Case Watch

Cincinnati Insurance Company v. CPS Holdings, Inc. (Ohio, Sept. 27, 2007)
An errors and omissions policy does not constitute underlying insurance. The Ohio Department of Administrative Services sued the insured for the alleged mismanagement of state funds. The insured requested a defense from the insurer. The insurer had issued an umbrella policy providing coverage in excess of the insured’s underlying insurance. The insured had also obtained an errors and omissions. The court held that the E&O policy was not self-insurance, was not listed on the schedule of underlying policies and was not an applicable policy of insurance, thus the umbrella policy was triggered.

Garcia v. Federal Ins. Co. (Fla., Oct. 25, 2007)
“Who is Insured” provision that provides coverage to any person with respect to liability because of acts or omissions of named insured covers only cover vicarious liability. A homeowner’s policy provided coverage to “any other person with respect to liability because of acts or omissions of the named insured.” The named insured’s caregiver struck a pedestrian while using the insured’s son-in-law’s vehicle to run errands for the insured. The pedestrian sued the insured, the caregiver and the insured’s son-in-law, alleging that they were each independently negligent in failing to maintain the vehicle’s brakes. The court held that the caregiver did not qualify as an insured, since the provision at issue did not cover a putative insured’s independent acts of negligence, but, rather, only covered vicarious liability.

Allstate Insurance Company v. Berge (D.C.-N.D., Nov. 6, 2007)
Illegal acts by qualifying insured precluded coverage to named insured. The District Court found the condominium owners policy’s intentional and criminal act exclusion precluded coverage to the insured involving a death at the property. The District Court concluded that the insured’s son invited the decedent over and provided her with alcohol and drugs which resulted in her death. Given that the insured’s son was an insured under the policy, his intentional actions barred the insured coverage due to the policy’s joint obligations provision.

Wood v. Nationwide Mut. Ins. Co. (N.Y. App. Div. 4th Dept., Nov. 9, 2007)
Insurer obligated to investigate employee status in order to allow timely disclaimer. An insurer denied coverage based on the employee exclusion. The court found in favor of the insured, holding that the insurer’s failure to timely issue its disclaimer under N.Y. Insurance Law § 3420(d) barred it from relying upon that defense to coverage. Specifically, the court found the insurer was not required to await the decision of the Workers’ Compensation Board before issuing a disclaimer and, indeed, it was required to conduct its own investigation whether the claimant was an employee, including obtaining a statement from the claimant.

Kenray Association, Inc. v. Hoosier Insurance Co. (Ind. App., Oct. 3, 2007)
Court finds no coverage under a commercial marketplace policy for customers’ claims against an insured for damage due to defective software. An insured computer software company filed suit against its insurer for coverage under a commercial marketplace policy and a commercial umbrella policy for claims against it by customers for breach of contracts and warranties. The customers purchased software developed by the insured but alleged that the software did not function properly and caused problems with their computer systems. In granting summary judgment in favor of the insurer, the Appellate Court held that the policies’ “impaired property” exclusions precluded coverage.

Gross v. Industrial Commission of Ohio (Ohio, Sept. 27, 2007)
Termination is not considered voluntary abatement for purpose of workers’ compensation. An employee failed to follow procedure, resulting in a serious injury. The employee was subsequently fired and he sought payment of Temporary Total Disability benefits. Under the principle of “voluntary abatement,” the benefits would end where the employee voluntarily leaves the workforce. The State Commission argued that based on the employee’s disregard for procedure his discharge was “voluntary” and he was not entitled to benefits. The court held that the termination was not “voluntary” and therefore the employee was entitled to benefits.

Case Watch is provided by Goldberg Segalla LLP (www.goldbergsegalla.com). Editors are Richard J. Cohen, Daniel W. Gerber and Sarah J. Delaney.