Liability insurance is, by definition, a product that provides financial protection for when things don’t turn out as planned. Most of the time when this occurs it’s simply a case of bad luck or because, well, stuff just happens. Or the outcome is one that nobody could have seen coming.
But there are other times when liability claims don’t arise just because stuff happens. Instead, they are the result of people’s actions that were so ill-conceived or Tom foolhardy that a liability claim was as predictable as a General Electric dividend. When you read liability coverage cases you are bound to come across some of these. These are the cases where all you can do is shake your head in disbelief and ask yourself – Wow, did he REALLY do that? Eventually the incredulous behavior leads to a lawsuit, which leads to an insurance claim, which leads to a coverage dispute, which leads to a reported decision, which leads to the final stage of this insurance circle of life -- an appearance in “Coverage For Dummies.”
I am pleased to present my 6th Annual “Coverage For Dummies” -- a review of the best cases, from the year just-concluded, that demonstrate attempts to secure insurance coverage for the frailty and imperfection of the human brain. This year’s installment follows. Cases in no particular order.
Remy v. Travelers Home & Marine Ins. Co. (N.D. Ill. June 11, 2013): [enhanced version available to lexis.com subscribers]. Mom was out shopping and sisters were arguing. So far nothing out of the ordinary. Then sixteen year old Francesca retaliated against her thirteen year old sister, Gabriella, by pushing a lit piece of paper into a vent connecting their bedrooms. Get this--the house caught fire and was extensively damaged. Francesca then posted pictures of the damaged house on Facebook and got 37 Likes. [I made that part up.] The court addressed the applicability of the intentional loss exclusion under a homeowners policy and could not yet determine if it applied.
Mercury Casualty Co. v. Noll (Cal. Ct. App. Sept. 26, 2013): [enhanced version available to lexis.com subscribers]. Two college students were at a bar. One was very drunk and the other drank enough to cause his judgment to be impaired. They were both waiting to use the men’s room and disagreed over whose turn it was to enter. You can see where this is going. One of the men entered (maybe there was some touching in the process) and began using the urinal. The other followed him and demanded an apology for cutting in line. When no apology was forthcoming the spurned man began hitting the other [no word if the other guy was still using the urinal] causing really serious injuries. At least they were fighting over something important. No coverage owed under liability section of homeowner’s policy because no “accident.”
Generali v. Ransdell (S.D. Fla. Sept. 16, 2013): [enhanced version available to lexis.com subscribers]. A lessee of a condominium unit lit a candle and placed it inside a wooden cabinet before going to bed. The cabinet ignited, triggering a fire suppression system, causing water damage to another unit. Coverage for the damaged unit was provided under a property policy, leading to the property insurer’s subrogation claim (case involved procedural issues).
Amica Mutual Ins. Co. v. Cody (Conn. Super. Ct. June 28, 2013): [enhanced version available to lexis.com subscribers]. A fourteen year old boy played a prank on his friend by hiding his shoes. Eventually he told his friend where the shoes were located. Apparently that was not enough. The friend went home and retrieved a metal baseball bat, retuned and smashed the other’s face, causing, as you can imagine, serious injuries. That is really messed up. At issue was coverage under a homeowner’s policy (case involved procedural issues).
Trustgard Ins. Co. v. Johnson (E.D. Pa. June 12, 2013): [enhanced version available to lexis.com subscribers]. A few friends (in their 20s probably), following some beers, decided to explore the grounds of a camp meeting association. They entered an unlit cottage. One of them set an American flag on fire and waved it around in an effort to make an interesting image for his friend to capture on his camera. Incredibly, this isn’t what gave rise to the claim. That was saved for the leaf fires they started. They left the grounds with a leaf fire still burning because it looked safe to leave. The next day one of them learned of a fire at the camp ground and turned himself in to authorities. Criminal charges were brought followed by a civil suit. No coverage was owed under liability section of homeowner’s policy on account of the criminal act exclusion.
Sciolla v. West Bend Mut. Ins. Co. (E.D. Pa. Dec. 18, 2013): [enhanced version available to lexis.com subscribers]. Teachers sustained injuries after being thrown off their donkeys while playing “Donkey Ball” in a middle school (playing basketball while riding a donkey). Coverage was owed to the donkey ball organizer because an exclusion for bodily injury to any person, while practicing for or participating in any sports or athletic contest or exhibition that the insured sponsors, was ambiguous.
Nationwide Mutual Fire Ins. Co. v. McDermott (E.D. Mich. July 15, 2013): [enhanced version available to lexis.com subscribers]. A marijuana growing operation in the basement of a house turned into one that manufactured a marijuana by-product called honey oil, a sticky THC-rich substance that is then heated and intoxicating fumes inhaled. The process involved the use of butane. Following the emptying of 24 cans of butane, the marijuana grower lit a welding torch to test the honey oil. Doing so, in a basement full of butane vapor, caused a fire that consumed the house. No coverage was owed under a homeowner’s policy because the loss was not an “accident.”
Nationwide Prop. & Cas. v. O’Neill (M.D. Ga. Nov. 8, 2013): [enhanced version available to lexis.com subscribers]. Coverage cases involving fights by people under the influence of alcohol are routine. What is not routine is when the participants are a father-in-law and daughter-in-law that just spent a night on the town. [What is up with that?] They got into an altercation in the front seat of the father-in-law’s pick-up truck upon leaving a bar. The daughter-in-law alleged that her father-in-law placed her in a headlock, hit her on the head, choked her and shoved her out of his pick-up truck. No coverage was owed under the father-in-law’s homeowner’s policy on account of the intentional act exclusion and criminal act exclusion.
Estate of Dobry v. Wilson Mutual Ins. Co. (Wis. Ct. App. Dec. 10, 2013): [enhanced version available to lexis.com subscribers]. Firing a .45 caliber handgun at your friends, even if you think there is no ammunition, is just not a good idea. Sadly, a nineteen year old, hosting an underage drinking party while his parents were out of town, did so and killed his friend. The shooter then told authorities that his friend was bleeding because he cut his ear while running in the woods. The court held that, even if the accident requirement in the initial grant of coverage were satisfied, the criminal act exclusion barred coverage. Metropolitan Prop. & Cas. Ins. Co. v. Cowie (Iowa Ct. App. April 24, 2013): [enhanced version available to lexis.com subscribers]. An individual provided his neighbor with his tractor to assist with landscaping. The tractor became stuck in the mud. The neighbor borrowing the tractor attached a chain between his pick-up truck and the front end scoop of the tractor and attempted to pull the tractor at about a 90-degree angle. The tractor tipped over, fell on top of the tractor owner, gasoline ignited and burned more than 50% of his body. [The 90% angle part is probably where this idea went south.] The court held that, for purposes of determining the applicability of the vehicle exclusion in a homeowner’s policy, it was an issue of fact whether the injuries were caused solely by negligent use of the vehicle.
Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.
The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.
Randy J. Maniloff is an attorney in the Philadelphia office of White and Williams, LLP. He concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.
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