WASHINGTON: Environmental Liability Claims Under MTCA
On June 2, 2014, the Washington State Court of Appeals issued a published opinion regarding what constitutes a “suit” in the context of environmental liability claims under the Model Toxics Control Act (MTCA). In Gull Industries Inc. v. State Farm Fire & Cas. Co., et al., the court held that there must be “an explicit or implicit threat” from a government agency of “immediate and severe consequences by reason of the contamination” in order to trigger the duty to defend and that no such threat was present. The opinion is significant in light of existing Washington law that states an insurer may be required to indemnify an owner or operator of contaminated property even if no agency has taken or overtly threatened formal legal action.—From CLM Member Molly S. Eckman
CALIFORNIA: Napa Valley Shaken by Largest Earthquake in 25 Years
On Aug. 24, Napa Valley wine country residents got a rude awakening at 3:20 a.m. when a magnitude-6.0 earthquake struck the region. The temblor caused building damage, fires, and injuries, and is the largest to strike northern California since the magnitude-6.9 Loma Prieta earthquake in 1989. The percentage of homeowners and renters who have earthquake insurance in the affected area is very low (less than six percent in Napa and less than 10 percent in Sonoma), according to the California Earthquake Authority. Disaster modeling firm CoreLogic EQECAT projects that insured losses could range from $500 million to $1 billion, though it recognized a “fair amount of uncertainty,” in regard to business interruption and contents losses, which still are being determined. Numerous historic buildings, businesses, and wineries were damaged in the quake—more than 30 structures in downtown Napa have been “red-tagged,” meaning that damage is too severe to allow inhabitants inside. One quarter of the estimated losses are expected to be residential losses; commercial losses, particularly in the wine industry, will be firmed up as the full extent of the shaking is tallied.—From Bevrlee J. Lips, Managing Editor
OREGON: Grounds for Excusable Neglect
In Portland Gen. Elec. Co. v. Ebasco Servs. Inc., an insurance carrier was attempting to set aside a default judgment under the “excusable neglect” provision of ORCP 71B(1) because its service agent did not forward the complaint to its local counsel. A party seeking relief from a default judgment on excusable-neglect grounds must offer evidence that, at the very least, identifies who made the mistake and demonstrates how the person’s conduct varied from the procedures in place for responsibly responding to lawsuits. Failure to do so will result in the court affirming the default judgment.—From Portland Oregon Chapter Member Jack Levy
KENTUCKY: Anti-Solicitation Statute Unconstitutional
In 2011, the Kentucky legislature enacted KRS 367.409, which prohibits the solicitation of victims of automobile accidents for 30 days following an incident. This is addressed to abuses of the tort system arising from the state’s no-fault statutes. Unfortunately, the U.S. District Court, Western District has held the statute to be unconstitutional in State Farm Mut. Auto. Ins. Co. v. Conway. First the court held the statute, applicable to all persons, to be too broad; the court suggested that it should be limited to licensed professionals. Then, the court held an exception for insurers to render the statute violative of equal protection. A notice of appeal has not been filed, but the time has been tolled due to motions being timely filed. The fight against fraud in Kentucky goes on.—From Kentucky Chapter Vice President Helena Carpenter
FLORIDA: New Law Regulates Lawsuit Lending Businesses
Lee County has been flooded with suits filed by Lee Memorial Health System (LMHS), a public body, seeking to enforce Chapter 2000-439 against various insurers for impairment of the hospital’s claims of lien. Insurers have defended enforcement of this lien law by alleging that it is unconstitutional under Article III, Section 11(a)(9) of the Florida Constitution, which provides: “[T]here shall be no special law or general law of local application pertaining to the creation, enforcement, extension, or impairment of liens based on private contracts, or fixing of interest rates on private contracts.” Insurers cited Shands Teaching Hospital v. Mercury Ins. Co., wherein Florida’s Supreme Court struck down an Alachua County lien law on the same constitutional grounds.
However, a recent circuit court decision in LMHS v. Progressive Select Insurance Company receded from that finding and held the LMHS lien law was, in fact, unconstitutional under Article III. The court, citing Shands, indicated that the contract between the hospital and its patient was private in nature and because the lien purported to attach to a patient’s private assets, it fell within the prohibition under Article III. Although LMHS argued that it was a public hospital and, thus, entered into public rather than private contracts with its patients, the court found the statutory language allowing the lien to attach to the patient’s private rights determinative of the issue. An appeal is expected.—From CLM Member Valerie Dondero
CONNECTICUT: Ruling on Claims Resulting from Single Fire
In Lexington Ins. Co. v. Lexington Healthcare Grp. Inc., et al., the Connecticut Supreme Court considered the amount of coverage available when a fire in a nursing home triggered multiple claims against a single insurance policy. Although the claims arose out of a failure to supervise the patient who started the fire, the claims were not “related medical incidents.” The court held that the phrase “related medical incidents” does not clearly and unambiguously encompass incidents in which multiple losses are suffered by multiple people when each loss has been caused by a unique set of negligent acts, errors, or omissions. Accordingly, a separate per medical incident coverage limit applies to each individual claim.—From Connecticut Chapter Member Edward Brady
MARYLAND: Three-Year Statute of Limitations for Finder’s Fee Suits
In NVR Mortgage Fin. Inc., et al. v. Carlsen, the Maryland Court of Appeals determined that borrowers’ claims against their mortgage brokers for nondisclosure of finder’s fees are subject to a three-year versus 12-year statute of limitations. The main question of law certified by the U.S. District Court was whether such claims fall under a statute extending limitations for certain actions involving sealed instruments. The state’s highest court held that they do not, citing a standard requiring that the action be created by common law, not by statute. The three-year statute of limitations, thus, applies to such finder’s fee actions.—From CLM Member Chris Yook