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This recurring feature examines insurance coverage decisions in the Midwest’s appellate courts, as compiled by the New York-based law firm of Goldberg Segalla LLA and edited by insurance lawyer Kevin T. Merriman (kmerriman@goldbergsegalla.com).
Castillo v. Prudential Property & Casualty Insurance Co.
(Indiana Appeals Court, Sept. 19, 2005)
Ruling: Insurer entitled to set-off of plaintiff’s liability coverage.
Passenger brought declaratory judgment action against driver’s automobile insurer, asserting that passenger’s recovery of policy limits regarding driver’s negligence could not reduce passenger’s recovery of underinsured motorist (UIM) benefits. Court granted summary judgment in favor of insurer. Passenger appealed. Court of Appeals held that (1) as a matter of first impression, the insurer was entitled to set-off in amount of settlement concerning insured’s liability, and (2) passenger was not entitled to have his attorney fees credited back to him.
State Automobile Insurance Co. v. Pasquale
(Ohio Sept. 16, 2005)
Ruling: UIM exclusion overturned.
Exclusion in UIM endorsement excluding coverage for vehicles “designated or used mainly off public roads while not on public roads” was invalid because it was not included in statutory guidelines for such coverage.
Causes of Action
Thomas v. Mallett
(Wisconsin July 15, 2005)
Ruling: A minor’s claim was not foreclosed by the state’s contribution right to remedy provision.
In a 58-page opinion which contained two separate dissenting opinions, the Wisconsin Supreme Court considered a claim of a minor against “lead carbonate manufacturers” for alleged serious neurological disorders as a result of the ingestion of paint pigmented with white lead carbonate. The majority of the court held that the “risk-contribution theory” of liability extended to white lead claims; however, the minor failed to state a claim under an enterprise liability.
Wooddale Builders v. Maryland Casualty Co.
(Minnesota Appeals Court, May 3, 2005)
Ruling: Coverage dates to remediation.
A house builder instituted an action against its CGL insurer and the insurer instituted a third-party action against several other carriers seeking contribution and indemnification. The court in applying the “pro-rata-by-time-on-the-risk” method of allocation held that the ending date for allocation was the date of remediation, not the date the insured noticed the claim.
Polk v. Landings of Walden Condominium Association
(Ohio Appeals Court, Aug. 5, 2005)
Ruling: Mold exclusion upheld.
Plaintiff, in a declaratory judgment action, sought coverage for mold damage from various carriers for various policy periods. The coverage issue involved several policy provisions including the “mold exclusion.” In applying the mold exclusion, the court held that the plaintiff’s “water losses” as to one of the insurers was not a “covered water loss.” Further, the court noted that the mold exclusion excluded losses caused by mold regardless of the initial or efficient proximate cause of the mold itself. “Because the mold damage is excluded, it cannot be an ensuring covered loss.”
Expert Witnesses
Denton v. Northeast Illinois Regional Commuter Railroad Corp.
(Ill. Dist. Ct. June 16, 2005)
Ruling: Expert evidence required for causation proof.
Plaintiffs alleged that mold exposure in the workplace caused personal injuries. In a previous decision, the Court struck plaintiffs’ medical expert. The court then granted defendant’s motion for summary judgment on the basis that plaintiffs could not, as a matter of law, demonstrate causation without an expert opinion.
Gentile v. Ristas
(Ohio Appeals Court, May 5, 2005)
Ruling: Upholding of the “caveat emptor” doctrine.
The plaintiff, purchasers of a residential home, instituted an action against various parties including, among others, a vendor, roofing contractor and structural engineer. The mold issue was characterized as follows: “Within five months after closing, the Gentiles experienced … toxic black mold …” The vendor, roofing contractor and structural engineer were granted summary judgment. In reaching its decision, the court applied the doctrine of “caveat emptor” and noted that the plaintiff was required to submit expert testimony on the claim that there was an improper inspection.
Statute of Limitations
Caldwell v. J.H. Findorff & Son Inc.
(Wisconsin Appeals Court, Apr. 21, 2005, unpublished)
Ruling: The statute of limitations is subject to a jury decision.
The plaintiffs, employees of an elementary school, sued the builders of the school for negligent construction, which led to excessive moisture and mold in the building, causing respiratory symptoms and other problems. At issue of this appeal was the application of a three-year statute of limitations. The court held that the date the plaintiffs discovered their cause of action is a question for the jury.
Bryant v. Stonegate Villas (Wisc. Circuit Court, Aug. 1, 2005)
Ruling: Discovery rule did not apply.
Plaintiff’s action for personal injuries arising from mold exposure was subject to two-year statute of limitations. The Court dismissed plaintiff’s action as time barred. Plaintiff suspected he lived in a mold-contaminated apartment and sought treatment for mold-related symptoms three years before serving defendant with a summons and complaint. The court rejected plaintiff’s argument that the statute of limitations did not begin to run until publication of a report in 2001 confirming the presence of mold in the apartment. The court reasoned that the discovery rule did not apply because the alleged wrongful conduct and injuries were not inherently undiscoverable.
Products Liability
In re Welding Fume Products Liability Litigation
(Ohio District Court, Aug. 8, 2005)
Ruling: Denial of motion to exclude medical evidence.
The court denied a defense motion to exclude any evidence that manganese exposure can cause or accelerate Parkinson’s disease. Further, the court ruled that the plaintiffs had provided sufficient scientific evidence (i.e., epidemiological and others) to allow the case to proceed to trial on the causation issue. There appears to be a dispute over the necessary scientific proof between manganese-induced Parkinsonism and Parkinsonism.
Workers’ Compensation
Peabody Coal Company v. Industrial Commission
(Illinois Appeals Court, Feb. 2, 2005)
Ruling: Upheld occupational disease claim.
The court upheld the determination of the Workers’ Compensation Commission that found the claimant, who had worked as a coal miner for 37 years and was exposed to rock, silica and coal dust, sustained an occupational disease. Specifically, the court held that the Commission’s finding was not against the “manifest weight” of the evidence. The Commission is to weigh the evidence and interpret medical coverage issues.
State of Ohio v. Industrial Commission (Ohio Court of Appeals, Aug. 25, 2005)
Ruling: Reversed denial of claim.
The Industrial Commission of Ohio denied the application of the injured employee for permanent total disability because the employee failed to provide evidence to establish that chronic obstructive pulmonary disease is an occupational disease with a long latency period. The claimant was employed at a foundry for 37 years where he was exposed to several types of metals and silica dust. The court vacated the Commissioner’s denial.
Mold
Cianci v. Safeco Insurance Co. Of Illinois (Illinois Appeals Court, Mar. 17, 2005)
Ruling: Hearing ordered on claim settlement.
Plaintiffs instituted an action against their homeowner’s insurer, cleaning company and mold removal company for various causes of action after their home was demolished and reconstructed due to mold. Plaintiff settled with its insurer and the cleaning company. The mold removal company sought transfer of the case. On this appeal, the mold removal company challenged the fairness and reasonableness of the settlement amounts and allocations. The court ordered a hearing on these issues.
Smothers v. Insurance Restoration Specialist, Inc. (Minnesota Appeals Court, Mar. 17, 2005)
Ruling: Dismissed due to spoliation of evidence.
The court dismissed plaintiff’s claim for breach of warranty and consumer fraud against a company they had hired to repair and clean the premises to prevent mold growth. It appears that the plaintiffs’ homeowners had spoliated evidence, which had been gathered from the house. The district court conducted a spoliation hearing and excluded the evidence that had been gathered from the house as a sanction. As a result of this evidence being excluded, the court held that the plaintiff would be unable to prove their claim and the complaint was dismissed.
Regulation
In Re Derailment Cases
(Nebraska Circuit Court, Aug. 2, 2005)
Ruling: Violations of regulations are not negligence per se.
City residents brought action against railroad and company that inspected freight cars relating to derailment that resulted in evacuation of city following release of benzene and other chemicals. The Court dismissed certain causes of action, reasoning that alleged violations of regulations did not constitute negligence per se.