COLORADO: “Lawful Activities” Means Both State and Federal Law Compliance
Both medical and recreational marijuana are legal under Colorado state law. However, in Coats v. Dish Network, the Colorado Supreme Court upheld an employee’s termination for off-duty medical marijuana use. Coats, a customer service agent and quadriplegic, tested positive for marijuana during a routine drug test by his employer. Coats had a doctor’s recommendation for marijuana, and there was no indication that he used marijuana while at work. However, Dish Network’s zero-tolerance policy prohibits marijuana, even for medical reasons. The Supreme Court held that the termination did not violate Colorado’s “lawful activities” statute. The term “lawful” refers only to those activities that are legal under both state and federal law. Employees who engage in an activity, such as medical marijuana use, that is permitted by state law but not under federal law are not protected by the statute. —From CLM Greater Denver Chapter Vice President Valerie Garcia
FLORIDA: Contract Execution Date Plays Into Entitlement for Treble Damages
In Taylor Morrison Services Inc. v. Ecos, homeowners sued Taylor Morrison for negligence by an unlicensed contractor and sought treble damages pursuant to Fla. Stat. § 768.0425(2). Taylor Morrison argued that the homeowners were not entitled to treble damages, as it maintained a “qualifying agent” when the contract was executed. However, one agent resigned from employment weeks earlier, and the other did not obtain the permits or supervise the project. The trial court found that, since the permits were not obtained by a licensed contractor, Taylor Morrison should be considered unlicensed and therefore subject to treble damages. The district court reversed, finding that Taylor Morrison maintained a qualified agent at the time of the contract execution, satisfying the statute. The court noted that while Taylor Morrison likely violated several laws by building a home without supervision and without proper building permits, any violation occurred after the effective date of the contract and the homeowners were not entitled to treble damages. —From CLM Central Florida Chapter Education Director Brett A. Smith, Esq.
MARYLAND: Plaintiff Must Prove Underinsured Motorist Liability in Accident Case
In Allstate Insurance Company v. Kponve, Allstate intervened as the underinsured motorist carrier in the plaintiff’s case against the responsible driver. After the tortfeasor’s carrier paid its minimal limits of $25,000, Allstate became the only remaining defendant in a trial that resulted in a verdict for $374,000 in compensatory damages. Though the insurance policy allowed for only $50,000 in underinsured motorist (UIM) coverage, the trial judge entered a judgment against Allstate for the full amount of the verdict, claiming that Allstate had the burden of proving the terms of its own coverage. Reversing this ruling, the Court of Special Appeals held that the plaintiff must prove Allstate’s contractual liability—not the other way around—and sent the case back for a recalculation that would likely reduce the award to $25,000, i.e., the extent to which the tortfeasor was underinsured. —From CLM Maryland Chapter President Irwin R. Kramer
NEW JERSEY: Fraud Conviction Does Not Require Financial Loss by Insurer
In State of New Jersey v. Robert Goodwin, the New Jersey Supreme Court held that a defendant can be convicted of insurance fraud even when an insurer is not induced by a false statement to pay a claim. In a case involving the false report of a vehicle theft that resulted in a seven-year prison sentence, the court held that the New Jersey insurance fraud statute does not limit criminal liability to cases in which an insurer suffered a financial loss resulting from reliance on a false statement. Rather, to find culpability, the statute requires only the knowing submission of a false statement of material fact. —From CLM Member Harry Baumgartner
OHIO: Ride-Sharing Regulations Arrive
On Dec. 22, 2015, Governor John Kasich signed House Bill 237, which allows the Public Utilities Commission of Ohio to regulate ride-sharing companies in Ohio, including Uber and Lyft. The 13-page bill sets minimum levels of commercial auto insurance that drivers must carry in all three coverage phases—app not on and no rider on board, app on but rider not yet on board, and rider on board. In phase one, the ride-sharing company must obtain coverage with minimum liability limits of $50,000 of coverage for bodily injury liability per person; $100,000 of coverage per accident for bodily injury liability; and $25,000 for property damage. In phases two and three, the minimum liability limits increase to $1 million. In all three phases, the ride-sharing company’s coverage is primary. The bill also requires ride-sharing companies to cooperate in applicable insurance carrier claims investigations. It takes effect on March 21, 2016. —From Southwest Ohio Chapter Director of Education Andrew Smith
PENNSYLVANIA: Insured May Settle Without Insurer Consent in Reservation of Rights Cases
In Babcock & Wilcox Co. v. American Nuclear Insurers, the Pennsylvania Supreme Court held as a matter of first impression that an insured did not forfeit the right to coverage when it reasonably settled tort claims without the insurer’s consent in a case being defended under a reservation of rights. The insurer withheld its consent to settle the underlying tort claims for $80 million, which was roughly one quarter of the potential coverage available. When Babcock & Wilcox later sued for reimbursement, the insurer claimed that the insured had violated the policy’s cooperation clause by settling the lawsuit. The Pennsylvania Supreme Court, however, disagreed and concluded that the insurer had breached the policy by refusing to consent to a reasonable settlement demand within policy limits. Importantly, Babcock & Wilcox does not stand for the proposition that an insured may obtain coverage for any unilateral settlement; an insured must seek its insurer’s consent before settling a claim and may only recover for reasonable amounts paid to settle covered claims. —From Northeast Ohio Chapter Secretary Michael C. Brink
TENNESSEE: Complaint Proceeds Despite Running of the Statute of Limitations
Tennessee law allows a complaint to proceed even if it is filed after the running of the statute of limitations if there has been either fraudulent concealment of the cause of action or the plaintiff didn’t know and had no reasonable way to ascertain the identity of the defendant. However, in Bracey v. McDonald, the Tennessee Court of Appeals makes clear that conclusory allegations are not enough. The actual facts must be set out in detail. From a prior Supreme Court opinion, the court stated, “[C]ourts are not required to accept as true assertions that are merely legal arguments or ‘legal conclusions’ couched as facts.” Saying the defendant hid or fraudulently did something is not enough. The court of appeals affirmed the dismissal. —From CLM Member James C. Wright