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FMG Law Blog Line

Posts Tagged ‘accident’

Is Georgia Game for Growing Bad Faith Liability?

Posted on: July 17th, 2018

By: Jessica Samford

As discussed in my last blog on bad faith, seeking bifurcation can be a proactive means to distinguish the issue of coverage from the issue of bad faith and appropriately manage the all too often unwieldy discovery process before it’s too late.  A recent case in Georgia is an interesting illustration of an insurer’s attempt to bifurcate issues after the discovery stage in a bad faith failure to settle claim in particular and is yet another cautionary example for insurers to carefully consider the increasing potential for extracontractual liability in Georgia.  Whiteside v. GEICO Indem. Co., 2018 U.S. Dist. LEXIS 87868, *3-*4 (M.D. Ga. May 25, 2018).

In that case, the trial court declined to bifurcate the issues of liability and proximate cause of damages at the trial stage as requested by Geico, which sought to have a jury determine whether or not Geico could be held liable for bad faith failure to settle before being presented with evidence of the default judgment entered against Geico’s insured of almost $3 million and causation of same.  Separation of liability and damages issues was not warranted according to the trial court because facts relating to Geico’s claim handling were relevant to both, and Geico’s concerns could be handled through proper jury instructions, special interrogatories, and the verdict form.  See also Whiteside v. GEICO Indem. Co., 2018 U.S. Dist. LEXIS 52761 (M.D. Ga. Mar. 29, 2018).  The trial court did, however, bifurcate the claim for punitive damages from the rest of the jury trial.

The result was a jury verdict of $2 million against Geico for failing to settle in response to a bicyclist’s demand for the $30,000 policy limit based on medical bills of almost $10,000 following a motor vehicle accident.  Previously, Geico had argued there was no coverage due to the insured’s failure to notify Geico of the subsequent lawsuit she was served.  Whiteside v. GEICO Indem. Co., 2017 U.S. Dist. LEXIS 203617, *6, 2017 WL 6347174 (M.D. Ga. Dec. 12, 2017).  Notwithstanding such a flagrant breach of the policy’s notice conditions, the trial court did not see coverage as being an issue since that coverage defense did not exist at the time Geico responded to the demand by offering to settle for about half the limits instead.

These unusual circumstances are certainly noteworthy, and extracontractual damages such as these are becoming less uncommon in Georgia bad faith cases.  FMG’s Insurance Coverage and Bad Faith BlogLine has already geared up to cover the Georgia Supreme Court’s upcoming rulings after granting cert on the scope of what triggers failure to settle liability in Georgia, not to mention the proposed changes to the Restatement of the Law of Liability Insurance and their impact.  Whatever is in the cards for extracontractual liability in Georgia, the risks presented by settlement demands should be evaluated in light of these current trends.

If you have any questions or would like more information, please contact Jessica Samford at [email protected].

Beware The Egg Shell Plaintiff

Posted on: February 13th, 2018

By: Jared K. Hodges

Recently, a jury from a historically conservative venue in Georgia awarded $2.7 million to a man who claims he was injured in a 4 m.p.h. rear-end collision. This unusual verdict should serve as an expensive reminder to insurance carriers, adjusters, and their counsel that not all low-speed, minor property damage incidents are alike.

Plaintiff Art Smith was 31 years-old when he was rear-ended in his Toyota Camry by John Bishop, who was driving a Ford F-150 pickup truck. Both Smith and Bishop were stopped at a traffic light in Cobb County, Georgia, when Bishop testified he “rolled into” Smith. Smith’s vehicle incurred merely $1,400 worth of damage, and he told the responding officers he was OK, before leaving the scene of the accident on his own.

The next day, however, Smith began experiencing stiffness in his neck, and he went to the emergency room. Smith underwent physical therapy and an MRI scan that revealed herniated discs in his neck, before he ultimately received cervical fusion surgery.

While Smith’s rapid spinal deterioration and treatment seems excessive given his young age, what Bishop could not have known, was Smith had undergone prior treatments for neck injuries several years before the accident. In Georgia, as in many jurisdictions, it is a tenant in torts that “a tortfeasor takes a plaintiff in whatever condition he finds him. A negligent actor must bear the risk that his liability will be increased by reason of the actual physical condition of the other toward whom his act [is] negligent.” AT Sys. Se., Inc. v. Carnes, 272 Ga. App. 671, 674, 613 S.E.2d 150 (2005). As the Smith case shows, the egg shell plaintiff is alive and well.

So many claimants and plaintiffs contend they are “egg shell plaintiffs,” it is easy for adjusters and defense counsel to become immune to these allegations, especially when there is minimal property damage, as there was in this case. Yet, insurers, adjusters, and defense counsel should remember that a tortfeasor takes a plaintiff in the condition where he finds him. If, for example, a plaintiff has a history of neck injuries that makes his neck susceptible to injury, it is possible a jury could find the defendant responsible for all subsequent neck treatments, even from an apparently minor injury-causing incident.

If you have any questions or would like more information, please contact Jared K. Hodges at [email protected]

Look Mom, No Hands!

Posted on: January 24th, 2018

By: Seth F. Kirby

On January 22, 2018 a Tesla Model S slammed into a parked fire truck on California’s 405 near Culver City.  The driver of the Tesla stated that prior to the accident he had the car’s autopilot system engaged.  This is just the most recent in a series of accidents in which Tesla’s autopilot system has been implicated.   At present, Tesla’s autopilot system is limited to what it refers to as Traffic-Aware Cruise Control.  This feature, which is also provided by other car manufactures, allows the car to maintain a lane and speed up or slow down depending upon traffic conditions.  The system relies upon driver input to observe and avoid stationary objects, which may be the true culprit that resulted in the recent crash.  Interestingly, all Teslas are equipped to function autonomously, taking its passengers to a destination with no human interaction.  Such features are not yet enabled due to the need to obtain regulatory approval, and the features of the current systems have been changed several times to encourage drivers to be attentive when behind the wheel (i.e. requiring the driver to maintain their hands on the wheel).

The advent of various levels of autonomous driving presents challenges and opportunities for the insurance industry.  Theoretically, the implementation of autonomous vehicles over the next decade or longer will result in fewer accidents and injuries as computers will be more reliable and predictable drivers.  Of course, machines can have errors, and on the road at 60+ mph, errors can have drastic consequences.  This begs the question.  As vehicles become autonomous, who will the auto carrier be insuring?  The easy answer is that the policy is issued to the individual that owns the car, so clearly the carrier is insuring the individual for their potential liability. In many states, however, the insurance “follows the car” and covers bodily injury and property damage arising from the use of the vehicle no matter who (or what) is operating the vehicle.  If the autonomous car makes a mistake, the law presently considers the human driver to be responsible for the vehicle’s operation and the liability is placed on the driver.  That seems reasonable in our present environment in which driver interaction is required for the system to operate.  It may seem less reasonable once the systems become fully automatic.  At that point, the individual’s carrier is essentially insuring the machine and its software, effectively turning auto liability policies into product liability policies.

In the short term, the transition between human and computer controlled driving presents problems as it can lull the driver into a false sense of safety.  It appears that when the driver has less interaction with the driving process their attention wanes and they may fail to avoid obvious hazards.  This is no different than the problems caused by other forms of distracted driving (texting, eating, tuning the radio), it is just a new dynamic that is being added to the roadway.  Eventually, the human element may be removed from the equation, but whether that will result in a net improvement in vehicle safety remains to be seen.  I fully suspect that many aspects of auto liability insurance will need to evolve as technology begins to take over the wheel.

If you have any questions or would like more information, please contact Seth Kirby at [email protected].

Construction Defects Can In Fact Be Accidents

Posted on: July 24th, 2013

By: Jonathan Kandel  

The Supreme Court of Georgia has further clarified the scope of coverage for construction defect claims under commercial general liability (CGL) insurance policies.  In Taylor Morrison Services, Inc. v. HDI-Gerling America Insurance Company, No. S13Q0462 (Ga. July 12, 2013), the court clarified that a construction defect claim constitutes an “occurrence,” as defined in a standard CGL policy, when the only damage alleged is to the work of the insured contractor.  While the court’s decision does not change the substantive scope of insurance coverage for construction defect claims, it shifts the focus of coverage.

In Taylor, a home builder’s insurance company filed a declaratory judgment action, seeking a declaration that there was no coverage for a class action lawsuit filed against the home builder.  The insured home builder had been sued by numerous homeowners, alleging that they suffered property damage to their houses, including water intrusion, cracked concrete slabs, and broken floors, due to the home builder’s alleged failure to include sufficient gravel under the homes’ foundations.  On appeal of the declaratory judgment action, the U.S. Court of Appeals for the Eleventh Circuit asked the Supreme Court of Georgia to clarify whether Georgia law requires damage to property other than the insured’s completed work for an “occurrence” to exist.  The Eleventh Circuit’s request appears to be based on the Supreme Court of Georgia’s decision in American Empire Surplus Lines Insurance Company v. Hathaway Development Company, 288 Ga. 749, 707 S.E.2d 369 (2011), which held that “an occurrence can arise where faulty workmanship causes unforeseen or unexpected damage to other property.”

The Supreme Court analyzed the usual and common meaning of “accident” – the operative term in the definition of “occurrence” – and concluded that the term refers to whether an event was intended or expected, not the nature or extent of the injury caused by the event or the identity of the person injured.  Based on its conclusion, the court held that an “occurrence,” as defined in a standard CGL policy, “does not require damage to the property or work of someone other than the insured.”

Recognizing that CGL coverage is not intended to insure against liabilities for the repair or correction of the insured’s faulty workmanship, the court explained that other provisions in a standard CGL policy account for that limitation.  For example, the court explained that coverage under a standard CGL policy is trigged by an “occurrence” that causes “property damage,” and a claim for the repair or replacement of faulty workmanship usually will not be for “property damage.”  The court also noted that claims for faulty workmanship may fall within the scope of certain “business risk” exclusions.

Finally, the court addressed whether the legal theory (or claim) asserted impacts the “occurrence” analysis.  Prior to Taylor, many Georgia courts found that there was no coverage when the only claim asserted against the insured was for breach of contract (not negligence).  The Supreme Court concluded that the legal theory (or claim) asserted usually will not determine whether the incident constitutes an “occurrence,” with one notable exception.  That being, when a “theory of liability is absolutely and necessarily inconsistent with the notion of an ‘accident’ – that is, when the theory of liability and the idea of an ‘accident’ are mutually exclusive – a claim premised upon such a theory of liability” cannot possibly constitute an “occurrence.”  The court identified fraud claims as an example of a theory of liability that is necessarily inconsistent with meaning of “accident.”   Moving forward, the availability of insurance coverage for construction defect claims will turn on whether there is “property damage,” as defined in a standard CGL policy, and whether exclusions to coverage apply.  The court’s decision brings Georgia law in line with the strong recent trend in other jurisdictions, including Florida, Maryland, South Carolina, Texas, and Virginia, among others.

 

The Marketing Risks of Insurance Related Litigation

Posted on: October 4th, 2012

By: Seth Kirby

Nationally syndicated radio host Clark Howard recently targeted auto insurer Progressive in his “Clarkrageous Moment,” a segment in which he expresses his outrage over various topics.  In this instance, his outrage stemmed from an auto accident in Maryland that caused the death of Kaitlynn Fisher.  Ms. Fisher was insured by Progressive, and her family submitted a claim for uninsured motorist benefits under her Progressive Policy, which was not immediately paid.  Mr. Howard was outraged that Progressive had the audacity to participate in a lawsuit against the at fault driver, arguing that Ms. Fisher, its own insured, was responsible for the accident.  Mr. Howard came across this case because of the social media efforts of Ms. Fisher’s brother.  He posted about the situation on his personal blog, and the story went viral, resulting in an outpouring of online reports and numerous mentions in various main stream media.

With condolences to the Fisher family for their loss, and putting aside the merits of the case, from a procedural standpoint, Progressive was simply exercising their rights as a UM carrier to determine who was responsible for the accident.  Such a system is used in many states and often requires a judgment against the tortfeasor before a UM carrier is required to pay damages to its insured.  The fact that such arguments are allowed, does not automatically shield a carrier from public backlash should their ligation decisions be challenged.  Indeed, in this instance, the fact that the carrier had a legal right to argue that the accident was the fault of their insured was either overlooked by many media outlets, or buried beneath headlines like “Progressive insurance on defense after dodging paying family of a client killed in a crash.” Matthew Barakat, Chicago Sun-Times, August 17, 2012.

While it is often said that any press is good press, I doubt that applies in this situation.  Not only did Progressive lose the underlying case, it has also suffered a blow in the eyes of the public.  But what could have been done to stop the backlash other than avoiding the suit altogether?  Insurance litigation has always required carriers to take public positions (in the form of pleadings) that are often against the financial interests of their insureds, but until recently, such lawsuits were not the subject of internet blogs and Facebook posts.  In our current social media environment, it seems that the marketing impact of insurance litigation must be considered along with the merits of each case.  When litigation is warranted, care must be taken to educate any interested media outlets regarding the purpose of the litigation.  Of course, doing so may be easier said than done.