Case Law

Editor’s note: This recurring feature examining insurance coverage decisions was compiled by the New York-based law firm of Goldberg Segalla LLP and edited by insurance lawyer Kevin T. Merriman.

Suire v.Lafayette City-Parish

(April 12, 2005)
Additional Insureds
This matter involved, in part, whether the general contractor’s insurers National Union Fire Insurance Company of Pittsburgh and the National Union Fire Insurance Company of Louisiana had a duty to defend the City of Lafayette and an engineer concerning an action that a homeowner had commenced against them. The underlying action concerned a construction project that involved, in part, the construction technique of “pile-driving,” which allegedly caused damage to the homeowner’s residence.

The court determined that the insurer did not have a duty to defend the engineer as an additional insured because the public contract between the general contractor and the parties did not require that the general contractor add the engineer as an additional insured. However, the court determined that the insurer did have a duty to defend the City because the public contract required that the general contractor add the City as an additional insured.

Morgan v. Auto Club Family Ins. Co.

(La. App., 3rd Cir., Apr. 6, 2005)
Mold Exclusion Barred Coverage for Loss Caused by Improper Ventilation
The court affirmed the trial court’s determination that the insured’s claims under the applicable homeowner’s policy involved perils that were not covered under the policy. The case involved mold damage to the insured’s attic that was determined to be caused by faulty workmanship involving proper ventilation. The applicable homeowner’s policy specifically excluded damage from faulty workmanship and mold. The court rejected the insured’s argument that the exclusion’s language did not exclude the damage where the ensuing loss was caused by the accumulation of condensation. The court reasoned that mold caused the damage, and that peril was excluded even if the mold was caused by lack of proper ventilation.
Ameen v. Prudential P/C Insurance Co.

(Apr. 1, 2005)
Auto–Uninsured/Underinsured Motorist
Motorcyclist brought action against his parents’ automobile insurer to recover underinsured motorist (UIM) benefits and damages for bad faith refusal to pay. The District Court entered summary judgment in favor of insurer and motorcyclist appealed.

The Oklahoma Supreme Court found the definition of “insured” to exclude resident relative under parents’ policy since he was not using car, but was driving non-owned motorcycle at time of accident, was invalid since it violated the statutory requirement of UM coverage. The Court reasoned that an automobile insurer may not dilute the legislatively mandated UM coverage by restricting coverage based upon the particular vehicle the insured is occupying at the time of injury.

Mid-Continent Cas. Co. v. Camaley Energy

(N.D. Texas, Mar. 31, 2005) (Unpublished)
Exclusions Applied to Well-Drilling Activities
The District Court for the Northern District of Texas held that the insurer Mid-Continent Casualty Company did not have an obligation to defend and indemnify three companies in an underlying action concerning an oral contract for well drilling on the underlying plaintiff’s leased property.

Defendants, Camaley Energy Company Inc. and Rodessa Operating Company Inc., had allegedly used a well bore on the underlying plaintiff’s leased property, and that well bore deviated to the neighboring leasehold.

The companies’ action allegedly caused a constructive eviction for the companies. The insurer had issued a CGL policy for the companies work, and the District Court held that two exclusions regarding the CGL applied to the underlying action.

The first exclusion concerned damages to real property arising out of the companies’ work. The second exclusion concerned the failure of the companies’ to perform their work under the oral contract.