by Benjamin Helford | Feb 6, 2024 | Blog News
The Western District of Washington granted an insurer’s motion for summary judgment, holding there was no coverage for the underlying lawsuits in Am. Strategic Ins. Corp. v. Jackson, No. 3:23-cv-05461-RJB, 2024 U.S. Dist. LEXIS 17172 (W.D. Wash. Jan. 31, 2024). The underlying litigation involves a former boys’ basketball coach for Sumner High School who was alleged to have sexual molested multiple former players while they were minors. The insurer filed a declaratory action and a motion for summary judgment, seeking a declaration that there was no duty to defend nor indemnify the underlying lawsuits.
The former coach first argued that the Motion for Summary Judgment was premature, as he could not testify on his behalf without waiving Fifth Amendment rights in the criminal case. The Court held that there was no issue, as there were no “substantive grounds” as to why the testimony of the defendant was necessary to argue for coverage under the insurance policy.
The Court then moved to the substance. First, they noted that, under the policy, there was coverage for an “occurrence,” defined as “an accident.” The Court noted that the allegations in the underlying lawsuits did not allege an accident, but rather they “allege a series of intentional acts of childhood sexual abuse” by the defendant. The Court therefore held there was no “occurrence” so no coverage under the policy.
The Court also took note that multiple exclusions apply, in particular an exclusion for bodily injury that is “expected or intended by an insured,” and an exclusion for bodily injury “arising out of sexual molestation.” The Court held that each of these exclusions would independently remove coverage for the underlying lawsuits. The Court therefore granted the Motion for Summary Judgment to the insurer.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Benjamin Helford | Jan 8, 2024 | Blog News
On December 29, 2023, the Oregon Supreme Court held in Moody v. Or. Cmty. Credit Union, 371 Or 692 (2023) that a first-party life insurer may be sued for negligent infliction of emotional distress by the spouse and beneficiary of the decedent. The decedent was accidentally shot and killed by a friend during a camping trip. The life insurer initially denied the claim based an exclusion for deaths “caused by or resulting from . . . being under the influence of any narcotic” because the decedent had had marijuana in his system. The decedent’s wife sued for breach of contract and negligence, arguing that the insurer negligently failed to perform a reasonable investigation before denying the claim, and that this negligence “increased emotional distress and anxiety caused by having fewer financial resources to navigate the loss of a bread-winning spouse.” The plaintiff had won in the trial court on the breach of contract claim, but the trial court dismissed the tort claims. The Oregon Court of Appeals overruled the trial court, and held that the plaintiff could bring the negligence action against the insurer under a negligence per se theory. The Oregon Supreme Court overruled the Oregon Court of Appeals on the negligence per se grounds, but held the plaintiff could still sue for negligent infliction of emotional distress.
The Oregon Supreme Court analyzed whether the plaintiff had pled sufficient facts to survive a dismissal of her negligent infliction of emotional distress claim. The Oregon Supreme Court noted that in order to allow a plaintiff to sue for emotional distress, there must be a limiting factor beyond mere foreseeability. Thus, the Oregon Supreme Court found the question of whether the plaintiff may sue for emotional distress was whether the plaintiff had a cognizable interest “as the surviving spouse of a deceased breadwinner, in having the insurance company with which she and her husband had contracted for life insurance benefits conduct a reasonable investigation of, and promptly pay, her claim for the promised benefits.”
The plaintiff argued that ORS 746.230(1), which outlines unfair claim settlement practices, was evidence of a legally protected interest. As the defendant pointed out, the Oregon Supreme Court had previously ruled in Farris v. US Fidelity and Guaranty Co., 284 Or 453 (1978) that ORS 746.230 was not intended to create a private cause of action. However, the Oregon Supreme Court noted that in Burnette v. Wahl, 284 Or 705 (1978), a statute may support a common-law claim if “it is necessary and desirable to further vindicate the right or to further enforce the duty created by statute.”
The Oregon Supreme Court notes that an insurance relationship is not merely one of payment of funds between parties, but one that provides the insured with peace of mind. In that way, the parties between an insurance contract are in “mutual expectation of service and reliance,” which is akin to doctor/patient relationship or a contractual relationship to purchase a burial plot for a loved one, both of which Oregon courts had allowed for the basis of negligent infliction of emotional distress.
The Oregon Supreme Court also held that allowing a cause of action “when a surviving spouse incurs serious emotional distress as a result of violation” of ORS 746.230 supports the purposes of that statute. In this case, the Oregon Supreme Court found that the plaintiff, having pled severe emotional distress caused by the life insurer’s negligent failure to reasonably investigate and promptly pay the policy of her breadwinning spouse, had pled sufficient facts to defeat the dismissal of negligent infliction of emotional distress.
Disclaimer: the opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S. or its clients.
by Benjamin Helford | Jun 26, 2023 | Blog News
On June 6, 2023, in Gold Creek Condominium-Phase I Assn. of Apartment Owners v. State Farm Fire and Cas. Co., Ninth Circuit Case No. 22-35606, Soha & Lang, PS attorneys Paul Rosner, Sarah Davenport, and Jillian Henderson filed an amici brief on behalf of the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies. The brief addressed the trigger of coverage in a first-party property insurance claim when there are hidden damages and the policy covers loss “commencing during the policy period.” It asked the Ninth Circuit to adopt an injury-in-fact trigger theory, which would provide clarity for cases involving hidden rainwater damage – a common hazard for property in Washington.
The brief argued that, while a continuous trigger theory has been adopted by Washington courts in the context of third-party insurance, such a theory is inconsistent with the language and policies involved in first-party property claims. Unlike in third-party insurance, the brief explained, “[a] property owner’s potential loss is capped at the value of the insured property.”
The brief also argued the term “commence” is not ambiguous under Washington law, and an injury-in-fact theory is consistent with both the policy language and Washington law, as “no reasonable policyholder would answer that the loss ‘commenced’ 55 times in a single year.”
Finally, the brief offered the alternative argument for a manifestation trigger, where coverage is determined when damage becomes apparent. Such a trigger “provides a bright-line rule that creates certainty for both insureds and insurers.”
Disclaimer: the opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S. or its clients.
