Siblings Who Hate Each Other and Insurance Coverage

In Peerless Indem. Ins. Co. v. Moshe & Stimson LLP, the court held that no coverage was owed to a law partner, under a liability policy, for a claim that he defamed his law partner – who also happened to be his sister. [Can you imagine Thanksgiving dinner. Pass the stuffing. *&%$#@.] The appeals court concluded that the employment practices exclusion precluded coverage.

The trial court had determined that the exclusion did not apply, because the suit did not involve employer-employee conduct, since one partner is not the employee of the other. The appeals court disagreed: “[W]e need not determine in what capacity Sarah was employed by the firm. Instead, the issue is whether Justin’s alleged actions, particularly his alleged defamation of his sister, were ‘employment-related.’” The court concluded that they were and, therefore, the employment practices exclusion precluded coverage.

Neighbors Who Hate Each Other and Insurance Coverage

In Lawellin v. Kemper Independence Ins. Co., No. 14-315 (C.D. Cal. Nov. 21, 2014) the California federal court held that no coverage was owed to a resident of the City of Indian Wells, under a liability policy, for damages arising out of a Warrant Application Case filed against him by the City. The issue – he refused to trim his ficus trees, despite ordinances banning hedges taller than nine tree, and a neighbor complained because it blocked his view. Ficus Man sought coverage from his insurer; it denied; and he lost the case against the City – leaving him liable for the City’s attorney’s fees in the amount of $97,000. He filed suit against his insurer for lots of things.

The court held that no coverage was owed based on “no occurrence:” “There is no dispute in this case that Lawellin knew about the hedge-height ordinance, or that he knew his ficus hedge exceeded the ordinance’s limit. It may well have been the case that Lawellin did not intend to harm his neighbor, but his subjective intent is irrelevant to whether Kemper had to pay for his legal defense. . . . [T]the record evidence shows that Lawellin knew his omission (not cutting the hedge) would harm his neighbor or violate the ordinance or both. He received multiple warnings and citations, and knew he was in continuous violation of Indian Wells’s ordinance, yet failed to act.”