CLM National: December 2023

Georgia court rejects a UM/UIM claim for an occupant of a tractor as the tractor is not an “auto” under the policy, a court in Chicago weighed equitable versus contractual subrogation, and the DOL issued a new fiduciary ruling that could reshape the regulatory environment for independent and captive insurance agents.

Washington

‘Other Good Cause’ in Unlawful Detainer Case Clarified

In Washington law, an Order for Limited Dissemination (OLD) allows former tenants who were defendants in unlawful detainers to seek a court order to block sharing of the action with a prospective landlord. The statute allows for an OLD for “other good cause.” Christina Parker leased an apartment from the Housing Authority of Grant County. The Housing Authority filed suit against Parker for failing to pay her utilities as required. The superior court granted a writ of restitution and Parker was evicted. Parker filed a motion for an OLD noting mitigating circumstances, which was denied. The Housing Authority in this case contended that “other good cause” should be limited to instances in which the tenant ameliorated the legal relationship with their former landlord. The court disagreed, finding the Housing Authority’s interpretation was too narrow. The Court of Appeals remanded the case for further consideration based on applicable legislative history and case law. —From CLM Members Josephine Meyer and Timothy Repass, Wood Smith Henning & Berman

Kansas

Coverage Requires Policyholder to Physically Reside at Residence

A federal court recently held that an insurer may deny coverage under a homeowner’s policy for a “residence premises” when the insured never actually lived at the premises. In Sina Davani v. Travelers Personal Insurance Company and Geico Insurance Agency, LLC, the District of Kansas granted the defendant-insurer’s motion for summary judgment holding that the plaintiff-insured never resided at the insured premises and residence, while the insurance contract requires an insured’s physical presence at a certain location and an intent to remain at the location for an indefinite period of time. —From CLM Member Vincent Passarelli, Cozen O’Connor

Illinois

Appeals Court Weighs Equitable Versus Contractual Subrogation

In Zurich American Insurance Co. v. Infrastructure Engineering, Inc., the First District Appellate Court in Chicago held an insurer was entitled to subrogate the rights of an insured despite the fact a different insured received the insurer’s payment for loss. Zurich issued a builder’s risk insurance policy to a general contractor, CMO. A different contractor subcontracted with Infrastructure to design the stormwater system. While under construction, a rainstorm caused the basement to flood and Zurich paid nearly $3 million. The Zurich policy contained a subrogation provision. Infrastructure was not an insured. Zurich alleged that Infrastructure’s defective stormwater system caused the loss. Infrastructure subsequently sought summary judgment, arguing Zurich was not entitled to subrogation. The trial court granted Infrastructure’s motion and Zurich filed an appeal. On appeal, the First District reversed in favor of Zurich. The court found when an insurer bases its right to subrogate on an express contractual provision, equitable subrogation standards do not apply. —From CLM Member Don Sampen, Clausen Miller

Ohio

No Agency Relationship Between Shipper Broker and Carrier

In a recent jurisdictional fight, Ohio came out on top. The underlying case involves a pollution clean-up dispute over two Superfund sites located in Michigan. In 1968, Ohio-based Scott Fetzer Company merged with the Indiana-based Kingston Products Corporation, which owned the manufacturing sites in Michigan. The Scott Fetzer Company took over all assets and liabilities of Kingston during the merger and continued operating the Michigan site until 1994. The EPA determined in 1986 that Fetzer was partly responsible for the clean-up. Fetzer spent years negotiating but ultimately agreed to fund remediation efforts. Scott Fetzer turned to insurance policies his company and Kingston had held in the 1960s for coverage. All insurers denied coverage. In the proceeding lawsuit, the Ohio Supreme Court had to decide which state law to apply. The justices decided since bad faith was alleged, this was a tort case, and Ohio law prevailed since the court found the most significant relationship to be in Ohio. —From Contributing Editor Abi Potter Clough

Georgia

Tractor Not ‘Auto’ Under Policy

Is uninsured/underinsured motorist coverage imputed to someone injured on a tractor operating on a public road that was not specifically scheduled on the policy? FMG secured a finding by the Georgia Court of Appeals that it is not. In Nationwide Agribusiness v. The Onionman Company, LLC et al., the insured attempted to bypass its failure to obtain UM coverage for a tractor by claiming the liability coverage provided under the policy was imputed by Georgia’s UM statute. Onionman claimed UM coverage not rejected in writing is imputed for the full amount of liability insurance available for that vehicle. UM coverage was not rejected, so Onionman argued auto liability coverage applied. The trial court agreed, but this was rejected on appeal. The Court of Appeals explained UM coverage wasn’t available under the policy since liability insurance is not mandatory for farm equipment and the tractor was therefore not an “auto” under the policy. —From CLM Members Lee D. Whatling and Philip W. Savrin, Freeman Mathis & Gary LLP

Washington, D.C.

New Rule Could Impact Agents

The Department of Labor’s (DOL) proposed fiduciary rule could dramatically reshape the regulatory environment for independent and captive insurance agents, potentially sparking a significant dispute over compensation and compliance. The proposal could bring substantial changes in the regulatory framework for insurance agents and brokers. The rule would clarify fiduciary responsibilities for professionals dealing with retirement funds, particularly agents that sell life insurance products, but some view them as potentially inhibiting advice to middle-market savers. The proposed changes could trigger a major shift in agents’ operations and remuneration, underscoring the ongoing friction between regulatory oversight and industry practices. The House of Representatives passed legislative amendments to prevent implementation of the DOL’s regulatory changes. If approved, the DOL’s proposal could transform the regulatory landscape for captive and independent insurance agents that sell retirement savings products, such as annuities, potentially affecting their compensation and the ways they provide advice to clients. —From Mark Friedlander, Triple I