Claims And Issues

WIND 2019: LET THE CONFERENCE BEGIN!

On its website, the Windstorm Insurance Network (WIND) describes itself as "the only member association to bring together both defense and policyholder professionals to connect, learn, and engage on important topics in the property/windstorm insurance claims industry."  I will be taking a look myself this week.

Starting tomorrow, Thursday the last day of January in 2019, and scheduled to continue on Friday, February 1, 2019, I will be attending the sessions I signed up for a couple of months ago.  They include catastrophe claims handling and Hurricane damages coverages.  I would like to meet up with many participants especially the defense and policyholder professionals that make up the announced membership of WIND, in other words, the people who represent the people who make and deny insurance claims every day but especially after Hurricanes and earthquakes and wildfires.

The 20th Annual Windstorm Insurance Conference is set for Jan. ​30 - Feb. 2, 2019 at the Walt Disney ​Dolphin Resort.  (I will not be staying there.  I will drive back and forth from my home in the Orlando area.  It's a lot less expensive.)

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

SEXUAL HARASSMENT SHOULD ALWAYS BEAR A PRICE, IF PERMITTED. PERIOD.

I left the following comment on www.regulations.gov earlier today concerning the proposal of the Department of Education to enable sexual harassment in education without fear of the Department asking for damages to enforce the law.  You can leave your own comment at any time between now and the end of the deadline on Monday, January 28, 2019.  If you speak up and leave a comment, then by law even the current Federal administrative state is required to hear you.  I urge you to make your voice heard!

January 27, 2019

Department of Education

www.regulations.gov

RE:    Comment to Docket ID ED-2018-OCR-0064

          RIN 1870-AA14

To the Department of Education:

This concerns your proposed changes to Title IX regulations that were published in the Federal Register at 83 F.R. 61462-61499.  You claim the authority to make these proposals as "20 U.S.C. 1681 et seq., unless otherwise noted."  83 F.R. at page 61495.  In particular, this comment addresses your proposed changes to Section 106.3 of the regulations, titled Available Remedies, also published in 83 F.R. at page 61495.

Your proposed changes to Section 106.3 of the regulations are not sustainable as a matter of law and as a matter of law applied to fact. 

First, your proposed changes to Section 106.3 would prohibit the "Assistant Secretary" of the Department of Education (i.e., "the Department") from seeking damages in any proceeding to enforce Title IX.  The purpose for which Congress enacted this statute is clear on its face. 

Section 1681, the beginning section of Title 20, sets the standard for discrimination in education on the basis of sex.  Subsection (a) of 20 U.S.C.A. § could not be more clear:  "No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance[.]"

There is nothing in the language chosen by Congress to effectuate its purpose that leads to the conclusions you propose as law in your changed Section 106.3, including taking away one of the powers of the Federal Government agencies, which is to seek damages in an appropriate case in order to compel enforcement of the Congressional mandate.  For this reason, your proposed changes to Section 106.3 are not supported either by law or by the law applied to any facts, and they should not be enacted.

Second, as you are aware the Federal Courts are currently instructed to defer to the interpretation given by Federal agencies to the statutes they are called upon to administer.  Your recently suggested interpretation, that Title IX does not allow your Department to seek damages in any proceeding to enforce Title IX, is contrary to the interpretation taken by the Federal Government since Title IX was first enacted nearly 50 years ago.  The existing interpretation is like the statute itself:  If Congress has not affirmatively spoken, one way or the other, about the recovery of damages as a tool in the administrative process of enforcing the mandate of Title IX, then the Department should remain silent itself and not interfere with Congress's own interpretation.  In other words, it is a job for Congress and the Courts, not the Department of Education.

If anything, 50 years of existing interpretation should be given judicial deference over your opportunistically recent one.  For this reason, your proposals to change Section 106.3 of the regulations should be rejected.

Third, your proposals in all of these proposed regulation changes which you published in 83 F.R. from page 61462 through 61499 inclusive, are internally inconsistent.  Your proposed changes would change the standard of liability to "actual knowledge" coupled with "deliberate indifference" in any administrative action brought to enforce the law.   However at the same time you would purport to take away the Department's ability to seek damages.  This is internally inconsistent.  It is also inconsistent with and contrary to the purpose of Title IX, which is quoted above from the statute itself in 20 U.S.C.A. § 1681(a).  For this reason, your proposed changes, including your proposals to change Section 106.3 of the regulations should be rejected as contrary to law and as contrary to law applied to the facts.

For all of these reasons, whether taken separately or together, your proposed changes to Title IX and its existing attendant regulations should not be enacted.  They should each and all be withdrawn or, if not withdrawn, then they should each and all be rejected as contrary to the law and contrary to the law applied to facts.

Thank you for your consideration.

Sincerely Yours,

Dennis J. Wall

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.  A version of this article was previously published at Claims and Bad Faith Law Blog.

WHAT THE JURIES DID NOT SEE: THE FORD PINTO CASES.

It is pretty much forgotten now.  There was a criminal case that resulted from a Pinto gas tank explosion in addition to the much more famous civil case that resulted in over $6.5 million in damages upheld on appeal in California.  The civil case was discussed in a post yesterday on Claims and Bad Faith Law Blog.

The criminal case grew out of an indictment in Indiana that was issued three days after the appellate court denied rehearing in the civil case in California.

Like the California civil case, the Indiana criminal case went to a jury.  The jury acquitted Ford.

Like the California trial judge, the Indiana trial judge refused to admit Ford's report and table into evidence.

The juries in California and in Indiana never saw the table which Ford itself

prepared.  Ford submitted the table to the National Highway Traffic Safety Administration (NHTSA) in opposition to a proposed NHTSA regulation related to rollovers.  Neither the Pinto gas tank explosion in California nor the explosion in Indiana involved a rollover, but the table Ford prepared was explosive.

To say again, the trial judges in California and in Indiana refused to admit the table into evidence.

The juries did not see it.

Here is a version of Ford's table which the juries did not see.  The following version was prepared by FEMA for use in a course on handling burn injuries:

Source:  Slide 8 of FEMA Burn Crisis and Continuity Management Powerpoint, Class Session 17, accessible online at https://training.fema.gov/hiedu/docs/bccm/bccm%20-%20session%2017%20-%20power%20point.ppt.

"$11 Cost vs. A Burn Death

Benefits and costs relating to fuel leakage associated with the static rollover test portion of FMVSS 208

Benefits

Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles.

Unit Cost:  $200,000 per death, $67,000 per injury, $700 per vehicle.

Total Benefit:  180 X ($200,000) + 180 X ($67,000) + 2,100 X ($700) = $49.5 Million.

Costs

Sales:  11 Million cars and 1.5 Million light trucks.

Unit Cost :  $11 per car and $11 per light truck.

Total Cost : 12.5 Million X ($11) = $137 Million.

Ford Motor Company Internal Memorandum - 'Fatalities Associated with Crash-Induced Fuel Leakage and Fires'[.]"

It was a long time ago, now.  The jury trials in Indiana and in California, that is.

There was no need for a blanket secrecy order.  The juries did not see this table.

Ford was not prejudiced by this evidence.  It was not admitted into evidence.

The judges refused to allow this table into evidence.

The jury system worked.

That should have actually inspired confidence in the justice system in the years since then.

But that is not the point.  Not really.  Blanket secrecy orders, umbrella protective orders, are really about concealing the evidence, not about the integrity of the justice system. 

But maybe, in the final analysis, it is all about the integrity of the justice system.  You cannot trust judges and juries to protect you from public awareness of huge problems.  Besides, judges and juries are likely to do the right things in the long run  -- and as they did in the exploding Pinto gas tank cases, they often do the right things in the short run as well.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

BAD FAITH ISN'T ENOUGH? INJURY IN FACT AND STATUTES.

As promised, here and also on Claims and Bad Faith Law Blog, FROM THE 2018 SUPPLEMENT:

 

Litig. & Prev. Ins. Bad Faith § 9:14.50 (3rd ed.)

Litigation and Prevention of Insurer Bad Faith, Third Edition

A pdf of this new section can be accessed here or on my website at www.dennisjwall.com.

  

July 2018 Update

Dennis J. Wall

Part III. First-Party Claims

Chapter 9. Standards of Insurer Conduct

[NOTE:  FROM THIS POINT THROUGH THE END OF THE PIECE, THE FOLLOWING HYPERLINKS ARE PROVIDED VIA THOMSON REUTERS AND REQUIRE A WESTLAW ACCOUNT TO ACCESS THEM.]

• 9:14.50. “Injury in Fact”: What happens to bad faith statutes?

Claims handling and penalties statutes regulating the business of insurance may not any longer provide causes of action to many policyholders and claimants.

In 2016, the Roberts Court grafted a requirement onto the U.S. Constitution which is not found in it—standing — but which is instead found in the Court's cases. Cases decided in lower courts since the Roberts Court raised standing to a constitutional prerogative are divided over whether Congress and State Legislatures can provide standing by providing remedies for statutory violations.

In Spokeo, Inc. v. Robins,¹ the Court raised the judge-made doctrine of standing to constitutional status. “Standing to sue,” the Court recognized, “is a doctrine rooted in the traditional understanding of a case or controversy. The doctrine developed in our case law,” said the Court in Spokeo, Inc. v. Robins.²

One of the elements of standing is “injury in fact,” which the Spokeo Court raised to “a constitutional requirement” which bars legislatures from conferring standing on people and organizations in most cases. To establish injury in fact, a person invoking a statutory remedy now must meet a newly-found constitutional requirement that she or he had a legally protected interest that is concrete and individualized to her or him, and that the harm is “actual” or “imminent,” not “conjectural” or “hypothetical.”³The Spokeo case itself was presented when Mr. Thomas Robins filed a lawsuit claiming an alleged violation of the Fair Credit Reporting Act by an internet search engine service which incorrectly provided information to the world about him. The Roberts Court remanded for a determination of whether Robins adequately alleged an injury in fact in his complaint.

As it has done by replacing “ultimate facts” pleading with “plausibility” pleading, in which allegations of fact in a complaint must be weighed by each individual judge who must dismiss the complaints that he or she does not think are “plausible,” the Roberts Court has laid down another obstacle to filing lawsuits in Federal Courts.⁴ It is fundamental to its process to note how many times the Court would have people believe that its work has consisted for several years now of finding procedural and constitutional limitations which other Courts somehow must have overlooked.

In an interesting application of the Spokeo “standing-means-injury—in-fact” requirement, the District Court in Stromberg v. Ocwen Loan Servicing, LLC^4.10 was confronted with a lawsuit filed as an alleged class action by “Plaintiff Bonnie Lynne Stromberg [who] asserts a California state law claim against two mortgage lenders and a mortgage loan servicing company for failing to reconvey a deed of trust on real property within thirty days after repayment of her home loan.”^4.20 The Court rejected the mortgage lenders' and mortgage servicer's challenges to Ms. Stromberg's standing to sue them by ruling that she had sufficiently alleged “injury in fact” through these “conclusory” allegations (which she handily supported with an affidavit and which the Court considered together with the allegations in her complaint):

The Court does not need to decide whether a bare procedural violation of California's analogous prompt-recording statute constitutes a concrete injury-in-fact for standing purposes because Stromberg has not alleged “a bare procedural violation, divorced from any concrete harm.” Spokeo, 136 S. Ct. at 1549. To the contrary, she has alleged “additional harm beyond the one [the legislature] has identified.” Spokeo, at 1549–50 (emphasis in original). In her complaint, Stromberg alleges that she “suffered injury in the form of slander of title, incurred costs, impaired credit and incomplete and inaccurate public records respecting her financial obligations and credit worthiness.” Compl. ECF No. 58 ¶ 43. Even if this allegation regarding injury is, as Defendants contend, too conclusory by itself to establish an injury-in-fact, Stromberg has also submitted an affidavit that includes further factual support for her standing. ECF No. 101-1, Ex. A.^4.30

Other Courts have found Spokeo standing to assert Fair Debt Collection Practices Act claims,^4.40 Telephone Consumer Protection Act claims,^4.50 Fair Credit Reporting Act claims alleged by a pro se plaintiff,^4.60 and products liability claims in multi-district litigation which include allegations of noncompliance with standards set under regulations issued by the federal Environmental Protection Agency and by the California Air Resources Board.^4.70

As an example of lower federal courts actively seeking situations in which people simply cannot sue for alleged violations of State statutes, even though States have provided the statutory remedies alleged in the given case, the Eleventh Circuit Court of Appeals held after Spokeo that a borrower-mortgagor in New York State could not bring that particular lawsuit for an alleged violation of New York Real Property Law because now the United States Constitution forbids such a suit.⁵ The Eleventh Circuit's decision in this case has been rejected by name in other Circuits,⁶ and it has been distinguished in the Eleventh Circuit based, perhaps ironically, on other Eleventh Circuit case law.⁷

However, this decision is by no means alone.⁸ In Spokeo itself, the Court deciding that case remanded for a determination of “plausibility,” in effect, of whether Thomas Robins and persons like him had alleged injury in fact as the U.S. Constitution now apparently requires.

The following case did not directly involve the Spokeo “injury in fact” directive, but it does illustrate the relative probabilities of success of any statutory action under a “Consumer Protection Act” by whatever name. In Fat Bullies Farm, LLC v. Devenport,⁹ potential sellers of real property brought a New Hampshire Consumer Protection Act (“CPA”) claim against prospective purchasers on account of the alleged conduct of the prospective purchasers. To describe the attitude of the New Hampshire Supreme Court in rejecting a New Hampshire CPA claim in this case as hostile, is to put it mildly. It is nonetheless instructive:

Viewing Fat Bullies and Simmons's [the prospective purchasers'] misrepresentation in conjunction with the remainder of their course of conduct does not alter our determination. Even taken together, the acts of showing up unannounced with an attorney and an option agreement, not recommending that the Devenports [the potential sellers of the real property] obtain legal counsel, attempting to negotiate price, not explaining the meaning of the language contained in the draft agreement, threatening and attempting to enforce an option agreement, and pursuing a contentious litigation strategy would not “raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” (Citations omitted.) We cannot conclude that the subject conduct offends established public policy, is immoral, unethical, oppressive, or unscrupulous, or causes substantial injury. (Citation omitted.)

For these reasons, we reverse the trial court's ruling on the Devenports' CPA claim and its award of attorney's fees to the Devenports as damages under the CPA.¹⁰

If the idea of “injury in fact” has been elevated surreptitiously from standing to the U.S. Constitution, it can certainly have an effect on claims based on State statutes providing remedies to ‘private attorneys general’ that the States rely on to enforce the laws. Time will tell whether State Unfair Claim Handling Practices Acts and Penalties Statutes governing the business of insurance will feel the effects and, if so, how.

Westlaw. © 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Footnotes

1

Spokeo, Inc. v. Robins,  U.S. , 136 S. Ct. 1540 (2016).

2

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

3

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-48 (2016).

4

See, e.g., Klika v. Capital One Bank, N.A., No. C15-0107RSL, 2016 WL 4544373 at *1 (W.D. Wash. June 30, 2016), and “PLAUSIBILITY AS A STANDARD? DON'T BELIEVE IT,” published on Insurance Claims and Issues Blog on Monday, May 1, 2017, at http://insuranceclaimsissues.typepad.com/insurance_claims_and_issu/2017/05/plausibility-as-a-standard-dont-believe-it-its-just-another-way-of-saying-theres-nothing-left-to-lose-with-apologies-to-m.html.

4.10

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540 (N.D. Cal. June 22, 2017).

4.20

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*1 (N.D. Cal. June 22, 2017).

4.30

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*6 (N.D. Cal. June 22, 2017).

4.40

E.g., Ferrell v. HSI Fin. Serv's, LLC, No. 1:16-cv-04624-RWS-AJB, 2017 WL 8186795 at *4 (N.D. Ga. December 22, 2017) (“After careful consideration of the pleadings and the rapidly expanding catalogue of case law interpreting and applying Spokeo, the undersigned is persuaded that Plaintiff's pleadings are sufficient to establish standing. The Court finds Defendant's motion unavailing on several grounds.”); Abraham v. Ocwen Loan Servicing, LLC, 321 F.R.D. 125, 166 (E.D. Pa. 2017) (“Numerous courts have applying Spokeo found a sufficient ‘injury in fact’ to support a FDCPA claim from allegations that a plaintiff suffered an ‘informational injury’ because the character of a debt had been misrepresented.”).

4.50

Progressive Health & Rehab Corp. v. Strategy Anesthesia, LLC, 271 F. Supp. 3d 941 (S.D. Ohio 2017) (“Indeed, as Plaintiff points out, the overwhelming number of courts that have addressed standing in a TCPA case subsequent to Spokeo have found standing.”) (pinpoint page references not available in April 2018).

4.60

Lovess v. Embrace Home Loans, Inc., No. JKB-17-2212, 2017 WL 4745452 at *2 (D. Md. October 20, 2017) (“This case is very close to Spokeo, but not quite there. Plaintiff is similarly alleging a procedural violation of FCRA and claiming that she is harmed by potential future consequences. But she has also alleged actual damages in the amount of $100,000 stemming from emotional distress and mental anguish, and therefore this is not a ‘bare’ procedural violation of the type at issue in Spokeo.”).

4.70

In re Chrysler-Dodge-Jeep Ecodiesel Marketing, Sales Practices, & Prod's Liab. Lit., No. 17-md-02777-EMC, 2018 WL 1335901 at *6 (N.D. Cal. March 15, 2018)(“Because Plaintiffs allege a financial injury, Spokeo does not support dismissal of their case.”).

5

Nicklaw v. Citimortgage, Inc., 839 F.3d 998, 1002-03 (11th Cir. 2016).

6

See, e.g., Weldon v. MTAG Services, LL, No. 3:16-cv-783 (JCH), 2017 WL 776648 at *6 (D. Conn. Feb. 28, 2017).

7

See Tillman v. Ally Fin. Inc., No. 2:16-cv-313-FtM-99CM, 2016 WL 6996113 at *4 n.7 (M.D. Fla. Nov. 30, 2016).

8

See also Michael G. McLellan, “Finding a Leg to Stand On: Spokeo, Inc. v. Robins and Statutory Standing in Consumer Litigation,” 31 Antitrust 49 (Summer 2017).

9

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 28, 164 A.3d 990 (2017).

10

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 164 A.3d 990, 998–99 (2017).

End of Document	© 2018 Thomson Reuters. No claim to original U.S. Government Works.

Reprinted from Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith, Third Edition (Thomson Reuters). Further reproduction of this article without the express consent of the publisher is prohibited.

FLORIDA FORCE-PLACED PREMIUM PRACTICES: FEDERAL JUSTICE SYSTEM STEPS ASIDE.

It is often pointed out that whenever class action rights are taken away to require that all claims be arbitrated, then small claims will not be made because they are, well, too small to litigate.

Add to that this fact as well:  Claims may be too small for federal courts when the claims stand alone even if they are not too small when they are combined in a class action.

Adele Levine took out a mortgage for a home in Pembroke Pines, Florida.  Ms. Levine died.  Her estate disputed the payment of insurance premiums that were placed by force on her mortgage loan by the lender's mortgage servicer.  Ms. Levine's estate allegedly incurred legal fees of $2,565 in these disputes with the servicer and the lender over the lender force-placed insurance premiums.

Adele Levine opted out of a class action settlement with the mortgage servicer.  Her estate then filed its own lawsuit instead, for alleged violations of the Florida Consumer Collection Practices Act (FCCPA), for alleged violations also of the Florida Unfair and Deceptive Trade Practices Act (FDUTPA), and for what a federal judge called "tortious interference."

Unfortunately for the estate, the only "actual damages" it could allege was the $2,565 in attorney's fees caused by disputes over the LFPI.  This was not enough for federal court, the federal judge ruled, even after adding the potential recovery of an additional $1,000 under FCCPA.

Case dismissed.

The moral of the story is that there is more to the story that when class action rights are taken away to require that claims be arbitrated, then small claims will not be made because they are too small to litigate.  For federal courts, "small" claims can be less than $75,000 which for most people and particularly for those who cannot afford to litigate in federal court, is not a "small" amount by any stretch.  But in this federal case, anything less than $75,000 was, well, too small to litigate.

Dennis Wall is at work on a book about concealed evidence and secret settlements, including cases involving lender force-placed insurance, that take our money, foreclose on our homes, and change our lives. 

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

Related articles

Video Displays "Lender Force-placed Insurance Practices".

"ACTUAL CASH VALUE" AS "REPLACEMENT COST," NOT "WHATEVER THE COST."

The decisions in the case of In re State Farm Fire & Cas. Co., 872 F.3d 567 (8th Cir. 2017), came out of a hailstorm.

The storm struck Ms. Amanda LaBrier's home in St. Louis, Missouri, damaging the home's exterior roof, siding, and gutters.  She made a claim under her homeowner's policy with State Farm.  The policy provided "Coverage A - Dwelling" property insurance coverage on a "replacement cost" basis. "Until actual repair or replacement is completed," however, the policy provided that the carrier would pay "only the actual cash value at the time of the loss of the damaged part of the property," but not more than "the cost to repair or replace the damaged part."  In that instance, the policy was in essence on a "replacement cost" basis for an "actual cash value."

State Farm made Ms. LaBrier an offer which she could -- and did -- refuse.  State Farm was ready to pay the policy requirement of "actual cash value" which in this case included an element of depreciation to account for the age of Ms. LaBrier's roof before it was shot with hail pellets. 

Ms. LaBrier apparently thought that she could do better than that, because she rejected State Farm's offer, hired a family friend to replace the roof, and sent State Farm the bill for the whole thing.  The trial court ruled in her favor, effectively equating "replacement cost" with whatever-it-costs even though the policy limited the carrier's obligation to pay "actual cash value" for any replacement.  The district court accordingly denied State Farm's motion to dismiss.  In a separate order, the district court overruled State Farm's objections to answering voluminous interrogatories about the claims of "putative class members."

Only later did the trial court also enter an order certifying a class of similarly situated State Farm policyholders.

The appellate court reversed the trial court's with directions to dismiss Ms. LaBrier's coverage claim and thereby to deny her motion to certify a class of State Farm homeowners to whom State Farm denied allegedly similar coverage claims.

The procedural posture of this appeal is interesting.  The trial court's denial of State Farm's motion to dismiss was never appealed, apparently.  The appellate court tells us that State Farm appealed two things in two appellate proceedings.  First, State Farm petitioned for a writ of mandamus that the district court "vacate what it alleges are overly-burdensome [sic] discovery orders."  In re State Farm, 872 F.3d at 571.

State Farm's second appeal was its only other appeal in this case, and it did not request appellate review of the trial court's order denying State Farm's motion to dismiss in this second appeal, either.  State Farm's second appeal in this case came when it requested and the Eighth Circuit granted "State Farm leave to appeal the class certification," which the Eighth Circuit thereafter consolidated with State Farm's other appeal, the State Farm petition for a writ of mandamus. In re State Farm, 872 F.3d at 572.

When the appellate panel reversed the class certification order it also reversed the district court's order denying State Farm's motion to dismiss.  You might have thought that the appellate panel would also naturally grant State Farm's mandamus petition since the panel "vacated" the lower court's orders "upholding premature classwide discovery[.]"  If you thought that, as I did, then you and I would both be wrong.  After saying that it vacated the lower court's discovery orders, thereafter the panel concluded its opinion with these other words:  "In light of this disposition [i.e., dismissal], State Farm's petition for a writ of mandamus is denied as moot."  In re State Farm, 872 F.3d at 577.

Go figure.

____________________________________________________________________________

Mark your Calendar!

You and your clients can sign up for health insurance starting next week on November 1, 2017 at https://www.healthcare.gov.

 

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

Pre-AWARD Interest Held Recoverable on Successful Appraisal.

What can a policyholder recover from its property insurance company in an appraisal of the policyholder's damaged property?  In Housing & Redevelopment Auth. of Redwood Falls v. Housing Auth. Prop. Ins., 864 F.3d 986 (8th Cir. 2017), the court held that an insured can recover pre-award interest from its property insurer on its insurance appraisal award.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

FLORIDA UM DAMAGES DETERMINATION BINDS BAD FAITH ACTION.

In a ground-breaking decision of an unsettled question of law, the Supreme Court of Florida has held that the determination of damages in an underlying uninsured motorist (UM) action sets the measure of at least one element of damages in a later bad faith action:

[A]n insured is entitled to a determination of liability and the full extent of his or her damages in the UM action before filing a first-party bad faith action. That determination of damages is then binding, as an element of damages, in a subsequent first-party bad faith action against the same insurer so long as the parties have the right to appeal any properly preserved errors in the verdict. The history of first-and third-party bad faith actions, this Court's precedent, and the legislative intent to eliminate the distinction between first- and third-party bad faith claims all support our conclusion. We also conclude that the trial court in this case did not err in retaining jurisdiction to allow the filing of a bad faith cause of action.

Fridman v. Safeco Ins. Co., 185 So. 3d 1214, 1216 (Fla. 2016).

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved. 

WELLS FARGO: COVERAGE FOR 5,300+ "BAD APPLES?" OR FORESEEABLE DAMAGES?

News reports have been published since at least 2013 that certain demands that Wells Fargo made (makes?) on its employees pretty much foreseeably result in fraud.  Recent news reports advise that because Wells Fargo employees were subject to "cross-selling" requirements, among other requirements, at least 5,300 Wells Fargo employees at the present count opened millions of bogus accounts and credit cards in the names of Wells Fargo customers so that the employees could meet their sales quotas.  See, e.g., Michael Corkery and Stacy Cowley, "DealBook / Wells Fargo Warned Workers Against Sham Accounts, But 'They Needed a Paycheck'" (New York Times Online, posted September 16, 2016); Andrew Ross Sorkin, "DealBook / Pervasive Sham Deals at Wells Fargo, and No One Noticed?" (New York Times Online, posted September 12, 2016).

Yesterday as this article is written, the current head of Wells Fargo confirmed the fraudulent opening of bogus accounts in testimony before the United States Senate.

He blamed the 5,300+ bad apples.  He called them "rogue employees."

Are there any insurance policies including any bonds that provide coverage for 5,300+ bad apples and rogue employees?  Wells Fargo is undoubtedly looking at this question right now.  So are its insurance carriers.

Or if the damages to Wells Fargo employees are not really the results of misconduct by 5,300+ bad apples and rogue employees, but if instead they are proven to be the results of corporate requirements imposed on the apples by Wells Fargo, it seems that there may be good arguments that many if not all of the damages to Wells Fargo customers were foreseeable and even intentional.   Wells Fargo admits that it has known about the fraud since at least 2013 and the "illegal sales" may have begun in 2009.  Michael Corkery, "DealBook / Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says" (New York Times Online, posted Tuesday, September 20, 2016).

There is a recurring exclusion or "carve-out" from commercial general liability insurance "occurrence" coverage when the policyholder is shown to intentionally cause the damages complained of by the underlying plaintiff.  This is a frequent insurance coverage issue.  If that is shown to be the case here, then Wells Fargo faces some difficult issues of what it knew and when it knew it, as they say, if Wells Fargo is inclined to put on proof to contest whether the reported pattern of fraud was a covered "occurrence" or the exclusionary insurance coverage equivalent of intentional damages.

Time will tell.  Stay tuned as coverage issues develop along with the liability issues embedded in this behavior.

Please Read The Disclaimer.  ©by Dennis J. Wall.  All Rights Reserved.

DUTY TO ASSESS LOST VALUE TO HOMEOWNERS IN GEORGIA.

A homeowner's carrier has a duty to assess the value that homeowners lose because of physical damage to their homes, even if their homes are repaired.  In Thompson v. State Farm Fire & Cas. Co., No. 5:14-CV-32 (MTT), 2016 WL 951537 (M.D. Ga. March 9, 2016), the District Court certified a class of Georgia homeowners who are alleging a claim that State Farm, their homeowner's carrier, did not assess the value lost in their homes.  The lead plaintiffs in particular successfully presented a claim for water damage after pipe burst in their home.  State Farm paid for repair of the damage under their homeowner's policy.  They were told by State Farm, however, that their policy did not cover "diminished value."  Their policy was allegedly the carrier's standard contract, common to the members of the Georgia class, and State Farm takes the position that its standard homeowner's policy simply does not cover diminished value.

Parenthetically, on the same record the Court in that case declined to certify another class consisting of Georgia homeowners pursuing a claim that State Farm had a duty to pay their lost value claims.  The Court determined that such a class of homeowners would require individualized damage determinations, and so no class could be certified on the duty to pay claims.  The duty to assess claims were certified, in contrast, because they present common claims under the same contract for alleged failure of a duty to investigate or assess diminished value.

This may not be as significant a decision as it sounds.  The Court in this case pointed out that in other class action lawsuits other "insurers have admitted their policies cover diminished value."  Thompson v. State Farm Fire & Cas. Co., No. 5:14-CV-32 (MTT), 2016 WL 951537, at *8 n.5 (M.D. Ga. March 9, 2016).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements).  See in particular id. Volume 2, § 9:5, "The question of bad faith--Presence or absence of fault" and surrounding sections in which first-party insurance coverage determinations, investigations and "assessments" are discussed at length.  All rights reserved.

FLORIDA UM DAMAGES DECISION FOR LEAP YEAR.

The Florida Supreme Court has held in a groundbreaking decision best reported in the Court's own words:

[A]n insured is entitled to a determination of liability and the full extent of his or her damages in the UM action before filing a first-party bad faith action. That determination of damages is then binding, as an element of damages, in a subsequent first-party bad faith action against the same insurer so long as the parties have the right to appeal any properly preserved errors in the verdict. The history of first-and third-party bad faith actions, this Court's precedent, and the legislative intent to eliminate the distinction between first-and third-party bad faith claims all support our conclusion. We also conclude that the trial court in this case did not err in retaining jurisdiction to allow the filing of a bad faith cause of action.

Fridman v. Safeco Ins. Co., ___ So. 3d ___, 2016 WL 743258 (Fla. 2016) (STATED NOT FINAL).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with  Supplements).  All rights reserved.

CATASTROPHE CLAIMS ISSUES AT THE WIND 2016 CONFERENCE!

Topics include lots of issues involved with handling Catastrophe Claims:  Lost income, Property Law, Hail Damage, among the rest.

More to come!

P.S.

Let's hope there are NO Catastrophe Claims to come!

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, Co-Author of "Catastrophe Claims / Insurance Coverage for Natural and Man-Made Disasters" (Thomson Reuters 2016).  All Rights Reserved.

DELAWARE STATUTE: INTEREST ON CLAIMS RECEIVED, UNPAID WITHIN 30 DAYS.

 

Image by NASA.

In Clark v. State Farm Mut. Auto. Ins. Co., No. 167,2015, 2016 WL 125432 (Del. January 11, 2016), the Supreme Court of Delaware affirmed a lower court's refusal to certify a class of people whose motor vehicle insurance claims were not paid within 30 days and yet did not receive interest payments from their insurance carrier.

The named plaintiffs had both been paid interest although their motor vehicle insurance claims had been received but not paid within thirty days.

The Supreme Court refused to follow the plaintiffs' newer theory requesting that the Delaware statute be construed to require payment of motor vehicle insurance claims within thirty days, "or else."  The Court wrote that the Delaware Legislature left those decisions to itself, and not to the Delaware Judiciary.  In the statute at bar, the Legislature made its policy choice:  The consequence for not paying insurance claims within thirty days of receipt is the accumulation of interest.

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

"INSURANCE CLAIMS AND ISSUES," THE BOOK: COMING IN 2016!

 

 Storm Clouds lined up over the Gulf of Mexico.  Photograph and text copyright 2015-2016 by Dennis J. Wall.

I am hard at work on an anthology of the best blogs from "Insurance Claims and Issues."  The anthology I submit to my publisher will keep all hyperlinks intact, including links to the Insurance Claims and Bad Faith Law blog.  When articles posted on Insurance Claims and Bad Faith Law blog are important to the anthology of "Insurance Claims and Issues," I am including them in the anthology too.

As each previously posted article is updated, the posted articles will remain just as available here as they always have been.  New articles will benefit from me being better informed and better equipped to discuss future insurance claims and issues.

I have contracted with Thomson Reuters (West Publishing Company to those fortunate to have the experience) to publish "Insurance Claims and Issues," the Book, in the late Spring or early Summer of 2016.  Best wishes to everyone for a joyous and Happy New Year!

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

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CYBERINSURANCE:  MANY DATA-LESS RISKS TO UNDERWRITE & PREMIUMS TO CHARGE.

THE ALI RESTATEMENT PROJECT OF THE LAW OF LIABILITY INSURANCE.

Majority Holds No Negligence Cause of Action by Insured Against I.A.

FLORIDA'S WAR ON EQUITY, CONTINUED?

In Florida Peninsula Ins. Co. v. Ken Mullen Plumbing, Inc., 171 So. 3d 194 (Fla. 5th DCA 2015), a panel of Florida's Fifth District Court of Appeal reinstated a first-party insurance company's third-party complaint against a plumber.  The third-party complaint included an alleged cause of action in equitable subrogation.

The insurance carrier paid on a water damage claim under a homeowner's policy.  Thereafter, the insurance carrier filed a third-party complaint against the plumbing company which allegedly caused the water damage.  However, the kicker was that the homeowner's damage was not fully paid at the time that the carrier filed its third-party complaint.

The trial judge granted the plumbing company's motion to dismiss the equitable subrogation count in pertinent part, on the ground that the insured homeowner had not been fully compensated for the water damage.  On appeal, the Florida appellate panel reversed and reinstated the third-party claim for equitable subrogation, in pertinent part.

The basis for the appellate panel's decision seems a bit murky.  In allowing the cause of action in equitable subrogation to go forward, the panel's opinion seems to have relied on the language of Florida's third-party practice rule.  That rule allows a third-party complaint to be filed against a nonparty who "is or may be liable" to the defendant/third-party plaintiff for all or a part of the original plaintiff's complaint against it.  Florida Peninsula Ins. Co. v. Ken Mullen Plumbing, Inc., 171 So. 3d 194, 197-98 (Fla. 5th DCA 2015).  In so ruling, the panel joined other Florida district courts of appeal on one side of a split among Florida's district courts of appeal.

However, the panel's opinion also included language summarizing the approach collectively taken by other DCA's "which permits pleading a third-party action for equitable subrogation before the underlying debt has been paid."  Florida Peninsula Ins. Co. v. Ken Mullen Plumbing, Inc., 171 So. 3d 194, 197 (Fla. 5th DCA 2015).  [Emphasis added.]  To the extent that this panel's opinion mirrors the ruling of two judges on a different panel in an opinion explored on Insurance Claims and Issues Bad Faith Blog on Sunday, October 4, 2015, perhaps there is a "war" in Florida on equity's requirement that the victim, i.e., the one which is the creditor in a subrogation action, must be fully compensated before subrogation will be available in equity.

Allowing a subrogation action to go forward in favor of the party which paid money to the creditor because the subrogation plaintiff had an obligation to pay under an insurance contract or for any other reason, does nothing for equity or for the creditor-victim.  Certainly, judges may have the power to order subrogation to go forward even when the creditor has not been fully compensated but they have no right if that is how they rule, to call their rule "equitable" subrogation.

Rather, equity clearly would seem to require that if the requirement of full compensation of the creditor-victim is discarded, that an appropriate substitute be put in place.  An appropriate substitute might include requiring that any recovery in the subrogation action, in which the subrogation plaintiff "stands in the shoes" of the creditor-victim, to be paid first to the creditors-victims until they are fully compensated.  Any remaining proceeds would be paid to the subrogation plaintiff only after the victim is fully compensated.  Under such an arrangement, that might be an equitable way to "punch" the subrogation plaintiff's "ticket" to claim standing to sue because it "stands in the shoes" of the victim.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements), including Section 7:9, Actions by Excess Carriers -- Subrogation.  All rights reserved.

 

HOMEOWNERS CAN SUE FRACKING COMPANIES FOR DAMAGES & INJURIES THEY CAUSE.

               The headline says it all:  “Oklahoma Justices Say Homeowners Can Sue Oil Companies Over Quakes,” reported by Richard A. Oppel, Jr., p. A14, col. 1 (New York Times Nat’l ed. Wed., July 1, 2015). 

               The decision was unanimous.  Richard A. Oppel, Jr., “Oklahoma Justices Say Homeowners Can Sue Oil Companies Over Quakes” p. A14, col. 1 (New York Times Nat’l ed. Wed., July 1, 2015). 

               How will fracking companies defend against damages suits when they do not have immunity?  Richard A. Oppel, Jr., “Oklahoma Justices Say Homeowners Can Sue Oil Companies Over Quakes” p. A14, col. 1 (New York Times Nat’l ed. Wed., July 1, 2015). 

               And how will fracking companies claim liability insurance coverage when they are sued for damages?

 

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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AIG SHAREHOLDER CLASS ACTION SETTLEMENT OF FEDERAL SUIT, ATTORNEY’S FEES.

               AIG has reportedly settled a shareholder class action lawsuit filed in Federal Court.  Even though the Federal Government closed its alleged investigations into the subject, without filing any criminal or civil regulatory enforcement action, the AIG shareholders’ lawsuit involved allegations that AIG “had led investors to buy stock and debt they otherwise would not have bought, resulting in billions of dollars in losses.”  The alleged failures of AIG were alleged failures “to disclose the risks [AIG] took on through its portfolio of credit default swaps and a securities lending program.”  Reuters copyrighted report, “A.I.G. to Pay Nearly $1Billion to Settle Class-Action Suit Brought by Shareholders,” p. 16, Col. 1 (New York Times Nat’l ed., Sunday, March 22, 2015).

               AIG’s monetary payment of indemnity in the settlement is a reported $970.5 Million.  Id.

               AIG will pay the plaintiffs’ attorneys $120.46 Million.  See id.

               Whether these numbers are “hard” or “soft,” including whether the settlement payments for indemnity in particular represent actual amounts to be paid to the plaintiffs in this settlement, are questions worth exploring further.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All Rights Reserved.

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A.I.G. to Pay Nearly $1 Billion to Settle Class-Action Suit Brought by Shareholders

ST. PATRICK'S DAY, 2014: THE DAY THAT BARRED ALL CLAIMS, supposedly.

NEW JERSEY, CHRIS CHRISTIE, EXXON AND ... INSURANCE?

    The State of New Jersey is the plaintiff in a lawsuit against Exxon which has been going on for 11 years.  The suit is about environmental contamination caused by Exxon at more than one site in New Jersey.  Exxon's liability has already been determined at trial.  All that remains is to determine damages in the next trial phase.  New Jersey has for years been seeking damages of $8.9 Billion or $8,900,000,000.00.

    However Governor Christie reportedly derailed that process.  His administration recently announced to the Trial Judge that the State of New Jersey and Exxon have reached a settlement for less than 3% of what New Jersey sought under its previous Governors who filed and maintained this successful lawsuit against Exxon:  They settled for a reported $250,000,000.00.

    The deal does not seem to be done yet, however.  Apparently the settlement agreement will be "submitted for public comment in April and would then be submitted for court approval in May," unless comments cause a change in the settlement.  See Benjamin Weiser, "Exxon Settles $9 Billion Pollution Case in New Jersey for Far Less" p. A15, col. 1 (New York Times Nat'l ed., Saturday, February 28, 2015).

    The announced settlement amount of $250,000,000.00 looks suspiciously like the amount of a self-insured retention or deductible on one of Exxon's presumably many liability insurance policies.  What role if any Exxon's insurance companies are playing and have played in this settlement is not yet reported.

    With respect to "public comment" on this settlement, how does that work exactly?  Can people who are not residents of New Jersey make comments, for example?  And what exactly is involved with "court approval" of this settlement, from why is it required to how is the process performed?  In short, "What's up, New Jersey?"

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

    

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DETERMINING DAMAGES IN U.M. BAD FAITH CASES: THE FLORIDA FEED.

          In GEICO Casualty Co. v. Barber, 2014 WL 3966053 (Fla. 5th DCA August 15, 2014), a majority of a Florida District Court of Appeal panel granted certiorari and quashed a trial court's order.  The lower court "Order on Plaintiff's Motion to Amend Pleadings and Defendant's Motion for Entry of Final Judgment" was entered "after [a U.M. carrier] confessed to judgment".  That was the only reason that the two judges joining in this view voted to grant certiorari.

          Certiorari is granted when lower courts act without jurisdiction.  In the view of the two-judge majority, the trial court in this case "lacked jurisdiction to take any action other than to enter judgment in the amount of the UM policy limits in favor of Barber [the person claiming Uninsured/Underinsured Motorist benefits under the GEICO insurance policy]."

          Parenthetically, under Florida law, a confession of judgment by an insurance company authorizes Florida courts to exercise jurisdiction over a motion for attorney's fees.  It is just not accurate that an insurance company's confession of judgment automatically divests a Florida court of jurisdiction.  To the contrary.

          Further, as the dissenting judge on the panel observed, judicial action is required after a confession of judgment by any party.  A party acting on its own cannot divest a court of jurisdiction to act.  Here, for example, according to the dissenting appellate judge, the trial court had to have entered an order granting the confession of judgment first, before it ever attempted to enter other orders in the case in order for those other orders to be invalid for lack of jurisdiction.  However, that is not what happened here.

          The trial court entered the orders on all motions -- to amend and to enter judgment -- at the same hearing, at the same time in the same order.

          Nonetheless, GEICO has precedent in favor of its position.  In one earlier case, the same District Court of Appeal held that a confession of judgment by a U.M. carrier "mooted" all issues between them because the trial court could not provide any "substantive relief" once it entered judgment in the amount of the U.M. policy limits against the U.M. carrier.

          The full Fifth District Court of Appeal, other District Courts of Appeal and the Supreme Court of Florida have all yet to be heard from on this issue.  If a U.M. carrier can confess to judgment in a U.M. case and thereby foreclose any determination of damages in the U.M. case, then there may be questions concerning the U.M. insured's rights to pursue other claims against the confessional U.M. carrier.

          The same questions would result if a verdict in the U.M. coverage case determining the damages caused by a U.M. tortfeasor were treated as having no legal effect after an entry of judgment for U.M. policy limits.  This argument is also being advanced in Florida U.M. cases.  See FLORIDA BAD FAITH ACTION AFTER U.M. VERDICT:  DISCOVERY, DAMAGES, DUE.

          One result is certain already.  The team of lawyers who defend the U.M. carrier in a U.M. case is ordinarily not the same team of lawyers who defend the U.M. carrier in a bad faith case.  Compare GEICO Casualty Co. v. Barber, 2014 WL 3966053 (Fla. 5th DCA August 15, 2014), with a U.M. bad faith case posted yesterday on Insurance Claims and Bad Faith Law Blog, Donna Batchelor v. GEICO Casualty Co., 2014 WL 3906312 (M.D. Fla. June 9, 2014).

          In the Barber appeal, the majority pointed out at the end of their opinion that foreclosing a determination of damages in the U.M. contract coverage case did not preclude Mr. Barber from "litigating the damages issue on his bad-faith claim".

          Presumably so.  However, the damages in question in a U.M. coverage action are the damages caused by the uninsured motorist.

          The damages at issue in a U.M. bad faith action are the damages caused by the Uninsured Motorist insurance carrier.

          In Florida, recoverable damages in a statutory U.M. bad faith case can include the entire amount of damages in a verdict beyond the U.M. policy limits.  In the Donna Batchelor case, for example, a jury found that GEICO's insured sustained damages "of approximately $1.8 million" caused by the uninsured motorist tortfeasor.  As the dissenting judge in the Barber appeal pointed out, however, in Florida the law presumes that the damages caused by an uninsured motorist tortfeasor are already determined by the time a U.M. bad faith lawsuit is filed.

          These are issues which concern the determination of damages necessary to pursue first-party bad faith claims in many jurisdictions besides Florida.  Time, the Courts, and the Legislatures will tell us their answers.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

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PARSING PUNI'S: INSURABILITY OF PUNITIVE DAMAGES.

          Just in time for the American Law Institute's Principles of Liability Insurance Law Project, which is meeting in Philadelphia today and tomorrow, a new judicial decision underscores the importance of addressing the insurability of punitive damages.

          The ALI Project is considering a draft proposal that would make it the default position that punitive damages are insurable.  It is important to take that position carefully, and it is important to be equally careful in drafting language authorizing policy exclusions from liability coverage for punitive damages.

          When the starting point in a coverage inquiry is that punitive damages are insurable, then some will press the view that even if certain damages are "punitive in nature" they are not necessarily going to be excluded as "punitive damages".  See Williams v. SIF Consultants of Louisiana, Inc., 2014 WL 718060 *5-*6 (La. Ct. App., 3d Cir., February 26, 2014)(holding that an exclusion of coverage for "punitive damages" and similar types of damages, quoted at length below, did not exclude coverage for damages sought in the case at bar because the exclusion did not specifically exclude "a damage punitive in nature.").

          This is not to say that making punitive damages insurable ought not to be the default position of liability insurance.  Nor is it to say that if that result happened regardless of policy language, i.e., that punitive damages are insurable and not excluded, that it would be the first time that a result was reached regardless of the language of the insurance policy.

          Rather, it is to say that when the chosen policy position is that punitive damages are insurable, care must be taken in saying exactly what that means.  And the care that should be taken is not only in drafting the default position that, in this instance, punitive damages are insurable.  Care should be taken further, and it should be taken in the drafting of principles which authorize liability insurance companies to exclude coverage for punitive damages under their policies.

          Even if in some cases the results seem predetermined.

          In the case of Williams v. SIF Consultants of Louisiana, Inc., 2014 WL 718060 *5 (La. Ct. App., 3d Cir., February 26, 2014), the insurance carrier's subject exclusion listed "'fines, penalties, taxes, and punitive, exemplary or multiplied damages.'"  [Emphasis added.]  The underlying plaintiffs' claims were all for damages under a Louisiana statute which subjected the policyholder "'to damages payable to the provider of double the fair market value of the medical services provided, but in no event less than'" $50.00 per day or $2,000.00.  Williams v. SIF Consultants of Louisiana, Inc., 2014 WL 718060 *5 (La. Ct. App., 3d Cir., February 26, 2014), quoting La. R.S. 40:2203.1(G).  [Emphasis added.]

          The appellate court in this case held that the exclusion did not apply here.  Two of the judges on the three-judge panel joined in an opinion that expressed the panel's ruling in these words:

While there are exclusions listed thereafter, those exclusions do not include a monetary amount that is a statutory damage or a damage punitive in nature.

Williams v. SIF Consultants of Louisiana, Inc., 2014 WL 718060 *6 (La. Ct. App., 3d Cir., February 26, 2014).

          Other than quoting the policy exclusion including the language which excludes coverage for "multiplied damages," the opinion never referred to that policy language.

          After quoting the statute's provision on damages which only describes one form of recoverable damages under that statute, namely, multiplied damages, the opinion never referred to that statutory language again.

          The third judge on the panel in this case did not join in the opinion of the other two judges, but instead concurred in the result.

          Before concurring in the result, and certainly before concurring in any opinion, to say again care should be taken in how punitive damages are declared insurable, and how they are declared excludable from coverage.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

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Punitive Damages in Insurance Bad Faith Cases?

 

TERRORISM RISK INSURANCE COVERAGE FOR THE SHUTDOWN, DEFAULT?

           The Terrorism Risk Insurance Act has been law for nearly 11 years now.  It is self-implementing, meaning that it requires no further Congressional authorization or appropriations.  The TRIA vests the Secretary of the Treasury with authority that is not reviewable by any Court.

          Under TRIA, the Secretary of the Treasury, with the "concurrence" of the Secretary of State and of the Attorney General, has the power to certify any act as an "Act of Terrorism" which primary and excess property and casualty insurers are required to cover, so long as each and all of the following requirements is met:

 1.       The act is an act of terrorism.

The apparent purpose of this circular requirement is to make it official that the act in question meets the following requirements and that insurance companies must cover and cannot exclude coverage for losses resulting from the act in question.

 2.      The act is dangerous to human life, property or infrastructure.

If anything, the reports coming out of Washington, D.C. provide overwhelming evidence that the shutdown of the Federal Government and even more pronounced, that defaulting on the national debt, are both dangerous to human life, property or especially infrastructure.

3.       The act resulted in damage within the United States.

If the government shutdown did not result in damage, there would be no reason to shut down the government even in the eyes of the terrorists responsible for shutting it down; the impending default, all the more so.

4.      The act has been committed by an individual or individuals (the creatures responsible certainly qualify in this regard, too) to influence the policy or affect the conduct of the United States Government by coercion.

 

Any questions whether the shutdown or default is intended to influence the policy or affect the conduct of the United States Government by coercion?

I didn't think so.

 

          To say again, TRIA provides a Federal Government "backstop" for insurance coverage provided under otherwise existing primary and excess property and casualty insurance policies.  The backstop is 'limited,' if that is the right word, to $100 Billion or $100,000,000,000.00 per year.  Current triggers for private insurer coverage and for the Federal Government backstop are when insured losses resulting from the certified acts of terror exceed any deductible, in which event the private insurance company pays a percentage of the coverage and the Federal Government pays the remainder of the coverage up to the annual cap. 

          In sum, the conditions have all been met for certifying the terrorist acts which forced the Federal Government shutdown and which are forcing a default on the national debt.  The solution to this unwarranted terrorist attack is clear:  Insurance to the rescue.  Secretary of the Treasury Lew, contact Secretary of State Kerry and Attorney General Holder.  Meet and concur, you might say.  Then:  Certify now.   Certify here.  Certify, baby, certify.

Please Read The Disclaimer.

          A brief look into several other kinds of insurance coverages -- including contingent business interruption, "political risk," and others -- is offered by Mark Garbowski, Esq., an attorney with Anderson Kill, who posted an article online at www.mynewmarkets.com with the title, "Is There Insurance Coverage for Losses Stemming From Government Shutdown or Default?"

Please Read The Disclaimer.

Pull it Off the Computer, Print it, we're done.

Canadians Wade into Sandy Losses With Their Own Computer Models, and the Insurance Information Institute (III) Estimates Too.

    Aon Benfield, based in Canada, estimates that as of May, 2013 the known and predicted losses from Sandy include "$72 Billion in total economic loss".  "Aon Benfield's cat modeling arm" estimates that total "insured losses" included in that amount "are estimated to be $30 billion.  The $30 Billion estimate of the Cat Modelers includes roughly $7.2 billion" in Flood Insurance payouts.  "$72 billion in total economic loss from Hurricane Sandy:  Aon Benfield" in "Daily News" posted online on May 14, 2013 by Canadian Underwriter.ca.

    The industry publication reports from Canada on a confusing and apparently competing array of facts.  The apparent conclusion is that Sandy may not trigger Hurricane Deductibles.  On the other hand, the computer modelers are reportedly convinced that (excluded) flood and surge caused much more damage than (covered) wind perils.

    The Insurance Information Institute reported in "The Topic" online in July, 2013 regarding "Catastrophes:  Insurance Issues".  The III posting announced a much lower estimate of insurance claims at that time as a result of Sandy, in the amount of $18.8 Billion, nearly half of the estimated Canadian Underwriter amount in May, 2013, cited above.  Total Sandy damage was also reported by the III in its post as of July, 2013 at $50 Billion, a figure clearly less than the estimated $72 Billion in total economic loss, above.

    Like the Canadian source discussed above, however, the III too concludes that most of the claimed Sandy damage is excluded and otherwise not covered under homeowner's policies or commercial policies purchased by small businesses.  Insurance Information Institute, "Catastrophes:  Insurance Issues / THE TOPIC JULY 2013," posted online at http://www.iii.org/issues_updates/catastrophes-insurance-issues.html#at_pco=cfd-1.0.

 Please Read The Disclaimer.

UIM SETOFF AGAINST POLICY LIMITS, NOT AGAINST CATASTROPHIC DAMAGES.

            A Tortfeasor's Liability Policy Limits are a setoff against Underinsured Motorist Policy Limits.  This is the rule in Illinois, as in most U.S. jurisdictions.  They are not set off against the Policyholders' Catastrophic Damages.  Such is the holding in Download Wehrle v. Cincinnati Ins. Co. *2, *4  (N.D. Ill. Memorandum Opinion and Order Filed August 21, 2012).

             This rule was applied because the UIM Policy at issue in that case required that a Tortfeasor's Liability Limits be set off against the UIM Policy Limits.  That the UIM Statutes authorized the Policy provision determined the outcome.  See Download Wehrle v. Cincinnati Ins. Co. *2 (N.D. Ill. Memorandum Opinion and Order Filed August 21, 2012).

 

Please Read The Disclaimer.

No Subrogation For Surety Against CGL For Defense, Expert Expenses.

    In the case of Hartford Accident & Indemnity Co. v. Crum & Forster Specialty Ins. Co., 2012 WL 2260915 (S.D. Fla. June 15, 2012), Download Hartford v. Crum and Forster (S.D. Fla. June 15, 2012) PUBLIC ACCESS, a Federal Judge decided that a Performance Bond Surety could not claim equitable subrogation for certain defense expenses against a General Contractor's Commercial General Liability Insurance Carrier.

    The bond contained no duty to defend.  Hartford, the Surety, sued Westchester, a CGL Carrier for a General Contractor for defense expenses.  Hartford retained Carlton Fields to defend the g.c. and Hartford also retained Expert Witnesses on behalf of the g.c. which was sued for Damages allegedly resulting from the construction of a condominium in South Florida.  Hartford alleged its right to recover $762,753.23 "in costs and fees incurred by the law firm" and bills submitted by two Expert Witnesses which totaled, respectively, $93,271.29 and $67,147.98.  Id. at *1.

    Hartford based its claims on equitable subrogation.  The Federal Court denied Hartford's claims, denied Hartford's Motion for Summary Judgment, and granted the CGL Carrier's, Westchester's, Motion for Summary Judgment.  Hartford failed in its claim to equitable subrogation, the Court ruled, for several reasons.  In part, Hartford could not claim equitable subrogation in this case because it made its payments as a volunteer.  Hartford had no duty to defend under the Performance Bond it issued.  Id. at *5.

    Please Read The Disclaimer.   

ALLOCATING COVERAGE WHEN DAMAGES PAYABLE BY INSURED ARE NOT ALLOCABLE.

... Is "Time on the Risk" a Defensible Way to Allocate Insurance Coverage?

 

"The principle underlying our decision is a straightforward one:  an insurance company cannot be held liable for periods of risk it never contracted to cover."

 

        In Pennsylvania National Mutual Casualty Insurance Co. v. Roberts, 668 F.3d 106 (4th Cir. 2012), Download Pennsylvania Natl Mut. Cas. Ins. Co. v. Roberts (4th Cir., Opinion Filed Feb. 3, 2012) PUBLIC ACCESS, the Court readily applied Maryland law to allocate Insurance Coverage.  Under Maryland law, "in lead paint or 'continuous trigger' cases such as this, Maryland courts determine an insurer's liability through a 'pro-rata allocation by "time on the risk."'"  Id. at 111.

        The Roberts case involved an infant who ingested lead and was poisoned by it.  She was born on January 17, 1991.  Twenty (20) months later, she was diagnosed with lead poisoning.  Id. at 109.  Using a cutoff of "August 1995" when the child apparently stopped "exhibit[ing] elevated blood levels," id., the District Court concluded that the period during which damages occurred was "55 full months," id. at 111, a finding accepted by the Federal Appellate Court in this case.

        The underlying liability case went to a jury verdict in Maryland State Court, which reduced the verdict amount to a Judgment of $850,000.00 "following an application of Maryland's noneconomic damages cap."  Id. at 110.

        "It is undisputed that [the Policyholder and another Tortfeasor Defendant] are jointly and severally liable for this amount."  Id.  [Emphasis added.]  The fact that the Damages award could not be allocated -- which is evident because there could not be joint and several liability, if the damages could be allocated -- seemed to be inconsequential to the Insurance Coverage allocation made by the Federal Appellate Court in this case.

        The Fourth Circuit panel's opinion, written by Judge J. Harvie Wilkinson, III, first applied Maryland law, which was directly on point of course, and held that "time on the risk" allocation of indemnity required allocation of Penn National's policy limits pro rated by time on the risk, of course.  Penn National's time on the risk was only 22 months, in an apparent finding of fact by the Appellate panel, and so Penn National was held liable by the Appellate Court to pay only 22/55 months' worth of the $850,000.00 Judgment here.  See id. at 113.

        But the opinion contained more words than that, in this case.

        The panel also ruled that even if Maryland law did not require this result, then the Federal panel's interpretation of contract law would also require this result.  Like most Policies in its class, the Penn National Bodily Injury/Property Policy -- which was never described as such, but looks from the opinion an awful lot like standard CGL or Commercial General Liability Policy or Landlord's Liability Policy language -- provided Coverage for Bodily Injury or Property Damage which "'occurs during the policy period.'"  Id. at 110, 112.

        The panel's opinion never once addressed the language of the insurance contract itself, namely that it provided  Coverage for damages occurring during the policy period and not simply Coverage for some abstract period of time unconnected with the determination of the Policyholder's liability to pay Damages.

        As a third reason for its decision, the Federal Appellate panel also wrote that a result other than 'pro rata allocation by time on the risk'  would be "disruptive for insurance markets as well."  Id. at 114.  There is so much that could be said in direct contradiction of this dictum.  That is enough to say about it here.

        The concluding observations of the panel in the Roberts case are quickly summarized:  Stuff happens.  See id. at 115 ("It is a dispiriting but inescapable fact that sometimes really bad things happen ....).  

        That concluded the panel's handling of the Roberts direct appeal.  Penn National Mutual Casualty Insurance Company cross-appealed, as well.  Penn National complained on appeal that although the District Judge was correct in applying Maryland's law of allocating Penn National's liability to pay the underlying Damages Judgment by pro rating Penn National's 'time on the risk,' still the District Court erred in the eyes of Penn National by allocating to it two (2) months too many on the risk.

        The Federal Appellate panel in this case agreed with Penn National on this point also.  Penn National's time on the risk was reduced by two (2) months on appeal.  Id. at 118-19.  As the opinion put it:  "Roberts' misfortune cannot be laid at Penn National's feet ....  To place the entire judgment on the insurer would be chaotic ...."  Id.

        If the little girl's lawyers argued that her life after lead poisoning was "chaotic," or if the Policyholder's lawyers argued that joint and several liability for the entire Damages was "chaotic," none of the Courts involved including this Federal Appellate panel appeared to be moved.

        Insurance Coverage under an Insurance Contract should never be determined by the extent of the damages which the claimant alleges in its claim against a Policyholder.  That is or should be true in all United States jurisdictions.  However, that is not nearly the same thing as deciding that a contract which provides Insurance Coverage for Damages, is somehow the same as a contract which provides Insurance Coverage based not on the Damages which occurred during the policy period, but based instead on the Insurance Company's 'time on the risk' regardless of what is written in the contract.

         

 

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FOURTEEN FOR THE EXPERTS: NEW INSURANCE CASES THAT MAKE EXPERT WITNESS LAW ....

.... The Twelfth Case.

    In a change-of-pace, Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog have been trading consecutive posts addressing a single common theme:  Court rulings on Expert Witness Testimony and Reports in recent Insurance Cases.  For the previously developed rules of law and judicial decisions on these issues, see generally as to Liability Insurance Cases, volume 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17 (West Publishing 3d ed. 2011; 2012 Supplement in process), and see generally as to all types of First-Party Insurance Cases, volume 2 id. § 12:18.

 

Hurricane Wilma Professional Engineer Expert Disallowed.

        In the case of Banta Properties, Inc. v. Arch Specialty Insurance Co.,  2011 WL 7118542 (S.D. Fla. December 23, 2011), Download Banta Props, Inc. v. Arch Specialty Ins. Co. (S.D. Fla. Case No. 10.61485, Order Granting Daubert Motion for Exclusion, Filed Dec. 23, 2011) PUBLIC ACCESS, the District Court disallowed a Plaintiff Property Management Company's proffered Expert.  The Expert in question is a Professional Engineer.  She was proffered to testify to her Opinions "that Hurricane Wilma damaged windows and doors at Plaintiff's properties and as a result needed replacement."  Id. at *1.  The Defendant Insurance Company requested the Court to exclude her Expert Testimony on a number of different grounds.

        In pertinent part, the Professional Engineer Expert could not satisfactorily attribute the Plaintiffs' claimed Damages to their claimed cause, Hurricane Wilma.  The Court "agrees that Mellinger was unable to attribute damage to Hurricane Wilma with any degree of certainty and that she used an unreliable methodology.  Therefore, the Court shall exclude her expert opinions."  Id. at *2.

        If an Expert is proffered on Damages, she should also offer acceptable Opinion Testimony as to what caused those Damages, or suffer the risk of not testifying at all, as in this case.

      Parenthetically, the exclusion of this Expert's Testimony does not appear to have harmed the Plaintiff''s case very much.  PACER, the online docket of the Federal Courts, reflects that the Jury returned a Verdict for the Plaintiff on January 30, 2012.  The Verdict includes the Jury's finding that $4,000,000.00 or $4 Million is the amount of the Plaintiff's covered Damages resulting from Hurricane Wilma.  On February 27, 2012, the Plaintiff filed a motion for entry of final judgment.

Part of a Series.  To be continued ....

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Double Recovery is a Matter of Proof, Not Opinion.

The winds and waters of Hurricane Katrina have spawned more than one blog post, article, book.  So it is with a recent decision by the Supreme Court of Mississsippi.  The new decision has so many features that it has been the subject of commentary on Insurance Claims and Bad Faith Law Blog, and in this continuing post as well.

   Hurricane Katrina struck Michael and Mary Robichauxes' home, detached garage, shed and personal property.  Their home, which had been located one block north of the Gulf of Mexico, was destroyed.  Mr. and Mrs. Robichaux made a claim on their Homeowner's Policy with Nationwide after the resulting destruction and damage.

   The Robichauxes' Homeowner's Policy with Nationwide provided limits, in pertinent part, of $131,000.00 for Coverage A for their Dwelling, $13,100.00 for Coverage B for Other Structures, and $97,405.00 for Coverage C, or Personal Property Coverage.  Robichaux v. Nationwide Mutual Fire Insurance Co., 2011 WL 6224472 *1, ¶ 4 (Miss. December 15, 2011), Download Robichaux v. Nationwide Mutual Fire Insurance Co. (Miss. Case No. 2010CA00109, Opinion Filed December 15, 2011) PUBLIC ACCESS.  Their Nationwide Homeowner's Policy carried "a hurricane rider," said the Mississippi Supreme Court, "which covered damage occurring as a result of a 'windstorm during a hurricane.'...  The hurricane endorsement covered damage to the dwelling and other structures, as well as personal property."  Id. 

   The Homeowner's Policy provided coverage for damage to the dwelling and to other structures caused by "all risks," while coverage was extended to damage to personal property which was caused by named perils.  Id. at *7, ¶ 26.

   Finally, the Policy also contained a Flood Exclusion and an Anti-Concurrent Cause Exclusion as well.  See id. at *4, ¶ 16.

   Nationwide at first denied the Robichauxes' claim "based on a finding that the loss was caused by water or water-borne material as defined by the policy."  Id. at ¶ 5.  Nationwide's denial of all coverage was based on various investigative reports "as well as the flood exclusion and anti-concurrent language in the subject policy ...."  Id.

   On an unreported date, Nationwide changed its mind and offered small amounts to settle the Robichauxes' claims "for potential dwelling damage" and for "potential damage to other structures".  The reasons for Nationwide's change of position are not given by the Mississippi Supreme Court in its opinion.  In any event, Mr. and Mrs. Robichaux returned the checks to Nationwide, uncashed.  Id. at *2 ¶ 6.  Instead, they sued Nationwide for "declaratory and injunctive relief, including indemnity under the insurance contract, compensatory and punitive damages, specific performance of the insurance contract, attorneys' fees, and ... [for] fraud and bad faith by the insurer and its agent."  Id. at *1, ¶ 1.

   Following a peripatetic journey from Mississippi State Court to Federal Court and back to State Court again, the Trial Court entered Summary Judgment for Nationwide.  The Robichauxes appealed.

Apparent Overpayment of Flood Insurance for a Dwelling is Not a Double Recovery For Uncompensated Damage to Other Structures.

    Dwelling Coverage.  Mr. and Mrs. Robichaux had a Flood Insurance Policy in addition to their Homeowner's Policy.  "The flood policy paid $136,500 for flood damage to the dwelling and $70,400 for flood damage to the contents of the home, amounts which constituted the policy limits."  Id. at *2, ¶ 6.  Even assuming the highest possible value of the Robichauxes' home which was supported by the evidence in the amount of $185,000.00, the Trial Court found that the land value was $53,860.00, resulting in a difference of $131,140.00 in the best possible case for the Policyholders here.  Since there could be no claim for Dwelling Coverage under the Nationwide Policy without double recovery here, the Summary Judgment for Nationwide was affirmed in this regard.  Id. at *6, ¶ 22.

   Other Structures Coverage.  The Trial Court found that the Robichauxes' shed and garage had a value of $5,000.00.  Given that the Robichauxes received $136,500.00 from their Flood Insurer for a dwelling with a value of at most $131,140.00, the Trial Court also "found" that the Robichauxes were effectively over-compensated for their Other Structures as well.

   This ruling was reversed on appeal.  "However, the record does not show that the payment of $136,500 for flood damage was intended to compensate for losses to other structures.  In fact, the estimate prepared by the flood insurance adjuster was described as an 'estimate to replace the dwelling,' with no mention of other structures."  Id. at *6, ¶ 24.  Accordingly, the issue of "whether wind damaged the other structures prior to their destruction by storm surge" was remanded for "a jury determination".  Id.

   Personal Property Coverage.  As noted, the Flood Insurance Carrier here paid its Contents Coverage Policy limits of $70,400.00.  The total damage to the Robichauxes' Personal Property was claimed to be $186,144.00.  Reversal on this issue was required in this case, wrote the Mississippi Supreme Court.  "Since the Robichauxes have not been compensated for the full value of their personal property, we remand this case to the trial court for a jury trial on the issue of whether wind damaged the Robichauxes' personal property prior to the flood damage."  Id. at *7, ¶ 25.

That concludes the holdings of the Mississippi Supreme Court in the Robichaux case on the issue of pleading and proving "double recovery" of insurance benefits.  The Court also addressed Insurance Coverage interpretation issues in this case.

  To be continued ..............

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"Put Your Hands Up, Or ... We'll SETTLE!" Not Hardly, Pilgrim.

   The Securities and Exchange Commission "enforcement chief" says settlements leave your client better off than what they could get if they went to Trial.  Edward Wyatt, "House Panel to Examine Settlements By S.E.C." p. B6, col. 1 (New York Times Nat'l ed., "Business Day" Section, Saturday, December 17, 2011), quoting "Robert Khuzami, the S.E.C.'s director of enforcement".  That is true only when you lose at Trial all the time.

   Anyone who has actually litigated cases knows that you settle when the risks to your client are greater than the chances of recovery.  No active practitioner ever consistently recommends settlements of potentially successful lawsuits because the amount of the settlements is equal to the amount or as much as your clients could get if they went to Trial.

   Evidence of this truth is clear.  Private lawsuits against "banks" return far more money than settlements negotiated by the S.E.C. and other currently staffed Federal agencies.

   What Insurance Coverages such lawsuits will trigger is even now  being litigated, along with the lawsuits themselves.  The plaintiffs are voting with their filing fees that they will be made whole faster and more efficiently by doing the recovery actions themselves, you might say: 

   If the bank settled with the investors using the same loss ratio that was applied in the Bank of America settlement [of a lawsuit filed by private investors], it would cost JPMorgan about $1.9 billion.  Still the bank would have other exposure outstanding.  JPMorgan faces about $31 billion in class-action cases, according to McCarthy Lawyer Links, a legal consulting firm.

   Elizabeth Nowicki, a professor of securities law at Tulane University and a former lawyer at the Securities and Exchange Commission, said that the efforts by investors might turn out to be the costliest and most important way that banks are held accountable for their mortgage security creations, because the push for accountability is coming from bank clients.  For instance, in the one mortgage security case the S.E.C. has brought against JPMorgan, the bank settled the allegations in June for $153.6 million.

Louise Story, "Investors Scrutinizing JPMorgan's Mortgages" p. B1, col. 6 (New York Times Nat'l ed., "Business Day" Section, Saturday, December 17, 2011).

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Title Insurance Companies Are Also Damaged by Mortgage Fraud.

 

   One Larry Levi, the assignee of a note and mortgage, purchased what the Federal Court sometimes called "a mortgage title insurance policy" in Levi v. Commonwealth Land Title Insurance Co., 2011 WL 4542904 (S.D.N.Y. September 30, 2011):  Download Levi v. Commonwealth Land Title Ins. Co. (S.D.N.Y. Case No. 09 Civ 8012, Opinion and Order Filed Sept. 30, 2011) PUBLIC ACCESS.   By whatever name, the Court was interpreting and applying a Title Insurance Policy in that case.

   Mr. Levi's claim was for breach of contract.  The New York Federal Court applied New York law.  The Court held that Mr. Levi adequately proved his covered claim.  It granted his Motion for Summary Judgment.  Id. at *3-*5.  He adequately proved that the mortgage he was assigned was a fraud.

   The Federal Court's compilation of recoverable Damages in this case was significant.  First, the Court held in accordance with universal law (including New York's) that "[a] title insurer must indemnify the insured for the actual loss, within the policy limit, stemming from the defect in the mortgage."  Id. at *6.

   Here, Mr. Levi was "a holder of a junior lien," and his recoverable loss would be his actual loss of "the lesser of 1) the unpaid principal on the mortgage debt and 2) the mortgagor's equity in the property, i.e., Levi's recovery if he had been able to foreclose."  Id. The Court in this case determined that Mr. Levi's actual loss, and thus his recoverable loss from his Title Insurance Company, was $1,000,000.00 or $1Million, "a point Commonwealth does not contest" -- and an amount which happened to be the Policy Limit on his Title Insurance Policy.  Id.

   Second, the Federal Court determined that Mr. Levi was entitled to Prejudgment Interest under New York law.  Prejudgment Interest accrues in New York from the earliest date on which the cause of action or claim could be ascertained.  In this case, the "starting point for prejudgment interest" would be the date when "the insured's cause of action accrues when it suffers an actual loss as a result of the defect in his lien."  Id. at *6-*7.

   Third and finally, the Federal Court rejected Mr. Levi's claim to attorney's fees, under Federal law.  "Commonwealth has not 'acted in bad faith, vexatiously, wantonly, or for oppressive reasons' and therefore a discretionary award of attorney's fees is not warranted."  Id. at *7.

   The implication of this and many other decisions which follow established principles of Insurance law, on Mortgage and Title Insurance Companies' exposure from fraudulent mortgages in the Great Credit Collapse through which we are all now living, is very clear:  The Collapse may also be the cause of the collapse of many as yet unknown Insurance Companies, which will undoubtedly file third-party or direct claims of their own against the persons responsible for the losses resulting from mortgage fraud.

   The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  Here is a link to the American Conference Institute Website Page which features this Conference including registration. If you or someone you know would like to attend, the ACI is offering a discount to the readers of this weblog.  If you would like to explore the ACI discount offer, contact:

Marc Gerstein
Delegate Coordinator
Office: 1-212-352-3220  x5432

[email protected]

 

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Owners Testifying Based on "Specialized Knowledge" Are Undisclosed Expert Witnesses.

   In Florida, owners of property are allowed to testify as to the value of their lost property  --  up to a very important point.  When an owner testifying to value of her or his property starts to testify based on "specialized knowledge," she or he just became an Expert Witness.

   If they were not disclosed in accordance with Court Order, their testimony in this regard is subject to being stricken as in the case of Fidelity Warranty Services, Inc. v. Firstate Insurance Holdings, Inc., 2011 WL 4577530 *4-*5 (Fla. 4th DCA October 5, 2011 and obviously not yet final).

   In the Fidelity Warranty case, once the offending testimony in question was stricken, there was no record evidence of value. As a result the Plaintiff in that case did not "meet its burden of proving the market value of its insurance agency," such that the Florida Appellate Court reversed "the final judgment for tortious interference" and remanded "for entry of a judgment for [Defendant] on that count."  Id. at *7.

   In many Insurance cases, the Policyholder is the owner of property at issue.  In many Insurance cases, the Policyholder's claim, moreover, is based on Insurance Coverage for destroyed property, the value of which needs to be established in order to complete the claim, or for diminished value of her or his property and the diminished value must be proven in order to prevail.

   The new Fidelity Warranty decision is therefore clearly significant both to potential Counsel for Policyholders and to potential Counsel for Insurance Companies alike.

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