This was an insurance agency malpractice action in which the plaintiff corporation, Credit Suisse Group, contended that when it set up an affiliate to foreclose on and take ownership of a New Orleans hotel in 2000, it specifically requested coverage for both itself and the affiliate. The plaintiff contended that the defendant insurance agency negligently failed to obtain an endorsement that provided it with coverage. In 2002, two class action suits relating to alleged mold in the hotel were filed. The insurance company disclaimed coverage as to the plaintiff and the case proceeded into discovery with the insurance company only covering the affiliate. The plaintiff maintained that the class of plaintiffs was growing, that it believed that the venue for the underlying litigation was unfavorable, and that it had no realistic choice, but to agree to pay $3,385,000, or half of the $7,700,000 settlement of the underlying case.
The defendant maintained that the policy contained a blanket endorsement that covered the plaintiff corporation, that the plaintiff negligently failed to attempt to enforce this coverage by bringing a declaratory judgment action against the carrier and that the plaintiff released the carrier and continued the litigation while it was not covered. The plaintiff contended that the alleged endorsement was unintelligible and not merely ambiguous, denying that it reasonably believed that it could be interpreted. The clause provided that “All persons or organizations that are required by written contract is (are?) a protected person or organization.” The plaintiff maintained that the clause did not additionally discuss the requirements which must be present for the party to be covered and contended that the clause was unintelligible. The defendant countered that the plaintiff did not bring a declaratory judgment action against the carrier seeking enforcement of coverage, and that in view of this fact, the plaintiff corporation’s position should be rejected. The plaintiff countered that it appeared that the class was growing, that it believed that it was litigating the underlying case in an unfavorable venue and that in view of these factors, and the unintelligible nature of the insurance clause, it acted appropriately.
The defendant also argued that the jury in this case should consider that the plaintiff corporation failed to advance its position in the underlying litigation properly. The defendant established that because of repeated missed deadlines for exchanging reports and because it was held to have failed to follow other procedural requirements, the plaintiff corporation was barred from producing liability or damages experts in the underlying litigation. The defendant maintained that in view of this factor, the jury clearly should not permit the plaintiff to shift its obligations to the defendant. The plaintiff had also named an insurance wholesaler who had obtained the coverage after the agent sent in the request. This party argued that it acted appropriately in obtaining the coverage for which the agent asked.
The case(s) cited herein was(were) reprinted with the permission of the publisher Jury Verdict Review Publications, Inc. www.jvra.com
These real life claims scenarios and jury verdicts are sponsored by InsuranceNewsletters.com, the premier provider of client newsletters for Insurance Agencies. While AgencyEquity.com will feature cases that are of interest to insurance agencies, InsuranceNewsletters.com content will focus on cases that are of interest to insurance consumers. Properly educating clients on real life situations helps them better understand the need for proper liability coverage. To learn more, go to InsuranceNewsletters.com.