COURT DECISIONS

Rough Notes, Jul 2007

Finally, the court addressed the question of whether the Johnson accident "arose out of Tri-State's work for Union Pacific. The lower court had emphasized that the TriState flaggers were not present at the time of the accident. The appellate court disagreed with this emphasis. It found that the fact the flaggers were not present at the time was irrelevant. The important thing was that the collision occurred at a construction zone for which Tri-State was responsible. According to the court, the Johnson accident " 'grew out of or flowed from' the quality of the traffic control at the crossing." Therefore, Johnson's claims arose out of Tri-State's work and were covered by the policies. Ohio Casualty had an obligation to defend and indemnify Union Pacific.

The district court's judgment in favor of Ohio Casualty was vacated, and the action was remanded to the district court to enter judgment in favor of Union Pacific.

Ohio Casualty Insurance Company vs. Union Pacific Railroad Company-No. 05-3814-United States Court of Appeals, Eighth Circuit-December 4, 2006-469 Federal Reporter 3d 1158.

Parties dispute statute of limitations

On September 28, 1996, Eddie Sellers, a resident of Mississippi, was driving his father's car when he was involved in an automobile accident in Tennessee. Shane Thurman, a passenger in the car, was seriously injured, and Thurman's minor son, Dalton, was killed. Eddie was not working for his father at the time of the accident. Eddie and his father, Donald, were named as defendants in a Tennessee lawsuit resulting from the accident.

Donald Sellers had an American States Insurance Company business liability policy for $1 million and an umbrella insurance policy for up to $1 million covering his Mississippi business, Dannie's Amoco. He had purchased this insurance through Brenda and Eddie Oaks of Oaks Insurance Company, agents for DeSoto Insurance. The umbrella policy provided coverage for business, not personal, liability. The policy was renewed by payment of premiums and was in effect on the date of Eddie Sellers' accident.

Sellers notified his agents of the accident and asked them to file a claim with American States. On August 26, 1997, American States sent Sellers written notice denying his claim. According to American States, the umbrella policy did not provide coverage because Eddie was not acting in the course and scope of Sellers' business at the time of the accident. Donald Sellers was eventually found personally liable for the injuries caused by his son's negligence. He appealed this decision to the Tennessee Supreme Court, but the court refused to hear the case. Sellers then filed suit in a Mississippi court alleging that the Oaks, Oaks Insurance Company and DeSoto Insurance had failed to procure the requested insurance and adequately explain the coverage. This lawsuit was filed in January 13, 2003, more than five years after American States' denial of the claim for the automobile accident.

The Mississippi statute of limitations provides that "[a]ll actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action occurred, and not after." Defendants Oaks and DeSoto filed a motion asking the trial court to dismiss Sellers' lawsuit because the statute of limitations had expired. The trial court denied their motion. They appealed to the Supreme Court of Mississippi, and the court agreed to address the statute of limitations issue.