CLM National: November 2022

News and verdicts that affect you from across the country

November 16, 2022 Photo

North Carolina considers whether the cost of labor is depreciable when calculating actual cash value, an Illinois court considers whether a pedestrian struck by a vehicle is entitled to UM coverage, and figures out of Florida show just how massive the storm surge was from Hurricane Ian.


Insurer Cannot Deny UM Coverage to Bicyclist

Illinois’ First District Appellate Court found that an insurer cannot deny UM coverage to bicyclists or pedestrians struck by motor vehicles. The case involved a 14-year-old bicyclist, Cristopher Guiracocha, who was struck by a vehicle that left the scene. The victim’s father filed a UM claim, which Direct Auto denied as Cristopher was not an occupant of an insured vehicle at the time of the incident. The district court granted summary judgment in favor of Direct Auto, but the appellate court reversed. “The parties agree that the Direct Auto policy, as written, does not provide UM coverage for Cristopher’s injuries,” the court said. But it added, “The terms of an insurance policy that conflict with a statute are void and unenforceable.” Section 143a of the Insurance Code states, “If a person constitutes an insured for purposes of liability coverage under a policy, the insurance company may not…deny uninsured-motorist coverage to that person.” The court determined Direct Auto’s policy conflicted with Section 143a.—From Senior Managing Editor Phil Gusman


Bankruptcy Stay Applies to Direct Actions

Plaintiffs brought a wrongful death and survival action in the U.S. District Court, Middle District of Louisiana for damages related to the death of their decedent in 2019. Decedent’s career as a welder was alleged to have resulted in his exposure to asbestos. Plaintiffs sought damages from numerous defendants, including a direct action under the Louisiana Direct Action Statute against two insurers that insured a now-bankrupt non-party, Reilly-Benton Company, Inc. (Reilly-Benton). Reilly-Benton’s bankruptcy was ongoing and involved potentially thousands of asbestos exposure claims. The insurers moved to dismiss or stay the claims against them, arguing the automatic bankruptcy stay provision in 11 U.S.C. § 362(a) applied because the policy proceeds are property of the estate where the value of the potential exposure claims exceeds the policy limits. The court held the Bankruptcy Court was the best forum to decide whether plaintiffs’ claims should be pursued through the Reilly-Benton bankruptcy proceedings or otherwise, and stayed the direct action claims.—From CLM Member Nathan R. Young, Goldberg Segalla


New Statistics Show Height, Reach of Ian Storm Surge

Hurricane Ian’s storm surge rose one to two stories high across 60 miles of Florida’s southwestern coastline and in some parts inland, according to early surveys of the damage and data from flood sensors. The survey’s findings appear to substantiate warnings from the National Weather Service that a life-threatening and destructive storm surge would extend far from Ian’s unpredictable landfall point, the Washington Post reported. United States Geological Survey data analyzed shows the surge rose to 13.23 feet in Fort Myers Beach, translating to over nine feet of ocean water above dry ground in buildings that sit above sea level. The data also showed an estimated nine-foot surge, meaning a foot or two of water, spread miles inland to Punta Rassa and Bonita Springs. Even the Florida Keys, which received only a glancing blow from the storm, recorded water levels several feet above normal. In the Tampa Bay region, on the other hand, Ian’s circulation and more southerly track meant winds pushed water away from shore.—From Mark Friedlander, Insurance Information Institute

North Carolina

Labor Depreciable When Calculating ACV

Property insurers often pay losses under a first-party property insurance policy at actual cash value (replacement cost less depreciation). It is undisputed that the costs of materials are depreciable, but whether the cost of labor is depreciable has been disputed in cases across the country. In Accardi v. Hartford Underwriters Ins. Co., the North Carolina Supreme Court determined that, because a damaged property must be considered as a whole, it would be illogical to differentiate between labor and material costs when calculating depreciation. “The policy language provides no justification for differentiating between labor and materials when calculating depreciation, and to do so makes little sense,” the court stated. “The value of a house is determined by considering it as a fully assembled whole, not as the simple sum of its material components.” The court said to conclude otherwise would impose additional liability upon the insurance company that it did not assume.—From CLM Members Suzanne M. Patinella and William W. Silverman, Wood Smith Henning & Berman

New Jersey

Condo Association Not Liable for Accident

A Guttenberg condominium association was alleged to be liable after a garbage collector was seriously injured while picking up trash on the road outside the condo complex. Plaintiff was injured after being pinned between a dumpster he was emptying and the co-defendant’s personal vehicle. The estimated damages ranged between $13 million and $17 million, with Galaxy Towers Condominium Association being held responsible for at least half of that amount. Defense argued that the New Jersey law on “off premise” liability demonstrated that the court should find no legal duty was owed by Galaxy to the plaintiff. Defense was also able to prove that Galaxy did not create any dangerous conditions on its property that caused the accident. Defense focused on the real cause of the accident: the actions of the co-defendant driver, versus the hundreds of homeowners who make up the condo association. Ultimately, the court accepted the defense’s public policy arguments and granted summary judgment in Galaxy’s favor.—From CLM Member Danielle DeGeorgio, Tyson & Mendes


No Immunity Protection for Use of “Soft Car”

In Daley v. Kashmanian, plaintiff sought damages from the City of Hartford and one of its police officers for injuries sustained when plaintiff’s motorcycle was hit from behind by an unmarked police vehicle known as a “soft car.” The vehicle was used when the officer was instructed to surveil motorcycles and “quads” in the area suspected of speeding and causing havoc. The trial court found in favor of the plaintiff, but the governmental immunity claim was to be later decided by the judge. The court ultimately set aside the verdict, finding that the officer’s actions fell under the “discretion acts” protected by the governmental immunity statute. The appellate court affirmed, but the Connecticut Supreme Court found that, although the decision to use a “soft car” to surveil the plaintiff was discretionary, once that decision was made, the officer had a ministerial duty and was legally bound to comply with the rules of the road, unless he was operating his vehicle as an emergency vehicle within the meaning of the Connecticut Statute, which the officer, at trial, conceded he was not.—From CLM Member Samuel Rodrigues, Callahan & Fusco

About The Authors
Phil Gusman

Phil Gusman is CLM's director of content.

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