Accidents

Insurance Coverage for Lender Vehicles Affects Louisiana, Other Residents

Published on: January 29, 2011 | By Berniard Law Firm

Buying a car usually entails walking around a car dealership, spotting a car you potentially want to buy, and then test driving the car to see if satisfies what you are looking for in a vehicle. However, one aspect that you may not take into consideration, is what happens if you get into a car accident while driving the car dealership’s vehicle? Who is is liable? Who ultimately has to pay? This all depends on the insurance contract the car dealership has, and whether or not you, as the test driver of the vehicle that has been damaged, is insured. Oftentimes, there is a limiting provision commonly found in insurance contracts called a “garage policy”, it excludes customers of an automobile dealership unless the customer does not have liability insurance of his/her owner is statutorily uninsured. But what exactly does this mean?

A garage policy is a provision designed to limit coverage under certain circumstances. For instance, the recent case of Chretien v. Thomas, the Louisiana Second Circuit Court of Appeal explored garage policies in depth due to the existence of one in a service station’s insurance policy. The course of events in the Chretien case involved the defendant, Thomas, bringing in a vehicle for repair. He was provided with a vehicle to drive while his vehicle was being serviced. Significantly, the car being serviced was his girlfriends and was listed as a covered vehicle under a policy issued by Allstate Insurance Company. The service station lent the vehicle to Thomas in hopes his employer would purchase the vehicle. The service station was insured by Stonington Insurance Company, which had the infamous garage coverage provision included in the insurance agreement. The garage policy excluded coverage for customers of the service station IF the customer had other insurance available. Shortly after being provided the “loaner” vehicle, Thomas was involved in an accident with the Plaintiff, who sued Thomas, the service station, as well as both insurance companies, Stonington and Allstate. The dilemma the court faced was determining who is ultimately responsible for coverage, and for how much. Under the garage policy, one would assume that Thomas would be responsible, since the vehicle he brought in for service was covered by insurance, thus, preventing him from relying on the service station’s coverage. However, the issue is not so easily resolved.

Both insured parties have a burden to meet, and a burden to prove in order to avoid liability. When determining whether or not a policy affords coverage for an incident, it is the burden of the insured to prove the incident falls within the policy’s terms. On the other hand, the insurer bears the burden of proving the applicability of an exclusionary clause within a policy, such as the “garage policy” provision found in Stonington’s agreement with the service station. To begin with, an insurance policy is a contract, as such, the party’s intent is reflected by the words of the policy, this determines the extent of the policy’s coverage. When looking at the policy’s language, one cannot read too much into the words, phrases and words are to be construed using their plain, ordinary, and generally prevailing meaning. Thus, interpretation or paraphrasing is not encouraged when exploring insurance policies, to put it simply, just look to the four corners of the document, and to nothing else, in order to understand what the policy means.

Court of Appeals Awards Bad Faith Damages Against Insurance Company Who Refused to Pay

Published on: January 17, 2011 | By Berniard Law Firm

For the family of someone killed in a tragic car accident faced with mounting medical bills there is nothing worse than learning that the driver at fault for the accident did not have insurance. Luckily, when that happens, you should be protected by the uninsured or underinsured motorist (UM) coverage on your vehicle. For the Jones Family, however, their UM provider refused to tender the policy limits even after undisputed evidence was provided that damages exceeded that amount. This nightmare happens to far too many families and is a sad reality during a time in which insurance companies try to limit payouts in any way possible.

Thomas Jones was severely injured when his motorcycle was hit by a vehicle driven by Bertha Johnson, and his wife Mary was killed. Johnson was entirely at fault for the accident but neither she, nor the owner of the car she was driving, had insurance coverage at the time. The Jones’ sought their policy limits of $100,000 per person/$300,000 per accident from their UM insurance and at one point the parties agreed that $200,000 would be paid. However the amount was not tendered due to disputes regarding liens from the Jones’ healthcare providers and the company’s concern regarding future claims.

Luckily the Jones had redress when their UM provider refused to pay. The Jones’ brought an additional claim against their insurer, the Markel American Insurance Company, and were awarded $100,000 in (additional) penalties as well as $10,000 in attorneys’ fees. In a recent decision (available here: 45,847-CA) the Louisiana Court of Appeals upheld that ruling.

Court Rules that Survival Suits Exists Against Insurance Company of a Dissolved Corporation

Published on: January 6, 2011 | By Berniard Law Firm

The death of a loved one can obviously be a hard time for a family. Families have to deal with many issues after the death of one of its members, and the financial implication of the death is a hard to handle issue. Many times financial issues may take a long time to materialize. When the death of a loved one is due to an accident or an effect from something on the job, many families have to sift through the complex legal system to see if they have any rights against the employer, or any third-party. Many people in the past have been impacted by exposure to asbestos. Many illnesses can occur due to this exposure, icluding malignant mesothelioma. Many families attempt to bring survival suits against employers when their loved one was exposed to asbestos during employment. The impact of asbestos exposure may not manifest itself for many years, or decades in the future. What if the corporation has changed hands? What if the corporation no longer exists? This last question was answered in a recent decision by the Appeals Court of Louisianna, Fourth District.

In Marcel vs. Delta Shipbulding Co.(Delta), the plaintiffs were survivors of a man who died due to malignant mesothelioma after exposure to asbestos while working for Delta. The plaintiffs were suing Delta’s insurance company, Continental Insurance Co.(Continental). The issue in the case was that the company went out of business in 1969. The employee worked there between 1948 and 1949. Continental argued that there could be no cause of action because the corporation was no longer in business. In trial court, Continental was able to successfully argue that due to today’s law, which states that all suits against a corporation are null and void three years after the dissolution of the corporation, the cause of action did not exist as a matter of law. Plaintiffs took their case to the appellate court arguing that the trial court was wrong to conclude that there was no cause of action.

The appellate court took the case as a matter of first impression. The Court had never dealt with a case where the corporation had went out of business prior to the enactment of legislation creating a cause of action in such circumstances. The new legislation was passed in 1969. The Court stated that the cause of action accrues in a long-latency occupational disease case when the tortious exposures are significant, such that they will later result in the manifestation of the disease. This meant that the cause of action accrued when the exposure occured back in 1948-49. The Court cited a Louisiana Supreme Court case for the proposition that a survival action accrues simultaneously with the tort, i.e. the exposure, and is transmitted to the heirs of the victim upon death. Based on this, the Court found that the appropriate law was the law that existed at the time of exposure, not the law that exists as it stands today. The statute in effect at that time was act 128. This act discussed the procedure of bringing an action against a dissolved corporation, but it did not discuss causes of action. Although the current law, which states that after three years a cause of action is barred against a dissolved corporation, would have barred this case, the law as it existed at the time of exposure would not bar the current suit, and that law is the law that applied to the current case. Continental brought forth case history that stated that any case against a dissolved corporation is abated at the time of dissolution. The Court was quick to state that even if that law would bar a case against Delta, it does not extend to parties other than the dissolved corporation like Continental. Therefore, the survivial action is not terminated due to Delta’s dissolved status.

In hard times, the last thing anyone wants to deal with is a difficult legal question regarding one’s rights. However, it is pertinent that potential legal issues be discussed with a lawyer as soon as possible. Each case has a time period in which it can be brought. It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim.

For more information on asbestos exposure and mesothelioma, feel free to browse our blog dedicated to the topic.

Louisiana Legislature Extends Period to Bring Suit in Home Fire Damage Cases

Published on: January 2, 2011 | By Berniard Law Firm

While Louisiana law has not always been a beneficial reliance for residents to fall back on, changes in the last 5 years have helped change that and make financial recovery in the wake of a disaster possible. The previous law in Louisiana stated that, after a fire to a home, the homeowner had 12 months in which to bring a case against the insurance company. A new law passed in mid-2007 extended the period to 24 months. This is a break for many families who felt the impact of such a disastrous event. It will give these individuals and families more time to figure out whether the insurance company’s offer is sufficient. As with every time a new law is passed, there are certain questions that remained to be answered as the situations arise. One such question is how the new legislation impacts those whose claim arose prior to the enactment of the law and had not expired by the time the law was enacted.

In Eric Holt vs. State Farm Fire Casualty Co., such a situation arose for Mr. Holt (Holt). In January 2007, Holt’s home was damaged in a fire. He was insured by State Farm Casualty Co. (State Farm). State Farm refused to pay for any of the damages under the policy. In February of 2008, Holt sued State Farm due to dissatisfaction with its ultimate decision. State Farm filed for summary judgment arguing that (1) the claim was barred because state law, at the time the claim arose, allowed only 12 months in which the claim could be filed for fire damage to a home and (2) the claim was barred because the policy stated that any claim must be filed within 12 months. State Farm argued that because of these two reasons, and the fact that the claim was filed more than 12 months after the fire, the claim is barred by the prescriptive period. The trial court refused to grant summary judgment and State Farm appealed.

In terms of State Farm’s claim that the policy between it and Holt barred any claim beyond a 12 month period, the policy also states that if the policy conflicts with state law, state law will control the issue. The appellate court then had to figure what state law governed the issue at hand. Act 43 of 2007 was enacted On August 15, 2007. The act increased the time in which to bring a home damage claim, including fire damage, from 12 months to 24 months. State Farm argued that because the act was enacted after the damage to Holt’s home, the act did not apply to Holt. Under Louisiana law, the difference comes down to (1) whether the legislature clearly identified if an act will apply retrospectively and (2) if the act does not clearly so state, if the act is substantive in nature, meaning that it creates or impacts a cause of action, it will only apply proscriptively, on the other hand, if the act is procedural in nature, meaning it impacts only how a cause of action can be brought, it can apply retrospectively.

Act 43 does not clearly state whether it applied retrospectively. The Appellate Court concluded that because the act only increased the time in which to bring a claim, and not the type of claim or any elements of the claim, that the act was procedural in nature. Under Louisiana law, it is a well settled issue that procedural acts can be applied retrospectively. The only exceptions to this are that if applying an act retrosepctively (1) impacts a vested cause of action, or (2) revives an already expired cause of action, the retrospective application would violate constitutional rights and would be unjust to apply. However, neither of these exceptions apply in the application of the law in Holt’s case. Therefore, the Court decided that Holt’s claim was not time barred by the prescriptive period.

It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim .

Fire Claim Difficulties Show Need for Skilled Attorney

Published on: December 23, 2010 | By Berniard Law Firm

In the legal world, one of the most important things to do is to make sure that all necessary documents are submitted to the court, and the opposing party, in a timely manner. The procedural aspect of the legal process has many deadlines that need to be met. The result of not meeting these deadlines could lead to the end of a litigation with no chance of bringing the same claim before court.

In Tapp v. Shaw Environmental Inc., we see an example of the results of waiting until the very last second to bring a claim against parties. Tapp, the plaintiff, brought a claim against a number of sellers and manufacturers of trailers. The basis of the complaint was a fire that occurred, in the trailer, on February 27, 2007. The statute of limitations, the time within which a claim could be brought for this event, was one year. Tapp waited until the very last minute to file a complaint on February 26, 2008. The complaint was literally filed on the very last day under the statute of limitations. On a later date, after the time period to bring the claim had passed, Tapp realized that there were other defendants that should have been added to the original complaint. The problem was that Tapp could not simply file a complaint against these new defendants. Tapp needed to add these defendants by a provision within the federal rules of civil procedure called “relation back.” The “relation back” procedure is like adding defendants to the original complaint as if they were actually on the original complaint. The purpose is to allow plaintiffs to add defendants even if the statute of limitation has expired. The federal rules of civil procedure explain that if the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out in the original complaint, and if there are new defendants, that these defendants are notified and added in the amendment within 120 days after the filing of the original complaint. This provision of civil procedure is a last second, last chance, opportunity to add new defendants. It is by no means the most efficient or effective way of adding defendants to a case.

The complaint filed against the first newly added defendant was filed on June 13, 2008. This defendant executed a waiver of summons on June 25, 2008, which was exactly 120 days after the filing of the original complaint. The Court ruled that, as to this defendant, the federal rules of civil procedure requirements for adding a defendant post-expiration of the statute of limitation had been met. Thus, this defendant was properly added onto the original February 26, 2007 complaint. Another amended complaint was filed adding another defendant on August 8, 2008. Using the same “relation back” procedure, the Court ruled that this newly added defendant was added outside the 120-day period allowed by federal civil procedure. Therefore, this defendant was not added to the case, and thus the plaintiff could seek no relief from this defendant for this claim. Tapp lucked out because at least one of the new defendants was added to the case. However, as this case clearly demonstrates, it is essential that claims are brought as soon as possible within the statute of limitation period, so that if anything needs to be done within the period, it can be done while time still remains to take action.

It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim.

Mineral Leasing May Have Negative Long Term Effects for Landowners

Published on: December 21, 2010 | By Berniard Law Firm

Owning property can be fulfilling for individuals but, with this sense of accomplishment comes extensive legal responsibilities. Owning non-residential property, in particular, can be stressful, particularly when a landowner is seeking compensation for property damage. In a recent case, the Court of Appeals for the state of Louisiana evaluated potential benefits of landowners suing for property damage. More specifically, the court evaluated whether landowners had a right to sue for damages caused by a party who obtained a mineral lease from prior landowners. The Court of Appeals agreed with the findings of the lower court and held that the plaintiffs could not recover because they were either: not the party who was entitled to compensation or that too much time passed and it was too late to sue.

In 1945, Chevron obtained three mineral leases from the Pasternack family for a 193-acre tract of land located in the Lake St. John Oil and Gas Field in Concordia Parish, Louisiana. Operations on the property were commenced by Chevron in 1945 pursuant to three mineral leases obtained from the previous owners, the Pasternack family. The Pasternack family sold the property in June 1999 and, after several conveyances, the property was owned by the Wagoners when the lawsuit was commenced. Still, the Pasternacks reserved their mineral interests in the land. Eventually, the Wagoners discovered that the subsurface of their property was contaminated with exploration and production waste, particularly through the use of unlined pits. As a result, they filed suit in August 2008, claiming that their property was contaminated by the oil and gas exploration and production activities of Defendants.

Through a complex timeline, Chevron leased and conducted oil and gas operations on the property from 1945 to 1992. Throughout the years, the lease was assigned to several entities including Devon, Merit, LSJ Exploration and Oil & Ale LSJ, Smith Operating and Management Company. Beginning in 2004, McGowan Working Partners leased and operated the shallow oil–producing subsurfaces beneath the property while the deeper subsurfaces were leased and operated by Denbury Onshore after 2004. Numerous exceptions were filed by various Defendants and the trial judge sustained the following exceptions filed or adopted by all Defendants: (A) Vagueness; (B) No Cause of Action for Strict Liability for Nuisance; (C) No Cause of Action for Strict Liability for Garde or Custody; (D) No Cause of Action for Abnormally Dangerous or Ultrahazardous Activity; (E) No Cause of Action for Breach of Contract or Warranty; (F) No Cause of Action for Punitive Damages; (G) No Cause of Action for Unjust Enrichment; and (H) No Cause of Action for Civil Fruits.

Hartzo Case Illustrates Difficulties with Insurance Policies, Disputes

Published on: December 19, 2010 | By Berniard Law Firm

The Court of Appeals of Louisiana, First Circuit, recently defined the way in which the Court would look at implied permission for the use of ones car. Depending on the terms of the auto insurance policy, the policy may provide protection for damages that even extend to the passenger in a vehicle driven by someone who has permission to drive the vehicle. This means that if the passenger died in the car accident, the passenger’s family may be able to collect by filing a petition for damages against the insurance of the actual owner of the car, not just the actual driver at the time of the accident.

In Hartzo v. American National Property and Causualty Insurance Company, the driver of a Ford Taurus crashed into a Toyota Tacoma. The driver and passenger of the Taurus were killed in the accident. The driver of the Taurus was the brother of the owner of the vehicle. The family of the passenger filed a petition for damages against American National Property and Casualty Insurance Company (ANPAC) and another insurance company. The insurance policy through ANPAC had provisions that extended such benefits if the driver of the vehicle had express or implied permission to drive the vehicle.

ANPAC thought that they had a good argument that the driver of the Taurus had no permission to drive the vehicle. The Court of Appeal looked at the facts and the policy that the owner of the vehicle had. The Court found that deciding whether there was express permission would not dispose of the case. The Court spent its time analyzing what factors they would look to in order to find implied permission. The Court stated that “the issue of implied permission involves a balancing of legal and public policy issues and must be inferred from the totality of the facts and the relationships involved.” With this statement the Court seems to be saying that both customary use and relationship can be used to find implied permission. The Court of Appeal later stated that the following factors were indicative of implied permission: (1) At the time of the accident the driver and owner of the vehicle were living in the same household, (2) On the day of the accident, the driver of the vehicle had already driven the vehicle with the knowledge of the owner, (3) In the past, the driver had driven the Taurus on many occasions. Therefore, the Court looked at both the relationship involved (i.e. the fact that driver and owner lived under the same roof) and the custom between the parties (i.e. the fact that the driver had driven the car on many occasions). Thus, ANPAC was liable under the petition of damages.

It is very important to clearly understand your insurance policy. The policy may be confusing and many different, and what may seem insignificant factors, can change the entire outcome of a litigation. It is essential that prior to settling any issues with your insurance company, that you seek the advice of competent legal counsel to help you maneuver through complex insurance policy determinations.

Progressive Insurance Slapped With Penalty for Failing to Pay in Covington Car Wreck

Published on: December 5, 2010 | By Berniard Law Firm

Previously on this blog, we have explored several cases that profiled the often contentious role that insurance companies play in auto accident litigation. In the interest of seeing that consumers get the benefits of the policies they pay for and to promote a speedy resolution for third parties who have legitimate claims, the Louisiana legislature enacted a law that requires insurers to pay claims within 30 days of being notified with a satisfactory proof of loss by the insured. La. R.S. 22:1892. An insurer’s failure to do so, if “arbitrary, capricious, or without probable cause,” can mean a penalty for the insurer of up to 50 percent of the claim amount, in addition to attorneys’ fees and costs. This requirement was at the center of the recently decided case, Krygier v. Vidrine.

On October 11, 2006, Kenneth Krygier was a passenger in a rented Chevy Cobalt being driven by his co-worker, Billy Toon. Krygier and Toon were on the way to their employer’s office in Covington when their vehicle was rear-ended by a Ford Explorer operated by Karen Vidrine and insured by Liberty Mutual. Toon also carried an insurance policy with Progressive that provided uninsured/underinsured motorist (“UM”) coverage to all occupants of an “insured” vehicle. Vidrine’s policy with Liberty Mutual had a limit of only $30,000 per incident, so when Krygier filed suit against Vidrine for the injuries he suffered in the crash, he also named Progressive and his employer as defendants. Progressive first denied responsibility for UM coverage because it alleged the rented Chevy wasn’t an “insured vehicle” under Toon’s policy, Krygier was not a “covered person” under the policy, and Vidrine was not underinsured. The parties filed cross-motions for summary judgment on these questions, and in December, 2007, the trial court determined that coverage under Progressive’s policy extended to Toon’s rental car and to Krygier as a guest passenger.

As part of the discovery process, Liberty Mutual served on all parties a copy of the policy with the $30,000 limit it had issued to Vidrine covering her Explorer. Nevertheless, Progressive took the position that it did not have sufficient documentation establishing that Vidrine was underinsured at the time of the accident. In January of 2008, Krygier gave a deposition during which he testified about his injuries, his ongoing medical treatments, and his pain and suffering. Krygier also provided documentation regarding his employment, lost earnings, and medical treatment in response to Progressive’s discovery requests. In November, 2008, Krygier filed an amended petition for damages in which he sought penalties, attorneys’ fees, and costs based on Progressive’s failure to tender its policy limits upon receipt of satisfactory proofs of loss. Krygier received only $15,000 from Vidrine’s Liberty Mutual policy (the balance of which was paid to Toon). Krygier alleged that, based on this result and the outcome of prior proceedings in the matter, Progressive was well aware that Vidrine did not have sufficient insurance to cover the damages he sustained in the accident. Progressive’s failure to pay, Krygier argued, amounted to a violation of the statute requiring a timely tender of payment. Accordingly, Krygier asked for $50,000 in penalties (half the policy’s $100,000 limit), together with reasonable costs and attorneys’ fees. The trial court granted Krygier’s motion, finding that Progressive was “arbitrary and capricious in failing to promptly tender policy limits,” and awarded penalties in the amount of $50,000 to Krygier. The judgment further awarded Krygier “the remaining interest owed on the policy limits, plus attorneys’ fees and costs.” Progressive appealed to an unsympathetic First Circuit. The court stated, “we find reasonable persons could reach only one conclusion, i.e., that Progressive acted arbitrarily, capriciously, or without probable cause in not tendering its policy limits within thirty days of” first learning of Krygier’s legitimate claim. The court affirmed the $50,000 penalty awarded by the trial court.

In this case, Krygier’s misfortune was only compounded by Progressive’s efforts to protract the litigation and delay payment. In situations like this, it is especially important for an accident victim to have an experienced attorney on his side to ensure he gets the recovery he deserves.

Court Examines Question of Insurance Policy Coverage Limitations After Tragic Car Accident

Published on: December 3, 2010 | By Berniard Law Firm

Many employees routinely use their own automobiles in the course of their employment. Whether running an occasional errand on behalf of the company, or using a car to make door-to-door sales calls, employees who drive their vehicles for the benefit of their employers may wonder how liability is affected if they are involved in an accident. Generally speaking, an employer is responsible for the negligence of its employees who operate motor vehicles on behalf of the company. For this reason, employers maintain liability insurance policies that cover them for losses that may arise from auto accidents caused by employees. Like other policies, these liability policies can be subject to specific limitations to coverage as arranged between the employer and the insurer. One example where the language of the policy exceptions proved determinative is the 2010 case of Anderson v. State Farm Fire & Casualty Insurance Co.

Donald Anderson worked for Labor Finders, a staffing agency with offices throughout the state of Louisiana. Anderson was killed when an oncoming motorist, Gordon Pugh, Jr., crossed the center line and struck his car as Anderson was driving to an appointment for work. After her father’s death, Monica Anderson filed a wrongful death action which named Pugh, Pugh’s insurer (State Farm Fire & Casualty Insurance Company), and National Union Fire Insurance Company as defendants. National Union was included because the company had issued a liability policy to Labor Finders which was in effect at the time of the accident. This policy, which applied to employees of Labor Finders, contained an endorsement for uninsured/underinsured motorist (UM) coverage. National Union answered, denying that Anderson was covered under the policy. Monica settled with Pugh and State Farm, after which National Union filed a motion for summary judgment. The trial court concluded that under the clear and unambiguous terms of the policy, Donald Anderson was not covered.

On appeal, the First Circuit conducted its own detailed analysis of the policy language. After noting that “insurers have the right to limit coverage in any manner desired, so long as the limitations are clearly and unambiguously set forth in the contract and are not in conflict with statutory provisions or public policy,” Campbell v. Markel American Insurance Co., the court found that an exclusion within the National Union policy which denied coverage to any employee who was injured in the course of operating an automobile applied to Anderson’s death. The court also concluded that Anderson was not covered under the policy’s UM endorsement because it extended coverage only to a “partner or officer” of Labor Finders, of which he was neither. Accordingly, the court concluded that the trial judge correctly found that Anderson was not eligible for liability coverage under the National Union policy, and affirmed the decision.

The Anderson case provides a warning to employees that they should not assume they will necessarily be covered by their employer’s insurance policy if they are involved in an accident–particularly, as here, one where they are not at-fault. We can presume, though it is not stated in the court’s discussion, that Monica Anderson settled with State Farm (the at-fault driver’s insurer) for a sum that was within the policy limits. The suit against National Union was, perhaps, an understandable attempt to obtain more funds beyond those she received in the State Farm settlement. While Monica’s situation is tragically sympathetic, the court made it clear that an issuer can use the language of a policy to limit coverage substantially, even to the detrmiment of an “innocent” party.

The Importance of Reading Your Insurance Policy: Louisiana Court of Appeals Denies Coverage in Logging Accident Case

Published on: November 18, 2010 | By Berniard Law Firm

In a recent Louisiana Court of Appeals case, an injured logger was not able to collect damages from his employer’s insurance company because the subcontractor at fault for the accident was found to be not covered.

Travis Palmer was working for A.T. Martinez (ATM), LLC, as a logging truck driver and was injured when he was struck by a log while his employer’s truck was being loaded with timber. Palmer sued his employer’s insurer, Royal Indemnity Company (Royal), alleging that they provided general liability coverage even though a subcontractor, KLM Logging (KLM) was at fault. The trial court granted a motion for summary judgment in favor of the Palmer and found that the insurance policy in question covered KLM but the court of appeals disagreed on appeal.

Royal denied coverage here on the primary grounds that KLM did not meet the definition of “an insured” or an “additional insured” under the terms of the policy issued to ATM. In addition, there was no agreement between ATM and KLM that required ATM to name KLM as an insured for the timber cutting/loading operations or for any other subcontractor work. KLM and ATM did allege, however, that had an oral agreement that ATM’s insurance would also cover KLM. The two owners of the respective corporations (who happen to be parent and child) claim that KLM paid insurance premiums to Royal for this coverage by virtue of ATM withholding part of the payments they owed to KLM. ATM believed that the policy covered their subcontractors, even though the owners admitted they never read it.