Claims And Issues

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.

Related articles

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

FLORIDA DUTY TO DEFEND INTENTIONAL TORT UNLESS "INTENTIONAL DAMAGES" EXCLUSION ....

.... AND CERTAINLY NOT WHEN THERE ISN'T EVEN  ONE IN THE POLICY.

             In Philadelphia Indemnity Insurance Co. v. Hamic, 2012 WL 5055558 (M.D. Fla. October 18, 2012), a Federal District Judge held that under Florida Insurance Law, there is a Duty to Defend a claimed Conspiracy to commit Malicious Prosecution.

            The Federal Court previously determined that there is a Duty to Defend a Malicious Prosecution Claim in the same underlying case.  An Attorney's Professional Liability Policy covering specified Errors and Omissions is at issue in the Federal case.   The Defendants in the underlying case, and also the Insureds on the Policy, are an attorney and his Law Firm.

            Philadelphia, the E & O Carrier, filed a Motion to Reconsider or to Amend the Summary Judgment of a Duty to Defend, specifically as to alleged civil conspiracy.  The Insurance Company argued that conspiracy is an intentional tort and is not covered by the Attorney's Professional Liability Policy at issue.

            The Professional Liability Policy at issue has no Exclusion for intentional torts, the Court observed.  Philadelphia Indemnity Insurance Co. v. Hamic, 2012 WL 5055558 *1 (M.D. Fla. October 18, 2012).

            Moreover, the Professional Liability Policy at issue covers Errors & Omissions some of which are intentional torts, "though not specifically malicious prosecution or conspiracies."  Philadelphia Indemnity Insurance Co. v. Hamic, 2012 WL 5055558 *1 (M.D. Fla. October 18, 2012).

            Even though conspiracy was claimed in the underlying case, conspiracy does not require an intent to cause the damages complained of, in order to allege it or to prove it.  Without an Exclusion of intent to cause the damages complained of, there is no doubt that there is a Duty to Defend such claims under settled Florida Insurance Law.   "The tort of civil conspiracy does not require a finding of specific intent to harm the plaintiff or to extract an intended result.  Essentially the intent to commit the tort does not also mandate an intent to do the harm that resulted, which was an arrest."  Philadelphia Indemnity Insurance Co. v. Hamic, 2012 WL 5055558 *2 (M.D. Fla. October 18, 2012), CITING LIME TREE VILLAGE COMMUNITY CLUB ASS'N v. STATE FARM GENERAL INSURANCE CO., 980 F.2d 1402, 1407 (11th Cir. 1993), in which the Author successfully represented a Florida Homeowner's Association when it and its elderly members were all denied a Defense under their Business Liability Coverage and under their Directors and Officers Liability Coverage, which was upheld on a Summary Judgment by a Federal District Judge, and which was unanimously reversed on appeal by the Eleventh Circuit in the decision relied on by other  Federal District Judges to determine a Duty to Defend, including in this October 18, 2012 decision.

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Robichaux Rulings, Redux (Part 2 of 2).

This continues a post here from January 4, 2012.

 

   The winds and waters of 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.

 1.  The Anti-Concurrent Cause Clause Does Not Apply Every Time That Water Appears.

    The Mississippi Supreme Court first held in pertinent part that the Homeowner's Policy at bar is not ambiguous.  The joint appearance in the same Policy of both a Hurricane Endorsement and an Anti-Concurrent Cause Clause does not provide an ambiguity, the Court held.  Id. at *4, ¶ 17.

   However, neither that ruling or the evidence in this particular case answers the question whether wind damaged the Robichauxes' property before Hurricane Katrina's flood left behind only the slabs of their home and their detached  garage:

However, the trial court erred in concluding that no genuine issue of material fact existed as to whether wind damaged the property prior to its destruction by storm surge.  Whether Nationwide had a duty of indemnity under the policy for wind damage, if any, occurring prior to the storm surge presents a triable issue of fact.

Id. at *5, ¶ 18.

  This ruling was applied not only to the Dwelling Coverage Claim under Coverage A, but also to the "Other Structures" Coverage under Coverage B, id. at *6, ¶ 24, and to the Personal Property Coverage Claim under Coverage C.  Id. at *7, ¶ 25.  However, before the Supreme Court could determine whether the Trial Court's Summary Judgment should be reversed on any of these issues, it needed to address another issue:  whether the Policyholders in this case were recovering two times for the same damages. 

 2.  The Anti-Concurrent Cause Exclusion Only Applies in Mississippi, the Mississippi Supreme Court Continues to Hold, When Wind and Noncovered Causes Concur to Cause Damage, Not Just Because There is a Noncovered Cause in a Case.

   The Robichaux Court adhered to its earlier ruling in Corban v. United States Automobile Association, 20 So. 3d 601 (Miss. 2009), and to other settled Mississippi law concerning All Risks Coverage, Named Peril Policies, and Anti-Concurrent Cause Clauses.  Here is how it did so.

   As noted, the Homeowner's Policy which Nationwide issued to Mr. and Mrs. Robichaux contained "All Risks" Coverage for the Dwelling and Other Structures, and "Named Perils" Coverage for their Personal Property.

   In virtually all American jurisdictions, the burden of proof that an Exclusion applies to a claim under an Insurance Policy is a burden belonging to the Insurance Company.  This rule of law applies in Mississippi as in other States, and it was applied to Anti-Concurrent Cause Exclusions by the Mississippi Supreme in Corban.

   As in Corban, the Mississippi Supreme Court in Robichaux held that the burden of proof belongs to the Homeowner's Insurance Company that its Anti-Concurrent Cause Exclusion applies.   Here, however, the Anti-Concurrent Clause does not apply, according to the Court:

The evidence in the present case shows that not all of the damage to the Robichaux residence was caused by the simultaneous convergence of wind and water; accordingly, the ACC clause was inapplicable.

Id. at *5, ¶ 19.

   In sum, in this case, in accordance with universally accepted rules the Policyholder bears the burden of proof on Insurance Coverage in the first place, and the Insurance Company bears the burden of proving that its Exclusions apply:

[U]pon remand, Nationwide has the burden of proving that the other structures under Coverage B were damaged by an excluded peril.  The converse is true with regard to the Robichauxes' burden of proving that personal property under Coverage C suffered accidental, direct, physical loss as a result of one of the enumerated perils, namely windstorm.

Id. at *7, ¶ 28.

 

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Individual Damaged Homeowners No Place to Stand, Court Says, Over HOA Homeowner's Policy.

   Individual Homeowners may have Property Damage claims.  Their Homeowners Association may have a Homeowner's Insurance Policy.  The individual Homeowners may seek to make a claim under it.  Can they?

   The Court in a recent Federal Case said, "No."  In that case, the Court held that individual Homeowners (or, in that case, Condominium Owners)  do not have standing to sue over their HOA's Homeowner's Insurance Policy (or, once again, in that case an "Association of Apartment Owners" Policy).    Peters v. Lexington Insurance Co., 2011 WL 6779598 *4 (D. Hawai'i December 27, 2011), Download Peters v. Lexington Ins. Co. (D. Haw. Case No. 11.00355, Order Filed Dec. 27, 2011 Granting Defendant's Motion for JOP) PUBLIC ACCESS.

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Hurricanes, "Hurricane Damage Insurance," Homeowners, Condominium and Homeowners' Associations.

   The differences between Insurance that might cover Hurricane Damages that is available to Condominium (and perhaps some Homeowners') Associations, on the one hand, and the "Hurricane Damages Coverage" that is available to Homeowners, are explored in a syndicated column by Richard White, "Community Living / Hurricane Damage Insurance," published this morning in the print edition on p. B9, col. 1 (Orlando Sentinel, Monday, July 18, 2011),  but not made accessible Online.  (At first, I was going to provide you with a link if I could find one elsewhere Online, but I could not find a link for this particular syndicated column.  However, here is a link to the July, 2011 edition of Florida Community Association Journal, which is entitled, "Disaster Preparedness Special".   In particular, an article which may be of interest begins on page 14, by Kathy Danforth, "Minimizing Your Disaster".  I hope these are useful to you and to your clients.)

   The biggest difference?  Insurance carried by Condominium Associations will not likely provide Coverage for personal property of Homeowners.  Only the Homeowner has an insurable interest in her or his personal property.  See id.

   This useful column also briefly addresses questions concerning FEMA and Homeowners Associations, and mobile homes, following Hurricanes.

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Association Boards and Homeowners', Unit Owners' Personal Liability Without Insurance?

   Statutes in California reportedly immunize Homeowners and Unit Owners who are members of their Homeowners' Association or Condominium Association, respectively, if certain conditions are met.  One of those conditions is the purchase and maintenance of appropriate Commercial or other General Liability Insurance Coverage, and Directors and Officers Coverage.  If the required Insurance Coverage is maintained, then Statutes in California reportedly provide that "the individual owners in an association" shall not be personally liable for Damages assessed against the Association and, further, that a "'volunteer' director," i.e., member of the Association Board, cannot be held personally liable either so long as certain required Insurance Coverage is maintained by the Association.  [See your jurisdiction's Statutes to determine if these things hold true in your jurisdiction as well.]

   Parenthetically, another requirement for board members to be immunized from personal liability is that their acts must have been committed in Good Faith.  Stephen Glassman and Donie Vanitzian, "Homeowners Association Insurance Protects Board and Titleholders From Liability/Without The General Insurance and Directors and Officers Coverage, Directors and Officers Can Be Held Liable and Would Be Negligent in Permitting Individual Titleholders to Be Liable as Well" (Los Angeles Times Online, Sunday, November 7, 2010).

   In fact, there is a view in California that as a result of these Statutes and the immunities they confer if followed, that failure to purchase the Insurance Coverage the Statutes require may be Negligence:

   Without the general association insurance and directors and officers coverage, the individual directors and officers may not only be held liable but also would be negligent in permitting individual titleholders to be held liable.

Id.

   According to the authors of the linked Q and A report from California, if any Insurance can be canceled it "is the coverage for the management company and its personnel.  A professional company should carry and pay for its own insurance.  If the management [company] cannot provide its own insurance coverage, it should not be providing services to your association."  Id.

   Note that standard Commercial General Liability or "CGL" Policies ordinarily include "Your Real Estate Manager" as an Additional Insured, for which there typically will  not be a separately stated Premium.

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Attorney's Fees, Using Reserves Without Disclosure, and Good Faith.

   The Directors who serve on the Boards of Condominium Associations and Homeowners' Associations have certain duties.  In many jurisdictions (check your local laws), these duties include duties of Good Faith in how if at all they use the Association's Reserves:

The association board's duties include performing due diligence and acting in good faith when it comes to preparing a budget and anticipating increases in assessments. 

Stephen Glassman and Donie Vanitzian, "Associations/Owners Feel Left in the Dark on Use of Reserves for Legal Bills" (Los Angeles Times Online, Sunday, January 31, 2010).   The linked newspaper column specifically addresses a question concerning what may be inadequately disclosed use of Reserves to pay Attorney's Fee Bills.

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