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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.

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