ALABAMA: Family Purpose, Negligent Entrustment, and Statutory Agency Liability Rejected
On the last day of the 2015 Alabama legislative session, SB 292 was passed and delivered to Governor Robert Bentley. The new law provides that, if a policyholder affirmatively consents to receive notice or documents by electronic means, any notice “or any other document required in an insurance transaction involving property and casualty insurance coverage may be delivered…by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act.” A policyholder must opt-in to receive electronic notices, and e-delivery cannot be the default method of communication or delivery under this legislation.
The legislation does not spell out exactly which documents may be delivered electronically. It simply references all documents “required under applicable law in an insurance transaction,” and documents that “serve as evidence of insurance coverage.” One issue for insurers to keep in mind, though, is that a customer must affirmatively consent to receipt of documents electronically, and the insurer must provide the customer with the list of the types of documents that will be delivered electronically prior toobtaining consent. An insurer must deliver notice or documents by other means if it has a reasonable basis to believe that the electronic notice has not been received or if the insurer learns the email address for the party is no longer valid.—From Alabama Chapter Member Edward A. “Ted” Hosp and Chapter President Timothy A. Clarke
CALIFORNIA: Right to Repair Act Permits Full Release in Exchange for Cash
A California appellate court recently provided guidance concerning the scope of release that may be obtained through settlement of a Right to Repair Act (RRA) claim. In Belasco v. Wells, the plaintiff filed a defect complaint against the builder of a home purchased in 2004. Pursuant to a 2006 settlement, the plaintiff executed a release of liability in exchange for a $25,000 cash payment. However, the plaintiff filed a second action against the builder in 2012. Subsequent to a summary judgment verdict in favor of the builder, the plaintiff appealed on grounds that the settlement was not a “reasonable release,” under the RRA. Civil Code Section 929 provides that, in lieu of a repair offer, which cannot be the basis of a release of liability, a builder may obtain a reasonable release in exchange for a cash payment. The appellate court concluded that the 2006 settlement was reasonable. The adequately represented plaintiff knowingly released the builder from future liability and was bound by the terms. —From Northern California Chapter Member Wakako Uritani
NEVADA: Application of Normal Work Test to Determine Statutory Employee
In D&D Tire Inc. v. Ouellette, the Nevada Supreme Court addressed whether an independent contractor’s actions were within the scope of a major or specialized repair so as to prevent it from claiming immunity as a statutory employer or co-employee. The case involved an Allied Nevada Gold Corp. employee, Ouellette, who drove a tire-changing boom truck owned by Purcell Tire & Rubber Co. A company was contacted when the truck needed specialized repairs. Purcell also sent Ryan Wintle to assist with the repairs. Ouellette and Wintle were both tire technicians. After repairs were made, Wintle got into the truck to move it and pinned Ouellette against a dumpster, causing injuries to his shoulder. Purcell maintained that it was a statutory employee of Allied and immune from liability under the Nevada Industrial Insurance Act (NIIA). The court noted that the NIIA is uniquely different from industrial insurance acts of other states in that subcontractors and independent contractors are accorded the same status as employees and are immune from liability. To determine whether a subcontractor or independent contractor is a statutory employee, the court applied the “normal work” test from Meers v. Haughton Elevator, which is not about “whether the subcontractor’s activity is useful, necessary, or even absolutely indispensable to the statutory employer’s business…[it] is whether that indispensable activity is, in that business, normally carried on through employees rather than independent contractors.” The court determined that Wintle was in the process of performing a specialized repair and, as a result, Purcell was not a statutory employee under NRS 616.B603 and NRS 616A.210.—From Nevada Chapter Vice President Gina Mushmeche
OREGON: Second Strike for Bad Faith Legislation
For the second consecutive legislative session, bills were introduced that would have added a cause of action for bad faith denial or handling of an insurance claim, but the Oregon legislature declined to pass the bills. SB 313 would have allowed a person to sue an insurer for “unlawful insurance practices,” permitted attorney’s fees for the insured in such an action, and allowed class actions against insurers. SB 314 would have added insurance services to the Unlawful Trade Practices Act. Though both bills were considered by the Senate Judiciary Committee, the Senate did not bring either bill up for a vote by the legislative calendar’s deadline to refer them to the House. Because the Oregon Senate did not pass either SB 313 or SB 314, it remains the case that Oregon does not recognize actions for bad faith handling of insurance claims.—From CLM Member Kevin Clonts
TENNESSEE: Enforceability of Arbitration Agreements
Are nonmutual requirements to compel arbitration agreements enforceable? Some states say “no,” while others say “yes,” or “it depends.” Tennessee is in the “it depends” category. In Berent v. CMH Homes Inc., the Tennessee Supreme Court gave a detailed discussion of the law in this area, citing a number of states as well as U.S. Supreme Court precedent. This opinion is a recommended read and is a good source for understanding the law as it relates to the enforcement of arbitration clauses.—From CLM Member Jimmy Wright
WASHINGTON: Supreme Court Rules on Meaning of “Collapse”
In June 2015, the Washington Supreme Court answered a certified question from the 9th U.S. Circuit Court of Appeals regarding the meaning of the undefined term “collapse” under the first-party property coverage of a policy State Farm Fire issued to a homeowners association. The court first held that the undefined term “collapse” is ambiguous. In Queen Anne Park Homeowners Ass’n v. State Farm Fire & Cas. Co., the court turned to the language of the policy and held that “‘collapse’ means the substantial impairment of structural integrity…of a building or part of a building that renders such building or part of a building unfit for its function or unsafe,” in a manner that is “more than mere settling, cracking, shrinkage, bulging, or expansion.” The court also noted that “‘structural integrity’ of a building means a building’s ability to remain upright and ‘substantial impairment’ means a severe impairment.” Taken together, they define impairment as something “so severe as to materially impair a building’s ability to remain upright.”—From Washington State Chapter President Paul Rosner