The Texas Supreme Court recently decided a case that pertained to whether an insured was occupying his car at the time of an accident. Coverage for the insured depended on that point. The case is United States Fidelity and Guaranty Company v. Goudeau, 2009 WL 5266378 (Tex.).
Goudeau worked for Advantage BMW and was driving one of its cars in the course of his employment. He stopped on the shoulder of the road to help another driver who had collided with the road's retaining wall. After getting out of his car and walking around the front toward the retaining wall, a car driven by Rodriguez slammed into both parked cars, pinning Goudeau against the retaining wall and crushing his pelvis.
Advantage BMW had two policies with the insurer, USF&G, a workers compensation (WC) policy and an auto policy. USF&G paid more than $100,000 in benefits to Goudeau and his medical providers under the WC policy but denied any benefits under the uninsured/underinsured (UM/UIM) coverage of the auto policy. When Goudeau filed a lawsuit against USF&G, the trial court granted summary judgment to the insurer; the court of appeals reversed; and the Supreme Court then took the case.
The court noted that the auto policy covered Goudeau as an employee while he was occupying a vehicle owned by the employer. "Occupying" was defined in the policy as "in, upon, getting in, on, out, or off". Goudeau conceded that he was not in the car when the accident occurred, nor was he getting in, on, out, or off the car. However, Goudeau asserted that he was upon the car when he was injured. The Texas Supreme Court disagreed, saying that a driver who has exited the car, closed the door, walked around the front, and then has the vehicle smashed into him cannot be said to be occupying the vehicle even if he ends up partly upon the car due to the accident. This would be, according to the court, ascribing to one word a meaning so broad that it is inconsistent with its accompanying words.
The court then recited a list of court decisions on the meaning of "occupying", and noted that, in deciding whether a person was occupying a covered auto under UM/UIM coverage, there have been a multitude of tests used by various courts: a four-pronged test (Rhode Island, Kentucky, Pennsylvania); a three-pronged test (Washington); a position-of-safety test (Nebraska); a severed-relationship test (Wisconsin); a chain-of-events test (Hawaii); a substantial-nexus test (New Jersey; a reasonable-relationship test (Maine, Montana); a close-proximity test (Virginia); a vehicle-orientation test (New Hampshire, New Mexico); a close-proximity or vehicle-use test (Delaware); a close-proximity and vehicle-use test (Iowa); and a plain-and-ordinary meaning test (West Virginia, Minnesota, Alabama, Oregon). These many different tests in use around the country rendered uniformity in a legal interpretation of the word "occupying" impossible.
Therefore, the court said that it would construe the word according to its plain language, using the ordinary, everyday meaning of the word to the general public. Accordingly, the court ruled that the plain meaning of "occupying" as defined in the auto policy here could not be stretched to include Goudeau. The decision of the appeals court was reversed and Goudeau could take nothing on his UIM claim.
Since the passage of the Telephone Consumer Protection Act (TCPA), there have been several court rulings on whether the law applies to unsolicited facsimile transmissions and whether claims based on such transmissions are covered under the personal and advertising injury liability insuring agreement of the general liability policy. The following two cases offer examples of current judicial thinking on the subject.
The case of St. Paul Fire and Marine Insurance Company v. Onvia, 2008 WL 5077281 (C.A.9 (Wash.)) is an appeal from the United States District Court for the Western District of Washington. The circuit court was asked to decide whether a liability insurer providing coverage for advertising injury offenses had a duty to defend against a claim alleging violations of federal and state statutes that prohibit sending unsolicited fax advertisements (also known as blast faxes). The district court held that the insurer did not have a duty to defend under Washington law.
The circuit court said that the argument put forth by the insured that the policy language is ambiguous because a person's right of privacy can have more than one meaning is not persuasive. The court said that the insured alleged a violation of the privacy right of seclusion while the policy only covered advertising injuries that violated the privacy right of secrecy. (Other court cases cited upholding this view included those in the Fourth Circuit, Pennsylvania, New Jersey, California, and Illinois). And, since the insured's claims did not allege that its private information was divulged, the insurer's duty to defend was not triggered. The ruling of the district court was affirmed.
(Before discussing the next case, note that, at this time, this ruling is available only in the Westlaw citation, was not selected for publication in the Federal Register, and is not precedent except as provided by 9th Cir. R. 36-3.)
The other case discussed here is from the United States Court of Appeals, Eleventh Circuit and pertains to a certification of a question to the Supreme Court of Florida. The question is: does a commercial liability policy that provides coverage for advertising injury ... provide coverage for damages for violation of a law prohibiting using any telephone facsimile machine to send unsolicited advertisement to a telephone facsimile machine when no private information is revealed in the facsimile? This case is Penzer v. Transportation Insurance Company, 545 F.3d 1303 (11th Cir., 2008).
Penzer received unsolicited facsimile transmissions and claimed that this constituted the publication of written material, was an unwanted intrusion on his privacy, and was a claim covered by the advertising injury insuring agreement in the general liability policy issued by Transportation Insurance. The insurer argued that there was no coverage under the policy terms because they were unambiguous and did not encompass Penzer's claims, and that there was no coverage due to several applicable policy exclusions.
The district court ruled that the phrase "oral or written publication of material that violates a person's right of privacy" is unambiguous, and that advertising injury coverage exists only when the content of the material published violates a person's right to privacy. Penzer appealed.
The circuit court noted that Florida law governed this case, but the Supreme Court in Florida had not construed the particular policy language at issue in this case. Therefore, the circuit court certified the question to Florida's Supreme Court for its views. However, the circuit court did offer its own view of the issue.
The circuit court was not in agreement with the decision of the district court.
The court said that the district court's holding that only content-based invasions of privacy, and not TCPA-based seclusion violations, are covered is placed in doubt by the wide divergence in case law that interprets the right of privacy as used in the insurance policy. (The court then listed quite a few decisions from many states, such as Kansas, Illinois, New Jersey, Washington, Pennsylvania, North Dakota, and California.). As for the exclusions, the court stated that the insurer had not met its burden of proving that any of the exclusions applied. The willful violation of a penal statute exclusion did not apply since most courts have found that the TCPA is not a penal statute. The state's public policy against insuring one's own intentional misconduct did not apply since that policy is not applicable where liability is not predicated on intent, and courts around the country have determined that the TCPA does not require intent, except when awarding treble damages. And, the breach of contract exclusion did not apply because Transportation did not demonstrate that its reading of the exclusion is the only reasonable interpretation and so, Penzer's contradictory interpretation of the exclusion creates a reasonable ambiguity that must be viewed in favor of the insured.
Since neither the policy exclusions nor the state public policy lead to a denial of coverage, the circuit court saw this as an unsettled issue of Florida law as to insurance policy coverage. A purely legal question of the interpretation of widely used language in a commercial liability insurance policy was at issue. Therefore, the question was to be submitted to the Supreme Court of Florida for an answer.
When the Florida Supreme Court will provide the answer is not known at this time, but the case does provide insureds and insurers with a hint of how the Eleventh Circuit would address the issue, plus a rather large number of court citations from around the country that have dealt with advertising injury coverage of TCPA claims based on unsolicited facsimiles.
In the Course of Employment
This case is a workers compensation action wherein the employer appealed a decision that the deceased worker's compensation claim was a covered claim. The case is Ardis v. Combined Insurance Company, 2008 WL 4613647 (S.C.App.). Note that this opinion has not yet been released for publication in the permanent law reports.
Ardis attended a regional sales meeting at a Holiday Inn in Georgia; the purpose of the meeting was to train employees for a new company incentive program. Ardis drove to the hotel from his home in South Carolina and since the drive took approximately five hours, when the meeting ended about 3 PM, Ardis chose to spend the night at the hotel and drive back home the following day. After the meeting ended, Ardis and his girlfriend went shopping, bowled, and ate supper before returning to the hotel. During the night while the couple was asleep, a fire broke out and due to the thick smoke, Ardis was unable to escape and died.
Ardis' mother initiated a workers compensation claim, requesting a lump sum settlement and burial expenses. The state workers comp commission concluded that the death was sustained in a compensable accident and awarded the beneficiaries burial expenses and a lump sum payment for the commuted value of 500 weeks of compensation at the rate of $396.58 per week. The employer appealed.
Combined contended that the death did not occur within the scope and course of employment. The appeals court looked to the state law and noted that to be compensable, an injury by accident must be one arising out of and in the course of employment, with "arising out of " referring to the injury's origin and cause, and "in the course of" referring to the injury7s time, place, and circumstances. For an injury to arise out of employment, the injury must be proximately caused by the employment, there must be a causal connection between the conditions under which the work is required to be performed and the resulting injury. An injury occurs in the course of employment when it happens within the period of employment at a place where the employee reasonable may be in the performance of his duties and while fulfilling those duties.
The facts of the event showed the appeals court that Ardis' death arose out of his employment because he was expected to be in the Georgia city the weekend of January 13 - 15 for a company sponsored sales meeting. This was a clear causal connection for the court; his presence at the hotel and his death were direct consequences of attending the business meeting. As for the injury occurring in the course of employment, the court said that, even though the meeting had ended, it was reasonably foreseeable and incidental to the fulfillment of his duties for Ardis to have spent the night at the hotel before making a five-hour drive back home. Although Ardis was not engaged in the actual performance of his business duties, the act of sleeping in the hotel room before returning home the next morning was a logical action given the circumstances, and so, was clearly incidental to the business trip.
Combined also argued that Ardis participated in a series of personal activities that constituted a substantial deviation from the course of his employment. Going to dinner, shopping, and going bowling were substantial deviations that rendered Ardis outside the scope of his employment at the time of his death. The appeals court disagreed and said that, even if these activities were identifiable deviations, the death occurred while Ardis was sleeping, so any deviation was cured or abandoned by the time of the accident. Moreover, his sleeping was incidental to employment and expressly included within the scope of the personal comfort doctrine; the decision to sleep at the hotel was an act that was necessary to Ardis' life, comfort, and convenience.
The decision of the commission was upheld.
Additional Insured and Primary Coverage
A general contractor sought a declaratory judgment that the liability insurance policy of a deceased subcontractor extended coverage to the general contractor as an additional insured. The supreme court of Orange County granted summary judgment for the general contractor and the subcontractor's insurer moved for clarification as to whether the coverage was primary or excess. This case is Briarwoods Farm v. Central Mutual Insurance Company, 866 N.Y.S.2d 847 (2008).
Rosado had a liability policy issued by Central Mutual. He was injured and then died while working at a job site as a subcontractor. The underlying lawsuit against the general contractor was settled and the status of the general contractor as an additional insured under Rosado's policy was also settled. When the question of primary coverage versus excess coverage for the additional insured arose, the court decided the question by reviewing the language in the subcontractor's policy.
The court said that, under current law and absent a showing that the general contractor was actually seeking excess coverage rather than primary coverage, a subcontractor's policy language calling for the general to be an additional insured required the coverage to be primary. The court also held that under the current law, a determination that the insurance policy of the subcontractor is primary coverage to the general contractor does not preclude a determination that the insurance policy of the general also provides primary coverage. Thus in this case, even though the Central policy does provide primary coverage for the general contractor as an additional insured, the general's own liability policy also provides primary coverage. This rendered both policies equally obligated to cover the costs associated with the settlement of the underlying wrongful death claim.
It should be noted for informational purposes that the current ISO CGL form declares that any other primary insurance available to the named insured covering liability for damages arising out of the operations for which the named insured has been added as an additional insured makes the liability policy of the named insured an excess policy.
Business Auto Policy and Personal Vehicle Use
This case was a declaratory lodgment action brought by the insurer concerning its duty to indemnify the insured against claims alleged in an underlying personal injury action. The underlying court action involved injuries suffered in a car accident caused by Hughes during the course of her employment by Gateway Security Services. This case is Lincoln General Insurance Company v. Gateway Security Services, Inc., 2008 WL 4472932 (E.D.Cal.); this is a slip copy.
At the time of the accident, Hughes was commuting to work in her personal vehicle. The auto policy of Gateway Security extended coverage to employees using nonowned autos in Gateway's business or personal affairs. The insurer sought a declaration that it had no duty to indemnify Hughes on the grounds that the policy does not cover her use of her personal vehicle during her commute to and from work.
The court noted that the auto policy does provide coverage for nonowned autos under certain circumstances and that the vehicle used by Hughes was owned by her and not the insured company. The court also took note of the point that Hughes testified that she often used her personal car on company business such as going to the post office and buying cleaning supplies for the business. And, also noted was the fact that the insured company did not have any written guidelines, manuals, or other writings that discussed the reimbursement for employees' use of their personal vehicles.
The court found that the evidence showed that Gateway purchased the business auto policy and answered "no" to the question in the insurance application as to whether employees regularly used their own vehicles in company business. Moreover, the evidence showed that Hughes used her own car for reasons of comfort and by choice. Under such circumstances, the court felt that it was not objectively reasonable for the insured to expect insurance coverage for an employee's commute to and from work in her personal vehicle.
Any exposure she had to accident risks during the commute was not due to any business directive or expectation of Gateway, but rather was due to Hughes' own convenience and to provide a method of transportation to work. If the company had wanted to insure such an exposure, there were endorsements available to address this issue. But, Gateway did not avail itself of this possibility. Therefore, the court ruled that under any reasonable expectation of the insured, based on the insurance policy as drafted, there was no coverage for the personal vehicle of Hughes for this claim.
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