Claims And Issues

MAKING FLORIDA WHOLE.

Sometimes the desire to see perceived equity performed makes judges do unusual things.  In Allstate Ins. Co. v. Theodotou, ___ So. 3d ___, 2015 WL 4486578 (Fla. 5th DCA July 24, 2015)(stated not released for publication in the permanent law reports), notice of certified question filed in Supreme Court of Florida 08.21.15, mandate issued by the Fifth District Court of Appeal on 08.25.15, a panel of one of Florida's intermediate appellate courts dispensed with the requirement of equitable subrogation that the injured party be made whole before there can be any equitable subrogation.

In that case, the majority concentrated on the equities in favor of the party seeking equitable subrogation, an automobile liability carrier which paid its policy limits to the injured claimant who recovered a judgment against the carrier's insured.  The judgment ultimately entered in favor of the injured claimant and against the insured was over $11 Million.  The carrier's policy limits were $1.1 Million.

In Allstate v. Theodotou, the Florida appellate court allowed the auto carrier's equitable subrogation claim against alleged subsequent tortfeasors, namely, medical care providers who allegedly caused or increased the injuries of which the injured claimant complained in his suit against the carrier's insured.  To say again, the injured person had not been made whole; some $10 Million of his injuries remained ascertained but unpaid.

In trying to reach a result which the panel perceived as the result that equity required, it is respectfully submitted that the panel concentrated on the wrong person.  The rule that requires an injured person to be made whole before equitable subrogation will be allowed, focuses on the injured person, not on the party seeking equitable subrogation.  If the auto carrier in this case is to be allowed a cause of action for equitable subrogation, one better alternative might be to require the injured person to be made a party plaintiff in the subrogation suit until her, his or its damages are paid in full, or if the injured person refuses to be joined in the subsequent lawsuit against alleged subsequent tortfeasors, then to document that fact, and in either case only then allow the equitable subrogation action to proceed thereafter.  Parenthetically, in this case, after obtaining judgment against the initial tortfeasor and her auto insurance carrier, the injured person filed his own subsequent lawsuit against alleged subsequent tortfeasors.  Allstate v. Theodotou, ___ So. 3d ___, 2015 WL 4486578, *1 (Fla. 5th DCA July 24, 2015).

The panel in Allstate v. Theodotou, ___ So. 3d ___, 2015 WL 4486578, *5 (Fla. 5th DCA July 24, 2015), wisely and unanimously certified the following question to the Supreme Court of Florida as a question of great public importance:

Is a party that has had judgment entered against it entitled to seek equitable subrogation from a subsequent tortfeasor when the judgment has not been fully satisfied?

Speaking of being made whole, if a major storm visits Florida in the near future -- and the hurricane season never ended before November 30 even before climate change took over -- there is a real question "Would Insurers Survive Storm?"  See Robert Trigaux, "On Business," p. 1D, col. 6 (Tampa Bay Times, "Business" Section, Sunday, May 24, 2015).

 

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All rights reserved.

MORTGAGEE "ATIMA": NO INTERESTS APPEAR, NO PAYMENT.

Where an insurance company paid a fire loss entirely to the homeowner, and the mortgagee was not named in the policy, the mortgagee's interests "did not appear" (no "ATIMA") and so the mortgagee had no claim on the insurance proceeds whatsoever. The Universal Holding: Mortgagee's case dismissed against the insurance company.  The most recent example is provided by Zaghi v. State Farm Gen. Ins. Co., 77 F. Supp. 3d 974, 978 (N.D. Cal. 2015).

The settled rule is discussed, along with related issues, in § 3.10, "What's Behind the Charge of Unnecessary Policies" in Dennis J. Wall, "Lender Force-Placed Insurance Practices" (The American Bar Association 2015).  "ATIMA" means that the mortgagees' interests are protected under homeowner's policies "as their interests may appear." This provision is usually coupled in the homeowner's policy with a requirement that the mortgagee shall be named on the check in the event that the insurance company pays proceeds under the policy.

Please Read The Disclaimer.  © 2015 by Dennis J. Wall.  All Rights Reserved. No Claim to Original U.S. Government Works.

Ohio Expands Medicaid, Apparently Covers Down Syndrome, Bill Regulates Abortion.

A bill introduced in the Ohio legislature would regulate women who state that Down Syndrome is a reason to have an abortion.  The bill would bar abortion for that reason.  See Tamar Lewin, "Ohio Bill Would Ban Abortion if Down Syndrome is Reason" p. 1, col. 4 (New York Times Nat'l ed., Sunday, August 23, 2015).

This regulation would apparently not be supported by any appropriation or private funds to assist people and familes affected by Down Syndrome.  As drafted before amendments, then, the bill would only provide restrictions to regulate abortion in cases of Down Syndrome without providing assistance when the children are born with Down Syndrome.

However, Ohio apparently may provide expanded Medicaid coverage for people and families most likely to be affected by Down Syndrome.  If the bill passes, Ohio would guarantee certain regulation of individuals, possible insurance coverage for individuals and families, but no public or private funding to address Down Syndrome.

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015), and "Litigation and Prevention of Insurer Bad Faith" (3d edition Thomson Reuters, 2015 Supplement), among other works.  All rights reserved.

 

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Video Displays "Lender Force-placed Insurance Practices".

Insurance Issues For the Ride-Selling, Room-Renting Economy.

There are an increasing number of reports raising questions about the extent of sellers' liability in the new ride-selling, room-renting economy.

Share these concerns?  In this climate, insurance issues are well worth a close examination given so many questions of liability in so many situations. A large top-tier law school is considering a symposium on the insurance issues shared by the potential liabilities of our new ride-selling, room-renting economy.  Let's leave it up to them to make their own announcement of who, when, and where.

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall.  All rights reserved.

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What's in a Claim? A Defense, Possibly.

Podcast of "Litigation and Prevention of Insurer Bad Faith" (Excerpts).

Check out this link to an excellent sound of Thomson Reuters Legal Current.  It will take you to a free podcast of "Litigation and Prevention of Insurer Bad Faith" (excerpts of which I read on the podcast, from four Lender Force-Placed Insurance Practices sections of the book).

Besides a podcast, the above link will take you to a Powerpoint which has morphed into a video with music.  You will also be able to download free handouts of the entire sections of my book from which I read the excerpts in the podcast.

I hope you find this information useful and informative.

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall.  His most recent book is "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All Rights to this blog-post article reserved.

 

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HEALTH INSURANCE COMPETITION "CREATED" UNDER ACA REPORTS LOSSES.

The established health insurance companies that benefit so much from the Affordable Care Act's embrace of their system are receiving other benefits from the ACA.  Insurance co-ops established as alternative providers of health insurance coverage under the Act (also known as "Obamacare" of course) are reporting losses.  The Department of Health and Human Services' Inspector General reports that last year 22 of the 23 co-ops brought into being under the ACA lost money.  See Robert Pear, "Insurance Co-ops are Losing Money, Federal Audit Finds" p. A11, col. 1 (New York Times Nat'l ed., "National" Section, Saturday, August 15, 2015).

 

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All rights reserved.

IS THERE D&O COVERAGE FOR GREED?

Blue moon over Washington, D.C. Image provided by NASA.

               Stock buybacks used to be a species of stock manipulation.  Then came the SEC.  Under President Reagan, the government regulated stock buybacks by issuing a new rule.  The SEC issued the new rule in 1982.  It is Rule 10b-18.

               Rule 10b-18 has been used as a so-called "safe harbor" by executives and the directors and officers that enable them to do so, to "buy back" stock of their corporation with immunity from prosecution for stock manipulation.  (Of course, the funds for the purchase of the corporation's own stock came then and come now from the profits of the corporation, profits which used to go in generally adequate numbers toward research and development, and worker compensation, among other competitive needs of the corporation.)

              The consequences of stock "buyback" for some 35 years have included increases in executive salary tied to increased earnings per share (earnings per share of stock trend upward, i.e., increase, as a result of buybacks) and increases in the value of shares held by executives (executives are riding a rising trend over the last three+ decades of being paid in shares of the corporation's stock, in addition to drawing down their rather hefty salaries).  See Andrew Ross Sorkin, "Dealbook / Stock Buybacks Draw Scrutiny From Politicians" p. B1, col. 5 (New York Times Nat'l ed., Tuesday, August 11, 2015).

               Is there director's and officer's coverage for these acts?  For corporate executives?  For the officers and directors who enable such acts?  Is that why Rule 10b-18 was promulgated by their SEC, to immunize them with its "safe harbor" from being sued for such acts?  Are the people who are the ones harmed by this conduct allowed by the law to sue?

              Follow the money, as they say.

              Is there anyone alive who seriously contends that the performance of U.S. corporations aside from making paper profits for their executives, directors, and officers has been competent by any other measure of performance in the last 35 years?  If so, let them stop buying things from China.  Has anyone been heard to say that the economy is in good shape at this time and that we as a society should keep running things the way they have been running for decades? Anyone?

P.S.

The writer of the linked newspaper article addresses the idea that government regulation of stock manipulation is not an answer to stock buybacks, but that the answer must come from the market.  If government regulation is not an answer to stock manipulation, and stock buybacks are stock manipulation regardless of whether government regulates them or not, then why did the SEC provide the immunity of Rule 10b-18 in the first place?  Until Rule 10b-18 was issued, stock buyback was not a problem because it was not done; it was stock manipulation, punishable as a crime as well as civilly.  So, why not withdraw Rule 10b-18, roll it back, make it void?  If issuing that rule in the first place caused the problem, then the solution would clearly seem to be to remove it.  In other words, to deregulate.   

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All rights reserved.

Zero to 29%: Different Rates, Different States, But Different Carriers?

               A blind study offering carriers an applicant for State-mandated auto liability insurance -- no frills, mind you -- produced huge premium differences.  The hypothetical auto insurance applicant in each case was a hypothetical widow with other personal factors that were held steady everywhere her application was submitted.

                Premium offerings varied not just depending on locale, but on which carrier offered the mandated auto liability insurance coverage.  One carrier never charged more to the same applicant in any place, while other carriers increased their premiums each according to its own reasons, from 3% more to 29% more.  Why?  We do not know.  The carriers apparently would not explain beyond offering untrue platitudes about the costs of insurance while treating everyone 'equally,' which is clearly not the case.

                And why does being a widow make such a big difference in her auto liability insurance premiums anyway?

                Questions that we can ask about the price of auto liability premiums are suggested by Ann Carrns, "Your Money Adviser / The Curious Factors That Shape Premiums," p. B5, col. 1 (New York Times Nat'l ed., "Personal Business" Section, Saturday, August 8, 2015). 

 

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All Rights Reserved.

Did you know that the foreclosure crisis ended? Read on.

          Home and condominium prices have been on the rise all through the Fall of 2014 through today, the Summer of 2015.  The Federal Housing Administration is receiving pressure from realtors and mortgagees such as lenders, to backstop with taxpayer funds what amount to subprime mortgages.  The realtors and mortgagees argue apparently that a guarantee from the FHA will provide people with the capacity to purchase condominiums who do not have that capacity without a guarantee.^FN1  A former head of the FHA, whose current position is as head of the Mortgage Bankers Association, is among those pushing the view that the foreclosure crisis has abated.^FN2

          Upon the same reasoning, the Chief Operating Officer of a business organization named “ReadySetLoan” also wants the Federal Housing Administration to guarantee purchases by seniors of reverse mortgages.^FN3

 

^FN1 See Kenneth R. Harney, “FHA Squeezing Loans for Condos Despite Surging Demand” (Los Angeles Time Online, posted Sunday, November 9, 2014.)  [Don't let the annoying ads distract you.  You can easily delete the ads or wait them out if you want.]

 

^FN2 See Kenneth R. Harney, “FHA Squeezing Loans for Condos Despite Surging Demand” (Los Angeles Time Online, posted Sunday, November 9, 2014.)

 

^FN3 See Kenneth R. Harney, “FHA Squeezing Loans for Condos Despite Surging Demand” (Los Angeles Time Online, posted Sunday, November 9, 2014.)

 

Reprinted with the permission of Thomson Reuters and the author from the manuscript of the author's 2015 Supplement chapters, and particularly Section 3:112, in “Litigation and Prevention of Insurer Bad Faith, 3d” ©2015 by Thomson Reuters.

THE MYSTERIOUS, DISAPPEARING EXPORT-IMPORT BANK LOANS AND CREDIT INSURANCE.

Image by NASA.

              A deadline for Congress to renew the Export-Import Bank came and went with the Senate extending the life of the Bank’s loans and credit insurance, and the House taking no action.

              Reportedly it is small businesses that suffer the consequences.  The opponents of the Export-Import Bank loans and credit insurance ignore the effects of their conduct on small businesses.  Instead they claim that the Bank helps large corporations, reportedly in particular Boeing, General Electric, and Caterpillar.  See Jackie Calmes, “Outlook for the Ex-Im Bank Dims as Congress Departs” (New York Times Online, posted Wed., July 29, 2015).  Of these, two – Boeing and General Electric – deal with comparatively strong unions.  The third – Caterpillar – has such poisoned labor relations that it is already moving or threatening to move its operations to other countries anyway, as in this report about Caterpillar moving product lines to Mexico from its plant outside of Chicago earlier this year:  See Lauren Leone-Cross, “Caterpillar Announces Production Line Moves From Joliet to Mexico” (The Herald-News, Joliet, Illinois, posted online on Friday, March 20, 2015; updated online on Saturday, March 21, 2015).

              Although the Export-Import Bank’s charter is likely to be renewed eventually, there is concern that damage will result from the House’s inaction.  In particular, there is concern that businesses will move their operations to other countries which offer credit assistance.  See Jackie Calmes, “Outlook for the Ex-Im Bank Dims as Congress Departs” (New York Times Online, posted Wed., July 29, 2015).

              Resistance to the well-heeled opponents of Export-Import Bank loans and credit insurance may be futile.  The opponents do not like competitors and unions.  No-one then is going to be left to resist them.

              Hedge funds and other wealthy entities and individuals may have a right to terminate key lending and credit insurance underwriting, if we let them.  But they have no right to call their rule capitalism.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of “Lender Force-Placed Insurance Practices” (American Bar Association 2015).  All Rights Reserved.

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