Insurance Law Update
Brown & James, P.C.
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 IN THIS ISSUE
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ABOUT US
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Brown & James, P.C. is a Midwest regional law firm with over 100 trial lawyers practicing in a wide variety of corporate and insurance litigation practice areas.
St. Louis, MO
Kansas City, MO
Springfield, MO
Belleville, IL
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 U.S. News Ranks Brown & James "Best Law Firm"
U.S. News and Best Lawyers have ranked Brown & James among their inaugural Best Law Firms rankings. Brown & James was ranked in five practice areas.
Click here to read more.
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 Statute of Repose Strictly Enforced in Construction Case
A subcontractor installed a refrigerator system in 1988 in a building that was destroyed by fire in 2000. In 2005, the owner’s insurer brought a $5 million subrogation action against the subcontractor, which the trial court dismissed as time-barred under Missouri’s ten-year statute of repose. In Travelers Indem. Co. v. Williams-Carver Co., WD71181 (Mo. App. W.D., Sept. 7, 2010), the Western District of the Missouri Court of Appeals affirmed the action’s dismissal. The insurer, in an attempt to escape the statute of repose, argued the refrigeration unit installed by the defendant was a “product,” and that the subcontractor’s failure to incorporate proper “fire walls” in the unit made the product defective. The court rejected the insurer’s argument, holding the refrigerator system was not a “prefabricated product” but the result of construction work that included the purchase, assembly, and installation of the necessary component parts on the landowner’s property. Therefore, the subcontractor was entitled to the protection afforded by the ten-year statute of repose. This action is now being appealed to the Missouri Supreme Court. |
No Permissive Use, No Coverage
After a week-long trial, the United States District Court for the Eastern District of Missouri issued a 71-page opinion in which the court found there was no coverage for a $10 million underlying judgment because the defendant driver did not have express or implied permission to use a company car at the time of the collision. In Hawkeye-Security Ins. Co. v. Bunch, No. ED1071 (E.D. Mo., Sept. 5, 2010), the court found the employee who was using a company car on a weekend while intoxicated did not have permission to use the vehicle in light of his employer’s company policy against unfettered personal use of company vehicles while not on work assignments. This decision makes for recommended reading. The court’s opinion provides a very good discussion of permissive use law in Missouri. We anticipate this decision will be appealed to the United States Court of Appeals for the Eighth Circuit. |
No Coverage for Allegations of Improper Home Repair
An insurer issued a CGL policy with an endorsement providing coverage for liability arising out of “improper home repair and remodeling.” Four separate actions were brought against the insured alleging fraud, misrepresentation, deception, and abuse. The trial court granted summary judgment for the insurer, ruling the underlying lawsuits failed to allege an “occurrence.” The trial court also ruled the “expected or intended” exclusion barred coverage. In West Bend Mut. Ins. Co. v. State of Illinois, No. 1-08-1693 (Ill. App. Ct., May 7, 2010), the Appellate Court of Illinois affirmed the trial court’s rulings. The appellate court held the trial court did not err in enforcing the “expected or intended” exclusion because the underlying complaints required specific proof that the insured acted intentionally. Similarly, the underlying actions did not constitute an “occurrence” because they alleged deliberate fraud and intentional acts of faulty workmanship, rather than negligence. The appellate court further held that isolated allegations of failing to act with due care did not give rise to a duty to defend the insured. |
Uninsured Motorist Includes Waving Elderly Woman
In a case of first impression, the Missouri Court of Appeals in Preston v. American Family Ins. Co., No. ED94294 (Mo. App. E.D., Sept. 21, 2010), has held that an unidentified elderly woman who waved the plaintiff to cross the street, who was then struck, qualified as an “uninsured motorist.” Since the elderly woman could be found negligent for waving the plaintiff across, and thus proximately causing the injury, the court held the plaintiff stated a cause of action for uninsured motorist coverage under Missouri law.
Moral of story: Beware of old ladies waving you across street! |
Stacking Liability Policies Permitted in Illinois
In an unusual accident, a motorcycle and an ATV covered under the same insurance policy were involved in a collision with each other. The policy afforded bodily injury liability limits of $100,000 per vehicle. The insured asserted the insurer was obligated to pay up to $200,000 under the policy ($100,000 for each vehicle), and the insurer maintained the policy’s anti-stacking provision limited coverage to a single vehicle. The Appellate Court of Illinois in Progressive Premier Ins. Co. of Ill. v. Kocher, No. 5-07-0468 (Ill. App. Ct., July 13, 2010), held the policy did not directly address situations involving the collision of two vehicles covered under the same policy. The appellate court further held the policy’s anti-stacking provision was inapplicable because the case’s facts did not invoke traditional “stacking” concepts. The appellate court went further to hold the anti-stacking provision was ambiguous because it could be read to prohibit “only true stacking” as well as barring recovery for more than one vehicle under any circumstance. Thus, the appellate court resolved the ambiguity for the insured, holding the policy provided a total of $200,000 in coverage for the ATV and the motorcycle. |
Open and Obvious Defense Upheld in Illinois
The Appellate Court of Illinois reinforced the defense of open and obvious in the case of Lake v. Related Mgm’t Co., L.P., No. 4-09-0867(Ill. App. Ct., Aug. 30, 2010), when it affirmed the trial court’s dismissal of the plaintiff’s complaint for injuries resulting from a trip and fall on a sidewalk. The appellate court held that a one-inch gap in the sidewalk, on which the plaintiff caught her heel and fell, was open and obvious as a matter of law. Therefore, as the plaintiff had known about the gap and walked over it numerous times before the day of the fall, her claim failed as a matter of law.
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Excess Carrier First in Line for Subrogation Recovery
In a case that discusses at length the subrogation rights of excess carriers versus primary carriers, the United States Court of Appeals for Eight Circuit in Travelers Prop. & Cas. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., (8th Cir., No. 09-1569, Sept. 22, 2010), held the excess carrier, Travelers, was entitled to recover its $10 million before the primary carrier could recover. The court so held even though the excess carrier had refused to participate or pay for any part of the primary carrier’s expenses in pursuing the subrogation claim. In allocating the subrogation proceeds, the Eighth Circuit held that excess carriers, as the last insurer obligated to pay a claim, are also the first insurers entitled to recover proceeds obtained from third parties in subrogation.
The Eighth Circuit’s decision is a lengthy one and provides the reader with a very good summary of allocation and subrogation principles.
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In Other News
Last Elected Judge in St. Louis County Retires
The Honorable John “Jack” Kintz announced his retirement from the St. Louis County Circuit Court bench. Judge Kintz was the last remaining elected judge from the days of judicial elections in the 1960s. Since the late 1960s, trial judges in St. Louis City and St. Louis County are appointed by the governor from a three-candidate panel selected by an independent judicial commission.
Defense Lawyer's Life Cut Short
Defense attorney Molly McBride’s life was ended tragically when she was hit by a car while walking on a gas station parking lot. A driver apparently attempting to text while driving, lost control of his car striking Ms. McBride. Molly, 31, left a husband and two young daughters behind. She practiced with the firm Kortenhof McGlynn, L.L.C. and will be missed by the St. Louis legal community.
Twenty-Five Largest Missouri Property & Casualty Companies Announced by Market Share
The Missouri Division of Insurance announced the 25 Largest Property and Casualty Insurance Groups for Missouri in calendar year 2009 with State Farm again leading with close to 14 percent of the Missouri market. For the full report, click here.
New St. Louis City Circuit Court Presiding Judge
The Honorable Steven Ohmer was elected the new Presiding Judge of the Circuit Court of St. Louis City for a two-year term. Judge Ohmer replaces the Honorable David Dowd whose term recently expired.
Defense Lawyers’ Home Bombed
The home of civil defense attorneys Thomas and Beth Boggs was recently the subject of an apparent pipe bombing by unknown suspects. For the full story, click here. |
Brown & James News
The two top/best Missouri defense verdicts of the year thus far according to Missouri Lawyers Weekly belong to Brown & James principals -- Robert Rosenthal for a defense verdict in a $5 million medical malpractice case and Corey Kraushaar for a defense verdict in a $5 million product liability case.
Don’t forget to save the date for Brown & James’ Annual Insurance Law Symposium on January 27, 2011, in St. Louis. More details to come.
Brown & James attorney Patrick Mickey has been invited to join the Theodore McMillian Inns of Court at St. Louis University School of Law. Membership is reserved for those lawyers chosen for recommendation by Masters of the Bench who represent the most experienced judges, lawyers and law professors in the St. Louis area.
Congratulations to the Brown & James clients making the National Retail Federation’s “Hot 100” List of Fastest Growing Retailers -- No. 3, O’Reilly Automotive; No. 29, TJX; No. 35, Walgreens; No. 41, Schnucks; and No. 65, AutoZone.
Brown & James principal Kristie Crawford was recently interviewed for a Q&A with The Springfield Business Journal. Click here to read the article.
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David Bub successfully defended his client in a large fire subrogation case recently tried in Callaway County, Missouri. David persuasively argued there was no clear determination as to the fire’s cause and that the owners, themselves, had the motive and opportunity to set the fire.
Brad Hansmann recently won an appeal in which the appellate court held the insured’s failure to produce documents and appear at an examination under oath was prejudicial to the insurer as a matter of law and affirmed the trial court’s dismissal of the insured’s lawsuit against the insurer.
Brad Hansmann successfully defended his client in Stone County, Missouri. An elderly plaintiff was attending a church function on the defendant’s property when she fell on a wooden walkway that was under construction. She alleged a construction defect and negligence and claimed in excess of $70,000 in medical bills. The jury returned a defense verdict for Brad’s client.
In a trip-and-fall case, the Fourth District of the Appellate Court of Illinois handed down a decision for James Craney and Greg Odom, who persuaded the court that the plaintiff's injuries were caused by a trip over an open and obvious condition, and that the "distraction exception" did not apply.
In a declaratory judgment action, asserting first priority over any subrogation recoveries, Bob Cockerham and Corey Kraushaar persuaded the United States Court of Appeals for the Eight Circuit to enter judgment for their client, Travelers, in a dispute over the recovery of subrogation funds. The Eighth Circuit held that Travelers’ excess policy unambiguously entitled Travelers to recover its $10 million payment before National Union, the primary carrier, could receive any recovery.
In a recent appellate case, Russ Watters and Ken Goleaner convinced the Missouri Court of Appeals to enforce a mold exclusion as a coverage bar for an underlying $200,000 judgment against an insured who had been found liable for his tenants’ personal injuries due to mold exposure resulting from a sewer backup.
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The Insurance Law Update is a monthly publication and is offered as a service to the clients and friends of Brown & James, P.C. to provide an informal summary of cases, legislation, rulings, and other developments impacting insurance law in Missouri, Illinois, Kansas and Arkansas. We hope you find it useful. Please let us know what you would like to see in upcoming installments. We look forward to your feedback.
The Insurance Law Update does not constitute legal advice or a legal opinion and is not an adequate substitute for the advice of counsel.
Click here to contact the editor
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