Articles Posted in Accidents

Published on: | By

Whether someone is working at the time of an accident can be difficult to tell, and it affects which insurance coverage applies. Harry T. Kemp was an independent contractor driving a Peterbilt tractor pulling a 50-foot flatbed trailer when the truck collided with an automobile driven by Lewis Jurey in East Baton Rouge Parish. Kemp had picked up his trailer from Baker Metal Works, which had completed repairs on the trailer. The Louisiana Court of Appeal decided 2-1 in Jurey v. Kemp (La. Ct. App. 1 Cir. 9/20/11) that Kemp was not working when the accident occurred. That affected which insurance policy covered the injuries received by Jurey and his two passengers.

Independent contractors with trucking companies may be covered by the company’s insurance when the driver is performing transportation services. When the independent contractor is not, non-trucking liability, or “bobtail,” insurance is needed to fill a gap in coverage. Liberty Mutual Fire Insurance Co. insured Dallas & Mavis Specialized Carrier Co., LLC (D&M), which had hired Kemp as an independent contractor. The Nineteenth Judicial District Court agreed with Liberty Mutual that the policy did not cover Kemp because he was “on his own time.” Instead, Kemp’s bobtail coverage from Great American Insurance Co. should cover the accident.

D&M’s policy would insure the accident only if the semi-tractor, leased to D&M, was being used for business purposes when the accident occurred. The reason for Kemp’s trip was decisive to determine coverage. Kemp’s lease with D&M required Kemp to “maintain the Equipment in proper operating condition and in full compliance with applicable government regulations.” On January 17, 2008, Kemp was picking up the trailer to make room at the Baker Metal Works. Kemp had requested the metal works replace some of the trailer’s decking boards and weld a door to make it easier to reach the wiring for lights and air lines for brakes. D&M did not request this work and did not know about it. Kemp did not ask for reimbursement, and D&M did not pay him for the trip. Nor was Kemp performing any transportation services for D&M or on standby.

Previous cases have established the outlines for when an independent truck driver is working. Driving home after a delivery is personal because it is after work has ended. When the company asks its independent contractor to remain in an area to pick up a load, the driver is working. Similarly, driving to a distant motel at night for rest to be ready to haul a load is work related.

Whether Kemp was on business depended on whether the lease with D&M required these repairs. Neither D&M nor Department of Transportation regulations required the repairs on the decking boards or creation of a door accessing the trailer’s wiring and air hoses. It would be different if regulations explicitly required these repairs. Instead, the repairs were for Kemp’s convenience. Because D&M did not require the repairs, it was not work related and D&M’s insurance policy did not cover him. Kemp’s bobtail policy was the appropriate insurer for the accident.

Judge Jewel E. “Duke” Welch disagreed. By his reasoning, the lease gave D&M “exclusive possession, control, and use of the leased motor vehicle for the duration of the lease agreement.” He interpreted “use ‘for’ D&M whenever that use furthered D&M’s business interests and was not a purely personal use of the covered vehicle by Kemp.” This may be a broader standard than previous cases allowed. The repairs may have made work easier for Kemp, but they also may have served D&M’s business interests. Kemp was maintaining the leased equipment for trucking-related purposes. Under the lease, he was obligated to maintain the trailer and make sure it passed periodic safety inspections. Kemp did not get reimbursed by D&M for any maintenance work because maintenance was his responsibility. Judge Welch would have reversed the district court.

Independent contractors are common in today’s flexible business world. In these business relationships, the line between work and free time is hazier than with traditional employment. More factors need to be taken into account. A lawyer skilled in determining potential liability will be able to distinguish the boundary between the individual’s and the company’s liability and which insurance policy should pay.

Continue reading

Published on: | By

Longterm treatment and care can oftentimes be difficult and emotionally taxing for all involved. What’s more, when an already arduous process is muddled by improper actions by the medical staff, legal resolutions do exist but are unlikely to remedy the problems caused.

After what seemed like a never-ending nap, an individual who will not be named was transferred to Our Lady of Lourdes Regional Medical Center in Lafayette, Louisiana, where she spent the last nineteen days of her life. Her family, including her husband and three children, brought a medical malpractice case against her treating and diagnosing physicians as well as their insurance carrier. After a grant of summary judgment and a denied motion to continue, the decedent’s family followed with an appeal against the treating neurologist, Dr. Steven Snatic, and his medical malpractice insurance provider, Louisiana Medical Mutual Insurance Company (hereinafter “LAMMICO”), claiming the denial of appropriate care, misdiagnosis and resultant death. Upon further analysis of the underlying issues, the court reversed the grant of summary judgment and the matter was remanded to the trial court.

An expert witness testified to the medical review panel that the decedent was properly diagnosed and treated, despite the fact that she was treated for a condition she did not have. The basis for this argument was that the treatment for the misdiagnosis of cryptococcal meningitis was supportive for her true condition, cerebritis. Simply stated, this is a bit like saying if you have a headache and take an aspirin, which happens to also cure the pain in your back, then you’re covered. While this seems to be a difficult legal argument, the expert explained that because the decedent had lupus, it was difficult to make an accurate diagnosis.

The appellate court reviews appeals of summary judgments de novo, basically starting from scratch, with an eye toward determining three issues: (1) whether the decision of the lower court was appropriate; (2) whether there was a genuine issue of material fact; and (3) whether the appellant was entitled to judgment as a matter of law. Verbatim, the Louisiana Code of Civil Procedure Article 966(C)(2) states: “the movant’s burden on the motion [for summary judgment] does not require him to negate all essential elements of the adverse party’s claim, action or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense.” Additionally, in a medical malpractice case, a plaintiff is required under Louisiana Revised Statutes 9:2794(A) to prove the three following elements: “(1) the standard of care applicable to the defendant; (2) that the defendant breached the standard of care; and (3) that there was a causal connection between the breach and the resulting injury.”

The real questions that remained included if there a genuine issue as to material fact and is the family entitled to judgment as a matter of law? It is safe to speculate that a person without an advanced degree in medicine can see a problem with a patient being misdiagnosed and treated for an ailment she did not have. Under these details, it is probably safe to go one step further and conclude that summary judgment was not rightfully granted. Doubt and questions as to material fact are dripping all over this case.

So, why was the summary judgment motion granted? In this case the decedent’s family had the burden to prove that there was a breach in the standard of care administered by the physician. In order to accomplish this task, it was necessary to present an affidavit from an expert. It turns out the decedent’s family was not able to obtain an expert neurologist in time to draft an opinion. After two failed attempts with motions to continue, the decedents engaged a cardiologist, who was also a board certified internist, for a supporting affidavit. However, the court looked right through the substance of the documents, or lack thereof, and granted the summary judgment motion, which brings us to the present.

Basically, by the structure of law, the defendants had to show that factual evidence exists to adequately establish there is no genuine issue of material fact in order to be successful with the motion. Here, it is not readily apparent that the healthcare and insurance providers were able to complete such a weighty task. The defendants argued that the expert’s opinion failed to identity his training or experience, as required under the statute, since he did not specialize in the desired field of neurology. However, Hebert v. Podiatry Ins. Co. of America determined that the particular field of specialty is not the crucial point, but instead the knowledge of the subject matter, such that the individual possesses the capacity to testify as to the matter at hand in satisfying the plaintiff’s burdens. Due to the fact that the cardiologist was not a neurologist, the lower court determined that he was not credible. However, it was strictly stated in the doctor’s opinion that “the standards of care ‘are common to both the specialties and are equivalent and known’ to him.” The doctor also discussed how it was obvious that the misdiagnosis combined with the complications of lupus dramatically reduced the decedent’s chance of survival.

Accordingly, it was determined that the lower court got it wrong. The cardiologist was in fact capable of testifying as to the standard of care that should have been given to the decedent. This leads to the conclusion that an expert witness need not have the exact same training or specialty in order to testify as to the burdens a plaintiff must meet in a medical malpractice case, so long as they are equipped with the knowledge and experience to competently answer the questions. The grant of summary judgment in favor of Dr. Snatic and LAMMICO was reversed.

Continue reading

Published on: | By

The Berniard Law Firm would like to wish everyone a Happy Holiday.

Regular posting will resume in 2012! Have a happy, and SAFE, holiday season!

Published on: | By

Uninsured/Underinsured Motorist (UM) coverage is designed to protect a policyholder against injury or loss inflicted by another driver who has inadequate insurance or no insurance coverage at all. Louisiana statute provides that “an insurer owes to his insured a duty of good faith and fair dealing,” which includes fairly and promptly settling claims with the insured. La. R.S. 22:1220. An insurer who breaches this duty is liable for damages that result from the breach. In order to establish a cause of action for penalties and or attorney fees, a plaintiff must show that (1) the insurer received sufficient proof the of loss; (2) the insurer failed to tender payment within 30 days; and (3) the insurer’s failure to pay is “arbitrary, capricious, or without probable cause.” La. R.S. 22:658. Louisiana courts have held that “arbitrary, capricious, or without probable cause” is “synonymous with ‘vexatious,’” and that a “vexatious refusal to pay” means it is “unjustified, without reasonable or probable cause or excuse.” The courts impose penalties on an insurer when the facts of the situation “negate probable cause for nonpayment,” but tend to avoid them when an insurer can point to “a reasonable basis to defend the claim and acts in good-faith reliance on that defense.” Pointedly, it is well settled that “bad faith should not be inferred from an insurer’s failure to pay within the statutory time limits when … reasonable doubt exists.” Instead, penalties are appropriate when the insurer refuses to tender a reasonable payment in an amount over which “reasonable minds could not differ.”

Louisiana’s Third Circuit Court of Appeal recently applied this jurisprudence in the case of Mitte v. Progressive Security Insurance Co.. On April 20, 2004, Dyna Mitte was severely injured when her vehicle was hit by an underinsured driver in Lafayette Parish. Mitte had UM coverage through Progressive and filed a claim after receiving only $32,000 from the other driver’s insurance company. Progressive made pre-trial tenders to Mitte that amounted to $393,624. Mitte then filed suit seeking penalties and attorney fees on the basis of those tenders that she alleged were “inadequate and untimely.” A jury found that the tenders made by Progressive were not adequate and awarded Mitte $1.6 million. However, the jury declined to award her penalties and attorney fees. Mitte appealed, arguing that the jury erred in failing to find that Progressive was arbitrary or capricious.

Mitte’s assignment of error was based in part on her argument that because the jury awarded a large sum compared to the tenders made by Progressive, Progressive was necessarily arbitrary or capricious. The court rejected this argument, stating that Progressive was not required to “meet some percentage of the total claim awarded [Mitte] to avoid penalties and attorney fees.” Rather, Progressive “needed to tender only a figure over which reasonable minds could not differ.” Further, the record included several factual disputes described by Progressive’s adjuster at trial. For instance, there was uncertainty over whether Mitte made a claim for lost earning capacity and also as to whether a gastric bypass surgery was related to the auto accident. Thus, although the jury ultimately concluded that Progressive undervalued Mitte’s general damages “by a fairly large extent,” there was a reasonable factual basis for the jury’s finding that Progressive was neither arbitrary nor capricious. Because the court could not find that the jury’s determination was manifestly erroneous, it affirmed the trial court’s judgment.

Continue reading

Published on: | By

Governments traditionally were immune from lawsuit. That has changed. In certain circumstances, governments may be held liable for the damage they cause. A coulee flooded homes in Lake Charles after Hurricane Rita, although the area is protected by a drainage district that operates pumps and pipes to ensure drainage. The Louisiana Court of Appeal affirmed a jury award against the drainage district in Bordelon v. Gravity Drainage District No. 4 of Ward 3 of Calcasieu Parish, No. 10-1318 (La. Ct. App. 3 Cir. 10/5/11).

Drainage district employees typically stayed in pump houses during hurricanes, but in July 2005, Louisiana state officials determined that no evacuation site in Calcasieu Parish could withstand a category 4 or 5 hurricane. The drainage district has automated pumps run by electricity, but if the power went out, the diesel-fueled backup pumps required human operation. Hurricane Rita was expected to hit land as a category 4 or 5 hurricane. The district decided to allow its employees to evacuate with their families to Opelousas, Ville Platte, and Lafayette. The whole area south of Interstate 10 in Lake Charles was a part of the evacuation.

Rita unexpectedly weakened to category 3 when it made landfall on Friday, September 24, 2005. Electrical power was wiped out across a wide area. The drainage district’s electric pumps at Pithon Coulee stopped at 9 p.m. No one was in the pump house to start the diesel pumps. When residents returned the next morning, their homes were fine, but the coulee waters were rising. Drainage district employees had yet to be recalled. The houses began flooding from the rising coulee waters after 3 p.m. Saturday. Early on Sunday, the district workers returned. They turned on the pumps at 8:30 a.m. By noon, the coulee was below flood stage.

Twenty-four homeowners sought damages from the district because it failed to plan a way to automate the diesel pumps and because its decisions during Hurricane Rita resulted in flooding. The district argued it was protected by governmental immunity under Louisiana Revised Statutes. A jury awarded the homeowners $1,570,219.60, although it recognized that the liability of the district’s insurer, American Alternative Insurance Corporation, was limited to $1 million. The drainage district and its insurer appealed.

Courts strictly interpret immunity statutes to limit their reach. Two statutes may protect the district. The Louisiana Homeland Security and Emergency Assistance and Disaster Act provides immunity when a government is “engaged in any homeland security and emergency preparedness activities” as a part of complying with the Act. An unpublished court of appeal decision persuasively limits immunity to actions taken during an emergency, but not before. Based on that decision, the jury decided against the drainage district because it failed to have a plan in place before the hurricane’s forecasted arrival. The court of appeal agreed. “A failure to plan for an emergency is not an emergency preparedness activity under the statutes conferring immunity for such activities.” The district was not immune for not having a plan to keep pumps running when the pump houses were not staffed and power was out.

Louisiana state and local governments also are not liable “based upon the exercise or performance or the failure to exercise or perform their policymaking or discretionary acts when such acts are within the course and scope of their lawful powers and duties.” Immunity exists for policymaking or acts for which a choice is acceptable within the government’s delegated powers. If the act is “not reasonably related to the legitimate governmental objective for which the policymaking or discretionary power exists,” or was done criminally or in some way intentionally, immunity does not apply.

The Louisiana statute is patterned after the Federal Tort Claims Act. A two-part test determines if immunity applies. Did the government employee have discretion, a choice, or did law require the employee to follow a certain course of conduct? If a specific action is mandatory, no immunity applies. If the employee has a choice, was that discretion “grounded in social, economic or political policy”? If not, the government may be liable. Louisiana has adopted the federal test for the state governmental immunity statute.

The court of appeal recognized that planning is an act of discretion, and ensuring employee safety above concerns to protect property “is clearly within the discretion of the district.” But, automating the diesel pumps had never been considered, although it would cost only $40,000 and the money was available. By statute, “the drainage district shall make adequate provision for the drainage of all lands and property affected thereby.” The district was required to provide adequate drainage of all property. The failure to consider a feasible alternative to ensure compliance with a statutory mandate prevented immunity for the effects of not automating the pumps. The court of appeal affirmed the district court jury verdict.

If you believe you have been harmed by a government, it is hard to know what to do. Government duties come from statutes and regulations, and governments may be protected from lawsuits. But not always. A lawyer will be able to review your claim and determine the government’s authority and potential liability.

Continue reading

Published on: | By

When one is successful on a claim against an insurance company the payment of the claim is expected to be prompt. Any delay in payment could result in the court imposing a penalty against the insurance company. In most, if not all, cases this penalty takes the form of court costs and attorney’s fees. But if an insurance company challenges a policy claim in court, and then loses, does that time when payment was refused constitute delay? The answer to this question is ‘it depends.’

In Louisiana Bag Co. v. Audubon Indemnity Co., the court held that if an insurer errs in interpreting its own insurance contract, then the insurance company will be held liable for the delay in payment resulting from the trial. This delay justifies the incurrence of penalties for attorney’s fees. If, however, the policy dispute revolves around facts rather than contract interpretation, then the “timely payment” provision is stayed during the trial. This was the situation of Maxley v. Universal Casualty Co. where Maxley’s car insurance policy through Casualty covered loss from both theft and fire. When Maxley’s car was stolen and set on fire, he filed for his claim. However, Maxley had left his car unlocked with the key in it. The policy through Casualty had an exception that nullified any claim if there was no evidence of forcible entry. The issue went to court with Casualty claiming it owed nothing under the policy because the theft was not through a forcible entry, and Maxley contesting payment was due under the fire provision of the policy rather than the theft. Maxley, in essence, argued that the exclusion provision for no evidence of forced entry was irrelevant because his car would have been recovered if it had not been for the fire.

The court found for Maxley, who then sought attorney’s fees for Casualty’s failure to make timely payment. The Third Court of Appeal upheld the denial of Maxley’s claim, stating that Maxley’s reliance on Louisiana Bag was misplaced. While Louisiana Bag relied on policy interpretation, Maxley’s case relied on a true disputation of the facts. It would be senseless to require the insurance company to pay the claim only to the have the claim payment rescinded if the facts were found in favor of the insurance company. This finding upholds efficiency in the industry as it is easier to withhold payment until truly due than it is to always make payment, then try to recoup it if made erroneously.

Continue reading

Published on: | By

It is well settled under Louisiana law that insurers owe a duty of “good faith and fair dealing” to their customers. Each insurance company is required to adjust claims in a fair and prompt manner and to make reasonable efforts to settle claims when possible. La. R.S. 22:1973 establishes that damages may be awarded against an insurance company that fails to meet this duty. One category of wrongdoing includes:

“Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.”

The statute also permits a wronged insured to collect penalties from the insurer “in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater.” The purpose of this law is to discourage insurers from failing to live up to the promises they make to their customers in their insurance policies and for which the customers pay premiums.

On October 27, 2004, Carl Guidry and his granddaughter were driving in Guidry’s pickup truck. They were rear-ended by Amber Guidry (no relation) and Guidry’s truck was knocked forward. Guidry suffered from neck and back pain following the accident. Two weeks later, on November 11, 2004, Guidry and his granddaughter were again rear-ended while driving in Guidry’s truck, this time by an SUV driven by Evelyn Smith. Guidry experienced further neck and back pain, as well as shoulder pain, after the second collision. Guidry sued both Amber Guidry and Evelyn Smith, and also sued his own uninsured/underinsured motorist (UM) carrier, Progressive. Guidry settled with Amber Guidry’s insurance carrier in the first accident for the policy limits of $10,000. At trial, the jury found that Guidry did not suffer damages in the first accident, but found that he did suffer damages in the second accident; they jury awarded Guidry medical expenses in the amount of $19,860 and general damages of $10,000. The jury also found that Progressive had been “arbitrary and capricious” in handling Guidry’s claims for general damages and medical expenses from both accidents; specifically, Progressive never tendered any money to Guidry for either claim. Accordingly, it awarded Guidry $50,000 for Progressive’s breach of duty and $10,000 in attorney fees. Then the trial judge awarded Guidry $100,000 in statutory penalties against Progressive.

Progressive appealed the penalty award to the Third Circuit. The court upheld the award after a review of Progressive’s handling of Guidry’s claims. Progressive admitted receiving proper notice of Guidry’s accidents in September, 2006 but disputed that Guidry could establish the amount of his damages. The general rule for UM carriers is that if the insured can show that “he was not at fault, that the other driver was uninsured or underinsured, and that he was in fact damaged,” the UM insurer cannot avoid liability just because the insured is unable to prove the exact extent of his general damages. Instead, the insurer “must tender the reasonable amount due as a sign of its good faith and its willingness to comply with the duties imposed upon it under the insurance policy.” See McDill v. Utica Mut. Ins. Co. The tendered amount would not be to settle the case, but to show good faith. Once the good-faith tender is made, the insurer must take “substantive and affirmative steps” evaluate the claim. In this case, Progressive opened its claim file in September, 2006 but did not depose Guidry’s treating physician and orthopedist until June, 2008–nearly two years later. It failed to pay Guidy any money towards the $3,500 in costs to repair his truck. Also, Progressive failed to tender any of the medical payment coverage ($5,000 per accident) included in Guidry’s policy, even though it ample evidence that injuries had resulted from the second accident. Guidry finally had shoulder surgery some four years after the second accident to relieve his debilitating pain, which was paid for by Medicare. Thus, the court concluded that “the jury was not unreasonable in finding that Progressive breached its duty to Mr. Guidry by failing to pay the amount of any claim within sixty days and by failing in its duty to timely investigate the accidents.”

What should have been a simple resolution for Mr. Guidry turned into a four-year-long nightmare of shoulder pain because his insurance carrier mishandled and delayed the payment he was entitled to receive under his policy. This case shows the value of an experienced accident attorney who can advocate on behalf of an injured victim.

Continue reading

Published on: | By

When litigation involves multiple parties, all of which are big national or international organizations, there is a higher likelihood that something is going to end up in the litigation process. The unfortunate nature of insurance coverage is that companies will try to find little nuances to try to argue their case, or will add little nuances to make any future case more difficult for opposing parties. One party to a contractual agreement may cite to these nuances to find a loophole to escape from any potential liability and, subsequently, leave someone who believed they had full coverage with nothing. Despite these loophole efforts, a court can still look at the realities of the circumstances and come to real life conclusions to the exclusion of the argument of either party. This is true in the case of Federal Insurance Company v. New Hampshire Insurance Company, when the court ultimately looked at the reality of a contractual agreement and decided that no matter what the terms of the contract were, the whole contract was in regard to a personal injury case.

Our previous blog post discussed this case but a brief summary is as follows:
The case began when Wayne Robinson was unfortunately hurt by an explosion at a chemical plant. The explosion occurred because there were certain chemicals used by the plant that reacted with each other to cause the explosion. One of the defendants in Mr. Robinson’s case was Thomas and Betts Corporation (hereinafter T&B). T&B allegedly manufactured a product that contributed to the explosion that caused Mr. Robinson’s injuries. T&B had liability insurance from both New Hampshire Insurance Co., which was the primary insurance provider, and Federal Insurance Co., which was the secondary, or excess insurance provider. Ultimately, Mr. Robinson settled with T&B.

The interest of discussing policy nuances hinges upon the terms of the agreement were between T&B and Mr. Robinson. In that agreement, T&B would give Mr. Robinson $5 million for bodily injuries and an additional $1.2 million for a potential breach of contract claim another plaintiff may have had against Mr. Robinson. In fact, by settling with T&B, Mr. Robinson was breaching his agreement with the plaintiff company. After Mr. Robinson reached his agreement with T&B the other plaintiff sued Mr. Robinson for breach of contract. This breach of contract was supposed to be covered by his settlement agreement with T&B. However, soon after the settlement, Mr. Robinson received a letter from New Hampshire Co., T&B’s primary insurer, that it was going to cover his $5 million settlement, but would not cover his $1.2 million settlement because it was for a breach of contract and therefore, outside the scope of its policy covering T&B.

As a separate issue, the court discussed whether the New Hampshire policy covered contractual agreements. However, it came to the conclusion that the use of the phrase “legally obligated to pay” rendered the policy to cover tortious actions. However, the court went on to explain that the entire settlement between T&B and Mr. Robinson did in fact relate to and cover the bodily injury claim. The settlement could only cover the bodily injury claim because the only action for which T&B was liable to Mr. Robinson was the bodily injury. Therefore, the settlement could not be for any breach of contract claim.

The $1.2 million settlement was a by-product of T&B inducing Mr. Robinson to settle his bodily injury claim against T&B. The court held that even though this separate amount is categorized as reimbursement for a breach of contract claim, it is still within the bodily injury claim because the settlement was made in consideration for the bodily injury claim. Therefore, because the bodily injury claim was covered by the New Hampshire policy, New Hampshire was liable for the entire settlement. Mr. Robinson received money from Federal, T&B’s secondary insurer, therefore Federal stepped into T&B’s shoes in its claim for reimbursement from New Hampshire. Therefore, New Hampshire owed Federal the money it paid to Mr. Robinson.

Even in cases where a contract defines things in a certain manner or when the law defines different terms, the realities of a contract are the ultimate facts that define a contract. Although, the New Hampshire policy only covered tortious actions and even though the settlement between Mr. Robinson and T&B defined two different amounts, one for bodily injury and the other for a breach of contract, the reality was that both amounts were in consideration for the bodily injury claim and therefore the reality was that New Hampshire owed the entire amount as per its policy with T&B.

Continue reading

Published on: | By

The terms in a contractual agreement between parties can have the effect of changing entire meanings of contracts. This is especially true in more complex litigation and more complex business agreements. If a business agreement requires the participation of multiple partners or parties, an ambiguously defined contract can have the effect of increasing the amount of litigation which will occur every time there is a legal dispute between any or all of the parties. The clear practical effect of writing clear-cut and well defined contracts is that, in the long run, there will be less of a chance that any dispute will require a long, drawn-out litigation process which has the effect of draining the wallets of all the parties involved.

This is most important where one or more of the parties is a single individual with limited resources, and in some situations, is represented by smaller firms that have much less financial resources compared to bigger business entities with more resources and financing at their disposal. As a legal practice, any person that becomes part of a contractual agreement should clearly define any type of ambiguous terminology in an effort to save the agreement from getting the definitional application of common law or practice. Never is this more necessary than when an individual is pushed up against an insurance agency that holds their financial future in their hands. The importance of defining a contract can be clearly seen in the case of Federal Insurance Company v. New Hampshire Insurance Co.

Both Federal and New Hampshire insurance companies became involved in litigation because they both insured Thomas and Betts Corporation (hereinafter T&B). T&B made a product which contributed to an explosion at an aluminum processing plant in Gramercy, Louisiana, leaving employee Wayne Robinson with injuries. Ultimately, Mr. Robinson sued T&B, which had liability insurance from both Federal and New Hampshire. Thus, when the suit began, Federal and New Hampshire’s policies kicked into effect. New Hampshire was the “first insurer” for T&B. Federal, on the other hand, was T&B’s second layer excess insurer. On the eve of the trial, Mr. Robinson came to an agreement with T&B which had the effect of potentially extinguishing the law suit. T&B was going to pay Mr. Robinson $5 million dollars in damages for his unfortunate bodily injuries, and an additional $1.2 million in consideration for a potential breach of contract claim by another plaintiff company against Mr. Robinson. Subsequent to this settlement, New Hampshire notified Mr. Robinson that it was going to pay him the $5 million, but that it would not pay him the $1.2 million promised by T&B. When Mr. Robinson then received a letter from the plaintiff company, he sent the notice to Federal to show the demand made of him. Federal ended up giving Mr. Robinson $990,000 for the potential breach of contract claim against Mr. Robinson. The pertinent part of the agreement between T&B and Mr. Robinson is as follows:

“Thomas and Betts and Its Insurers agree to hold harmless, indemnify and defend Wayne Robins, et al, The Fields law Firm and Cleo Fields for any amount owed to AXA, Kaisers Subrogated Property Reinsurers, Caleb Didriksen and the Didriksen Law Firm, not to exceed 1.2 million dollars.”

Eventually, Federal sought the $990,000 from New Hampshire arguing that the amount should have been given to Mr. Robinson as part of T&B’s policy with New Hampshire. New Hampshire argued that this amount was not within T&B’s policy with it. The pertinent part of T&B’s policy with New Hampshire was that New Hampshire, “becomes legally obligated to pay by reason of liability imposed by law or assumed by [T&B] under an Insured Contract because of Bodily Injury.” This seems simple enough, however there was no definition of “legally obligated to pay.” In the world of contracts, the contracting parties have the ability to define things in any manner they see fit. These definitions should, however, be included in the contract itself in the index of terms. When a contract does not define any of the material terms, the terms should be filled in by the court. In this case, the court decided that since the phrase was not defined, it should be filled in with what was commonly used in Louisiana. It Louisiana, it was well settled that the use of the phrase was for damages arising out of tortious actions and not from a contractual obligation. Therefore, on the face of the assertion, Federal would be out of luck because it sought money from New Hampshire for money it gave Mr. Robinson due to a breach of contract. Even though the court sided with Federal for other reasons, Federal would have been dealt a strict blow because it did not read the policy between T&B and New Hampshire clearly enough to see that the term was not defined.

Therefore, before taking any action any party should clearly read any existing agreement between relevant parties and should make sure any contract it signs has clearly defined terms that will not lead to unnecessary litigation which will only serve to drain resources.

Continue reading

Published on: | By

In order to avoid extreme costs incurred from accidents, some businesses purchase two types of insurance policies. The first and most common type of insurance is primary insurance. Under this policy, business assets and liabilities are covered in exchange for the payment of a premium. This coverage, however, is capped in order to protect the insurance company from excessive claims. For this reason, many businesses, especially those dealing with expensive equipment and goods, will carry a second insurance policy that provides coverage beyond what is offered through the primary insurer. These policies are known as excess insurance. Premiums for these excess policies are often lower and provide a much higher cap on claim amounts. Excess insurers are able to provide such cheap, yet extensive coverage because the chance of such a catastrophic accident occurring that exhausts the primary insurance cap is minimal. However, as is evident in Indemnity Insurance Company of North America v. American Commercial Lines, L.L.C., where multiple boats collided on the Mississippi River, maritime accident costs sometimes extend beyond primary insurance coverage, bringing questions of how excess insurance money should be handled by courts.

When insurance disputes arise, many times the insurance company will concede the full policy amount, deposit it with the court, withdraw from the proceedings, and leave the claiming parties to battle out their rights to the money in court. Statutory provisions guide the timeline for when primary insurance policies must be deposited with the court, but what is the protocol for an excess insurer that wants to follow the primary insurer’s footsteps? This was the main question in the American Commercial Lines case. The plaintiffs sued the excess insurers claiming that the excess insurers deposited the policy amount with the court too late, resulting in the loss of hundreds of thousands of dollars in interest that could have been distributed amongst the victims. In deciding the case the court had to analyze a couple different issues.

The first issue dealt with determining what law applies to the case. Since the case involves maritime insurance, the court had to decide between maritime law and state law. Statutes provide that if no federal maritime law controls the issue, then state law applies. Because no specific maritime provision covers when an excess insurer should deposit policy amounts with the court, Louisiana court applies. This means, as mentioned above, that excess insurance will not kick in until after all primary insurance funds have been exhausted. This essentially answers the question the second issue poses: when does the excess insurer need to deposit policy amounts with the court?

Continue reading
Contact Information
1140 St Charles Ave
New Orleans, LA 70130
Phone: (504) 521-6000Fax: (504) 617-6300

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Please do not include any confidential or sensitive information in a contact form, text message, or voicemail. The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.

Copyright © 2025, Berniard Law Firm
JUSTIA Law Firm Blog Design