Insurance Disagreement

Business Use Exceptions in Auto Liability Policies Under Maryland Law Reviewed by Federal Appellate Court: Forkwar v. Empire Fire and Marine Ins. Co.

November 12, 2012 | Lebowitz & Mzhen

After obtaining a verdict in a car accident lawsuit, the plaintiff sought to enforce the judgment against the defendant’s insurer. The insurance company successfully argued that the “business use” exception barred coverage of the plaintiff’s claim, as the defendant was operating his vehicle in the course of his work at the time of the accident. The court in the original lawsuit had found that the doctrine of respondeat superior, which holds an employer liable for certain acts of an employee, did not apply to the defendant’s employer. The court in the present case, Forkwar v. Empire Fire and Marine Ins. Co., nevertheless found that the business use exception applied. The case highlights an important challenge for Maryland plaintiffs who may obtain a verdict, but might have difficulty enforcing it.

The plaintiff, Augustine Forkwar, was involved in an automobile accident during the early morning of November 26, 2004 with Hameed Mahdi. Mahdi was an independent contractor of J&J Logistics. He owned his vehicle but leased it to J&J. At the time of the accident, he was on his way to a job for J&J when he stopped to get something to eat. Empire Fire & Marine Insurance Company had issued a commercial auto insurance policy to Mahdi, but it asserted that it was not obligated to defend or indemnify Mahdi under the policy’s business use exception.

Forkwar sued Mahdi and J&J in October 2006, alleging negligence against Mahdi and respondeat superior liability against J&J. Forkwar reportedly made no attempt to prove liability against J&J, and she did not oppose its motion for judgment as a matter of law in the middle of trial. The jury entered a judgment against Mahdi, who was a no-show at trial, for over $180,000. Forkwar then filed suit against Empire for indemnification. Empire removed the case to federal court and moved for summary judgment based on the business use exception. The district court granted the motion, and Forward appealed to the Fourth Circuit.

Denial of Death Benefits Upheld by Court Because Decedent’s Intoxicated State Excluded Him from Coverage: Fitzgerald v. Colonial Life & Accident Ins. Co.

November 5, 2012 | Lebowitz & Mzhen

The wife of a man who fell off a pier and drowned filed suit against an insurance company after it refused coverage for accidental death and dismemberment benefits. The insurance company cited an exclusion for accidents involving a presumption of the influence of alcohol. A federal judge ruled in Fitzgerald v. Colonial Life & Accident Ins. Co. that the exclusion applied to the decedent. It found that the decedent’s blood alcohol content exceeded Maryland’s legal limit for intoxication, and that the decedent’s own negligence contributed to his death.

The decedent, Jeffrey Fitzgerald, had been drinking during the evening of September 19, 2009 at a marina in Edgewater, Maryland. According to witness statements, Fitzgerald was observed carrying a forty-two-inch television to a boat docked at the pier. He apparently fell into the water, and his body was found later in fifteen to twenty feet of water about twenty feet away from the pier. The autopsy concluded that drowning was the sole cause of death. A toxicology test performed several hours after his death found a blood alcohol level between 0.27 and 0.31 percent, between three and four times the legal limit in the state of Maryland.

Fitzgerald had a term life insurance policy issued by Colonial Life & Accident Insurance Company that named his wife, Lynette Fitzgerald, as beneficiary. She filed a claim for benefits. After reviewing the police report and other documents, Colonial agreed to pay the full $100,000 under the policy certificate, but concluded that she was not entitled to accidental death and dismemberment benefits. Colonial cited an exclusion in the policy certificate for accidental losses related to illegal drug use or a blood alcohol percentage that would cause a presumption, under Maryland law, that the person was under the influence of alcohol. Maryland’s legal limit for driving under the influence offenses is 0.08 percent.

Maryland Court of Appeals Affirms Judgment Giving State Jurisdiction Over Football Player’s Workers’ Compensation Claim

August 27, 2012 | Lebowitz & Mzhen

In a suit brought by a professional football team and its insurer challenging a decision by the Maryland Workers’ Compensation Commission (the “Commission”), the Maryland Court of Appeals has ruled in favor of a former football player who sustained career-ending injuries during a game. The court ruled in Pro-Football, Inc. v. Tupa that the Commission has jurisdiction over the player’s claim, that his injuries were “accidental,” and that he is therefore eligible for compensation under the Maryland Workers’ Compensation Act.

Thomas Tupa entered into a four-year contract in March 2004 with Pro-Football, Inc., which operates the Washington Redskins professional football team. Tupa would play the punter position on the team. Pro-Football is a Maryland corporation that owns the stadium where the team plays its home games, FedEx Field in Landover, Maryland. The teams practice and warm-up facilities are located in Virginia. Tupa’s contract includes a clause that gives the Commonwealth of Virginia and the Virginia Workers’ Compensation Commission jurisdiction over disputes between the parties.

Maryland Appeals Court Rules on Issue Preclusion and Contributory Negligence in Auto Accident Case

July 12, 2012 | Lebowitz & Mzhen

An interesting decision by the Maryland Court of Special Appeals addressed the applicability of an out-of-state jury verdict in a Maryland lawsuit concerning issue preclusion. In Bryan v. State Farm Mutual Automobile Insurance Co., the court found that a New York verdict finding a driver negligent precluded the driver from claiming on his insurance policy in Maryland. The court applied the doctrine of contributory negligence, which is still on the books in only a handful of states, including Maryland.

Brenton Bryan was driving in Freeport, New York on May 29, 2006, with his wife and two children in the car. According to Bryan, a “phantom vehicle” cut him off by changing lanes unexpectedly. This caused Bryan’s car to strike two other vehicles. The driver of one of those cars was Juan Chevez. Chevez and his wife, Ines Chevez, who was a passenger in the vehicle, sued Bryan in Queens County, New York, alleging that he was negligent and therefore responsible for the accident.

A jury trial in December 2010 focused exclusively on the question of Bryan’s liability. The jury found that Bryan operated his vehicle negligently that night, and that this was a “substantial factor in bringing about the accident.” Bryan and the Chevezes subsequently agreed to settle the matter for $30,000 in exchange for a general release.

Fourth Circuit Apportions Damages Pro Rata in Maryland Lead Poisoning Case

March 14, 2012 | Lebowitz & Mzhen

A Baltimore girl’s $2 million jury verdict for toxic exposure to lead paint suffered a setback last month, when the Fourth Circuit Court of Appeals ruled that the insurance company for the realty company that owned the house where she lived would only be obligated to pay forty percent of the total judgment. She still stands to receive a substantial sum of money, but the court’s ruling cuts the amount she may realistically expect to collect.

Lakia Roberts lived at a house in Baltimore from 1991 to 1998. When she was only twenty months old in 1992, doctors diagnosed her with lead poisoning. She continued to exhibit elevated levels of lead in her blood until 1995. Lead poisoning can have serious health effects on children, including learning disabilities and kidney damage, according to the National Institutes of Health. Roberts and her mother filed a state lawsuit against Attsgood Realty Company in 2005, claiming that the company’s negligent management of the property where they lived caused her lead poisoning.

As we previously reported in this Maryland Accident Law Blog, a jury awarded Robert $2 million in 2009, consisting of $500,000 in actual damages and $1.5 million in non-economic damages. Due to a Maryland law that caps non-economic damages at $350,000, her total judgment was reduced to $850,000.

Attsgood had sought defense and indemnification from its liability insurer, Pennsylvania National Mutual Casualty Insurance Company, commonly known as Penn National. The company had issued an insurance policy to Attsgood with one year of coverage beginning on January 13, 1992, later extended by another year. Attsgood did not have liability coverage on the property before this date. Attsgood sold the property on November 1, 1993. The policy with Penn National stated that it would pay damages for bodily injury and property damage occurring during the term of the policy.

After the jury verdict in 2009, Penn National sought a declaratory judgment in federal court holding that it was only obligated to pay at most $340,000, that being forty percent of the judgment against Attsgood. It argued that, since Roberts’ claim was for ongoing damages occurring from her birth on January 17, 1991 until August 1995, when the lead in her blood reached normal levels, it should only be obligated pay pay for the damages that occurred after its coverage began on January 13, 1992 and before Attsgood sold the property in November 1993. Roberts argued that Penn National should be obligated to pay the full amount of the judgment.

Paralyzed Construction Worker Receives One of the Largest Workers’ Compensation Settlements in History After a Long Fight

February 13, 2012 | Lebowitz & Mzhen

A former Pennsylvania road worker who was paralyzed by a drunk driver as he directed traffic has reached a workers’ compensation settlement agreement for $3 million. This is believed to be one of the largest settlements in the U.S. In getting to this point, he has also gone through a Dram Shop Act lawsuit and a bad faith insurance claim.

Joseph Tuski was directing traffic on January 17, 2001 in Warminster, Pennsylvania. At about 10:30 a.m., a car driven by Michael Petaccio struck him. Petaccio reportedly sped around a line of cars Tuski had stopped, hitting Tuski and throwing him about sixty feet. The accident rendered Tuski a quadriplegic, and he must spend the rest of his life in a wheelchair with 24-hour care. Petaccio had reportedly just left the Ivyland Cafe, a bar in Warminster owned by Petaccio’s family where Petaccio was the manager. Petaccio pleaded no contest to driving under the influence and aggravated assault later that year, and he was sentenced to three years in prison but received work release.

Tuski first filed suit against Petaccio and the Ivyland Cafe, claiming negligence and Dram Shop Act liability. Dram Shop Acts hold businesses who serve alcohol to visibly intoxicated individuals liable for damages subsequently caused due to that person’s intoxication. Tuski presented evidence that, at the time, he had $1.6 million in medical bills and future medical expenses of at least 12 million. A Philadelphia jury awarded Tuski an enormous but largely symbolic verdict in 2004 totalling $75.6 million in damages. This included $50.6 million in compensatory and $25 million in punitive damages, but neither defendant had the ability to pay such an amount. Petaccio only had $100,000 in liability insurance coverage, while The Ivyland Cafe had coverage of $1 million.

After the verdict, the bar lost its appeal, although a judge cut the jury’s award in half. The bar’s insurer then reportedly refused to pay the policy limits of the award. Tuski sued the insurance company for bad faith refusal to pay a claim. Although a plaintiff in an injury case has no direct relationship with a defendant’s insurer, since the insurance company’s obligation to pay is based on a contractual relationship with the defendant, many states allow a plaintiff to pursue an insurer for payment of a specific award. In this case, the bar assigned its rights under its insurance contract to Tuski. In June 2007, Tuski reached a settlement with the insurance company for $20 million.

Maryland Says Allstate Must Repay $17.5 Million To More Than 20,000 Auto Insurance Policy Holders

October 26, 2006 | Lebowitz & Mzhen

The state of Maryland says that insurance company Allstate must refund $17.5 million to more 20,000 auto insurance policy holders. According to the Maryland Insurance Commissioner’s office, the administration had received numerous complaints after the property and casualty insurer had sent premium increase notices to policyholders between January 2003 and March 2005 without detailing the violation or accident that each policyholder had committed which led to the premium increase. Refunds will average $850, and Allstate is being fined $100,000 for not complying with state law by sending the premiums without the required information.

A spokesperson for Allstate says that every policyholder who received the notice of a premium increase had a past violation or accident that justified the increase. They admit, however, that the specific statutory language was missing and have expressed their regret for the error.

Auto insurance laws in the State of Maryland require that all drivers must have: