Plaintiff which had already denied all coverage for defense and for indemnity of an underlying lawsuit filed against the Policyholder.

 The Nature of the Case:  A Declaratory Judgment Action With No Claim For Bad Faith Alleged.

(For more specific facts of the case, please see the beginning post here of Monday, April 25, 2011.)

 Diamond State's Motion to Compel Another Rule 30(b)(6) Deposition of His House, and to Take the Deposition of Ms. Kristen Glaspy, is Granted -- Kind Of.

    As was noted in Monday's post, His House's Corporate Representative was already deposed in the Declaratory Judgment Action by Diamond State. She was already deposed in the underlying case as well.  Ms. Glaspy was also deposed previously in the underlying case.  Further, the Court agreed that the Rule 30(b)(6) Notice was "overly broad".  Nonetheless, the Court granted Diamond State's Motion to Compel.  Somewhat.

   The Court allowed Diamond State to take the depositions, but "on a limited basis" and "severely limited in duration".  Id. at *7.  Each deposition would be completed within one hour.  The Rule 30(b)(6) topics of inquiry for the corporate representative deposition were prescribed in the Court's Order.  So were the limited areas of inquiry which Diamond State was allowed to make while deposing Ms. Glaspy.  Id. at *8.  "If Diamond believes that additional time is needed in either scheduling the depositions and or in completing the depositions," its counsel could get together with His House's counsel and ask for a Hearing.  Id. (The Online Docket of this case on Pacer reveals that no such Hearing was requested.)

   This was the ruling of the Magistrate Judge after she reviewed "the record as a whole".  The reasons given for ruling are not based on "the record as a whole," however.  They have implications for other Declaratory Judgment Actions concerning future insurance coverage disputes.  The Court ruled in this case as it did for three announced reasons which provide questionable support for these rulings, whether taken alone or together.

   "First, it is indisputable" that material can be discovered, said the Court.  "Therefore information which may shed light on the nature or the services provided by His House are particularly germane ...."  Id. at *7.  That may certainly be the case, but the Court did not offer any explanation as to why these "particularly germane" questions were not asked in the first Rule 30(b)(6) deposition of His House in this case, nor as to why "the nature or the services provided by His House" went seemingly undiscovered in the underlying case in which His House was sued for wrongful death.

   Second, the Court added that "[i]n addition, ... in the 'duty to indemnify' context, the facts of the underlying tort action adduced at trial or developed in discovery are central to the resolution of that claim....  Thus, facts related to the underlying tort action, and specifically the circumstances surrounding the death of the infant, are also relevant to resolving the 'duty to indemnify' claim and are discoverable in this action."  Id.  Facts relating to the underlying tort action are ordinarily available in the discovery taken in the underlying tort action.  A coverage action is not generally an appropriate forum in which to try the issue of the insured's underlying liability.  This is particularly true when, as here, such a determination of the insured's liability would be before any determination of the insured's liability in the underlying case.

   Specifically in this case, the circumstances surrounding the death of the infant are precisely the circumstances that prompted the filing of the underlying wrongful death lawsuit and discovery in it, yet the Court in this case made no reference to the discovery already taken in the underlying case in this regard.

   Third and finally, "the Court notes that Plaintiff Diamond is not a party in the underlying state action ... and thus was not present for the depositions of either Kristen Glaspy or His House's corporate representative taken in that matter."  As a result, said the Court, it would allow His House's deposition to be taken again in this Declaratory Judgment Action because Diamond State was not present to ask questions in the underlying action.  That Ms. Glaspy and His House were also previously deposed in the underlying actions did not occasion inquiry into what was asked in those earlier depositions, but instead became a reason to allow them to be deposed again in the Declaratory Judgment Action, "albeit on a limited basis."  Id. at *7.

   Anyone who has tried a Declaratory Judgment Action arising out of an earlier-filed tort action has experienced the requirements imposed by Judges to show them why the discovery taken in the underlying case is not adequate to provide the answers to the interrogations that are proposed for new depositions of the same persons in the Declaratory Judgment Action.  No such inquiry appears from the opinion in this Declaratory Judgment Action concerning Diamond's "limited" depositions of His House and Ms. Kristen Glaspy.  The rulings would perhaps be more readily applied by Courts and counsel in other Declaratory Relief Actions if that inquiry had been made in this one.

The Online Docket of this case on Pacer, the Online Docket for Federal Courts, reflects that the District Judge granted the Plaintiff Liability Insurance Company's Motion for Summary Judgment on January 31, 2011 or within two weeks after the U.S. Magistrate Judge entered the Discovery Order which is the subject of this post.  Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Order Granting Summary Judgment, Filed Jan. 31, 2011) PUBLIC ACCESS. To be continued ......

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Competing Deposition Notices of Rule 30(b)(6) Corporate Representatives.

   In Diamond State Insurance Co. v. His House, Inc., Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Discovery Order, Filed Jan. 18, 2011) PUBLIC ACCESS also published as 2011 WL 146837 (S.D. Fla. January 18, 2011), a United States Magistrate Judge was confronted with competing Rule 30(b)(6) Notice of Deposition of Corporate Representatives. One Notice was served on behalf of a Policyholder-Defendant.  The other Notice was served on behalf of a Liability Insurance Company-Plaintiff which had already denied all coverage for defense and for indemnity of an underlying lawsuit filed against the Policyholder.

 The Nature of the Case:  A Declaratory Judgment Action With No Claim For Bad Faith Alleged.

    The case began when Diamond State filed suit for declaratory relief against His House and others.  His House was a nonprofit corporation engaged in the business of caring for foster care children placed with His House by the State of Florida.

   Having already denied all coverage to His House for defense or indemnity with respect to an underlying wrongful death suit, in this case Diamond State sought declarations that (1) a Professional Liability Policy and (2) a Commercial General Liability Policy which it issued to His House did not provide coverage for the wrongful death lawsuit against His House.  Id. at *1.

     In addition to requesting judicial declarations that the two Policies did not provide coverage under their clear language, Diamond State also alleged that His House's coverage if any under the Professional Liability Policy at issue was voided because His House allegedly "knew of the death of the infant prior to ... the application for the professional liability policy".  As to the CGL Policy, Diamond State also alleged that the "occurrence" that caused the child's death "occurred prior to the policy period and thus no coverage is available under that policy either".  Id. at *1.

   The wrongful death lawsuit or underlying case was filed against His House as the result of the death of an infant, "M.C.," after the child was placed in the care of His House's employee, Ms. Kristen Glaspy, a "foster care mother who was employed by His House".  Id. at *1.

 The Competing Rule 30(b)(6) Deposition Notices and Motions to Compel:  First, His House's Motion to Compel the Deposition of Diamond State's Corporate Representative.

    The Policyholder, His House, wanted to depose Diamond State Insurance Company's Corporate Representative on five (5) designated areas, four of them concerning interpretation of the "policies at issue in this case" in one respect or another, and the fifth area concerning the Insurance Company's handling and denial of His House's claim to coverage under the Diamond State Policies.  Id. at *3.

   Diamond State wanted to re-depose His House's Corporate Representative after His House's Rule 30(b)(6) Deposition had already been taken once in the Declaratory Judgment Action, and once in the underlying case.  In addition, Diamond State wanted to depose Ms. Glaspy, who again was an employee of His House, and who had already been deposed in the underlying case as well.  The Magistrate Judge resolved the issues surrounding a Rule 30(b)(6) Deposition of the Insurance Company first.

   Florida substantive law "governs the substantive portions of this declaratory action," she pointed out.  Under Florida law, "the construction of an insurance policy is a question of law to be determined by the court."  If the insurance policies were held to be unambiguous, they should be interpreted in accordance with their clear terms.  If the Court found the insurance contracts ambiguous, then the Court would be required to construe the wording most strictly against the Insurance Company.  Id. at *2.

   Florida substantive law therefore made interrogation about the Policies at issue "irrelevant to the resolution of this declaratory action."  Id. at *4.  If the Policy provisions at issue were unambiguous, there would be no need for testimony about them.  If the Court held the policy provisions ambiguous instead, then in this case, at least, "Defendants will automatically prevail in the instant declaratory action."  Id.  "Thus, under either scenario, the testimony of Diamond's corporate representative is irrelevant."  Id.

   As to the claim handling inquiry, it might be appropriate in a bad faith case, the Court suggested, see id. at *4-*5, but it was not relevant to this action for declaratory relief concerning the wording used in two insurance policies.  As to the allegations made by Diamond State to the effect that His House knew of the infant's death before applying for the Professional Liability Policy, the prospective testimony was again irrelevant.  In this case, His House did not dispute the date of the infant's death or the date of its Professional Liability Insurance application.  Under the circumstances of this peculiar case, the Court denied His House's Motion to Compel the deposition of Diamond's corporate representative.  Id. at *6.

The Online Docket of this case on Pacer, the Online Docket for Federal Courts, reflects that the District Judge granted the Plaintiff Liability Insurance Company's Motion for Summary Judgment on January 31, 2011 or within two weeks after the U.S. Magistrate Judge entered the Discovery Order which is the subject of this post.  Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Order Granting Summary Judgment, Filed Jan. 31, 2011) PUBLIC ACCESS. To be continued ......

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ERISA Claim for the Long Term: No Remand, No Dismissal.

   Mr. Glenn Herman was an insured under his Employer's long-term disability plan.  He successfully claimed long-term disability benefits and received monthly payments of $661.25 for a time.  Hartford, which issued the Disability Plan and Policy to Mr. Herman's Employer, adjusted Mr. Herman's benefits downward to reflect his receipt of individual disability benefits from the Social Security Administration.  The resulting payment by Hartford was an adjustment to $50.00 per month thereafter.  Download Herman v. Hartford Life and Accident Insurance Co. (S.D. Fla. Case No. 10.61661, Omnibus Order Filed April 15, 2011) PUBLIC ACCESS, also published as 2011 WL 1458050 (S.D. Fla. April 15, 2011)(authorized password required to access Westlaw).

   Mr. Herman filed suit in Florida State Court.  His Complaint against Hartford was in two counts:  Bad Faith failure to pay benefits under the Disability Plan, and a Declaratory Judgment to restore his previous level of disability insurance benefits.  Hartford removed the case to Federal Court and simultaneously filed a motion to dismiss based on failure to exhaust administrative remedies under ERISA, and the stage was set for the Federal Judge to hold both that ERISA applied to Mr. Herman's claims, and then to hold that it did not.

   First, the Federal Court denied Mr. Herman's motion to remand.  Hartford removed the case based on Federal question jurisdiction provided by ERISA.  The Federal Judge applied a "'general rule'" operating in the Eleventh Circuit that a case arises under Federal law only if it is Federal law that confers the claim or cause of action.  The Federal Judge in this case agreed that ERISA confers Mr. Herman's claim and denied his motion to remand.  Id. at *2.

   Second, the Federal Court denied Hartford's motion to dismiss based on Mr. Herman's alleged failure to exhaust administrative remedies.  Without mentioning a second time in this opinion that Mr. Herman was pursuing both a Bad Faith claim under Florida law, and as a claim for Declaratory Relief, the Court noted that "ERISA allows a plan 'participant or beneficiary' to bring a civil action to recover benefits due under the terms of a plan."  Id. at *2.  The Court was apparently convinced without further explanation that Mr. Herman had done this.  However, exhaustion of administrative remedies would depend upon the terms of the Disability Plan, said the Court.

   The Disability Plan in question in this case provided an administrative appeal process for outright denial of claims, but not for what the Court called "adjustment" of claims.  Mr. Herman's claim was not denied, it was adjusted, in the eyes of the Court.  Accordingly, there were no administrative remedies for Mr. Herman to exhaust and Hartford's motion to dismiss in this case was denied.  Id. at *2.

 The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Associaton's Insurance Coverage Litigation Committee.

Preemption of Bad Faith Claims under ERISA is examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §9:16 (Shepard's/McGraw-Hill Second Edition, West Publishing Company 2010 Supplement and Third Edition in process).

 

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"Educating" The Judge Who Tries Your Client's Case: Sometimes ...

... Maybe "Not Such a Good Thing After All."

   Defense lawyers are certainly not alone when "educating the Trial Judge" becomes a factor during the course of filing their motions and briefs.  Sometimes at least some Policyholder or Plaintiff lawyers may have the same motivation during the course of filing their motions and briefs as well.

   Such seems to have been among the motivating factors at work on the face of a judicial report concerning the Court's disposition of one of the approximately eight (8) Motions in Limine, from Plaintiff and Defendant collectively, in the First-Party Bad Faith Case of Download Altheim v. GEICO General Ins. Co. (M.D. Fla. Order Filed April 14, 2011) PUBLIC ACCESS, also published as 2011 WL 1429735 (M.D. Fla. April 14, 2011)(authorized password required to access Westlaw).

   The Plaintiff, Ms. Bethany Altheim, was issued an Uninsured/Underinsured Motorist Policy by GEICO.  Ms. Altheim got into an automobile accident with one Ms. Meredith Tucker.  Ms. Altheim demanded the $10,000.00 UM/UIM Policy Limit, and later demanded $1,000.00 less.  GEICO refused both UM/UIM demands.  Ms. Altheim then sued GEICO in Florida State Court and recovered a $750,000.00 Judgment against GEICO, "pursuant to a stipulation by the parties."  Before a week had passed, she filed her First-Party Bad Faith lawsuit against GEICO.  Altheim v. GEICO General Insurance Co., 2011 WL 1429735 at *1.

   With that one-paragraph of context all that seems reasonably necessary to understand the attempted Motion in Limine in question, Ms. Altheim's lawyers filed what the Court in that case described as a "Motion to Exclude State of Mind Evidence".  Id. at *2.  GEICO opposed this motion on the grounds that the motion was in essence overly broad and vague.  The Court agreed with GEICO in this regard.

   In addition, the Court served notice in this case that it refused to be "educated" about Florida law which, parenthetically, provides grounds in at least some circumstances to argue for the relevance and admissibility of evidence on the issue of whether a case "could" have been settled by the insurer if evidence tends to show that the underlying claimant was not willing to settle (see previous posts here, for example, in the Categories of Bad Faith, Defenses in Insurer Bad Faith Actions, Evidence, and Settlement Demands and Offers).  The Court in considering this particular Motion in Limine wrote this in its ruling:

The Court agrees that the motion [is] over-broad and is unclear as to what specific testimony Plaintiff is seeking to exclude.  In addition, the Court is not prepared to agree at this time that state of mind testimony can only be elicited from expert witnesses or that Plaintiff's willingness to settle is speculative or irrelevant.

Id.

Postscript:  The same or a similar issue arising in a different case and involving defense attorneys is explored in a post on Insurance Claims Bad Faith Law Blog on Tuesday, April 19, 2011.

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Establishing Diversity Jurisdiction: Burden of Proof, Standard of Proof ... Counterclaim?

   American General Life and Accident Insurance Company issued a Life Insurance Policy to Mr. William Johnson.  After that, it increased the face amount of the Policy from $50,000.00 to $100,000.00.  Mr. Johnson died.  His death took place within two years of the effective date of the face amount increase, which triggered "a routine contestable investigation" by American General.  Download American General Life & Accident Insurance Co. v. Johnson (M.D. Ga. Case No. 7.10cv00136, Order Filed April 7, 2011) PUBLIC ACCESS., also published as 2011 WL 1336554 *1 (M.D. Ga. April 7, 2011)(authorized password required to access Westlaw), to which the Federal Court added an Addendum the same day:  Download American General Life & Accident Insurance Co. v. Johnson (Addendum Order Filed April 7, 2011) PUBLIC ACCESS.

   What American General found in its investigation was not identified by the Federal Court in this case, but whatever it was it was enough for American General to file a Complaint in Federal Court for a Declaratory Judgment of Rescission.  Not rescission of the entire Life Insurance Policy.  American General paid the previous face amount of $50,000.00.  American General instead contested the increase of the face amount by another $50,000.00 to $100,000.00.  American General Life & Accident Insurance Co. v. Johnson, 2011 WL 1336554 at *1.

   Betty Johnson was the Defendant.  She was William Johnson's wife and life insurance beneficiary.  She responded to the Complaint for Declaratory Relief with a Motion to Dismiss based on lack of diversity and therefore a lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).  Id.

   The attack on diversity focused on the Federal statutory requirement that Federal Court diversity jurisdiction include an amount in controversy in excess of $75,000.00, exclusive of interest and costs.  American General as the Plaintiff invoking Federal Court diversity jurisdiction bore the burden of proof by a preponderance of the evidence "that the claim exceeds $75,000."  Id. at *2.

   American General's Complaint was for Declaratory Relief and did not specify the amount in controversy.  "There is no question that the $50,000 additional face amount is in controversy."  Id.  The fight was about whether there was $25,001.00 more at issue in this case to meet the jurisdictional amount which was required to exceed $75,000.00.

   Although the Federal Court in this case said that it did not consider a Counterclaim filed by Ms. Johnson, id. at *3 n.3, it surely appears that in fact, it did.  Ms. Johnson carefully filed a Counterclaim "for the $50,000 unpaid portion of the policy, as well as a statutory bad faith penalty not to exceed $24,999 ....  Thus, Ms. Johnson specified in her counterclaim that she was seeking a maximum amount of $74,999."  Id. at *1.

   The Federal Court just as carefully examined the bad faith penalties that Ms. Johnson was seeking in this case.  "The issue is whether the claimed bad faith damages and attorneys' fees are sufficient to establish the rest of the jurisdictional amount."  Id. at *2.  "Under Georgia law," wrote the Federal Court, applied to the facts alleged in this case, "bad faith" statutory penalties could include a maximum award of 50% of the denied benefit, or here, 50% of $50,000.00 which would be a maximum additional $25,000.00, plus Ms. Johnson's attorney's fees.  Therefore, if Ms. Johnson was awarded the maximum statutory bad faith penalty plus at least $1.00 in attorney's fees, the jurisdictional amount would be satisfied in this case.  The problem with assuming that Ms. Johnson would receive the maximum available statutory bad faith penalty in this case, however, is that this assumption would "'an impermissible speculation as to what a jury may or may not award in this case.'"  Id. at *3.  In fact, in the eyes of the District Judge, that assumption "is too speculative to give this Court jurisdiction."  Id. at *2.

   There was another way to establish diversity jurisdiction consdering Ms. Johnson's Counterclaim.  Her award of statutory bad faith penalties, and her attorney's fees award, might result in an additional $25,001.00 if she also recovered the $50,000.00 face amount increase in her late husband's Life Insurance Policy.  Not only was this again speculative, said the Federal Court, id. at *2 - *3, but "[i]n addition, American General has provided no evidence whatsoever to establish a dollar amount" for Ms. Johnson's attorney's fees.  "Consequently, American General has failed to show by a preponderance of the evidence that its Complaint satisfies the amount in controversy and, as a result, this Court lacks jurisdiction to hear the case."  Id. at *3.  In and Addendum Order, the Court corrected this statement to acknowledge that American General had indeed filed an Affidavit reflecting that Ms. Johnson's attorney's fees, if awarded, would be over $30,000.00.  Download American General Life & Accident Insurance Co. v. Johnson (Addendum Order Filed April 7, 2011) PUBLIC ACCESS.  The Federal Court did not alter its ruling, however.  The amount in controversy was still too speculative for the Court to exercise jurisdiction in this case.

   For all these reasons, the Federal Court in this case granted Ms. Johnson's Rule 12(b)(1) Motion to Dismiss for lack of subject matter jurisdiction.

   Removal and remand, establishing diversity jurisdiction and amounts in controversy, and related burdens of proof and standards of proof in Insurance Cases are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ current 5:1, new 5:57 (Third-Party Cases) and current 11:1, new 11:23 (First-Party Cases) (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement; Third Edition in process for projected June, 2011 publication).

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Amending the Bad Faith Complaint.

   In Download Ajax Paving Industries, Inc. v. American Home Assurance Co. (M.D. Fla. Case No. 8.10cv2508, Order Filed March 30, 2011) PUBLIC ACCESS, also published as 2011 WL 1188699 (M.D. Fla. March 30, 2011)(authorized password required to access Westlaw), the Plaintiff was Ajax, a Florida corporation.  It filed suit over a Workers Compensation and Employers Liability Policy it received from American Home Assurance Company.

   Ajax filed a Complaint in four counts:  (1) Breach of contract; (2) Declaratory Relief; (3) a Count left unspecified by the Court in this opinion; and (4) alleged "breach of an implied duty of good faith and fair dealing."  Ajax Paving Industries, Inc. v. American Home Assurance Co., 2011 WL 1188699 at *1.  (American Home filed a motion to dismiss all but the third claim, which was certainly the reason it went unidentified in the Court's opinion.)

   Ajax's response to a motion to dismiss from American Home in this case was to request leave to cure the deficiencies in its complaint which American Home had pointed out in its motion.  It is unclear with respect to Count 4 in particular whether Ajax wanted to allege a bad faith claim or not, but it was apparently clear to the Court that in this case Ajax conceded that "Ajax 'has not asserted a bad faith claim'".  Id.

   The Plaintiff's request for leave to amend in response to the Defendant's motion to dismiss in this case was granted.  The reasons that amendment was allowed by the Federal Court are potentially instructive to practitioners and clients alike:

1. The request to amend was timely.
2. It was Ajax's first request to amend in the case.
3. Amendment would not be futile "because the purpose of amendment is to cure deficiencies identified by American Home."
4. The following factors which result in denial of a request for leave to amend were not present here, in sum and in substance:  undue delay; bad faith or dilatory motive; repeated failure to cure past deficiencies; undue prejudice to the opposing party, and futility of amendment.

Id.  The bottom line in this decision, quite literally, was this:

It is preferable to allow amendment than to decide the present dispositive motion based upon Ajax's concessions and assumptions.

* * *

American Home may reassert its arguments after Ajax has amended the complaint, if necessary.

Id. at *2.

   Here is a copy of Ajax's Amended Complaint which it filed as of April 8, 2011:  Download Ajax Amended Complaint Filed 04.08.11 in Ajax Paving Industries, Inc. v. American Home Assurance Co. (M.D. Fla. Case No. 8.10cv2508).  You should take a look for yourself.  It appears however that Ajax has now clearly alleged a bad faith claim; whether its claim has legal merit will not be known for certain unless and until the Court rules on that question.

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WHEN STATUTE OF LIMITATIONS BEGINS IN ACTION AGAINST INSURANCE AGENT.

      In Download Kelly v. Lodwick (Fla. 4th DCA Case No. 4D09.4501, Opinion Filed April 6, 2011) PUBLIC ACCESS; STATED NOT FINAL, also published as 2011 WL 1261163 (Fla. 4th DCA April 6, 2011)(authorized password required to access Westlaw), the Appellate Court was faced with three choices for when the Statute of Limitations begins on an action for alleged negligence and breach of fiduciary duties:

1. The date that the policyholder discovered that it lacked insurance coverage which the insurance agent allegedly was supposed to put in place;
2. The date that the policyholder began to incur defense fees and expenses after it and another insured were sued by the injured claimant; or
3. The date that the policyholder, the other insured, and the injured claimant agreed to a consent final judgment in the underlying case (which was in the amount of what would have been the policy limit of the "casualty policy" the agent allegedly was supposed to obtain for the policyholder).

   Under Florida's four-year statute for bringing an action for negligence or for breach of fiduciary duties, only the second or third choice would allow the action against the agent to proceed.  The Trial Court chose the first option.  It twice granted the agent's motion to dismiss, with prejudice. 

   The Appellate Court chose the second option and rejected both the first and third choices.  It apparently announced a new rule in doing so, although not the rule that might first appear.

   The Appellate Court applied the law to the facts of the case before it.  The law is well-known:  "The last element constituting a cause of action for negligence or breach of fiduciary duty is the occurrence of damages."  Kelly  v. Lodwick, 2011 WL 121163 at *2.

   The facts of this particular case were of course revealed only by allegations in the complaint against the insurance agent, because this was an appeal from a dismissal with prejudice.  The policyholder in this case did not begin to incur damages until it began to incur expenses to defend itself.  This particular policyholder alleged that it began to incur defense expenses after it was sued by the injured claimant.

   That is when the Statute of Limitations began to run on the subsequent lawsuit filed against the insurance agent, because that is when the policyholder first incurred damages allegedly due to the absence of the "casualty policy" which it was the agent's alleged responsibility to get for the policyholder.  "At that time, if the school had coverage with the second insurer, then the plaintiffs' suit against the school and the employee would have triggered the second insurer's duty to defend the school and the employee."  Id.  at *3.

   The Appellate Court was careful to state that the holding it pronounced in this case was not intended to be a rule for all seasons, so to speak.  The Court rejected the date of the settlement consent judgment in the underlying case because although that may have been the date when the policyholder and the other insured incurred the most damages, it was not the date that they first began to incur damages and thereby started the Statute of Limitations to run.  Id. at *4.

   Further, the Court rejected the argument (and the Trial Court's ruling) that the Statute of Limitations began to run in this case on the date that the policyholder in this case discovered that it did not have the insurance coverage (which was also the date of the underlying incident in this case).  Moreover, there could be a fourth date when the Statute of Limitations might begin in other, future alleged negligence or fiduciary breach lawsuits against insurance agents for failure to procure insurance coverage.  That would be in a case where the policyholder immediately incurred (or alleged that it immediately incurred) expenses after the alleged incident, to defend itself "against the plaintiffs' possible claim."  Id. at *4.  [Emphasis by the Appellate Court.]

   The Appellate Court said again that the allegations in the complaint controlled the outcome on an appeal from a dismissal with prejudice in this case, just as the existence of genuine issues of material fact, or not, would govern the outcome of cases involving motions for summary judgment following discovery.  "Rather, we recognize, as a factual matter, that situations may occur in which the party lacking insurance takes immediate steps to defend itself against the underlying plaintiffs' possible suit....  However, if such allegations do not appear on the face of the complaint, but discovery reveals the existence of such evidence, then a motion for summary judgment based on a statute of limitations affirmative defense may be granted instead."  Id. at *4.

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On Wisconsin: Lessons in Lawyering.

   So you have an agenda.  You work in a large law office, let's say.  Your boss is political, you might also say.  Your boss has an agenda.

   So you have instructions.  Your boss tells you to file a lawsuit which will protect or promote his agenda.  Ordinarily, a lawyer files a lawsuit in the name of another person.

   So now you have an agenda and you have instructions.  Only one thing is necessary.

   You need to speak with your prospective client before you file a lawsuit in the name of that prospective client. 

   You see, when you are a lawyer, you may have an agenda, and you may have instructions to file a lawsuit, but a  lawsuit belongs to the client -- not to you.  Or to your boss, or to your agenda.

   In Wisconsin, an assistant attorney general filed an appeal in the name of the Secretary of State.  The assistant had an agenda and instructions.  One problem.  The Secretary of State says he was never asked.

   Turns out he does not want to appeal at all.  And perhaps embarassing to the lawyer or lawyers who filed his appeal, he has told that to the Supreme Court where "his" appeal is pending.  Reportedly, the Secretary of State  now has his own lawyer who has asked for the appeal to be withdrawn, after he successfully pointed out that the attorney general's office has what is reported as a "conflict".  See Ed Treleven, "La Follette Asks Court to Withdraw Appeal of Injunction Against Collective Bargaining Bill" (Wisconsin State Journal, posted online Wednesday night, April 6, 2011).

   The Wisconsin Secretary of State is a Democrat.  The Wisconsin attorney general is a Republican.

   Do you think the lawyers knew that before an appeal was filed in which an assistant or assistants attorney general represented that they, well, represented the appellant?  It seems like that would have been all the more reason to speak with the appellant, before filing his appeal, if only to ask simply if he wanted to take an appeal.

   Political shenanigans are no substitute for acting like a lawyer.  Or for common sense.

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The Poor Have No Health Insurance, Mr. Potter.

   2/3 of the people who are enrolled in the Medicaid program providing direct payments to participating doctors for medical treatments, are "low-income people who are 65 and older or disabled."  Robert Pear, "G.O.P. Blueprint Would Remake Health Policy /Seeks Trillions in Cuts /Medicare and Medicaid Costs Could Be Split With Consumers" p. A1, col. 1 (New York Times Nat'l ed., Tuesday, April 5, 2011).

   About half of the people who benefit from Medicaid are children.  Id.

   A proposal to kill their medical care has been made in Washington. Part of the proposal is to replace poor people's access to medical care with a cadre of private corporations that would decide whether money should be paid for their medical treatment.  We are told that this would save money.  In fact, money is the only reason behind this proposal.  It has been reported from coast to coast and you can read about it here.  See, e.g., Noam N. Levey and Kathleen Hennessey, "GOP Bets Voters Will Choose Fiscal Well-Being Over Healthcare Safety Net" (Los Angeles Times Online, posted Wed., April 6, 2011); Carl Hulse, "Republican Plan Would Cut $4 Trillion Over Decade" p. A13, col. 1 (New York Times Nat'l ed., Monday, April 4, 2011).   Unfortunately the news stays the same.

   To paraphrase Mr. George Bailey when he reminded Mr. Potter about reality, people do most of the living and dying in this country.

    I always liked the idea of living in Bedford Falls, even though it was not perfect.  Potterville was a nightmare.  Do you think differently?

The author is Co-Chair of the Health, Life and Disability Subcommittee of the American Bar Association Insurance Coverage Litigation Committee.

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HUD Program Offers Hope of Relief ... to Mortgage, Title Insurers.

 

   There is a program to take the squeeze off Mortgage Insurance Companies and Title Insurance Companies.  Do you remember the sensation of losing blood when you were punched in the nose during your childhood (not that long ago)?  Mortgage Insurance Companies and Title Insurance Companies have been paying money to lawyers and on Claims a lot since late 2006, early 2007.

   The program to let up the pressure is not a proposal.  It is operational.

   However, you and your clients may never see it.  You may only get the chance to read about it in online newspapers from far-away places.

   The program is called the Emergency Homeowners Loan Program.  It is a joint effort by the United States Government through Housing and Urban Development, and the State Governments.  Therein lies a snare.  Will your State Government participate or will it turn away program money to preserve Mortgage Servicers' and Mortgagees' current streams of income?

   The only Homeowners who should even think about applying for the Emergency Homeowners Loan Program, where it is available, are people who:

• Have lost income during the Great Economic Collapse or because of a medical condition;
• Are 3 to 12 months behind on their Mortgage payments, interest, principal, and servicing fees hidden and disclosed;
• Are a Defendant or about to become a Defendant in a Foreclosure lawsuit filed by a Plaintiff who may or may not know who really owns the Mortgage;
• Have income below the median income of their neighbors; and
• Have what is reported to be "a 'reasonable likelihood' of resuming mortgage payments within two years."

See Ovetta Wiggins, "Maryland Joins HUD Foreclosure Loan Program" (Washington Post Online, Friday, April 1, 2011).

   After meeting each of these qualifications, an eligible person can receive a maximum loan of $50,000.00, hardly enough to pay down the Mortgage on any property in the high-rent district, so to speak.  The loan is limited to 12 months "of overdue debt" as well.

   Under the business model which existed some 30 years ago, under which Homeowners payed off their Mortgages to banks and were done, this program would have made enough profit even for the banks.  Under the business model which caused the Great Collapse, and which is inexplicably still in charge of us, this program will undoubtedly be opposed by those who stand to make even more money from interminable debt followed by Foreclosures.

   For the sake of the Mortgage Insurance Companies and the Title Insurance Companies, in addition to the Homeowners, this program is worth joining.  You and your clients can join it, if your State Government is available to meet your needs and the needs of your clients, and of the distressed Mortgage and Title Insurance Companies.

Please Read The Disclaimer.

  

"Narrow Network" HMOs Cheap Because No Choice.

Looks like it is okay for HMOs to come between you and your doctor.  So long as the cost reductions go to the right people.

   Employers are looking to purchase Health Plans from what is called "narrow network" HMOs because they "narrow" Health Plan Premiums.  "Narrow network" HMOs also narrow down the short list of available doctors.

   Employees who are provided such Plans through their Employers, as their alternative to  no Health Insurance Coverage at all, are finding that they have to drop their doctors because so few doctors sign up for these HMOs.

   Health Insurance Companies are reportedly promoting "narrow network" HMOs to Employers on the basis of paying out lower Premiums.  The Health Insurance Companies apparently do not mention the lack of medical providers.  See Duke Helfand, "A Shift Toward Smaller Health Insurance Networks/Thousands of Employers in California and Nationwide are Opting for 'Narrow Network' HMOs, Which Offer Notable Savings on Insurance Premiums But Also Offer Fewer Medical Providers" (Los Angeles Times Online, Sunday, April 3, 2011).

   Where do you suppose that money that comes from this cost reduction, actually ends up?  Wherever that is, is that the best business use of it?

   Good questions.  Someone should ask them.  Oh, wait.  I just did.

The author is Co-Chair of the Health, Life and Disability Insurance Law Subcommittee of the American Bar Association Insurance Coverage Litigation Committee.

Please Read The Disclaimer. 

"Forced Flood Insurance": New Parable for Wise and Foolish People.

   Give your bank the power over you to force you to pay Flood Insurance Premiums, and they apparently will.

   Whether you need it or not.

   Whether you live in a flood plain or high and dry. 

   Whether you are like the wise person of the well-known Parable who built your house on rock so that it stood fast when the storm and the floods came, or whether you are like the foolilsh person in that same Parable and you built your house on sand so that when the storm and the floods came, your house fell.

   "And what a fall that was."

   The lesson appears to be to respond right away to the Mortgagee Bank's demand letter for you or your clients to obtain Flood Insurance, or the Bank may force you buy it and send you the bill.  

   Regardless of whether your house is built on rock or on sand.

   P.S.  This lesson applies whenver you give your bank the power to force you to buy any type of Insurance.

See also the post here on Monday, March 28, 2011.

 Please Read The Disclaimer.