by Paul Rosner | Dec 14, 2016 | Blog News, Publications
In Mutual of Enumclaw Ins. Co. v. Myong Suk Day; Division I, No. 75633-8-I, the Washington Court of Appeals held that the insured suffered no harm where the plaintiff had fully and unconditionally released its claims against the insured, reversing the trial court’s imposition of coverage by estoppel.
Usually, when an insured enters a stipulated judgment with a covenant not to execute, the insured agrees to a judgment and assigns claims against its insurance carrier to the claimant in exchange for a covenant not to execute on the insured’s other assets. If the insurer has engaged in bad faith while defending under a reservation of rights, then the claimant pursuing the assigned bad faith claim against the insurer may be entitled to a rebuttable presumption of harm and coverage by estoppel.
In this case, however, the insured retained her claims against her insurer and assigned only her claims against her independent insurance agent to the tort plaintiffs. Also, the settlement agreement included language that required the tort plaintiffs to sign a full satisfaction of judgment of their claims against the insured once the assigned claims against the agent were concluded. After the tort plaintiffs settled with the agent, the trial court (in a consolidated action) conducted a reasonableness hearing, concluded that the settlement amount was reasonable, and imposed coverage by estoppel.
In Werlinger v. Clarendon Nat. Ins. Co., 129 Wn. App. 804, 120 P.3d 593 (2005), the Washington Court of Appeals held that an insured could not establish harm where the insured and his spouse were shielded from personal liability by their bankruptcy status and there was no competent evidence that they suffered emotional distress as result of insurer’s actions. Here, relying on Werlinger, the Court of Appeals held that the trial court erred when it imposed the remedy of coverage by estoppel since the insured was legally insulated from any exposure on the agreed judgments because of the settlement provision granting her the right to full satisfaction of the judgments against her, independent of any claims against her insurance carrier.
Article by Paul Rosner and Jennifer Dinning.
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision both during the claims handling process and after an allegation of bad faith claims handling has been made.
Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Jennifer Dinning | Dec 9, 2016 | Blog News, Publications
On December 8, 2016, the Oregon Supreme Court upheld the determination of the Court of Appeals holding that plaintiff/respondent West Hills Development Company (“West Hills”) was an insured under a policy of insurance issued by Oregon Automobile Insurance Company (“OAIC”) and was entitled to a defense, but did so on alternative grounds. The Oregon Supreme Court found that there was no question regarding whether West Hills was an additional insured under the policy in question, and questions regarding the duty to defend were properly resolved under the “four corners” or “eight corners” rule..
The underlying lawsuit arose from West Hills’ work as the general contractor for a townhome development in Sherwood, Oregon (“Arbor Terrace”). West Hills hired multiple subcontractors, including L&T Enterprises, Inc. (“L&T”). West Hills was added as an additional insured (“AI”) on L&T’s insurance policy with OAIC. The language of the AI endorsement provides that West Hills is an insured “only with respect to liability arising out of [L&T’s] ongoing operations performed for [West Hills].” The Arbor Terrace homeowners association sued West Hills, alleging that negligence of West Hills’ subcontractors had caused defects which lead to water damage and that West Hills was liable for that negligence due to negligent hiring and supervision. The complaint alleged that damages occurred before the owners purchased their units, but did not provide any further detail regarding timing of damage.
The Court found, contrary to the argument of the parties and the determinations of the lower courts, that the language of the AI endorsement made clear that West Hills was an additional insured under the policy. Accordingly, the Court proceeded under the four corners” or “eight corners” rule, applying the principle that ambiguities in the complaint be resolved in favor of the insured, in order to determine if the duty to defend was triggered. The Court found that, although the complaint did not specifically name L&T or specifically allege that West Hills was liable for the negligence of L&T, the allegations of the complaint presented facts that “reasonably could be interpreted to result in West Hills being held liable for conduct covered by the policy: L&T’s operations for West Hills.” The Court rejected OAIC’s argument that the allegations of the complaint were barred by the “ongoing operations” language in the AI endorsement. The Court noted that the language covers claims “arising from” ongoing operations, and that the complaint’s vague statement did not rule out damage occurring during ongoing operations. Accordingly, the Court found that OAIC had a duty to defend West Hills based on the allegations of the complaint and the language of the insurance policy.
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision both during the claims handling process and after an allegation of bad faith claims handling has been made.
Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Sarah Davenport | Dec 2, 2016 | Blog News, Publications
On November 30, 2016, the Oregon Court of Appeals upheld the application of an anti-assignment clause in an insurance policy where the assignment arose from the insurer’s refusal to defend or indemnify rather than from a judgment against the insured. In doing so, the Court of Appeals addressed the effect of ORS 31.825 on the anti-assignment clause.[1]
In Clinton Condo. Owners Assn. v. Truck Ins. Exchange, 282 Or App 484 (2016), Clinton Condominium Owners Association (“Association”) sued a window washing company, We Do Windows, Inc., for negligence and breach of contract. We Do Windows was insured by Truck Insurance Exchange, which declined to defend or indemnify We Do Windows. We Do Windows assigned its claims against Truck Insurance Exchange to the Association as part of a settlement. The Association then filed this action. Truck Insurance Exchange brought a summary judgment motion, which the trial court granted on the basis that the anti-assignment clause provided that an insured could not assign any rights or claims under the policy without consent from the insurer, and that an anti-assignment clause was not rendered unenforceable by ORS 31.825. The Association appealed.
The Oregon Court of Appeals cited Brownstone Homes Condo. Assn. v. Brownstone Forest Hts., 358 Or 223, 363 P3d 467 (2015), to hold that ORS 31.825 is limited to “allowing an insured to assign excess judgment claims.” It reasoned that, because the assigned claims brought by the Association arose from Truck Insurance Exchange’s refusal to defend or indemnify We Do Windows, and not from a judgment against We Do Windows, the anti-assignment clause applied and the trial court rightly granted summary judgment dismissing the action for lack of standing.
[1] ORS 31.825 provides that “[a] defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the cause of action against the insurer unless the assignment specifically so provides.” (Emphasis added).
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision both during the claims handling process and after an allegation of bad faith claims handling has been made.
Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
