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Coverage Opinions
Effective Date: June 25, 2014
Vol. 3, Iss. 10

Declarations: The Coverage Opinions Interview With Dick Thornburgh,
Former United States Attorney General
A Distinguished Career; Who Killed JFK?; Major League Baseball Dropped The Ball; Pete Rose And The Hall Of Fame; The Giant Spoon; Legalizing Marijuana; Three Mile Island; Term Limits; What I Did For Summer Vacation
Dick Thornburgh served as Pennsylvania’s Governor for two terms and three years as United States Attorney General. He served in the Justice Department under five Presidents. The former U.S. Attorney General was kind enough to speak to Coverage Opinions about the serious and not so serious. In one word he told me what he thinks about insurance and his answer to my question who killed John F. Kennedy was quite interesting.

Randy Spencer’s Open Mic
Happy Half-Christmas: Talking Insurance Coverage With Santa Clause

You Won’t Believe This Case -- I Did Not Make This Up. Really.
I’ve been known to make up a decision now and then. But this one, from a New Jersey federal court, is real. I didn’t make it up because… I couldn’t.

World Cup: Soccer And Insurance Coverage
The World Cup is in full swing. So that can mean only one thing --
I ponder whether any coverage cases have centered around soccer.

Chillin’ With One Of The Biggest Insurance Celebrities Of Them All
What a thrill to hang with an insurance legend. And he gave me a very cool toy to give to some Coverage Opinions readers..

Federal Court Lists 10 Requirements For A Reservation Of Rights Letter
Is a reservation of rights letter simply a letter that calls itself a reservation of rights? Some courts have taken issue with such letters because there are not sufficiently specific. See the 10 requirements of a ROR that one federal court listed.

A Dog Bite Coverage Case Gets To A Supreme Court
Few of the coverage cases in the dog bite genre are from state supreme courts. This one was.

Court Looks For Fair Way To Interpret Golf Cart Coverage
Insurer Gets It Rough And Insured Gets The Green

Lots of courts have addressed whether golf carts are “autos” for purposes of liability and automobile policies. Here’s one that is atypical. And you might not believe the outcome.

ISO Pull Up A Stool: Federal Appeals Court Offers A Different Way To, Er, Draft A Liquor Liability Exclusion
The 2013 version of ISO’s commercial general liability policy involves some amendments to the Liquor Liability exclusion. The Sixth Circuit just offered one more thing that ISO may want to consider.

When The Duty To Indemnify Is Broader Than The Duty To Defend
When it comes to coverage principles this one is as black as coal: the duty to defend is broader than the duty to indemnify. But in Texas it can be a different story.

Boston Strong: Insurance Coverage Veteran Jim Wagoner Has A Story
You Need To Hear

Jim Wagoner of McCormick Barstow ran in the 2014 Boston Marathon. The 65 year old and 150 pound coverage lawyer did so while pushing his 241 pound disabled son in an 80 pound racing chair. Jim provides his incredible story here.

Tapas: Small Dishes Of Insurance Coverage News And Notes
· Texas Supreme Court Justice Don Willett At It Again – Most Important Liability Coverage Judge Wins Another Award
· Claim Is Made And Reported During Same Policy Period -- But Still Fails To Satisfy The Notice Requirements
· Why I Don’t Own A Stairmaster





Vol. 3, Iss. 10
June 25, 2014



In one sentence Dick Thornburgh told me everything you need to know about how the public views its political leaders. In his autobiography, Where the Evidence Leads, the former two-term Pennsylvania Governor and United States Attorney General tells a story about the 1979 World Series between his beloved Pittsburgh Pirates and the Baltimore Orioles. At the Series opener in Baltimore, then Maryland Governor Harry Hughes threw out the first pitch. He was greeted with boos and catcalls. Baseball Commissioner Bowie Kuhn was not happy about this and summarily banned politicians from throwing out first pitches in the future. So when the Series moved to Pittsburgh Thornburgh was denied the experience for which he had awaited a lifetime.

On a call a few weeks ago with Thornburgh, I brought up this story and told him that I thought Kuhn got it wrong in how he responded to the Hughes incident. Instead of painting with such a broad brush, he should have only banned politicians from throwing out a first pitch if they had below a certain approval rating. I threw out 65% as a proposed cut-off. Thornburgh laughed and said that it wouldn’t make a difference. Then he paused for a second and added: “Even 100% they would still boo you.”

The baseball fanatic Thornburgh did ultimately realize his dream of throwing out a first pitch courtesy of the Texas Rangers. To his credit he confessed that he dropped the ball. Speaking of baseball and dropped balls, that’s what Major League Baseball did when they overlooked Thornburgh for the Commissioner’s job in 1993. But I’m getting ahead of myself.

On one hand I was pretty nervous as I prepared for my interview with Thornburgh. Speaking to a former Governor and United States Attorney General is not exactly something I have a lot of experience with. On the other hand, I concluded from my preparation, which included watching some other Thornburgh interviews, that he had a real regular-guy sense about him. And I was completely right. Thornburgh was affable, funny, self-deprecating and revealing. And while I asked him several serious questions, he went along with the ones that were, well, on the sillier side. When I thanked him for taking the time to speak with me for my “little insurance newsletter,” which I pointed out was not exactly the Weekend Interview in The Wall Street Journal, he replied: “I’ve talked to smaller media outlets than yours my friend.”

A Distinguished Career

The best way to illustrate the vastness of Dick Thornburgh’s career is this: there is a Dick Thornburgh Room, at the University of Pittsburgh’s Hillman Library, where his papers are archived -- and the term “linear feet” is used on the library’s website to describe the volume associated with each subject. I mean no disrespect to Mr. Thornburgh that I am about to summarize a career, that has produced a library, in about a one page timeline. [Incidentally I mentioned to Thornburgh that it must be nice to have your own library. If his wife starts getting on his case for having too much clutter around the house he can just pack it up and send it off to the library.]


Thornburgh received an undergraduate engineering degree from Yale (proving with his performance why few lawyers major in engineering) and his law degree in 1957 from the University of Pittsburgh School of Law. In 1959, after a stint at ALCOA, he became the nineteenth lawyer at then Kirkpatrick, Pomeroy, Lockhart & Johnson (now K&L Gates). The firm has done quite-well since Thornburgh came on board – growing today to over 2,000 lawyers. [That’s more than the total number of lawyers in each of North Dakota, South Dakota and Wyoming, according to the ABA’s numbers.]

Thornburgh was unsuccessful in a bid for the U.S. House of Representatives in 1966. In 1969 President Nixon appointed him as the U.S. Attorney for the Western District of Pennsylvania and in 1975 President Ford named him an Assistant Attorney General for the Justice Department’s Criminal Division.

Thornburgh served as Pennsylvania’s Governor from 1979 to 1987. He left office with a 72% approval rating. [That’s staggering. These days a President’s dog doesn’t have a 72% approval rating when he leaves office.] Thornburgh then served as Director of the Institute of Politics at Harvard’s John F. Kennedy School of Government from 1987 to 1988.

Thornburgh was appointed as United States Attorney General in 1988 by President Reagan (unanimous confirmation by the United States Senate) and was retained in office after President Bush was elected. He served three years as Attorney General. While Attorney General he twice argued and won cases before the United States Supreme Court. He left as A.G. in 1991 to run (unsuccessfully) for the Pennsylvania Senate seat that was vacated when Senator John Heinz was killed in a plane crash. Thornburgh served a one-year appointment as Under-Secretary General at the United Nations from 1992 to 1993. He returned to private legal practice, at K&L Gates, after 25 years of public service.

Thornburgh has served on numerous boards, including Merrill Lynch, Rite-Aid and ARCO. He has been awarded honorary degrees by over 30 colleges and universities and lectured on over 125 campuses. Washingtonian magazine called Dick Thornburgh one of “ten legendary Washington lawyers who will forever leave their mark on the District’s legal landscape.”

[With attribution to Wikipedia and the Thornburgh Papers’s website]

Still Practicing Law – But Not Insurance Coverage

The 81 year old Thornburgh is Counsel at K&L Gates in the firm’s Washington, D.C. office, practicing in the area of government affairs. I asked Thornburgh about his current practice. He told me that these days he doesn’t pull down books from the shelf. Rather, his role is one of a “troubleshooter,” helping out it various areas. He also serves to vouch for the firm with potential new clients, he told me. But he still considers himself a lawyer – “and a pretty good one.”

I asked him if clients have thought that by hiring the former Attorney General their problems can be solved by Thornburgh just picking up the phone. Well that is obviously not the case he assured me. You need to be realistic and truthful in what you can accomplish.

Thornburgh and I spoke a week before the interview to set it up. He wanted to be sure that I understood that, while his firm has a substantial coverage practice, he personally has no experience in the area. I assured him that that was fine -- but that I would still manage to find a way to ask him an insurance question. I can usually find an insurance angle in anything. Well, one week later our call took place and I told Thornburgh that he stumped me. For the first time ever I couldn’t think of anything insurance-related to ask someone. “Good!” he replied.


Dick Thornburgh And The Giant Spoon

In 1966 Dick Thornburgh ran for Congress – seeking to represent a Pennsylvania district that covered various parts of Pittsburgh. As part of the campaign he produced a billboard featuring himself holding an enormous wooden spoon – bigger than him -- with the accompanying message: “Dick Thornburgh will stir things up in Congress.”

I asked Thornburgh where one gets a spoon that large and does he still have it – perhaps in his library at the University of Pittsburgh. He said that there is only one way to get a spoon that large: “photographic trickery.” Pure and simple it was photo shopped and he provided the precise details on how it was done. Even 50 years ago nothing was what it seemed.


When Major League Baseball Dropped The Ball

Thornburgh recounts in his autobiography that in 1993 the Major League Baseball Commission’s job was vacant. He was contacted by the search firm, met with the owner’s committee and was told that he had survived several cuts. But in the end – which took several years -- the job went to Milwaukee Brewers’s owner Bud Selig. Thornburgh was told that the owners wanted someone more “media-oriented.”

Ironically, Thornburgh’s final contribution to the matter turned out to be an August 1994 op-ed in The Wall Street Journal in which he called for a return to a Judge Landis-type commissioner to help solve the game’s problems. Major League Baseball didn’t go that route. Instead they chose Selig, whose background was in the automobile business.

What happened next? Baseball went through a two-decade disgrace by many players’ use of performance enhancing drugs. Somehow I can’t help but think that the steroid and related-PED situation would have turned out differently if the guy sitting in the chair in the Commissioner’s office had once been the Attorney General. Baseball could have had its drug problems handled by the former highest law enforcement officer in the country -- who called drug abuse “Public Enemy Number One” when he took the oath of office. Instead it was tackled by someone whose background was the car business.

Pete Rose And The Hall Of Fame

Bud Selig – for fifteen years -- has declined to act on Pete Rose’s application to have his lifetime ban from baseball overturned. This would enable Rose to be eligible for Baseball’s Hall of Fame. Would the outcome have been the same for Rose if Thornburgh had gotten the Commissioner’s job? I asked Thornburgh this question. More specifically, my question was whether Rose should be in the Hall of Fame. No, Thornburgh replied without hesitation. “His records should be recognized,” Thornburgh said, but for behaving as he did (betting on baseball games in which he was acting as a team manager), he does not belong in the Hall of Fame.

Lessons From Three Mile Island And Term Limits

Thornburgh was sworn in as Pennsylvania’s 41st Governor in January 1979. Just two months later he was faced with a crisis of epic proportions – an accident at the Three Mile Island nuclear power plant near Harrisburg. Thornburgh was widely praised for his role in overseeing the emergency response efforts as well as coordinating funding for the clean-up.

In Where the Evidence Leads, Thornburgh sets out ten lessons from TMI. Number 8 – “Forget partisanship, for there is no Republican or Democratic way to manage a real emergency. In our stewardship of this most basic of public trusts, leaders inevitably survive or suffer together, and so do the people they are elected to serve.”

This is certainly true when life and limb are involved. Such bipartisanship was clearly on display in the aftermath of September 11th. So why can’t this lesson apply to other “real emergencies” such as the federal debt or other problems that have proven impossible to solve on account of partisan gridlock in Washington? “Politics is the art of compromise,” Thornburgh said, and the rigidity in both parties makes that hard to come by. Even though we may be in for a “rough patch” ahead, he is an “optimist” and tends to think that the democratic process works. When I asked if term limits were the solution he said that he did not favor them (and was quick to point out that it wasn’t because he was personally impacted by them as Pennsylvania’s two-term Governor). Besides, Thornburgh said, we have terms limits. “It’s called the voting booth.”

Legalizing Marijuana

I was pretty sure that I knew what Thornburgh’s answer was going to be to my question whether marijuana should be legalized. In his autobiography he describes his tough as nails war on drugs during his time as Attorney General. But that was a long time ago. Since then marijuana for recreational use has been legalized in two states and more than half the states now have laws that in some way permit medical marijuana (which is surely a wink and a nod to the medical part in some cases). And Thornburgh has spoken out against “absurd” federal over-criminalization of trivial wrongs. So with the country perhaps moving in the direction to decriminalize marijuana, and Thornburgh speaking out against ticky-tack crimes, might the former top law enforcement officer in the country now favor legalization of pot – or least be willing to consider it?

That would be a big N-O. The former Attorney General responded in no uncertain terms: “Until you can show me a civilization in the history of mankind that has profited from the legalization of drugs, I’m not for it.” He acknowledged that some states will decide that it’s right for them, but it’s “not smart.”

The Governor’s Favorite Letter

In 1981 I was fifteen years old, going to high school in Philadelphia, and sent a letter to the Governor. I asked him something about initiatives being taken by then President Reagan. Thornburgh responded and I still have his June 16, 1981 letter. In it he praised Reagan and said that the President was “moving quickly and effectively to set basic directions that are the right ones for the country.” [cuts in taxes, spending and reform of federal regulations] Thornburgh also stated in his letter that, because I was concerned about these issues, he was enclosing a copy of his budget address and his “directive to eliminate unnecessary regulations that are unduly burdensome on citizens and businesses in the Commonwealth.” Given my social life at the time I probably read these things.

I asked Thornburgh if he remembered my letter. “Wish I could say I did,” Thornburgh answered. He said that he received a lot of letters and others were assigned to address them. However, he was sure that mine was so interesting and outstanding that it was no doubt sent right up to him.

The Law School Problem And Summer Vacation

Also on my call with Thornburgh was Lauren Kelly, who is spending this summer working with me as a Research Assistant in the preparation of a new edition of “General Liability Insurance Coverage: Key Issues in Every State.” [Thornburgh will presumably not be buying a copy.] Lauren just completed her first year at Villanova Law School. I asked Thornburgh if Lauren could ask him a question – explaining that it would make for a great story, in her “What I did for summer vacation” report, to say that she spoke to the United States Attorney General. Thornburgh, showing his typical modesty, laughed and wondered why that was such a big deal.

Of course he didn’t mind taking a question from Lauren and she hit him with “the law school problem.” She listed all of the commonly discussed flaws -- tuition is very high, you leave school with a lot of debt, jobs are scarce and even if you get a job you are unprepared for actual practice – and asked Thornburgh for his solution.

Thornburgh said that he gets this question a lot. He acknowledged that jobs are down and there are too many lawyers – “but never enough good ones,” he stressed. But unlike some, his response was not that the system needed to be changed. Thornburgh’s answer seemed to be that the system is what it is and students just need to work hard to be one of those good lawyers for whom the profession will always be able to accommodate.

Who Killed John F. Kennedy?

My interview with Thornburgh was coming to an end. It was time to go big. I explained to him that it would be a huge boost for my insurance newsletter if he gave me a scoop – something that I could tout and which would draw a lot of attention to Coverage Opinions. I could sense him waiting for what I was about to unleash. “Who killed JFK?,” I asked. Thornburgh laughed. I thought I knew what his answer was going to be. But I was wrong. “Can’t help,” he replied. “Haven’t the slightest idea. Go ask Kevin Costner,” Thornburgh suggested. Interesting answer, I thought. The Attorney General pointed me in the direction of Kevin Costner. He didn’t point me in the direction of the Warren Commission Report.


Vol. 3, Iss. 10
June 25, 2014


Happy Half-Christmas: Talking Insurance Coverage With Santa Clause

Randy Spencer is on vacation. And since today is Half-Christmas, there was an easy solution to filling his space. Here is the pre-Christmas interview -- Single Cause Is Comin’ To Town --that Spencer did with Santa Clause in the December 19, 2012 issue of Coverage Opinions.

Santa, thank you so much for taking the time to speak with Coverage Opinions. No doubt you are very busy at the moment.

You can certainly say that again. Believe me, it would be much easier to do this in February. And that’s what I told that reporter from Rolling Stone who wanted to come up here and see this place hummin’ at full throttle – sorry, can’t do it now, call me in a couple of months. But when I heard that Randy Spencer wanted to interview me I dropped everything -- including the tike that had been sitting on my lap. If this interview should happen to throw things off schedule, and kids in Nebraska don’t get any toys, so be it. There’s always next year.

It seems surprising but I’ve heard that insurance coverage is something that greatly interests you.

It is. It’s no secret what occupies most of my time. But people don’t know much about the other things that keep me busy. Let’s just say that, well, sometimes I don’t deliver all of those Xbox 360 games that I should. But insurance coverage is my greatest passion. I’ve even thought about changing the spelling of my name to Clause. But Mrs. Claus says that if I do that I can sleep with the reindeer. Check out the sleigh in the driveway on your way out. The license plate is L8-NOTIC.

Needless to say you have a very unique organization here. This must create a lot of challenging insurance issues. Let’s start with the basics. Tell me about your general liability exposure.

That’s not too complex. We do not have a lot of premises exposure. Not too many people venture up here. It’s cold and there are no direct flights. Our biggest premises risk is the mail man. He comes non-stop starting at Thanksgiving. It’s only a matter of time before he wipes out on that ice on the walkway that sometimes I can’t be bothered to clear.

But we do have some operations exposure. I can’t deny that we cause damage to some roofs. Look, it’s just inherent in the risk of landing the sleigh – which, by the way, is not considered an “auto” under the CGL exclusion. Check out Claus v. North Pole Casualty and Indemnity Company. I really think that people should just let it go in the spirit of the holiday. But many still insist on making a claim for the damage to their roof. But I can tell you that these ingrates never make a second claim because after that I transfer them to the naughty list. And once in a while Blitzen will bite a kid’s hand when taking a carrot. The insurer usually defends based on assumption of the risk, but eventually it is usually just easier to settle for cost of defense and close the file.

Products liability is our biggest general liability concern. I’m still smarting from that Supreme Court decision that made me liable for defective products under the Restatement of Torts Section 402(A). Can you believe that? Talk about no good deed going unpunished. That decision sent our products liability premium through the roof. And now I hate having to say – “Sorry kid, can’t get that for you. Too dangerous. You’ll shoot your eye out. If you are not happy complain to the American Trial Lawyers Association.”

If general liability is your most basic exposure, what is your most unique?

That’s easy. Rudolph’s red nose and my beard are critical to the long term success of this business. They are very challenging to price and only a few options exist for placing them. They are insured by Lloyd’s – the same syndicate that had the risk on Liberace’s hands. But let’s face it -- insuring my beard is much more impressive.

So it’s real?

Yeah wise guy. It’s real.

What other risks do you contend with that no other businesses would?

Some professional liability exposures have been a real problem. And since there isn’t much demand for a Santa E&O Policy it has required a lot of manuscript drafting.

What kind of professional liability exposures do you have?

Kids that ask me for something and then wake up on Christmas morning and find that it’s not there. If a kid asks me for an iPad, and gets a sweater, I can expect a demand letter from his lawyer within a week. And from some of the verdicts that I’ve taken in these cases I can tell you that they have real jury appeal. I make it clear when speaking to the kids that I am not promising to get them anything. But the kids hear what they want to hear. And the next thing I know I’m accepting service of a detrimental reliance suit.

I’m sure you are very careful not to make any promises.

Believe me I am. And we have a good lawyer up here who tells me exactly what to say. He’s even a North Pole Super Lawyer, so you know he’s gotta be good. But it’s an inherent part of the business. The biggest problem are the mall Santas. Those guys mean well, and we do good training, but let’s face it -- they are amateurs. They get caught up in the excitement and the next thing you know some kid thinks that Santa has promised to bring him a pony.

How do you try to minimize this?

It is hard to do. The number of mall Santas is huge. I can’t police all of them. Like I said, we do a lot of training, but the problem can’t be solved. I require that all mall Santas hold me harmless and name me as an additional insured on their policies. And on a primary and non-contributory basis. But it is hard to keep track of all of those certificates of insurance. And you know that sometimes getting AI rights can be challenging.

Are they any other professional liability exposures?

Unfortunately there are. It is not uncommon for a kid to be put on the naughty list and take real issue when he finds coal in his stocking. Some of these delinquents sometimes challenge these determinations and bring claims for what they think I should have brought them, not to mention asking for all sorts of nonsensical consequential damages and attorney’s fees. Look, I’ve been doing this for a long time. I know when a kid deserves to be on the naughty list. These claims are baseless. But because of the expense of defending them I am forced to err on the side of caution, and put some kids on the nice list, when I know they don’t deserve it.

I noticed a lot of elves when I was walking in. It would seem you have your share of workers compensation issues.

The elves are the backbone of this operation. Unfortunately they get hurt more than we’d like to see. They make many wooden toys by hand. That requires cutting a lot of wood. We have some very big mechanical saws out there. Sometimes the elves are exhausted from working 16 hour shifts this time of the year. You can see where I’m going with this. So yes, workers comp. is a big issue for us.

Is there anything special about this year’s trip around the globe that you are looking forward to.

I always appreciate it when the little ones leave cookies and milk. But this year I am hoping that kids in Colorado and Washington leave me brownies.

Last question, can you tell me what you hope to get in your stocking this year?

Oh, that’s an easy one. A copy of the Second Edition of General Liability Insurance Coverage: Key Issues In Every State, by Randy Maniloff and Jeffrey Stempel, available on the Oxford University Press website and Amazon.com. If you see Mrs. Claus on the way out please whisper that to her.

Santa, thank you so much for sitting down with Coverage Opinions and sharing all of this. Can I say hello to the reindeer on my way out.

Sure. Just sign this waiver and keep your hands away from Blitzen.

That’s my time. I’m Randy Spencer.

Contact Randy Spencer at Randy.Spencer@coverageopinions.info


Vol. 3, Iss. 10
June 25, 2014

You Won’t Believe This Case -- I Did Not Make This Up. Really.

Imagine this scenario for a second. A man is having marital problems. So he takes the not unreasonable step of visiting his priest to seek guidance. Unbeknownst to the man, however, the priest has been having an intimate relationship with the man’s wife. The priest fails to mention this detail. Instead, the priest tells him that he should make no further efforts to save his marriage and accept his wife’s decision to seek a divorce.

Now, as a member of the Jewish faith, I have very little experience with priests. It’s pretty much been limited to seeing the priest on the way out of a wedding or funeral and giving him a wave and a nice job Father. But despite my lack of first-hand knowledge with priests I’m pretty sure I know this much--most priests would probably react differently when confronted with a parishioner that is having marital problems. I imagine that the conversation would be more along the lines of the priest telling the parishioner that marriage can be difficult, it takes hard work, there are going to be bumps in the road, ups and downs are inevitable and he should do whatever he can to solve the problem. But not this priest. Nope. He hears that his lover’s husband thinks that his marriage is in trouble and his reaction is swift – Oh this sounds bad my son. It’s time to throw in the towel. (And, by the way, I know what your towels look like.)

While I’ve been known to make up a decision now and then, this one is the real deal -- courtesy of a recent New Jersey federal court. By it’s not just any decision. It’s one in a coverage case! Baby when it rains it pours. Now to the coverage part of the story – which has its own share of hard-to-believe facts.

In Drew v. Church Mutual Insurance Company, No. 13-1906 (D.N.J. May 29, 2014), Henry Drew was the priest and Michael Doerr was the parishioner. In May 2009, Doerr found out about the affair and informed Drew of his discovery via text message. Drew notified his supervisors of the affair, and Doerr’s knowledge of it, and Drew then fled the country under his supervisors’ direction. It just gets better and better.

Drew secretly returned to the U.S. in the Summer of 2009. In February 2011, Doerr brought an action against Drew in New Jersey state court for breach of fiduciary duty and negligent infliction of emotional distress. Doerr alleged that Drew, because of the affair, had an irreconcilable conflict of interest in providing marriage counseling to him.

Drew sought defense and indemnification under a Church Mutual policy for the claims being made against him. Church Mutual declined. Drew filed a complaint against Church Mutual seeking a declaratory judgment that coverage was owed. Drew and Doerr reached a settlement and Drew assigned any policy rights to Doerr.

At issue was coverage, for a “counseling incident,” under a policy for Counseling Professional Liability. The policy defined “counseling incident,” in relevant part, as follows: “any act or omission in the furnishing of counseling services.”

The more specific issue before the court was the applicability of an endorsement for Prior Acts Coverage. The endorsement only provided coverage for a “counseling incident” that an insured did not have knowledge of before the Prior Acts Date of July 1, 2010. So the issue before the court, and the crux of its analysis, was whether Drew had knowledge of the “counseling incident” before July 1, 2010.

The court did not break a sweat to conclude that no coverage was owed, as there was “no question” that Drew had knowledge of the counseling incident before July 1, 2010: “[I]n May 2009, Plaintiff received a second text message from Doerr. Plaintiff subsequently informed his superiors of Doerr’s text message regarding discovery of the affair. Plaintiff’s superiors then told him to flee to Canada to avoid service of process in Doerr’s pending lawsuit. Based on these facts, Plaintiff’s claim that he was only aware of the ‘counseling incident’ upon being served with Doerr’s complaint in October 2010 is unpersuasive.” Wow.



Vol. 3, Iss. 10
June 25, 2014

World Cup: Soccer And Insurance Coverage

The World Cup is in full swing. So that can mean only one thing – the entire planet coming together, with a shared purpose of cheering on their national soccer team, in a spirit of competition and good will. Well, yeah, but I was thinking more like it means that I ponder whether any coverage cases have centered around soccer. When I went in search of this answer I was expecting a low score. Obviously with the beautiful game never gaining a major toe-hold in this country – which is sad – it would make sense that there wouldn’t be too many coverage cases revolving around it. I was right. There weren’t many. The most popular cases involved coverage for automobile accidents that just so happened to take place en route to youth soccer games. As for real soccer-related cases, involving coverage disputes under general liability policies and the liability section of homeowner’s policies, which is which Coverage Opinions is all about, it was slim pickins. But I found a couple.

In Clermont Central Soccer Assoc. v. Cincinnati Insurance Company, 676 N.E.2d 1281 (Ohio Ct. Comm. Pleas. 1995) an Ohio trial court addressed coverage under the following circumstances. “Jeffrey Snider was acting as a referee for a tournament soccer match being held by plaintiff Clermont Central Soccer Association. During the course of the match, Snider attempted to avoid running into children who were running the wrong way [how cute], and fell, suffering injuries when he hit his head. As a result of the injuries sustained by Snider, Snider brought suit against plaintiff [Clermont Central Soccer Assoc.], alleging that plaintiff was negligent in sponsoring a soccer game on a field with unsafe conditions.”

Clermont Central Soccer Assoc. sought coverage under its policy issued by Cincinnati Insurance Company. Cincinnati disclaimed coverage on the basis of the following exclusion: “With respect to any operations shown in the schedule, this insurance does not apply to ‘bodily injury’ to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.”

The court held that the exclusion did not apply on the basis that a referee is not clearly excluded under the athletic participants clause. Calling the language contained in the exclusion “imprecise,” court explained its decision: “[T]he court finds that the athletic participants clause is ambiguous at best. Exclusions are to be interpreted in light of their limiting titles. The title ‘Athletic or Sports Participants’ used by CIC is ambiguous, inasmuch as ‘participant’ is susceptible of more than one meaning. One could reasonably believe that the term ‘participant’ is synonymous with the term ‘player’ or one could believe that the term ‘participant’ applies to anyone involved in any way with the sporting event.”

In Process Systems International, Inc. v. Continental Casualty Company, 678 N.E.2d 866 (Mass. Ct. App. 1997) a Massachusetts Appeals Court addressed coverage under the following circumstances. Process Systems was in the business of producing cryogenic tanks and heat exchangers. Despite this being its business, it manufactured goal posts to donate to the Timberlane Soccer League, which were installed in a Plaistow, New Hampshire school playing field. A child died from injuries sustained when one of the goal posts fell on him. A New Hampshire jury awarded damages of $925,000 against Process Systems, the league and the local school district.

Process Systems sought coverage under a commercial general liability and commercial umbrella policy issued by Continental. Continental asserted that no coverage was owed on account of an exclusion for bodily injury which is included within the Completed Operations Hazard or the Products Hazard.

Process Systems argued that the goal posts should not be considered its product because it did not trade or deal in goal posts. The court rejected this argument, noting that “it has been held that even a brief excursion into the stream of commerce will cause one to be classified as a manufacturer, seller, handler or distributor of goods or products regardless of how foreign this occasional venture may be to his normal activities.” (citation omitted). Further, the court stated that “[n]othing in the wording of the products hazard exclusion suggests that a product must be one within the regular course of business of an insured.” The court also rejected Process Systems’s argument that the goal posts should not be considered its product because they were donated and not sold.

The Massachusetts appeals court concluded that no coverage was owed to Process Systems on the basis that the underlying claim involved bodily injury included within the Completed Operations Hazard or the Products Hazard exclusion.


Vol. 3, Iss. 10
June 25, 2014

Chillin’ With One Of The Biggest Insurance Celebrities Of Them All

In a crowded field of insurance mascots there’s Geico’s gecko and then everyone else. Progressive’s Flo, Allstate’s Mayhem Guy and Aflac’s duck – while all very clever -- are just playin’ for second place. So what a thrill it was a couple of weeks back to hang with the granddaddy of insurance mascots, at an event for the wonderful Alex’s Lemonade Stand, to raise money for pediatric cancer. [Alex Scott, the brave little girl whose lemonade stand on her front lawn started it all, lived in my neighborhood. Her family still does. So Alex’s Lemonade Stand is an important part of my community.]

The gecko gave me a bunch of PEZ dispensers. He whispered to me that it helps to be on a PEZ dispenser when trying to meet female geckos. I have a few of these awesome PEZ dispensers sitting here. Ain’t no way you can buy one of these in a store. So if you are a gecko fan, and can’t live without having one of these bad boys, let me know and I’ll send one your way (Act soon. Supplies are limited.)

The gecko and I chatted about some auto policy provisions and he got pretty animated when it came to what qualifies as “use of an auto.” For a lizard hawking auto policies for a long time he sure has a narrow view of what qualifies as “use of an auto.” You would have thought he was a chameleon the way he was trying to turn every auto claim into a CGL claim.





Vol. 3, Iss. 10
June 25, 2014

Federal Court Lists 10 Requirements For A Reservation Of Rights Letter

“What’s in a name? That which we call a rose by any other name would smell as sweet.” William Shakespeare, “Romeo and Juliet,” Act II, Scene 2. [Well, actually, Wikipedia.] But the same cannot be said of reservation of rights letters. In fact, just the opposite. A letter that is called a reservation of rights may be nothing of the sort.

What makes a letter a “reservation of rights” letter? Is it enough to call it a reservation of rights letter? Is it enough to say, sometimes multiple times, that the insurer is reserving its rights to deny coverage? In some cases, the answer may be no.

Despite how commonplace reservation of rights letters are for insurers in the claims context, some courts have taken issue with the content of such letters – concluding that, while a letter with the words “reservation of rights” may have been issued, the notice provided to the insured in such letter, of the reasons why coverage may not be owed for some claims or damages, was not sufficiently specific to be adequate.

One court described the situation as follows: “In this case, the Court finds that Safeco’s reservation of rights letter did not ‘fairly inform’ Liss of the reasons it was reserving its rights and that the letter was inadequate as a matter of law to preclude application of the estoppels doctrine.  The only factual reference contained within the policy is: ‘As you are aware, this lawsuit arises out of a gunshot incident on July 10, 1997.’  More importantly, the letter sets forth pages of policy provisions but does not explain why Safeco believed the insurance policy would possibly not cover Liss for the shooting incident.  In other words, Safeco did not ‘apply’ the sole fact stated to the policy’s legal terms.” Safeco Ins. Co. of Am. v. Liss, No. DV 29-99-12, 2005 Mont. Dist. LEXIS 1073, at *41 (Mont. Dist. Ct. Mar. 11, 2005); see also Osburn, Inc. v. Auto Owners Ins. Co., No. 242313, 2003 WL 22718194, at *3 (Mich. Ct. App. Nov. 18, 2003) (“[W]e conclude that, because Auto Owners’ reservation of rights letter was not sufficiently specific to inform plaintiffs of the policy defenses the insurer might assert, the letter did not constitute ‘reasonable notice.’”) (comparing an example of sufficiently specific reservation of rights language to that which was not); Hoover v. Maxum Indem. Co., 730 S.E.2d 413 (Ga. 2012) (“In order to inform an insured of the insurer’s position regarding its defenses, a reservation of rights must be unambiguous. If it is ambiguous, the purported reservation of rights must be construed strictly against the insurer and liberally in favor of the insured. A reservation of rights is not valid if it does not fairly inform the insured of the insurer’s position.”).

I have seen many (many) reservation of rights letters that do not meet the “fairly inform” standard. These letters set out a very brief factual summary – sometimes just a couple of paragraphs to summarize a long and complex complaint – then spew out seven pages of policy provisions, many of them not relevant, and conclude with – we reserve our rights. Such letter may not survive a challenge that it does not meet the “fairly inform” standard.

An effective reservation of rights letters needs to do several things. Most importantly, while it must cite the facts in detail and potentially relevant policy provisions, it must then tie them together and set forth which facts are relevant to support a potential lack of coverage based on the cited policy provision. To fairly inform the insured of the insurer’s position it is not enough just to list the facts, even in detail, and then separately list a bunch of policy provisions.

In Western Heritage Ins. Co. v. Asphalt Wizards, No. 13-34 (W.D. Mo. June 3, 2014) the court addressed coverage for a fairly typical TCPA/junk fax case. The insurer undertook its insured’s defense in 2008 and sent the insured a letter containing a two line description of the complaint, the name of defense counsel and the policy’s limit of liability and deductible. Then, four years later, the insurer’s counsel sent the insured a twelve-page reservation of rights letter, which the court noted contained a lengthy, detailed explanation of the insurer’s coverage position.

However, the Asphalt Wizards court held that the insurer waived its coverage defenses because it undertook the insured’s defense without any reservation of rights: “To begin, the Court finds the 2008 letter to Asphalt Services is not a reservation of rights letter. Although it identifies one of the relevant policies at issue and restates the allegations in the state court petition, it does not provide any other information from which Asphalt Wizards could infer that Western Heritage was defending subject to a reservation of rights. On the other hand, the 2012 letter is a reservation of rights letter because it bears almost all of the indicia of a typical reservation of rights letter. This letter was ineffective, however, because it was untimely. Western Heritage had notice of the lawsuit in May of 2008, but did not notify Asphalt Wizards of its reservation of rights until the fall of 2012. Since Western Heritage knew, or should have known, from reading the state court petition in May of 2008 that it possessed applicable coverage defenses and yet waited four years before sending a reservation of rights letter, it waived its ability to deny coverage under the Policies.”

In comparison, the Asphalt Wizards court stated that “[a] typical reservation of rights letter does most, if not all, of the following: (1) identifies the policy at issue; (2) quotes, or at least refers to, the relevant policy provisions and identify any terms, conditions, or exclusions which may bar coverage; (3) refers to specific, relevant allegations in the complaint; (4) identifies which claims may not be covered; (5) explains in detail the basis for the insurer’s coverage position; (6) sets forth the proposed arrangement for providing a defense and, depending on the law of the jurisdiction, advises the insured of its right to independent defense counsel; (7) advises the insured of any actual or potential conflicts of interest between the insurer and the insured; (8) reserves the right to withdraw from the defense; (9) contains a general reservation of rights, including the right to assert other defenses the insurer may subsequently learn to exist during further investigation; and (10) uses the words ‘reservation of rights.’” (citations omitted).

The insurer was fortunate that, under the facts at issue, the loss of its coverage defenses was not consequential. The court concluded that, despite the waiver of its coverage defenses, the insurer did not wave its $1,000 “per-claim” deductible and no class member will have more than $1,000 in damages.

While Western Heritage dodged a bullet, the lesson from the case is clear: “A reservation of rights is not valid if it does not fairly inform the insured of the insurer’s position.” Hoover v. Maxum Indem. Co. (Ga. 2012).


Vol. 3, Iss. 10
June 25, 2014

A Dog Bite Coverage Case Gets To A Supreme Court

I love dogs. I love coverage cases. So do the math -- I love dog bite coverage cases. On one hand, I’m glad that there are so many of them. On the other hand, a lot of dog bite coverage cases can mean only one thing -- there are a lot of dog bites. And that’s not a good thing. So it’s a real pickle. One thing about all of these dog bite coverage cases -- most are not from state supreme courts. I could poke around on Westlaw and get some data on that -- but there’s no pointer to that. Suffice to simply say that few of the coverage cases in the dog bite genre are from state supreme courts.

By now you know exactly where this is going – a state supreme court just issued a decision in a dog bite coverage case. While the case does not address any real coverage issues, it does offer something worthwhile – a demonstration of just how broad the duty to defend can be.

In Howe v. MMG Insurance Company, No. YOR-13-529 (Me. June 17, 2014) the Supreme Judicial Court of Maine addressed coverage for Janet Howe, under the liability section of a homeowner’s policy, for a suit filed against her by her Condominium Association. Specifically, the Condo Association alleged that Howe’s dog was a nuisance -- being vicious, threatening and having bitten people. Howe’s insurer, MMG Insurance Company, declined coverage on the basis that Howe’s dog was a nuisance, not that it caused any “bodily injury” or “property damage,” and, therefore, the complaint sought only uncovered equitable relief. Coverage litigation ensured. The trial court sided with MMG. Howe sniffed her way to Maine’s highest court, which reversed.

The Supreme Judicial Court first set out the test for determining a duty to defend – which it noted is broad: it “is triggered if the complaint tendered contains any allegations that, if proved, could fall within the coverage afforded by the policy.... [I]f the complaint—read in conjunction with the policy—reveals a mere potential that the facts may come within the coverage, then the duty to defend exists. Furthermore, where the events giving rise to the complaint may be shown at trial to fall within the policy’s coverage, an insurer must provide the policyholder with a defense.”

Looking at the nuisance claim, in general the court concluded that, because it “might be shown at trial” that the dog had bitten, scratched and otherwise damaged Association property, a claim for property damage had been established. Further, while injunctive relief was requested, so too, the court noted, were damages, interest, penalties, costs and attorney’s fees.

Turning to the negligence claim, the court held that “[t]he allegation that the dog has ‘bitten people’—possibly fellow unit owners, because the statutory count (Count V) alleges that ‘unit owners have been assaulted’ by the dog—outlines a claim of bodily injury for which Howe might be answerable to the Association, depending on the facts developed as the case proceeds.”

There isn’t a whole lot to say about this case. And while it does demonstrate the breadth of the duty to duty, that’s a dog bites man story, if there ever was one, for anyone reading this. But the case involved a pooch, coverage and a supreme court. Spaniel just had to indulge me. Thanks.


Vol. 3, Iss. 10
June 25, 2014

Court Looks For Fair Way To Interpret Golf Cart Coverage
Insurer Gets It Rough And Insured Gets The Green

Lots of courts have addressed whether golf carts are “autos” for purposes of liability and automobile policies. I’ve confronted the issue a couple of times and it’s an interesting one. The Court of Appeals of Georgia just had a golf cart coverage case before it. But the issue in American Strategic Ins. Corp. v. Helm, No. A14A0466 (Ga. Ct. App. June 9, 2014) is not your typical one.

In 2012, William Helm struck and injured Tracy Self while Helm was driving his four-seat motorized golf cart around a master-planned community. Self filed suit against Helm for negligence in the operation of the golf cart. Helm was insured under a homeowner’s policy issued by American Strategic Insurance Corp. ASI filed a declaratory judgment action seeking a determination whether Helm’s policy provided coverage for the accident.

The ASI policy provided liability coverage but also contained specific exclusions pertaining to ‘Motor Vehicle Liability,’ in particular, “no coverage for ‘motor vehicle liability’ unless the ‘motor vehicle’ is: A motorized golf cart that is owned by an ‘insured,’ designed to carry up to 4 persons.” However, Helm’s policy also included a Georgia Special Provision Endorsement, which superseded and replaced the policy language involving golf cart coverage. The Special Endorsement modified coverage to read, “A motorized golf cart: (1) Owned by the ‘insured’; (2) Designed to carry up to 2 persons.”

So to be clear – the ASI policy excluded coverage for motor vehicle liability -- but provided coverage for a motorized golf cart “designed to carry up to 2 persons.” The golf cart at issue was a four-seater.

Self argued that coverage was owed because the phrase “designed to carry up to 2 persons” set a minimum requirement, such that a one-person golf cart would not be covered under the policy, but any golf cart with two seats or more would be covered. ASI in turn claimed the phrase set a maximum and acted as an exclusion for golf carts with any more than two seats.

The Georgia appeals court was confronted with a classic case of competing interpretations of a policy provision. The court held that the policy was susceptible to two reasonable interpretations, and, therefore, ambiguous. Because of this conclusion, the court construed the ambiguity against the insurer and found that the exclusion did not apply.

While the court did not say exactly what drove its decision, it appears to have been influenced by a couple of things. The deposition testimony of ASI’s director of underwriting supported the conclusion that the policy could reasonably be interpreted two different ways. Second, the court noted that Self pointed out “other instances in which the phrase ‘up to’ can be used to set a minimum, noting for example that if a job posting stated that applicants must be capable of lifting up to 40 pounds or typing up to 90 words per minutes, those applicants who are capable of lifting more or typing faster would not be excluded.”


Vol. 3, Iss. 10
June 25, 2014

ISO Pull Up A Stool: Federal Appeals Court Offers A Different Way To, Er, Draft A Liquor Liability Exclusion

A couple of the amendments to the 2013 version of ISO’s workhorse commercial general liability policy (CG 00 01) involve the Liquor Liability exclusion. In general, it has been amended to state that it applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, etc. of others and the failing to provide transportation of any person that may be under the influence of alcohol. The exclusion also has been amended to state that a BYOB is not considered selling, serving or furnishing alcoholic beverages.

The Sixth Circuit just offered one more thing that ISO may want to consider if its intent is to preclude coverage under a CGL policy for all-things-liquor and shift such exposures to a stand-alone Liquor Liability policy.

At issue in KSPED LLC v. Virginia Surety Company, No. 12-6618 (6th Cir. June 2, 2014) was coverage arising under the following circumstances. Cynthia Bivens, along with John Marsh, attended an event at the Kentucky Speedway race car track. Marsh was served alcohol by a food and beverage concessionaire employee. Later that day, Bivens, while riding in a vehicle driven by Marsh, sustained fatal injuries when Marsh lost control of the vehicle, causing it to overturn. The Estate of Cynthia Bivens commenced a wrongful death lawsuit against Kentucky Speedway, which owned the racetrack, and DJ’s Food Service Management Group, Inc., the concessionaire that employed the individual who served an allegedly intoxicated Marsh.

The litigation was settled. The liability insurers for OS Speedway (the concessionaire that subcontracted to DJ’s the right to sell food and beverages at the Speedway) and DJ’s paid the estate about $350,000. Kentucky Speedway settled its portion for $10,000 and incurred approximately $74,000 in defense fees. Kentucky Speedway brought an action against Virginia Surety Company alleging that it wrongfully refused to defend and indemnify it pursuant to a Commercial General Liability policy. The district court concluded that Virginia Surety’s failure to defend and indemnify constituted a breach of contract.

The dispute centered around the applicability of the Liquor Liability exclusion. The relevant language at issue was that which is contained in the pre-2013 edition of ISO’s CGL form – coverage excluded for liability arising out of the sale of alcoholic beverages if the insured is “in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.”

The court devoted many pages to the question whether Kentucky Speedway was “in the business” of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. In doing so it took a very close look at the concession agreement whereby Kentucky Speedway granted OS Speedway the sole and exclusive right to sell food and alcoholic and non-alcoholic beverages at all events held at the Speedway. Following this arduous review the court concluded that Kentucky Speedway was in the business of selling alcohol: “Speedway’s substantial control over the manner in which alcohol was sold, beyond simply for the purpose of maximizing profits, only confirms our judgment that, notwithstanding the fact that the persons serving alcoholic beverages were not Speedway employees and that Speedway did not have a liquor license, Speedway was in the business of selling alcohol. The fact that Speedway chose to engage in the business of selling alcohol by entering into an agreement with a concessionaire who possessed such a license does not relieve it of the consequences of the conduct in which it engaged. Speedway exercised substantial and meaningful control over the sale of alcohol.” The court noted that “Speedway did not simply rent space to a vendor and collect a flat fee for the right to use the space.”

The court was also persuaded that, beyond the legal relationship between Kentucky Speedway and the concessionaire, the Liquor Liability exclusion applied based on its purpose: “The CGL Policy, as its language suggests, provides coverage, without payment of additional premiums, where the sale or serving of alcohol occurs on an infrequent basis because of the significantly lower risk of such limited activity. The exclusion of liquor liability coverage reflects the commonsense consideration that the use of premises for an ongoing venture of selling alcoholic beverages significantly increases the risk to the insurer. Whether the insured directly furnishes alcohol to consumers and whether it is licensed to do so do not affect the increased risk of insuring a party engaged in the regular for-profit sale of alcohol that the liquor liability exclusion removes from coverage.”

While that could have been last call for the court it wasn’t. Before turning off the tap the court provided some advice to Virginia Surety about how to draft a Liquor Liability exclusion: “While we decide this case in favor of Virginia Surety, our decision should not be viewed as an endorsement of the manner in which it drafted its liquor liability exclusion. There are at least two reported cases that provide examples of liquor liability exclusion clauses that could have easily avoided the burden and expense of this litigation. First, in Cnty. of Schenectady v. Travelers Ins. Co. [N.Y. App. Div. 1975] the insurance policy provided that it did not apply to bodily injury or property damage for which any insured ‘may be held liable, as a person or organization engaged in the business of manufacturing, distributing, selling or serving alcoholic beverages or as an owner or lessor of premises used for such purposes, by reason of the selling, serving or giving of any alcoholic beverage.’ Similarly in McGrif v. United States Fire Ins. Co. [S.D. 1989] the liquor liability exclusion provided that the insurance policy did not cover the ‘an owner or lessor of premises used for’ the manufacturing, distributing, selling or serving alcoholic beverages.”

Perhaps ISO will consider this advice or perhaps it sees the circumstances at issue in Kentucky Speedway – insured subcontracts the sale of alcohol, on its premises, to another -- as too infrequent to warrant an across the board change. Either way, when a court provides such specific instructions on how to draft a policy provision, note must be taken of it.


Vol. 3, Iss. 10
June 25, 2014

When The Duty To Indemnify Is Broader Than The Duty To Defend

When it comes to coverage principles this one is as black as coal: the duty to defend is broader than the duty to indemnify and if an insurer does not have a duty to defend, it does not have a duty to indemnify.

But in Texas it can be a different story. A determination that an insurer has no duty to defend may not bring the fat lady out on stage. Texas allows an insured to come back for a curtain call and seek coverage for damages in an action for which there was no duty to defend. This Texas-ism was on display in Acadia Ins. Co. v. Martin, No. 13-798 (N.D. Tex. May 28, 2014).

At issue before the Texas federal court was the potential availability of coverage for Martin, Ltd. for a fatal accident in connection with its work designing and installing a new sewer system for Gordon, Texas. An employee of another contractor was directed to open a manhole, climb inside and remove a plug from the sewer line. When he removed the plug, toxic fumes were released and he died.

The employee’s parents filed suit against several project participants including Martin. Acadia Insurance Company, Martin’s insurer, filed an action seeking a declaration that it owed no duty to defend or indemnify Martin and others for the underlying suit. Acadia argued that it had no duty to defend because the underlying suit fell within the pollution exclusion. The parties seeking a defense did not dispute that methane is a pollutant or that the pollution exclusion otherwise applied to the facts alleged in the underlying suit. Instead they asked the court to consider extrinsic evidence that they contended demonstrated that the employee may have died from a lack of oxygen. The court refused to consider such extrinsic evidence on the basis that it was impermissible to do so under Texas law. Thus, the court concluded that, based on Texas’s eight corners rule, Acadia had no duty to defend.

In most states this would be the end of it. But not so in Texas. Following its conclusion that Acadia had no duty to defend, the court did not turn out the lights. Instead it turned to the question whether Acadia may have a duty to indemnify – which is based on the facts actually established and not simply those alleged in the underlying complaint.

In support of its argument that no coverage was owed, Accadia submitted the autopsy report for the decent and the results of the OSHA investigation. The autopsy report had been amended to change the cause of death from “asphyxia due to methane gas inhalation” to “asphyxia due to oxygen displacement in a confined space.” The OSHA investigation indicated that death was from asphyxiation due to the inhalation of toxic vapor.

The court held that “the corrected autopsy report raises a genuine issue of material fact as to whether Ramirez’s death falls outside the pollution exclusion of Plaintiffs’ policies.” While the report was amended to list “asphyxia due to oxygen displacement in a confined space,” Acadia argued that such oxygen “would have to have been displaced by methane or some other gaseous substance that was present in a concentration capable of causing injury or death.” The court disagreed: “[Acadia], however, fail[s] to demonstrate that the substance which displaced the oxygen was in fact a pollutant as defined by the policies. It is not sufficient for Plaintiffs to note that the oxygen must have been displaced by another substance. Rather, Plaintiffs must show, by competent summary judgment evidence, that the substance which displaced the oxygen was a pollutant under the policies and that the means by which the oxygen was displaced falls within the exclusions.” There you have it – the Texas two-step in action.


Vol. 3, Iss. 10
June 25, 2014

Boston Strong:
Insurance Coverage Veteran Jim Wagoner Has A Story You Need To Hear

I know what Boston Strong means – and so do you. It’s an attitude. An emotion. It exists in your head. Your heart. But for McCormick Barstow’s Jim Wagoner the strength also extends to his arms, legs and lungs.

The veteran and highly accomplished coverage lawyer from Fresno, California ran in the 2014 Boston Marathon. That’s an achievement that very few can claim. But Jim’s race experience differs from just about everyone else’s. With 35,000 participants in the marathon the runners are hardly alone. But Jim Wagoner was really not alone. He completed the 26 mile course while pushing his 18 year old son Colby in a racing chair. Here are a few more numbers to consider. Jim is age 65. He weighs 150 pounds. Colby is 6’3” and weighs 241 pounds. His nickname is Moose. The racing chair weighs 80 pounds. It is not hard to figure out that Jim is pushing well over twice his weight.

Pushing his children in a road race is nothing new for Jim. It is something that he has done for years with his children in an annual Father’s Day race close to home. He would do so until they grew out of the stroller and were able to run with him. But for Colby the stroller has never disappeared. It just got bigger. Colby has learning disabilities, hypotonia, autism and cannot speak.


Jim’s run with Colby earlier this year in Boston, on the world’s biggest marathon stage, was undertaken in support of the Massachusetts Down Syndrome Congress. But the 6½ hours that Jim and Colby actually spent on the streets of Boston was just a small part of the marathon experience. It also included pre-race fundraising, a 6,000 mile round-trip journey between Fresno and the Bay State -- in a motor home, no less -- and participation in various events surrounding the race. In “Our Boston Marathon Adventure,” below, Jim shares the experience of a lifetime. Jim Wagoner is truly Boston Strong in every sense of the term.

A few words about Jim Wagoner – insurance coverage litigator. He is a partner in the Fresno office of McCormick Barstow, where he has practiced for the past 40 years. The list of reported coverage decisions in which he has been involved is endless – the names of many of which are recognizable. I can’t imagine that there are too many coverage lawyers anywhere that can compile a list as long. As a coverage lawyer Jim Wagoner has run numerous marathons.

Tim Puin of the Janik law firm brought Jim Wagoner’s story to my attention. As Tim put it when describing Jim’s story to me – Some duties are even broader than the duty to defend. Thank you Tim for alerting me to Jim’s story and to Jim for letting me share it with Coverage Opinions readers.

Our Boston Marathon Adventure
By Jim Wagoner
Based on what happened last year, I figured that if I was ever going to push Colby in the Boston Marathon, this was the year to do it. We applied and were accepted to run by the Massachusetts Down Syndrome Congress in support of its organization and its theme of “Promoting Acceptance And Inclusion,” a cause which could not have been any more appropriate for our family. I also had to get the racing chair approved by the Boston Athletic Association, including proof we had the right type of tires. In addition, I had to convince the guy from the Race Director’s office who called me that I wasn’t crazy (although I wasn’t so sure myself) and that I could run the course pushing 300+ pounds.

According to what I was able to determine, the course had 783 feet of uphill and there were 34 hills. I started training in November, pushing Colby up hills in Fresno’s Woodward Park. My best pre-race training memory was one time when I had just gotten through struggling to push Colby up a hill when a woman on her bike rode past us and said, “It is my birthday and you just made my day.” As she rode away, I thanked her, told her “Happy Birthday” and thought to myself – she just made mine too.

We had a lot of great fundraising moments, including Nicole’s lemonade stand in front of our house the week before we left, the ladies at Colby’s special needs class at Northwest Church spontaneously starting their own fundraising effort to help us with the travel expenses to and from Boston, the McCormick Barstow employees holding a Jeans Day and raising over a $1,000, the complimentary fundraising luncheon hosted by Fleming’s which raised almost $4,000 and the video of Glee’s Lauren Potter and the MDSC kids welcoming Colby to Boston and singing “Happy Birthday” to him. But the best “fund raising moment” was this: Colby attends school at Ramacher, which is for children and young adults with various types of disabilities. When the teachers heard about us being in the Boston Marathon, they started, on their own initiative, a fundraising effort. They had “Team Colby” t-shirts, with Colby’s picture on the front, made up for all the staff to wear on the day of the race. They also sold raffle tickets for 4 gift baskets they put together.

Wendy and I were asked to come to the school to pick the winning raffle tickets. When we got there, all the other disabled students, along with their teachers and aides, were waiting in the school yard for us and gave us a cheer. They had signs reading “Good Luck Colby” and “We Are Proud of You.” One of the non-verbal students came up to me just to touch me (I am still wondering if she was trying to say anything other than “Hello”). The best of the baskets, which was considered the grand prize, included 4 tickets to a San Francisco Giants game. One of the teachers really wanted to win it so that she could give the tickets to her dad, a big Giants fan, for his upcoming birthday. So she put her raffle tickets in her Bible and left them there and prayed all week to win it. If there was ever any doubt about whether God was blessing our journey, that doubt was erased when I pulled one of her tickets. (The raffle raised over $1,000 for MDSC).

Since Colby doesn’t do well on planes, we left for Boston on Sunday, April 13th in a rented motor home with Wendy and I sharing the driving. We saw snow in every state from Utah to Massachusetts and played the license plate game. The first night we stopped in an RV park in Utah. Colby made it clear he wanted us to explore other options for sleeping arrangements and we spent the rest of the road nights in hotels where he could walk around. For the most part, Colby loved the trip as he enjoyed being close to the family. He would watch movies (with Flora Jean dutifully holding the TV while simultaneously playing board games with Nicole), look out the window and occasionally take naps. The best “Fresno to Boston trip moment” was at the hotel in Joliet, Illinois, meeting the desk clerk, Michael, who did not have a right hand. He enjoyed hearing about our adventure and wished us the best of luck, while reminding me why God gives children with disabilities to certain parents. The rest of the trip was largely uneventful, although I did get a ticket on notorious I-90, just two miles across the state line into New York. The State Trooper was parked alone on the side of the road with his lights flashing for no apparent reason. Because it was extremely windy, I was just trying to keep the motor home going straight so I didn’t change lanes. When he pulled me over, he explained the New York law requiring drivers to move over for stopped emergency vehicles. When I explained to him why I didn’t change lanes because of the extreme wind and the safety of my family, he replied “I would have done the same thing” as he handed me the ticket. Undeterred, and since we were making good time and Colby loves waterfalls, we stopped at Niagara Falls and took pictures.

We arrived in Boston on Friday, April 18th. At the W Hotel we were greeted warmly by everybody and Colby became an instant “rock star.” One of the housekeepers on our floor, Rita Montero, became especially attached to Colby and gave him big hugs every time she saw him.

Throughout the city, “Boston Strong” signs, shirts and jackets were everywhere, and many of the marathon runners wore their bright orange or blue “Boston Marathon” jackets. We were met in Boston by a distant cousin of Wendy’s, Laura Lewis, who is a police officer for the Massachusetts Port Authority. Laura trained with Sean Collier, the M.I.T. Officer who was killed last year in the aftermath of the bombings. Talking with her about Sean and his death brought us much closer to last year’s tragedy.

Colby and I were the third leading fundraisers out of thousands of charity runners, raising over $61,000 for MDSC. The top 20 fundraisers were invited to attend a Red Sox game on Friday night in the John Hancock luxury suites at Fenway Park. Going up the elevator, a man handed Nicole a batting practice foul ball which she now cherishes and is going to encase. We were greeted at the game by, and had the pleasure to speak with, the last American winners of the Boston Marathon -- Joan Benoit (1979, 1983), Bill Rodgers (1975, 1978, 1979, 1980) and Greg Myers (1983).

MDSC held a luncheon on Saturday honoring the entire MDSC team which raised over $116,000 and we all wore our “Team Colby” shirts. When we first arrived and Maureen Gallagher, the Executive Director of MDSC, came over to introduce herself, Colby promptly pulled her hair (not quite the introduction I was hoping for). At the luncheon, we also met many of the other MDSC team members who were running in the marathon and their families.

On Easter Sunday, the Easter Bunny came to the hotel and Nicole and Alana were successful in finding everything he left in one of the hotel rooms. We also checked out the course (Heartbreak Hill didn’t look so bad… from the inside of a car).

On the morning of the race it was a big hassle finding the right bus to board to reach the starting line and making sure the racing chair got there. But everything worked out. The buses with the wheel chair, duo team and mobility-impaired runners were given a police escort and they literally closed down the Massachusetts Turnpike for us for about 25 miles. On the bus we had the honor of meeting and speaking with Dick and Rick Hoyt. Dick’s wife also joined us, and when she saw Colby she asked if he was “Moose.” The “best starting line moment” was at the Runners Village at Hopkington Common when Wendy, Dan, Nicole and Flora Jean gave me last hugs and Nicole said to me, “Daddy, you may not be the fastest, but you’re the best.”

The race itself was an incredible experience. The mobility-impaired runners started at 8:50 a.m. Some were blind and others went the whole way on crutches. Colby and I started with the other duo teams and the wheel chairs at 9:17 a.m., followed by the elite women runners at 9:40 a.m. and the official start at 10:00 a.m. The elite woman runners passed us at about mile 4 and they were literally flying by. At about mile 6, the elite men runners passed, one of whom slowed down enough to say hi to Colby and try to give him a high five. The strategy of the elite American men runners, to work together against the African competitors, to help Meb Kefeizighi become the first American to win in more than 30 years, was amazing – it was like a poker game broke out in the middle of a marathon.

Over a million people lined the course to watch the race and they were incredibly supportive, constantly yelling, giving us high fives, ringing cow bells and shouting words of encouragement. There were quite a few signs honoring the people who were killed in last year’s bombings as well as Sean Collier, and tons of both “Boston Strong” and “M.I.T. Strong” signs. There were also quite a few signs reading, “No More Hurting People. Peace,” the sign originally made famous by Martin Richard, the 8 year old boy who was killed in last year’s bombings.

Colby loved the race, frequently letting out yells and flapping his arms. Quite a few people tried to give him high fives and one woman stopped and offered to shake his hand and he actually shook her hand. Dennis Alves, my friend in the town of Ashland, was there with his family at the 4 mile mark and had a sign supporting us. Our friends, Paul and Susan O’Sullivan, were at mile 10 in the Town of Natick and saw us again at mile 24. The MDSC cheering section was stationed at mile 17 and the whole family—Wendy, Nicole, Dan, Joe, Abby, Alana, Ashley and Flora Jean—met us on Heartbreak Hill at about mile 20. We passed the “Official High Five Station” manned by a bunch of kids handing out high fives and also the various “scream tunnels,” including that of the Wellesley College girls who also offered kisses to runners passing by and holding signs saying things like “Kiss Me, I’m Getting Married” and “Kiss Me-I Am The Fun Size.”

Our best “during the race moment” occurred when a woman runner from the Central Valley who recognized us, ran past, and began pointing to Colby and shouting “Colby, Colby, Colby” to the crowd. The entire crowd then began chanting, “Colby, Colby, Colby” for about 100 yards and Colby began flapping his arms.
I quit counting hills when I realized that what they considered a hill, and what I considered a hill pushing Colby, were two entirely different things. We did the first 10K at under a 5 hour marathon pace. But after that, despite all our training on the hills in Fresno, and the three half marathons we did with no problem, my legs began cramping and I kept having to stop and stretch (the hills of Fresno are no match for the hills of Boston). After stretching, I would start up again and the crowd would cheer us like they would a boxer getting off the canvas on an “8 count.” I also remember thinking with about 10 miles to go that it seemed like there was a rolling clap of thunder starting about 10 feet in front of us which kept leading us as we made our way through the course.

During the last several miles I saw several runners collapsed on the street receiving oxygen and other aid as the temperature warmed up. That was one thing that made me grateful for training in Fresno. As we approached the finish line, the announcer acknowledged “Jim and Colby Wagoner” having come “all the way from California,” the money raised for MDSC and asked the crowd to thank us and our donors. And they did. We finished eighth out of nine duo teams at 6:33:16. (It was Dick and Rick Hoyt’s last race together so they took their time, finishing at 7:37:33.) After the race, we again met with Laura and also met her husband, Aaron, who works at M.I.T. and also knew Sean.

By the return trip most of the snow had melted. The best “return trip moment” was when we were driving on I-80 through Nebraska and the “Change Engine Oil” light in the motor home came on. We pulled off the freeway in Lincoln, Nebraska, eagle-eye Wendy spotted a Jiffy Lube and we met Steve Scheidt, the Manager. We began talking about the Cornhuskers coming to Fresno to play the Bulldogs for the third game of the upcoming season. While we were all in the waiting room, we struck up a conversation with Codie McGrath, a young lady who worked there and who had previously lived in California. She seemed to really like Colby. When we left, she commented that we “made her day.” As we pulled out, I thought about the woman bicyclist in Woodward Park who said the same thing and how I again felt the same way. As I thought about all the people we had encountered during the entire adventure, it also occurred to me that any time anyone slows down long enough to look for the good in someone else, they’re probably going to find it.

We were making good time and were shooting to get back home on Saturday, April 26. However, coming out of Baker, California (about 80 miles west of Las Vegas), the generator in the motor home caught fire. A man driving by saw the flames coming out of the side of the motor home and motioned for Wendy to pull over. After quickly getting everybody out of the motor home, and sitting Colby on a blanket on the side of the freeway so grandma could feed him pizza to keep him content, I tried the fire extinguisher. It gave me about two seconds worth of retardant before it pooped out. Wendy and I then began throwing everything liquid we had at the flames, including milk, orange juice, Gatorade and sodas. (It must have been quite a sight to the other drivers on I-15 heading to L.A. -- a couple trying to put out flames with a half-gallon of milk and some orange juice while Colby and Flora Jean were having a picnic on the side of the road sharing a pizza.) Eventually, another motorist with a fire extinguisher stopped and we got the fire completely out. Everyone was fine, although Nicole did become a bit upset during the first few hectic moments worrying about getting Colby out. We were told by the Fire Department that the motor home was rendered un-drivable. Nicole later commented to Flora Jean, in her typical dramatic fashion (and in all seriousness), that “this is the sort of thing that could scar me for life.”

The company we rented the motor home from claimed they could not get us a substitute until Monday because all of their locations were “closed on weekends.” When I pointed out to the gentlemen on the phone that I had picked up our motor home from their location in Clovis on a Saturday, he had no direct response and ultimately was of no help. We wound up taking a taxi back to Las Vegas, rented 2 mini vans at the airport, and drove all night to Fresno, arriving about 6:30 a.m. Sunday morning.

It was an honor to participate in what was a historic event in both the running community and beyond. It was also an honor to represent all of our donors (over 200 from 15 states) and supporters who helped us through this amazing adventure. The entire experience was a catharsis for our family and we are greatly appreciative of everyone who helped and supported us along the way, particularly Maureen Gallagher, Becca Canavan and Josh Komyerov at MDSC, Susan Hurley of Charity Teams and Kara McDonald of the Boston Athletic Association, and, most importantly, the students, teachers, aides and staff at Ramacher.
Vol. 3, Iss. 10
June 25, 2014

Texas Supreme Court Justice Don Willett At It Again – Most Important Liability Coverage Judge Wins Another Award

A couple of issues back I devoted over 2,000 words making the case that Texas Supreme Court Justice Don Willett is the most important liability insurance coverage judge in America. Well Justice Willet does it again. This time he wins the award for writing an opinion in a case involving the party with the hardest name to pronounce in the history of the American legal system. Look at this doozie of a company’s name appearing in a June 6 Justice Willett opinion.

Claim Is Made And Reported During Same Policy Period -- But Still Fails To Satisfy The Notice Requirements

In Templo Fuente De Vida Corp. v. National Union, No. A-4516-12T1 (N.J. App. Div. June 6, 2014) a New Jersey Appeals Court held that a claim that was made against the insured, and reported to the insurer six months later, but still during the same policy period, did not comply with a “claims made” policy’s notice requirements. The policy contained a requirement that, in addition to a claim being made and reported during the same policy period, notice to the insurer also must be “as soon as practicable.” The six month delay was held not to be “as soon as practicable” and the insurer did not need to prove prejudice -- even with respect to the “as soon as practicable” requirement. For a commentary taking issue with the decision check out Carl Salisbury’s post at the Kilpatrick Townsend “Global Insurance Recovery Blog.”

Why I Don’t Own A Stairmaster

In Landmark American Insurance Co. v. VO Remarketing Corp, No. 13-1386 (D. Colo. June 13, 2014) a Colorado federal court interpreted the terms “finally delivered” as used in the “auto exclusion” in ISO’s standard CGL policy. More specifically, “finally delivered” is part of the policy’s definition of “loading or unloading,” which is considered “use of an auto” for purposes of the exclusion. Before the court was coverage for bodily injuries sustained when a Stairmaster, while being delivered to a second story loft, cascaded down, ironically, a flight of steps. The issue was this. If the Stairmaster had been “finally delivered,” then it was no longer in the process of “loading or unloading,” so the delivery was no longer considered “use of an auto,” thereby taking it outside of the auto exclusion.

The competing coverage arguments were as follows: The insurer argued that “finally delivered” means the specific location within a home where the item is placed in its final position. “[S]ince the Stairmaster had not yet been placed in Tibbe’s second story loft as directed, the unloading of the Stairmaster had not yet ceased at the time of the Accident, and thus delivery was not complete.” The delivery company-insured argued that “finally delivered” “could reasonably be understood to mean arrival at the home or commercial address where the item is to be turned over to the customer.” The delivery company also argued that “delivery had been completed because the employees ‘had crested the stairs’ to the second story loft at the time of the Accident.” Applying the “complete operation doctrine,” the Colorado federal court held that the auto exclusion applied because the accident occurred before the conclusion of the loading and unloading of the insured vehicle. The insured’s employees still had control of the Stairmaster when the accident occurred.

“Loading or unloading”-related “auto exclusion” cases arise with some regularity under CGL policies. Such cases often involve disputes between CGL and auto insurers over which is liable for a claim. Given that VO Remarketing involves the interpretation of specific language contained in the industry’s bread and butter CGL policy, it has the potential to serve as future guidance. That makes it worthy of note.