TT&H eNotes: Liability – August 2018

CLIENT ADVISORY

MARYLAND CLIENT ADVISORY

Maryland Court of Special Appeals rules past medical expenses in medical malpractice cases may be reduced by total write-offs.

In Netro v. Greater Baltimore Medical Center, September Term 2016 (July 5, 2018), the Court of Special Appeals of Maryland upheld the Circuit Court for Baltimore County’s grant of a Defendant’s post-trial motion to reduce a jury verdict for past medical expenses in a medical malpractice case by the amount of write-offs Plaintiff received from medical providers. The Court also ruled that Maryland law is not preempted by the federal Secondary Payer Act. As you may recall, these same parties were involved in Netro v. Greater Baltimore Medical Center, 891 F.3d 522 (4th Cir. 2018), where the Fourth Circuit ruled that Plaintiff was not entitled to double damages when Defendant waited to pay a money judgment that included conditional Medicare payments until after the trial court reduced the judgment amount and entered an amended final judgment.

Questions about this case can be directed to Renita Collins, at (410) 653-0460 or rcollins@tthlaw.com.

SIGNIFICANT CASE SUMMARIES

PENNSYLVANIA CASE SUMMARIES

Walker v. Save-A-Lot

United States District Court for the Eastern District of Pennsylvania

No. 18-95

Decided: June 12, 2018

A pallet display of bottled water in shopping aisle is a “known and obvious condition” as a matter of law.

Background

Plaintiff Walker was shopping in the Save-A-Lot when she tripped and fell over a pallet displaying bottled water for sale. Plaintiff had passed a pallet display of bottled water, pushed her shopping cart, and then “parked” it next to a second pallet display of bottled water. She then walked approximately two feet to a frozen food case in order to choose an item. After she chose her item, she took two steps backward from the frozen food case and tripped over the second pallet of water. Plaintiff claimed that Defendant was negligent.

Defendant filed a Motion for summary judgment and argued that the pallet of water represented an open and obvious condition, which relieved the store from liability. Plaintiff claimed that she did not see the pallet as she was “focused” on choosing her frozen food item. She further argued that whether a condition was open and obvious was an issue of fact for the jury.

Holding

The District Court granted summary judgment. The Court held that the pallet water display was a known and obvious condition and that no reasonable jury could find Defendant breached any duty of care owed to Plaintiff. No duty is owed when the alleged dangerous condition, in this case the display, is known and obvious such that both the condition and the risk are apparent to a reasonable person, in the position of the customer. Such an obvious condition relieves the defendant of any duty, unless the Defendant would anticipate the harm despite the obviousness of the condition. The Court also held that customers have a duty to look where they are going and note obstacles while walking, even in the presence of sale displays. As the surveillance video showed, Plaintiff walked past the first display, parked her cart and stood next to the second display, which had water stacked to eye level, and was walking backwards at the time she fell.

Questions about this case can be directed to Rebecca Sember-Izsak, at (412) 926-1446 or resember@tthlaw.com.

Hovatter v. CSX Transp., Inc.

Pennsylvania Superior Court

2018 Pa. Super. 205

Decided: July 13, 2018

Exposing Defendant to a forum known for higher verdicts, settlements and costs helps support dismissal of interstate FELA case filed in Philadelphia County.

Background

Plaintiffs were railroad workers who were injured on the job while working for CSX.  Hovatter lived in Maryland and was injured there.  Wilson lived in Kentucky and worked for CSX in Kentucky, Ohio and Indiana.  He was injured in a state other than Pennsylvania. CSX hauled freight through Philadelphia County on a regular basis. Plaintiffs filed separate complaints against CSX, and CSX moved to dismiss both actions under the doctrine of forum non conveniens. It had been stipulated that if Plaintiffs dismissed their actions in Philadelphia and filed them in a more appropriate forum, CSX would not object based upon venue or personal jurisdiction, and would not raise the statute of limitations as a defense, since both actions were timely filed in Philadelphia. The Trial Court denied CSX’s motion to dismiss, holding that Plaintiffs’ choice of forum under FELA was entitled to “particular deference.”

Holding

In a consolidated appeal from the denial of the motion to dismiss based upon the doctrine of forum non conveniens, the Superior Court reversed and remanded the case to be dismissed by the Lower Court. The Superior Court took note of CSX’s stipulation not to object based upon venue or personal jurisdiction, and not to raise the statute of limitations as a defense, provided suit was filed in an alternative forum.  In addition, as Plaintiffs themselves resided outside Pennsylvania, their selection of Pennsylvania as the forum for their action “may be less stringently considered.”  Moreover, the application of the doctrine of forum non conveniens in an interstate context solves the problems faced by defendants in defending a case in a forum known for large recoveries, large settlements, and greater expenses.

Questions about this case can be directed to Joe Holko, at (610) 332-7005 or jholko@tthlaw.com.

Maas v. UPMC Presbyterian Shadyside

Pennsylvania Superior Court

No. 185 WDA 2017

Decided: June 29, 2108

Though the patient did not verbalize a specific threat against a particular victim nearby, or any other named individual, he did communicate his intent to kill a neighbor to hospital personnel and, as such, the Defendants had a duty to communicate a reasonable warning to the tenants next door.

Background

Terrence Andrews attacked and killed Lisa Maas, a neighbor who lived four doors away in his Oakland area apartment building, Hampshire Hall. Mr. Andrews had a long history of mental illness and had recently transitioned from personal home care to the Oakland apartment. While staying at the Oakland apartment in 2008, Mr. Andrews made a number of visits to the ER at UPMC Presbyterian d/b/a Western Psychiatric Institute and Clinic (WPIC). During one of his visits, he described a plan “to kill the next-door neighbor and everyone” and “eat his pills.”
On May 29, 2008, Pittsburgh Police responded to a call of a possible domestic dispute at Hampshire Hall. The officers observed Mr. Andrews covered in blood leaving the apartment of Ms. Maas. Ms. Maas was dead as the result of multiple stab wounds with scissors. Mr. Andrews admitted to the killing and told officers that he had previously requested to be admitted to WPIC because he was going to kill someone as his medication was not working.

Holding

The Superior Court held that the trial court properly denied summary judgment in favor of Defendant UPMC Presbyterian, finding that the mental health professionals involved in Mr. Andrews’ treatment had a duty to warn given the facts presented. Although he did not verbalize a threat to anyone specific, he did communicate his intent to kill a neighbor. The identities of the fourth floor tenants nearby could have been readily ascertained and UPMC Presbyterian had a duty to communicate a reasonable warning under the circumstances.

Questions about this case can be directed to John Lucy, at (717) 441-7067 or jlucy@tthlaw.com.

Webb-Benjamin, LLC v. Int’l Rug Group, LLC

Pennsylvania Superior Court

No. 1514 WDA 2017

Decided: June 28, 2018

Superior Court reverses Trial Court’s Order sustaining Preliminary Objections, finding that Pennsylvania has general personal jurisdiction over Plaintiff’s claims because Defendant registered to do business in Pennsylvania as a foreign association.

Background

Plaintiff is a Pennsylvania company that provides assistance and support in arranging and administering home furnishing sale events. Defendant is a Connecticut company that arranges and administers sales events for sellers of home furnishings. The parties entered into a contract in 2016 in which Plaintiff would retain a client, Eisenbergs’ Fine Furniture of Calgary, for Defendant, and to render services to a furniture sale for Eisenbergs in Calgary, Canada, in exchange for commissions on the furnishings sold. Defendant agreed to make weekly payments of sales commissions and a single payment at the conclusion of the Eisenbergs’ sale, based upon a percentage of gross profits. In January 2017, the parties “ended their relationship” and “agreed that Plaintiff . . . would be entitled to its agreed-upon sales commission for the duration of the Eisenbergs’ event.” On February 25, 2017, Defendant registered to do business in Pennsylvania as a foreign association. Following the conclusion of the Eisenbergs’ sale in May 2017, Defendant failed to pay Plaintiff for the outstanding agreed upon commission.

Plaintiff filed an Amended Complaint in Westmoreland County, Pennsylvania alleging breach of contract. Defendant filed Preliminary Objections alleging, among other things, that Pennsylvania lacked personal jurisdiction over Defendant. The Trial Court found that Pennsylvania’s long arm statute, 42 Pa.C.S.A. § 5301, does not provide jurisdiction over claims that are based upon events that occurred prior to a foreign association’s registration in Pennsylvania. As the parties entered into an agreement in 2016, prior to Defendant’s registration, the Court had no jurisdiction over Plaintiff’s claims against Defendant.

Holding

Superior Court reversed. The Court analyzed 42 Pa.C.S.A. § 5301 and found that the statute does not preclude claims against foreign associations registered in Pennsylvania arising from events that occurred prior to registration. The Court also rejected Defendant’s argument under the Due Process Clause of the 14th Amendment of the U. S. Constitution that its registration as a foreign association in Pennsylvania was not sufficient to render it “at home” in Pennsylvania, which would preclude jurisdiction by a Pennsylvania Court.

Questions about this case can be directed to Joseph Shields, at (570) 820-0240 or jshields@tthlaw.com.

Matranga v. U-Haul Co. of Pa.

Pennsylvania Superior Court

No. 1067 EDA 2017

Decided: June 22, 2018

Superior Court upholds summary judgment for U-Haul in negligence action where U-Haul was Plaintiff’s statutory employer and where Plaintiff contractually waived his claims against U-Haul.

Background

Plaintiff Matranga, was employed by staffing agency, McGrath Technical Staffing. U-Haul, a client of McGrath, entered into a contract with McGrath that included a waiver, wherein employees would waive their right to pursue claims against U-Haul for workplace injuries. The contract also provided that all workers assigned to U-Haul are employees of McGrath and that such workers are not employees of U-Haul. Matranga suffered a serious injury as a result of a forklift accident while at the U-Haul facility and subsequently brought a negligence action against U-Haul.
U-Haul filed a motion for summary judgment claiming that it was not liable for Matranga’s injuries based on the defenses of, among other things, statutory employer and contractual waiver/release. The Trial Court granted said motion and dismissed Matranga’s complaint, with prejudice.

Holding

The Superior Court upheld the entry of summary judgment. The Court noted that despite the language of the contract indicating that Matranga was not a employee of U-Haul, the evidence clearly showed he was a statutory employee of U-Haul. Accordingly, Matranga’s exclusive remedy was to seek recovery under the Pennsylvania Workers’ Compensation Act. Further, the Court found that Matranga had contractually waived his claims against U-Haul and that he presented no evidence to nullify his written waiver.

Questions about this case can be directed to Brook Dirlam, at (412) 926-1438 or bdirlam@tthlaw.com.

Anthony v. Parx Casino

Pennsylvania Superior Court

No. 2904 EDA 2017, 2018 Pa. Super. 162

Decided: June 12, 2018

Superior Court reaffirms that a corporation is not subject to venue based upon the activities of a sister corporation.

Background

In October 2015, Plaintiff tripped and fell over a broken walkway and curb while visiting Defendant Parx Casino and Racing’s (Parx) facility located in Bucks County, PA. Parx, the largest casino gaming complex in Pennsylvania, is owned and operated by Defendant Greenwood Gaming and Entertainment, which is a wholly-owned subsidiary of Greenwood G & E Holding, which is a wholly-owned subsidiary of Defendant Greenwood Racing. In addition to owning entities related to Parx, Greenwood Racing owns various other unrelated corporations that operate in Philadelphia County. Plaintiff filed his Complaint in the Court of Common Pleas of Philadelphia County. In sustaining Parx’s preliminary objections alleging improper venue, the Trial Court ordered the case to be transferred at Plaintiff’s cost.

Holding

On appeal, the Superior Court affirmed its 2012 decision, which dealt with analogous facts and the very same Defendant, Parx, holding that a corporation is not subject to venue based solely upon the business activities of a sister corporation. The Superior Court held that Plaintiff failed to show that Greenwood Racing exercised “overwhelming control” over Parx to satisfy the “domination and control” exception to subject Parx to litigation in Philadelphia County. Additionally, the Court held that an anticipated joint venture between Parx and Greenwood Racing for the issuance of a casino license in Philadelphia County failed to create the necessary quality and quantity of acts to sustain venue in Philadelphia County.

Questions about this case can be directed to Jeff Criswell, at (412) 926-1443 or jcriswell@tthlaw.com.

MARYLAND CASE SUMMARIES

Dolan v. Kemper Independence Ins. Co.

Maryland Court of Special Appeals

No. 0084, September Term 2017

Decided: June 28, 2018

Where submitting to an examination under oath (EUO) is a condition precedent to coverage, a policy holder’s refusal to do so is a material breach of the policy allowing the carrier to disclaim coverage. A deposition is not a substitute for an EUO.

Background

Plaintiff Dolan was a passenger in an automobile accident. Mr. Dolan requested UIM benefits under his insurance policy. After several formal requests from his insurance carrier, Kemper. Mr. Dolan refused to attend an examination under oath (EUO). Mr. Dolan eventually filed suit against the driver and Kemper; he agreed to attend a deposition as a part of that lawsuit. Kemper filed a separate declaratory judgment action seeking to have the court declare that the EUO was a prerequisite to receiving UIM coverage and that Mr. Dolan breached his contract with Kemper when he refused to attend an EUO. The Trial Court ruled that an EUO administered by Kemper was a prerequisite to Mr. Dolan receiving UIM benefits; his failure to do so was a material breach of the insurance contract. Therefore, Mr. Dolan was not entitled to UIM benefits under the Kemper policy. Mr. Dolan appealed.

Holding

The Court of Special Appeals of Maryland affirmed the Trial Court’s ruling and held that an insured breaches an insurance contract when he refuses to submit to an EUO. Further, a breach of an insurance contract allows the insurer to disclaim coverage. Merely submitting to a pretrial deposition in a related lawsuit does not satisfy the EUO requirement because a deposition and EUO serve vastly different purposes—EUO’s relate to the insurer’s investigation of a claim rather than for related litigation not involving the insurer. In addition, the procedures are different because an EUO is not strictly subject to the rules of civil procedure.

Questions about this case can be directed to Renita Collins, at (410) 653-0460 or rcollins@tthlaw.com.

Harleysville Preferred Ins. Co. v. Rams Head Savage Mill, LLC

Maryland Court of Special Appeals

September Term, 2016, No. 2409

Decided: June 28, 2018

A duty to defend exists even where a tort suit does not allege facts that clearly bring a claim within policy coverage, if there is a potentiality that the claim could be a covered claim.

Background

Mr. Muehlhauser was the general manager and majority owner of a Rams Head bar and restaurant located in Savage Mill. In 2014, a female patron was using the women’s restroom at Rams Head when she discovered a portable camera. In 2015, Muehlhauser pled guilty to criminal charges for video taping females in the facility’s restroom. Two different sets of Plaintiffs filed class action lawsuits in the Circuit Court for Howard County due to the visual surveillance of female patrons and employees using the toilets for prurient intent and to fulfill his sexual perversions. Plaintiffs sought damages for, among other things, emotional distress and severe humiliation due to Muehlhauser’s tortious conduct. Muehlhauser was alleged to have been acting on behalf of Rams Head in taping the females. During the period of the allegations, Rams Head had a commercial general liability insurance policy with Harleysville. Harleysville sought a declaratory judgment that it did not owe a defense to Rams Head or Muehlhauser for either action because the complaints did not allege covered injuries. The Circuit Court declared that Harleysville had a duty to defend Rams Head and Muehlhauser against both complaints.

Holding

The Court of Special Appeals affirmed in part and reversed in part. It concluded that Harleysville had a duty to defend Rams Head because the plain language of the insurance policy covered the “invasion of the right of private occupancy of a room . . . that a person occupies, committed by or on behalf of its owner . . . .” Because the policy language applied, a duty to defend Rams Head existed. However, because the invasion of privacy by Muehlauser was criminal and the policy excluded coverage for conduct arising out of criminal acts, Harleysville had no duty to defend Muehlhauser.

Questions about this case can be directed to Salvatore Cardile, at (410) 653-0460 or scardile@tthlaw.com.

NEW JERSEY CASE SUMMARIES

Wear v. Selective Ins. Co.

New Jersey Superior Court, Appellate Division

No. A-5526-15T1, ____ N.J. Super. ____

Decided: July 20, 2018

Insurer not obligated to defend toxic exposure action due to the anti-concurrent and anti-sequential language in the policy exclusion.

Background

Defendant appealed from the grant of summary judgment in favor of Woodbury Medical Center Associates ordering Defendant to reimburse and fund the defense of Woodbury in an underlying environmental personal injury claim. Plaintiff Wear worked in a building owned by Woodbury and sued Woodbury for injuries from exposure to toxic conditions in the building, including mold and filter fragments from the HVAC system.  Selective had issued a business owners insurance policy to Woodbury, which included liability coverage for bodily injury. However, this coverage included a mold, fungi and/or bacteria exclusion. Selective issued a denial of coverage letter to Woodbury, based on the exclusion in the policy. Selective asserted that the anti-concurrent and anti-sequential language in the exclusion precluded coverage, even if other concurrent or sequential causes contributed to Plaintiff’s injury.

Woodbury filed a declaratory judgment action seeking to have Defendant defend and indemnify Woodbury in Plaintiff’s litigation.  The Trial Court granted partial summary judgment to Woodbury and ordered Selective to fund and reimburse Woodbury’s defense costs, noting that Plaintiff had alleged her injuries were also caused by filter particles from the HVAC filter in addition to mold/fungi. Plaintiff’s claim against Woodbury proceeded to arbitration and the arbitration panel rendered an award in Plaintiff Wear’s favor for “workplace exposure to . . . mold.”  Plaintiff Wear then intervened in Woodbury’s declaratory judgment action, arguing that Selective was obligated to pay her arbitration award.  The Trial Court declined to order payment of the award.

Holding

The Appellate Division affirmed in part and reversed in part. It held that Selective should not have been obligated to defend, because the anti-concurrent and anti-sequential language in the exclusion required mold to be excluded as a cause of Plaintiff’s injury in order to trigger coverage.

This case reaffirmed the carrier’s option, first set forth in the Burd case, to deny the provision of a defense, where coverage is excluded for one or more of the alleged causes of injury claimed in a plaintiff’s complaint, including where such potential causes are mutually exclusive. However, the decision not to defend the insured might make an insurer liable for reimbursement of defense costs, if the cause of the plaintiff’s injury is determined to be one that is covered.  In this case, Selective’s anti-concurrent and anti-sequential language was cited by the Appellate Division as potentially removing coverage and, therefore, the duty to defend.

Questions about this case can be directed to Mark Sander, at (856) 334-0415 ext. 8915 or msander@tthlaw.com.

Hill v. St. Barnabas Med. Ctr.

New Jersey Superior Court, Appellate Division

2018 N.J. Super. Unpub. Lexis 1699

Decided: July 16, 2018

The reasonable time in which a commercial property owner must act to clear snow and ice from public walkways does not begin until after a storm ends.

Background

Plaintiff Hill filed a negligence suit for personal injuries against Defendants St. Barnabas Medical Center (SBMC) and Barnabas Health Maintenance Companies (BHMC) from a slip and fall. On January 21, 2014, Plaintiff Hill arrived at SBMC for pre-admission tests for a surgical procedure. Plaintiff testified that it was snowing during her trip from home to the hospital. Plaintiff was wearing “regular flat shoes.” The snow just began to cover the ground of the hospital parking lot when she arrived. Plaintiff had no trouble walking into the hospital from the car. After several hours, Plaintiff left the hospital exiting from the same entrance and taking the same pathway to her vehicle. Plaintiff’s expert report indicated that 2-3” of snow had accumulated between 9 a.m. – 2 p.m. As Plaintiff was about to leave, she received a call to return to the hospital to provide a urine sample. Returning to the hospital, Plaintiff walked the same pathway when it was snowing heavily. The path was slippery and at least half an inch of snow/ice was on the ground where she walked. After providing the sample, Plaintiff was returning to her vehicle when she slipped and fell on the crosswalk outside the main entrance of the hospital. The Trial Court granted summary judgment in favor of the Defendants.

Holding

The Appellate Court affirmed, citing that the Plaintiff herself testified that it was snowing heavily when she left the hospital to return to her car the second time and as such, Defendants were not obligated to remove ice and snow until after the storm ended so liability could not be imposed. The Court explained further that the evidence also established that Defendants had taken reasonable actions to address the accumulation of snow and ice while the storm was continuing.

Questions about this case can be directed to Paraskevoula Mamounas, at (610) 332-7029 or pmamounas@tthlaw.com.

Molino v. Twp. of South Orange

New Jersey Superior Court, Appellate Division

No. A-3548-16T2

Decided: July 12, 2018

In New Jersey, a municipal parking authority is entitled to snow and ice removal immunity.

Background

Plaintiff Molino alleged she sustained personal injuries while walking with her husband in the Township of South Orange, NJ when she slipped and fell on an icy sidewalk adjacent to a municipal parking lot. The municipal parking lot was owned by the Township and operated by the South Orange Parking Authority. Snow and ice removal services were performed by the Township per a contract with the Parking Authority. Plaintiff filed suit against the Township and the Parking Authority. The Trial Court granted summary judgment for the Township and the Authority.

Holding

On appeal, the Court affirmed the Trial Court’s grant of summary judgment. The Court found that the Parking Authority was not deprived of the common law snow and ice removal immunity because it collected parking fees and operated a jitney service. The Court noted that the Parking Authority was operating within its bounds as a public entity and used the revenue raised through the parking fees and jitney service to finance the cost of its operation. The raising of revenue to finance the cost of the Parking Authority’s regulation does not amount to operating a commercial venture. The Parking Authority was thus entitled to common law snow and ice removal immunity.

Questions about this case can be directed to Michael Bishop, at (610) 332-7009 or mbishop@tthlaw.com.

DC CASE SUMMARY

Ashbourne v. Hansberry

United States Court of Appeals for the D.C. Circuit

No. 17-5316, 2018 U.S. App. LEXIS 17876

Decided: June 29, 2018

The Doctrine of Res Judicata bars Title VII employment discrimination claims that could have been brought in previous Federal Court lawsuit, but were pursued administratively.

Background

Plaintiff Ashbourne a former IRS tax attorney, was terminated in May 2011. Ashbourne challenged her firing in Federal Court and in a Treasury Department administrative proceeding. In late 2011, she filed three federal lawsuits in Maryland alleging violations of her constitutional right to due process and other rights arising under several federal laws. These lawsuits were consolidated and transferred to the U.S. District Court for the District of Columbia (“Ashbourne I”). Meanwhile, Ashbourne filed an administrative complaint with the Treasury Department in November 2011 alleging Title VII employment discrimination claims. Treasury denied the Title VII claims in December 2012 and informed Ashbourne that she could appeal to the EEOC or file a lawsuit in federal court. She appealed to the EEOC in January 2013 and did not join the claims with Ashbourne I.

Ashbourne I was transferred to federal court in D.C. and the Court ordered Ashbourne to file a consolidated complaint addressing all of her claims. When Ashbourne filed her consolidated complaint, she did not mention her Title VII claims. In September 2015 the EEOC dismissed the Title VII claims under 29 C.F.R. § 1614.409, which prohibits pursuing administrative and judicial remedies at the same time. After the EEOC dismissal, Ashbourne again did not notify the Court of her Title VII claims or join the claims with Ashbourne I. Ashbourne I ended badly for Ashbourne, in a combination of summary judgment and dismissal with prejudice. Eight months after the EEOC dismissal and six months after the conclusion of Ashbourne I, Ashbourne filed another federal lawsuit against Defendants, this time for Title VII claims (“Ashbourne II”). The Court dismissed Ashbourne II as barred by res judicata.

Holding

On appeal, the Court addressed the issue of whether Title VII’s requirement of exhaustion of administrative remedies changes the application of res judicata, or claim preclusion, which prevents the same parties from litigating the same claim multiple times. Judge Millett’s opinion found that the issue in Ashbourne II “fits res judicata doctrine to a T,” and held that res judicata applies to Title VII claims such as Ashbourne’s where it was “entirely feasible” for Ashbourne to have included the Title VII claims in her initial lawsuit. The Court’s opinion noted that Ashbourne had numerous opportunities to join her Title VII claims with her pending lawsuit and suggested that the outcome might have been different if Ashbourne had been able to show a barrier to joining her Title VII claims with the pending Ashbourne I lawsuit. The Court affirmed the judgment of the district court dismissing Ashbourne II under the doctrine of res judicata.

Questions about this case can be directed to Peter Biberstein, at (202) 945-9506 or pbiberstein@tthlaw.com.

VIRGINIA CASE SUMMARY

Nat’l Liab. & Fire Ins. Co. v. State Farm Fire & Cas. Ins. Co.

United States Court of Appeals for the Fourth Circuit

No. 17-1969 (Unpublished)

Decided: May 31, 2018

“Other insurance” provisions which fall within the confines of the Omnibus Statute cannot use excess liability language to remove or reduce liability of an insurer.

Background

A yacht, insured by State Farm and National Liability and Fire, caught fire and injured two passengers. The passengers sued the yacht’s owner, the named insured on both policies. Each policy had an “other insurance” provision; State Farm’s provided for a pro rate share of any claim up to the limit of its policy, and National’s provided coverage only after any other coverage was exhausted. National sued for a declaratory judgment concerning the interpretation of the two provisions, maintaining that State Farm should be required to pay up to its limit. State Farm asserted that the language of National’s policy was void under Va. Code §38.2-2204 (“Omnibus Statute”), and National should be required to pay a pro rata share.

The District Court held that National’s provision was valid because it was not subject to the Omnibus Statute, and that the two policies “other insurance” provisions should be reconciled by requiring State Farm to pay up to its limits before National would have to make any payments.

Holding

The Court of Appeals agreed with State Farm that National’s provision was actually void under the Omnibus Statute, and reversed and remanded for further proceedings. The Omnibus Statute applies to liability insurance for bodily injury resulting from ownership, maintenance, or use of motor vehicles, aircrafts, and private watercrafts, and prohibits any provisions which “[purport] or [seek] to limit or reduce the coverage.” Because an “other insurance” clause which falls within the purview of the Omnibus Statute and applies only in excess situations necessarily limits liability of the insurer, the Court held that such a provision is void. However, any policy not covered by the Statute could continue to use such limitations, such as homeowners’ policies.

Questions about this case can be directed to Collin Shannon, at (202) 945-9504 or cshannon@tthlaw.com.