Court decisions

Rough Notes, Apr 2003

INSURANCE-RELATED COURT CASES

Digested from case reports published in the North Eastern Reporter 2d, West Publishing Co., St. Paul, MN

UM Coverage in mother's death does not transfer to child

State Farm Mutual Automobile Insurance Company had issued an auto liability policy to James J. George. He and Erin Hitch had a minor child, Taylor, but they were not married and did not live together. The child lived with her father On July 2, 1998, Erin Hitch was a passenger in a car involved in a collision, and she was killed. The driver of that car had no liability insurance.

James filed a claim under the UM coverage of his policy on behalf of his daughter, Taylor, for the loss of her mother State Farm Mutual denied the claim and filed an action for declaratory judgment that it was not liable. The trial court granted summary judgment in favor of the company, and the insured appealed.

The higher court noted that the child's mother was not an insured under James' policy, and she would have had no right to recover damages. The child's claim derived from her mother, and her damages were not covered by the UM provision of the policy. The policy provided for damages for "bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be sustained by an insured and caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle."

The court added that "Taylor's damages are not bodily injury to her and are not covered under the express language of the policy."

The judgment entered in favor of State Farm in the lower court was affirmed.

State Farm Mutual Automobile Insurance Company v. James J. George et al., Appellant-No. 3-010111-Appellate Court of Illinois, Third District-January 18, 2002-762 North Eastern Reporter 2d 1163.

Condo association & condo owner dispute liability for fire

Michelle Stefano purchased a condominium unit in April 1996. The following February a pipe burst in the wall between the garage and her bathroom. She filed a claim with the insurance carrier for the condominium (Association) and liability was refused. She then filed a claim with her carrier, State Farm. The lower court dismissed State Farm as a defendant, finding the Association was liable for the damage.

The bylaws of the condominium Association provided that each unit owner was

responsible for property insurance for the unit. The Association had a duty to purchase property insurance for the common areas, and for certain areas of each unit. The insurance carrier for the Association was Farmers Insurance Company and Truck Insurance Exchange (collectively "Truck"). The bylaws of the Association stated that the Association would buy insurance for the benefit of the unit owners, and that Truck could cancel the policy only after prior notice to the Association and each unit owner to whom a certificate of insurance had been issued.

Stefano filed this action on August 27, 1999, to recover damages because of bad faith on the part of Truck.

Truck eventually paid the claim on February 28, 2001.

The trial court entered summary judgment in favor of the insurance carrier for the Association. On appeal, the higher court decided that the court erred in granting the motion for summary judgment. It said there were genuine issues of material fact that should have been decided in the trial court. The summary judgment was reversed and the action remanded for proceedings in accordance with this opinion.

Stefano, Appellant, v. Commodore Cove East, Ltd., et al.-No. 20447-Court of Appeals of Ohio, Ninth District, Summit County-August 1, 2001-762 North Eastern Reporter 2d 1023.

Agent sued after vacant building burns

In April 1995, Willie Broadnax talked with David Morrow, a member of the insurance agency of Morrow & Wells, Ltd. At that time, Broadnax told Morrow that he was purchasing a building in Decatur, Illinois, and that he intended to renovate it and open a package liquor business on the premises. He wanted an insurance policy to cover the premises. Morrow then called Indiana-based Roush Insurance Services, Inc., and Roush arranged for Acceptance Indemnity Insurance Company to issue a policy to Broadnax on April 14, 1995. The policy had a limit of $70,000 liability.

On October 5, 1995, the premises sustained a fire loss in excess of the policy limit. Later that month Morrow helped Broadnax file a proof of loss. On May 10, 1996, the claim was denied by Acceptance. On the same day it filed an action for declaratory judgment that it was not liable under the policy because the building was vacant, in violation of the policy requirements. The trial court granted summary judgment in favor of Acceptance. The insured then filed this action against the insurance agents, alleging negligence on their part because they knew, or should have known, that the building would be vacant and unoccupied for a period in excess of 30 days during the remodeling.

The agents filed a motion to dismiss the action because it was filed after the expiration of the statute of limitations, and the action was dismissed. The insured appealed.