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It has been a while since I've sent out anything from Coverage Opinions. There just haven't been any worthwhile cases and I respect everyone's time too much to send something just for the sake of it.

But here are a couple of brief notes, on recent cases, that I believe are interesting enough to warrant a read.

My USA Today Op-Ed: Happy 100th Birthday Rodney Dangerfield 

Insured Wins Case Thanks to ALI Insurance Restatement

More Proof Why "The Accident" Issue Is So Difficult

My USA Today Op-Ed: Happy 100th Birthday Rodney Dangerfield 

Rodney Dangerfield would have turned 100th today. To commemorate the birthday of my favorite comedian, I published a tribute to him in USA Today. As part of it, I interviewed his widow, Joan Dangerfield, about her late-husband's life and the impact it still has long after his death. Needless to say, she shared some great stories – and even gave me some "no respect" jokes to use that Rodney never told in public!

I hope you can check out my tribe to Rodney Dangerfield on his centennial birthday:


Insured Wins Case Thanks to ALI Insurance Restatement

As I discussed in my recent webinar on the subject, many courts, since its adoption three years ago, have cited the ALI Restatement of the Law, Liability Insurance, in opinions. But, in very few cases, did it play an instrumental role in the decision. Instead, the RLLI was cited for a general principle of law or, if cited for a substantive purpose, the court's decision would have been the same without or without it.  
But that's not what happened two weeks ago in Thompson v. Dennis Widmer Construction, No. 20-1145 (D. Ore. Nov. 10, 2021). Here, the insured won, and it can thank the RLLI for the victory.

At issue in Thompson was coverage for a settlement of a construction defect suit. The Thompsons sued DWC, their general contractor, for property damage to their home. Contractors Bonding and Insurance Company (CBIC) defended DWC under a reservation of rights. The Thompsons offered to settle their claims; however, CBIC was never willing to pay enough to make that happen. The Thompsons and DWC agreed to a stipulated judgment in the amount of $225,000 and the Thompsons sought to collect, by way of a garnishment action, from CBIC.

In that action, DWC filed crossclaims against CBIC, alleging that CBIC breached its contractual and fiduciary duties to DWC by failing to settle the Thompson litigation and refusing to pay the resulting judgment against DWC.

CBIC filed a motion to compel unredacted copies of documents from DWC and the Thompsons. CBIC also sought unredacted copies of assigned defense counsel's file notes from the Thompson litigation, as well as a slew of other documents from assigned defense counsel, including correspondence between DWC and counsel.   
DWC had withheld correspondence between it and assigned defense counsel based on attorney-client privilege. CBIC argued that the attorney-client privilege did not exist between co-clients [CBIC and DWC] and their shared counsel.

In support of entitlement to the documents, CBIC argued, among other things, that "(1) Oregon's 'tripartite' rule created an attorney-client relationship between defense counsel, DWC, and CBIC such that no privilege can exclude CBIC; [and] (2) that there can be no common interest or attorney-client privilege over communications not kept confidential between DWC and their counsel (or between the Thompsons and their counsel)."

Following a discussion of attorney-client privilege under Oregon law, the court concluded: "When it comes to the interplay between attorney-client privilege, the tripartite relationship, and discovery, neither party cites case law directly on point. But DWC directs the Court to the Restatement of the Law of Liability Insurance § 11(2) (Am. L. Inst. 2019): 'An insurer does not have the right to receive any information of the insured that is protected by attorney-client privilege, work-product immunity, or a defense lawyer's duty of confidentiality under rules of professional conduct, if that information could be used to benefit the insurer at the expense of the insured." 

The opinion could use more explanation of the documents, and what was in them, that CBIC wanted to use in the coverage litigation. Of course, that's the problem – it is a discovery dispute/motion to compel.

While the court's cite to the RLLI was not the only thing it relied on, to conclude that CBIC was not entitled to the correspondence between DWC and defense counsel, it certainly played an important part in the court's decision that the insurer could not obtain documents, between the insured and defense counsel, to be used to deny coverage.   

The court's use of the RLLI is consistent with what my take has long been – the RLLI is not going to usurp existing law, but is a possible place for courts to look when other guidance is lacking. Here, the court noted that neither party cited case law directly on point, and then turned to the RLLI for support.

More Proof Why "The Accident" Issue Is So Difficult

For years I have been discussing the challenges faced by courts that must determine whether bodily injury or property damage was caused by an "occurrence"/accident. It is the oldest and least settled of all liability coverage issues. Decisions going back to the 1800s, which read like they were written yesterday, are not hard to find.

It is safe to say that Main Street America Assurance Co. v. Marble Solutions, LLC, No. 20-2411 (W.D. Tenn. Aug. 30, 2021) is not going to make the issue any clearer. Just the opposite in fact.

At issue was coverage for a contractor, hired to remodel a hotel, whose employee committed a sexual assault of a minor. Claims were brought against the contractor for negligent hiring and negligent supervision. 

Turning to whether, for purposes of the contractor, the bodily injury at issue was caused by an occurrence, the court held that it was. And the court's rationale: "[D]etermining what qualifies as an occurrence requires a more holistic approach than the one suggested by [the insurer]."

How's that for guidance: the need to use a "holistic approach" to determine if bodily injury or property damage was caused by an "occurrence"/accident.
According to Dictionary.com, holistic means "incorporating the concept of holism, or the idea that the whole is more than merely the sum of its parts, in theory or practice."

In reaching its decision, the court looked to a hodgepodge of factors, and case rationales, and concluded that, when considering all of the pieces combined, the bodily injury was caused by an occurrence. There is little doubt that, based on this so-called holistic approach, an "occurrence" is this: a court knows an accident when it sees one.

Ironically, if you read hundreds of "occurrence"/accident cases, you are likely to come away with that same conclusion. But in Main Street America Assurance Co. v. Marble Solutions, the court said as much.


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