Monthly Archives: May 2006

Recommended Reading On Late Notice

Marc Mayerson has written an excellent analysis of late notice law in various jurisdictions, and makes a persuasive argument for the requirement that an insurer show prejudice to its interests due to an insured’s late notice to defeat indemnity obligations. 

I agree with pretty much all of what Marc says, but my favorite part of his post is where he explains how the policyholder’s arguments in Country Mut. Ins. Co. v. Livorsi Marine, (Ill. May 18, 2006), which I posted about here, would have been more convincing if they had analyzed the larger context of insurance coverage law and shown how the prejudice rule is in keeping with the parties’ expectations.  One of my least favorite sights is a brief containing a coverage argument that is nothing more than an incantation of magic words, without any explanation of how the argument makes sense in the totality of the policy and in the realm of insurance law in general. Writers like this give the impression they are constantly grabbing your elbow to hurry you along before you realize how thin and threadbare the brief is.  What they don’t realize, of course, is that the natural reaction to this sort of intellectual shoving is to resist the argument.  (I am making this observation not about the briefs in Livorsi, but about legal writing in general).

This is one of the many fascinating aspects of insurance coverage law: it is built upon so many layers and so much hidden history that the lawyer who is willing to act as an archeologist and do some digging can uncover intellectual treasure that truly enhances an argument.  It’s funny how lawyers too often are willing to settle for sounding like mere paid shills who want to use the reader as a wastebasket for words, rather than thinking, reasonable human beings who have knowledge to share.  It is also strange how often lawyers forget that a brief is just a chance to communicate one-to-one with another human being, who happens to be a judge.  If we remembered these things, we’d take more care with our legal writing, and our writing would be a lot better and more effective.

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Filed under Duty to Indemnify, Liability Policies

State Farm Hit With $13 Million Verdict For ‘Reckless’ Claims Handling

Because of its similarities to allegations made against insurers in recent Hurricane Katrina lawsuits, this Oklahoma verdict will make insurance carriers sit up and take notice. 


Filed under First Party Insurance

Memorial Day 2006

Sixty -one years ago this month, the men of the Sixth Infantry Division, U.S. Army, were in their fifth month of fighting the Japanese Imperial Army on the island of Luzon, the Philippines.  They had just cracked the Shimbu line after a two-month battle in which the division’s three regiments were thrown into a battle against 14,000 Japanese soldiers waiting in bunkers, pillboxes, trenches and caves.  During the Shimbu line battles, every attack was met with a counterattack from the Japanese, who favored night actions and the banzai charge.  Many of the Sixth’s soldiers were ill with diseases like malaria from fighting in the jungles of New Guinea the prior year against elite Imperial Marines.

At that time, in late May 1945, plans were being drawn up for Operation Coronet, the invasion of Honshu, Japan, which was to begin on March 1, 1946.  Operation Coronet was to follow Operation Olympic, the invasion of Kyushu, which was scheduled for November 9, 1945.  How many American dead and wounded were expected from these two invasions is disputed, but this much is known for sure — the Army manufactured 500,000 Purple Hearts in anticipation of the battle for Japan, a stockpile it has yet to exhaust in all the years since.  The Order of Battle for Operation Coronet included the landing of eight armored and infantry divisions west of Tokyo Bay.  These divisions were then to fight their way north and take the city in conjunction with other U.S. forces.  Among those divisions was the Sixth. Among the three regiments of the sixth was the 63rd Infantry Regiment, and among the 63rd’s 12 companies was Company C.  Among the soldiers of Company C that would have fought their way toward Tokyo, presuming they had not already been killed in their landing transports before they hit the beaches by one of the 10,000 kamikaze planes assembled to oppose the landings, was a young staff sergeant named Fred Rossmiller, my dad.  In addition to the perhaps 400,000 American dead expected in the battle, it was thought 5 million to 10 million Japanese soldiers and civilians would die.

As we now know, Operation Coronet never happened, because the war ended in September 1945.  If it hadn’t, my dad might never have made it back to Wildrose, North Dakota, where years later, he delivered me, the fifth of five children, one October morning on our farm.  My dad never said much to me about the war.  I asked him once if he had killed in battle.  He said he didn’t know: he fired at the enemy and they fired at him.  If he had killed someone, he had not personally seen it.  He then told me a different story, about how when he was fighting in Luzon, he and his unit came upon some members of the Filipino Army, who had captured a Japanese soldier, tied him to a tree and were beating him.  My dad stopped them, but his unit was involved in a battle, and had to move on.  They couldn’t take the prisoner with them.  After his unit moved out, my dad said, he didn’t know what happened.

The mutual enmity between the Japanese and American armies in World War II was extremely high.  Yet my dad had tried to protect this enemy soldier, and apparently thought this a more appropriate lesson for his child than his other combat experiences, because he never talked to me about them in the same kind of detail. Mostly, what I know of the Sixth and its battles I have read in the official division history and elsewhere.

In the abstract, it may sound like a cliche to talk about honoring those who have served and sacrificed for our nation.  But that abstract concept of service and sacrifice is made up of millions of individual real acts by real people who did things like carry a 70-pound machine gun on their backs through dense, mountainous jungle, and sleep with their boots on both to keep snakes and bugs out and to be ready for an enemy suicide attack.  People like my dad, who fought in 306 days of combat, the last 219 of them consecutive, and then went home and farmed, didn’t complain, and didn’t talk much about what he had done.  There is a word for people like that, people like my dad: heroes.  And they  have Memorial Day lest we forget.

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Judge Senter Hands Down Decision In Katrina Lawsuit Against State Farm

For those who just can’t get enough Katrina insurance coverage news, here’s a link to a story about Judge L.T. Senter’s latest decision involving a homeowner lawsuit against State Farm.  He upheld the flood exclusion as unamibguous, but found the clause that excludes concurrent covered and uncovered causes to be ambiguous.  The basis of the decision, however, appears to be the same as his earlier decision in Buente v. Allstate.  I’ll let you know if there are any surprises when I have time to read his opinion.  Here’s a link to my earlier post on Judge Senter’s decision in Buente v. Allstate.  Here is another link to an account of Judge Senter’s decision.

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Filed under First Party Insurance

Insurance, Fraud & Polygamy

It’s not often you find a story that has all three elements, but here it is.  I’ll let you know when they make the movie of the week.

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Some Mighty Expensive Life Insurance

According to a West Virginia lawsuit, a couple paid $1 million in premiums over 20 years for a $3.2 million policy.  Here’s the story, which doesn’t discuss the specifics of the policy.  Probably there were some "whole life" or investment aspects to the policy, but the plaintiffs’ lawyer has at least one good point on his side in his misrepresentation case: anyone who can afford to pay an average of $50,000 a year in life insurance premiums probably either doesn’t need life insurance or could pick a much better investment.   

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Filed under Industry Developments

Damages of $1.6 Million Sought For Dog Death

As fun as it is to talk about insurance and insurance coverage, I also strive from time to time to serve up a slice of Oregon life here at Insurance Coverage Law Blog.  This lawsuit has been the talk of the town this week (if you define "talk of the town" as meaning "four people have mentioned it to me").

UPDATE: The jury awarded damages of $56,000, $50,000 of it in punitives.  The judge bounced the claim for loss of companionship as not being viable under Oregon law.  Here’s the story.

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Florida Court of Appeals: Insurer Not Allowed Current Offsets For Undefined Future Workers Comp Benefits

The Florida Court of Appeals held that an insurer may not take an offset for undefined future workers comp payments when paying out for uninsured motorist coverage.  The opinion was written narrowly to specifically address only those cases where workers comp benefits have not been resolved in a manner that gives the claimant a present claim to liquidated future damages.  The case is USAA Casualty Ins. Co. v. McDermott, 2006 WL 1359640 (Fla.App. 2 Dist. May 19, 2006).  The normal rule with UM coverage is that it shall not duplicate workers comp, personal injury protection or similar benefits, but shall be over and above those benefits.

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Filed under UIM/UM Coverage

Homeowners Insurance Premiums Way Up In Some Coastal Areas

I have never been a big fan of USA Today, but this is a decent effort at a story about increased homeowner premiums in coastal areas.  It has some really good anecdotes, but makes a number of points that the author doesn’t explore or even seem to realize are there.  One is the casual mention of an idea that I suspect would strike most people as unjust, foolish and expensive: creating a federal program to collect a tax on homeowners insurance across the country so that people who live on the coast can afford to pay their premiums.  We already have two common funds to deal with this problem: they are called federal flood insurance and federal disaster payments.  Law and Economics folks refer to this as an "externality," where one seeks to push the cost of an activity onto others.

The writer also steps right around the point that home values on the coast are "skyrocketing."  That being the case, you have to suspect the anecdotes were carefully vetted to weed out folks who have $1.3 million houses to make the story more sympathetic, and while the story discusses the huge rise in homeowners insurance premiums, there is no exploration of the overall increase in wealth of homeowners through increased home values.  I’ve run into this attitude in citizen advisory boards I’ve served on here in Portland, where people seek special funds to assist people (including a lot who have 100 percent equity in their homes) who have to pay more in property taxes as home values go way, way up. It’s hard to make them see that someone who owes an extra few hundred dollars in taxes while the value of their home is gaining $50,000 per year is not a charity case. 

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Illinois Supreme Court: Insurers Need Not Prove Prejudice To Prevail On Late Notice

Country Mutual Ins. Co. v. Livorsi  Marine, Inc. , 2006 WL 1348722 (Ill. May 18, 2006) makes no sense to me.  The Illinois Supreme Court affirmed a lower court’s holding that an insurer is not required to prove prejudice as a condition of refusing coverage under an occurrence policy’s late notice provision.  As a justification, the Supreme Court cited Illinois precedent, but totally whiffed on trying to come up with a better reason for such a rule.

Probably the least persuasive part of the opinion was the attempt to show the difference between Illinois’ requirement of prejudice for an insured’s breach of a policy’s cooperation clause, and the lack of a prejudice rule for late notice.  In my opinion, there really isn’t a reason for a prejudice rule in one instance but not the other.  It’s mystifying.  Maybe some of you folks in Illinois and elsewhere can make better sense of this than I can.


Filed under Duty to Defend, Duty to Indemnify, Liability Policies