2010 INSURANCE LAW UPDATE. Written and Presented by: DALE JEFFERSON Martin, Disiere, Jefferson & Wisdom, L.L.P.

Transcription

1 2010 INSURANCE LAW UPDATE Written and Presented by: DALE JEFFERSON Martin, Disiere, Jefferson & Wisdom, L.L.P. Written by: DAVID D. DISIERE, JAMIE P. COOPER Martin, Disiere, Jefferson & Wisdom, L.L.P. 808 Travis Suite 1800 Houston, Texas (Fax) State Bar of Texas 26 TH ANNUAL ADVANCED PERSONAL INJURY LAW COURSE Dallas July 14-16, 2010 San Antonio August 4-6, 2010 Houston September 1-3, 2010 CHAPTER

2 TABLE OF CONTENTS I. INTRODUCTION... 1 II. ABATEMENT... 1 A. Abatement Period of Texas Insurance Code Enforced By District Court in Response to Plaintiff s Failure to Provide Statutorily-Required Notice Letter... 1 III. APPRAISAL... 1 A. Texas Supreme Court Enforces Appraisal Despite Causation Issues... 1 B. Appellate Court Conditionally Grants Writ to Compel Hurricane Ike Appraisal and Abates Underlying Bad Faith Suit... 2 C. Allstate Wins Default Judgment From District Court Appointing Umpire to Participate in Appraisal Process Under Homeowners Policy... 2 D. Trial Court Grants Insured s Motion to Compel Appraisal Despite Causation and Scope Issues... 3 E. U.S. District Court Holds Insurer Waived Right to Appraisal... 3 IV. AUTO POLICIES... 3 A. Texas Supreme Court Construes Ohio Auto Insurance Policy s Intentional Injury Exclusion... 3 B. Failure to Meet Burden of Proof and Improper Jury Argument Results in Reversal of $116,726 Underinsured Motorists (UIM) Jury Award... 3 C. Resident of Vehicle Owner on Personal Auto Policy Does Not Qualify As Covered Person For Purposes of Recovering UIM Coverage... 4 D. Accident Caused By Ice Falling From Passing Tractor Trailer Does Not Satisfy Actual Physical Contact Requirement of UM/UIM Policy... 4 E. Property Damage Benefits Paid to Insured Under Auto Policy Are Subject to the Collateral Source Rule... 4 F. Fact Questions Exist in Business Auto Policy Dispute Seeking Coverage for Spread of Tuberculosis on Bus... 5 G. Appellate Court Reverses Summary Judgment and Remands Case Based on Insufficient Evidence for Application of Covered Auto Exclusion... 5 H. Appellate Court Holds Single-Vehicle Accident Occurred After Personal Auto Policy Expired But Before Renewal... 6 I. UM/UIM Coverage Not Available to Insured Injured By Self-Insurer Owned Vehicle, Despite Insured Inability to Pursue Self-Insurer... 6 J. Court Holds Use Of Vehicle as a Vehicle is Required to Trigger Coverage Under Commercial Auto and Umbrella Policies... 6 V. BROKERS AND AGENTS... 6 A. Insured s Third-Party Customer May Rely on Agent Statements and Certificate of Insurance to Bring Claims Against Agent and Insurer When Coverage is Not As Expected... 6 B. Agent not Liable For Not Obtaining UM/UIM Coverage Equal to Liability Limits... 7 VI. COMMERCIAL POLICIES... 7 A. Athletic, Sporting, or Exercise Exclusion Not Applicable When Person Injured While Playing the Helicopter Game... 7 B. Appellate Court Affirms Summary Judgment for Contractual Party Seeking Defense and Indemnity for Underlying Suit Involving Fatality On Construction Site... 8 C. Use of And/Or in CGL Employer s Liability Exclusion Results in Duty to Defend Claims By Subcontractor... 8 D. Known-Falsity Exclusion Applies to Vice-Principals As Well As to Corporate Officers... 9 E. Additional Insured Endorsement Does Not Preclude Coverage When Negligence is Alleged Against Additional Insured... 9 F. New Partnership Not Entitled to Prior Corporation s CGL Coverage... 9 G. No Coverage Under Commercial Property Policy for Property Damage to AC Units Caused By Theft of Copper Tubing From Units H. Commercial Liability Policy s Hazardous Materials Exclusion Applies to Deadly ii

3 Concentration of Argon Gas I. Commercial Liability Auto Exclusion Does Not Apply to Injury Sustained While On Motorcycle.. 10 J. Court Finds CGL Insurer Has No Duty to Defend or Indemnify Insured in Patent Infringement Lawsuit K. Federal Court Denies Carrier s Summary Judgment on Duty to Defend and Sua Sponte Moves for Summary Judgment on Behalf of Contractor and Subcontractor Worker L. Scope of Commercial Policy Exclusion Turns On The Difference Between Tort and Contract Allegations in The Underlying Suit VII. CONSENT TO SETTLE A. District Court Refuses to Consider Evidence Disclosing Confidential Communications Made During Mediation VIII. DUTY TO DEFEND A. Houston Federal Judge Grants Preliminary Injunction Prohibiting Lloyd s of London from Withdrawing Payments Under D&O Policies B. In Limited Circumstances, Extrinsic Evidence Can Be Considered in Determining An Insurer s Duty to Defend C. Duty to Defend Arises When Third Party Plaintiff s Complaint Alleges Any Amount of Property Damage Occurs During The Policy Period D. Failure to Cooperate Precludes Coverage E. Duty to Defend Additional Insured - Status Not Limited By General Indemnity Provision F. Comp Carrier Has No Duty to Defend Absent Allegations of Employment Relationship IX. DUTY TO INDEMNIFY A. Duty to Indemnify Is Not Dependent on Duty to Defend B. No Duty to Indemnify Exists in Negligent Misrepresentation Claim Surrounding Subdivision Plots and Plans C. Insurer Not Obligated to Indemnify Insured for Common Law Fraud Judgment D. Trademark Infringement Claims Are Not Advertising Injury Claims, and As Such, There is No Duty to Indemnify X. HOMEOWNERS POLICIES A. Carrier and Agent Not Liable for Damages Exceeding Policy Limits Due to Alleged Undervaluation of Historic Home B. Summary Judgment Reversed on Water Damage Claims; Upheld On Mold Claims C. Carrier Fulfilled Its Duty to Indemnify for Construction Damages After Obtaining a Valid Release From Homeowner XI. INSURANCE POLICY INTERPRETATION A. Texas Supreme Court Rules a Fact-Finder Should Resolve Ambiguity Issues B. Policy Limits Tender Ends Insurer s Obligation Even If Insured Objects to Claim Payment and Lawsuits Are Still Pending C. Widow Not Entitled to Policy Benefits When Husband Dies on Cruise Excursion Policy Terms Undefined: Plain and Ordinary Meaning Does Not Provide Coverage D. Restitution Uninsurable Under Texas Law As a Loss Under Executive and Organization Liability Coverage XII. INSURED S BURDEN TO PROVE COVERAGE A. Insurer Wins Judgment No Duty to Defend or Indemnify Insured XIII. LIFE INSURANCE POLICIES A. Estate Lacked Standing to Challenge Distribution of Life Insurance Proceeds When Not a Named Beneficiary XIV. MEDICAL EXPENSES: PAID OR INCURRED A. When a Jury Awards More Medical Expenses Than It Should, the Court Can Reduce iii

4 the Award Through a Remittitur or Remand the Case for a New Trial XV. NOTICE OF CLAIM/PREJUDICE A. Texas Supreme Court Holds Prejudice Rule Applies to Claims-Made Policy B. Texas Supreme Court Applies Prodigy Requiring Prejudice to Deny Late Notice Claim in a Claims-Made Policy C. Title Insurer Relying On Notice Provision in Title Policy Must Show Prejudice and Court Allowed Showing of Prejudice As a Matter of Law XVI. OTHER INSURANCE PROVISIONS DISPUTES BETWEEN CARRIERS A. Insurers to Pay Pro-Rata Share of Policy Limits When Both Have Duty to Defend B. Fifth Circuit Judges Ask Court to Reconsider En Banc Its Other Insurance Analysis C. Fifth Circuit Refuses to Extend Mid-Continent v. Liberty Mutual to Action to Recover Defense Costs XVII. PROMPT PAYMENT OF CLAIMS ACT A. Prompt Payment of Claims Act Applies to Claim for Indemnification of Legal Fees B. Court Rejects Unconstitutionally Vague Challenges to Prompt Payment of Claims Act XVIII. POLLUTION EXCLUSION A. CGL s Pollution Exclusion Does Not Provide Coverage for Claims for Consequential Damages Arising From State Agency s Investigation of Dumping B. Absolute Pollution Exclusion Precludes Coverage for Carbon Monoxide Claim XIX. PUNITIVE DAMAGES A. Public Policy Against Punitive Damages Coverage Under UM/UIM Extends to Related Coverage Under Umbrella Policy XX. STATUTE OF LIMITATIONS A. Statute of Limitations Bars Insurance Suit Even Though Claim Was Reopened to Investigate Damage Allegedly Arising From Original Insurance Claim XXI. SUBROGATION A. Employee and Third-Party Tortfeasor Are Jointly and Severally Liable for Settlement Amount Wrongfully Withheld From Carrier With Subrogation Interest B. Insurer s Subrogation Not Waived, Nuisance-Based Flood Claims May Proceed C. Texas Health Insurance Risk Pool Waived Subrogation Rights XXII. WAIVER AND ESTOPPEL A. Waiver and Estoppel Did Not Expand Risks Covered By Insurance Policy XXIII. WORKERS COMPENSATION A. Texas Supreme Court Rules No Jurisdiction When Administrative Remedies Are Not Exhausted in Workers Compensation Claim B. Texas Supreme Court Conditionally Grants Mandamus Relief and Directs Trial Court to Order Plea to the Jurisdiction in Workers Compensation Bad Faith Suit C. Texas Supreme Court Holds General Workplace Insurance Plan Provides Broad Workers Compensation Insurance Protection D. Stroke is A Compensable Injury E. Worker s Compensation Carrier Can Be a Subclaimant Under Texas Labor Code F. Insurer Does Not Waive Extent of Injury Challenge If Claim Was Reasonably Discoverable Within Compensability Determination Period G. Workers Comp Claimant Failed to Exhaust Administrative Remedies H. Appellate Court Affirms Summary Judgment in Lawsuit Involving Employee and Nonsubscriber Employer Based Upon Workers Compensation and Employee Exclusions I. Expert Medical Testimony Necessary to Prove Causation for Extent of Injury Issue J. Deadline to Dispute Occupational Disease iv

5 K. Court of Appeals Rejects Dual-Persona Doctrine As Avenue to Overcome Exclusive Remedy Provision of Texas Workers Compensation Act L. Workers Compensation Insurer Has Valid Interest in UM/UIM Benefits M. Invalid Advisories Rendered Previous Workers Compensation Impairment Rating Invalid N. Defendant Fails To Prove That Plaintiffs Claims Are Barred By Workers Compensation Act O. Court Stays Workers Compensation Bad-Faith Suit Indefinitely Pending Resolution of The Ruttiger Case Pending Before The Texas Supreme Court XXIV. ODDS & ENDS A. Adjuster s Notes May Be Withheld As Privileged Under Texas Civil Procedure Rule B. Insurer Wins Mandamus Relief to Sever Claims Against It Brought In One Lawsuit By Multiple Insureds for Separate Claims Under Separate Policies on Separate Dwellings C. Insurer Has No Duty to Warn of Salvaged-Titled Car s Condition When Sold Under Texas Transportation Code Section D. Insurer Wins Declaration That It Did Not Violate Insurance Code By Selling Stop Loss Policies to Self-Funded Plans E. Houston Court of Appeals Refuses to Grant Mandamus Relief to TWIA Which Would Have Allowed TWIA to Avoid Producing Its Complaint Log XXV. CONCLUSION v