Insurance Law Update
August 2013
Brown & James 
General Defense & Insurance
Law Symposium 
January 23, 2014
Brown & James presents its annual Symposium on trends in the law at the Sheraton Westport Hotel.  Invitations will be forthcoming this fall.  Save the date.
In This Issue
Case Law Updates
TCPA Damages are Covered Damages and Extra-Contractual Damages are Recoverable if Insurer Fails to Defend
The Missouri Supreme Court, in Columbia Casualty Co. v. Hiar Holding, LLC, No. SC93026 (Mo. banc, August 13, 2013), has held that statutory damages awarded under the Telephone Consumer Protection Act (TCPA) are covered damages for "property damage" and "advertising injury" under general liability insurance policies.  The Supreme Court's decision, which overruled Court of Appeals decisions to the contrary, makes plain that insurers in Missouri must defend and indemnify their insureds against TCPA claims brought in Missouri unless their policies contain clear and unambiguous limitations on coverage for such claims.

The Missouri Supreme Court's decision also changes Missouri law governing the damages that may be recovered against an insurer that breaches its duty to defend.  In Hiar Holding, the Supreme Court held the insurer had to satisfy the entire $5 million class action settlement entered into by the insured and the TCPA class members, although the insurer's liability limits were $2 million and there was no bad faith claim pending. Remarkably, the Supreme Court's decision conflated breach of contract claims against insurers with actions for bad faith.  The Court held that when an insurer wrongfully denies coverage and fails to provide a defense, the insurer must indemnify its insured for all damages flowing from the insurer's breach of its defense obligation, regardless of the insurer's policy limits.

The Hiar Holding case is a must read decision.  Every insurer considering a declination of coverage in Missouri should consider the impact of the Supreme Court's holding concerning extra-contractual damages.
Co-Employee Liability Claims Strictly Limited
In a very broadly written decision, the Missouri Court of Appeals in Carman v. Wieland, No. ED98872 (Mo. App. E.D., July 16, 2013), held that an employee may not maintain a common-law negligence action against a co-employee for an on-the-job injury unless the co-employee breaches a duty owed to the plaintiff that is entirely independent of their employer's non-delegable duty to provide a safe workplace.  In Carman, the defendant co-employee backed a truck over the plaintiff while working.  The Court of Appeals held that the employee's duty to operate the truck safely was a part of, or subsumed within, the employer's duty to provide a safe workplace.

The Carman decision is significant because it may stem the tide of co-employee liability claims that have flooded Missouri courts following the decision in Robinson v. Hooker, 323 S.W. 3d 418 (Mo. Ct. App. 2010).
Anti-Stacking Language Upheld in Automobile Liability Policy
Anti-stacking language in an automobile liability policy is valid and unambiguous declared the Missouri Court of Appeals in
Allstate Property and Casualty Insurance Company v. Davis, No. WD75439 (Mo. App. W.D., July 23, 2013).  The Court, in deciding the stacking question for the insurer, rejected the argument that the Missouri Motor Vehicle Financial Responsibility Law (MVFRL) dictated a different result. Significant to the Court's decision was the fact that the Allstate policy insured three vehicles under a single policy, and, thus, the Court of Appeals distinguished the Missouri Supreme Court's decision in Karscig v. McConville, No. 303 S.W. 3d 499 (Mo. banc 2010), where the Supreme Court permitted the stacking of liability insurance policies because there were two separate policies at issue, an operator's policy and an owner's policy, which the Supreme Court held had to each provide the minimum coverage mandated by the MVFRL.  The United States District Court for the Western District of Missouri recently reached the same conclusion in Owners Insurance Co. v. Mann, No. 12-1441-CV-W-SOW (W.D. Mo., August 1, 2013).
 
For a good understanding of Missouri governing the stacking of automobile liability insurance policies, a thorough review of the Karscig, Davis, and Mann decisions is recommended.
Absolute Pollution Exclusion Requires a "Release" of Waste or Toxins to Apply
In Doe Run Resources Corporation v. Lexington Insurance Company, Nos. 12-2215 & 12-3498 (8th Cir., June 13, 2013), the United States Court of Appeals for the Eighth Circuit, in two companion decisions, provided an in-depth analysis addressing the application of the absolute pollution exclusion in Missouri. The Eighth Circuit held that damages from lead tailings and by-products from lead smeltering plants, when released into the air and onto adjacent property, were excluded from liability coverage under the absolute pollution exclusion.  However, the Eighth Circuit also held when there are allegations of injuries resulting from the public's contact with the waste product on the insured's property where the insured, in essence, stored the product in piles, there was no "release" of the waste; therefore, the exclusion may not apply as a defense to coverage.
 
We recommend the reading of both decisions for an excellent discussion on the application of the absolute pollution exclusion.
Open and Obvious Condition is Complete Defense
In Holzhausen v. Bi-State Development Agency, et. al., No. ED98252 (Mo. App. E.D., August 13, 2013), the Missouri Court of Appeals held that when the plaintiff fell off a steep drop-off on an embankment overlooking Metro-Link rail tracks, the drop-off and tracks constituted an open and obvious condition as a matter of law barring recovery.  The Court of Appeals explained that as the plaintiff testified there was nothing to distract her view of the drop-off, it was obvious that an invitee would reasonably be expected to realize the dangers associated with the drop-off and, thus, the plaintiff's claim was barred as a matter of law.
 
For an excellent discussion of the law governing open and obvious conditions in premises liability cases, this case makes for recommended reading.
Household Exclusion Upheld in Rental Car Contract
In Affirmative Insurance Company v. Broker, No. ED98700 (Mo. App. E.D., July 30, 2013),  a case handled by Brown & James, the Missouri Court of Appeals enforced the "household" exclusion to bar the claimants' recovery against a husband in a wrongful death action brought as a result of his wife's death in an automobile accident, and further upheld the exclusions in a rental car agreement as additional defenses to coverage.  The Court of Appeals, in so ruling, rejected the argument that the promotional materials provided with the vehicle rental altered the policy's clear terms.  Moreover, the Court held that since the rental car company paid the minimum $25,000 required under the MVFRL, the insurance policy issued on the vehicle had no further obligation because the policy was clearly designated as an "excess" policy.
Gun Shop Owners Are Not Liable for Gun-Related Injuries
In Noble v. Shawnee Gun Shop, Inc., No. WD75536 (Mo. App. W.D., July 16, 2013), the Missouri Court of Appeals held that a gun shop owner was not liable as a matter of law for the shooting death of two people killed by ammunition sold to the killer shortly before the shooting. The Court explained under Missouri law that the retail seller of a product cannot be liable for a non-defective lawful product that causes injuries resulting from the product's "misuse" by another away from the retail establishment.
Recent Trial Results
Brad Hansmann and John Cooney obtained a defendant's verdict for their client who operated a farm supply store that sold allegedly defective grain to a farmer causing a herd of cows to become ill and lose milk production. The jury, finding no liability, concluded the grain as sold was not defective.
Daniel Hasenstab obtained a jury verdict in Williamson County, Illinois, for the owners of a gymnastics center.  The plaintiffs' eight-year-old daughter broke her arm after falling from a set of gymnastics rings at the center.  The jury rejected the plaintiffs' claim that the defendant had failed to properly supervise the minor and returned a defendant's verdict.
In a case tried by Jackie Kinder, the jury found for her glass company client in a case in which an intoxicated volunteer, who offered to help with the clean up of glass, decided to put his fist through glass to allegedly break it down.  In defense of her client, Jackie Kinder persuaded the jury that safety glass was not required and her client obtained a defendant's verdict.
In a Madison County, Illinois products liability case, Denise Baker-Seal obtained summary judgment for her manufacturer client by convincing the trial court that the evidence, including expert opinions, failed to demonstrate that the product was defective.
David Bub and Jeff Lester convinced a St. Charles County jury that their bar client was not at fault when a customer, who had a bit too much to drink, was hurt while another customer was sliding down a slide in the bar.
Mike Maguire obtained a defendant's verdict in Franklin County for his UIM carrier client when the jury found that the insured, who had a surgically repaired rotator cuff tear and $24,000 in paid medical, had been fully compensated by the tortfeasor's insurer.
The plaintiff in a UIM case was unable to persuade a federal jury that he was entitled to more from the UIM carrier than he had already received from the tortfeasor's liability carrier.  Brad Hansmann brought in another win for a UIM carrier by convincing the jury that the plaintiff had already received more than enough money in the first settlement.  (This verdict continues a two-year winning streak for Brown & James in UIM cases taken to verdict in jury trials.)
Robert Brady won a defendant's verdict for his insurance company client in a first-party arson and fraud case.  After a three-day trial in Jefferson County, the jury found that the insured had set the fire and returned a defendant's verdict.
Russ Watters, David Bub and Irene Marusic received a defense verdict for their client shopping center in a two-week federal district court case in which the jury found that the shopping center was not responsible for an injury to a delivery driver who was hurt while making a delivery to one of the stores in the center.  After more than eight hours of deliberations, the jury returned a verdict for the shopping center, rejecting outright the claim of the plaintiff who had sought more than $4 million in damages at trial.
In Other News
Best Lawyers 2014
10 lawyers from Brown & James, P.C. were recently selected by their peers for inclusion in The Best Lawyers in America 2014 (Copyright 2013 by Woodward/White, Inc., of Aiken, SC). 
Corey Kraushaar Honored as 2013 "Up & Coming" Lawyer
St. Louis principal Corey Kraushaar was selected as a 2013 "Up & Coming" Award honoree by Missouri Lawyers Weekly. Selections were made by the newspaper's editors based on academic and career accomplishments, community involvement, and the ability to overcome obstacles and make a difference in the legal system. 
Justin Chapell Elected to MODL Board of Directors
St. Louis principal Justin Chapell has been elected to the Board of Directors for the Missouri Organization of Defense Lawyers.  He will serve as Co-Chair on the Publications Committee and sit on the Amicus Committee.
Upcoming Speaking Engagements and Events
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Brown & James, P.C. is a Midwest regional law firm with more than 100 attorneys representing companies in litigation, appeals and insurance coverage matters.



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