811, 2013

Seventh Circuit Allows Homeowners’ Insurance Bad Faith Lawsuit to Go Forward – Schuchman v. State Auto Prop. & Cas. Ins.

November 8th, 2013|bad faith|Comments Off on Seventh Circuit Allows Homeowners’ Insurance Bad Faith Lawsuit to Go Forward – Schuchman v. State Auto Prop. & Cas. Ins.

A couple from southern Illinois will have a chance to prove their personal injury lawsuit, thanks to a ruling from the Seventh U.S. Circuit Court of Appeals. In Schuchman v. State Auto Property & Casualty Insurance Co., Norman and Glenna Schuchman attempted to make a claim on their homeowners’ insurance after a fire damaged their home in Junction City, Illinois, near Centralia. The insurance company, State, denied the claim because the Schuchmans had moved from the home to mobile homes on the same property, making it no longer their “residence premises” as the policy defined it. They sued and the district court entered summary judgment for State. But the Seventh Circuit reversed, saying the term “residence premises” was ambiguous, and ambiguities are construed in favor of coverage.
Glenna Reed bought a parcel of land in Junction City in 1980, three years before she married Norman Schuchman. The parcel is 1.5 acres and contains eight lots along West 14th Street and Madison Avenue in Junction City. She moved into the home at issue, which was later assigned the address 109 West 14th Street, and moved her husband in after they married. She later added two mobile homes for family members, both of which were assigned mailing addresses on Madison Avenue. They bought the homeowners’ policy at issue in 2000, listing 109 West 14th Street as the address of the property to be insured. Sometime before 2004, however, they moved into two more mobile homes on the property. Because State did not cover mobile homes, they bought a separate policy covering these. Their son lived in the original home until 2008.
In 2010, the home caught on fire, causing severe damage to the structure and possessions inside. State eventually agreed to cover the possessions, but denied coverage for the damage to the house because it was not being used as a “residence premises” as the policy defined it, and because the Schuchmans had violated a special condition requiring them to maintain a residence only at the “residence premises.” The Schuchmans sued for insurance bad faith in Illinois state court; State removed the case to federal court. The court granted summary judgment to State on cross-motions.
In the policy, State agrees to cover “the dwelling on the residence premises shown in the Declarations, including structures attached to the dwelling.” The 14th Street address was listed as the residence premises, which “also includes other structures and grounds at that location.” Using these definitions, the Seventh Circuit concluded that the residence premises can be a location with multiple buildings, and that the Schuchmans may reside on any building within that location. It further concluded that the 14th Street address could include mobile homes that had other mailing addresses if they were on the same property. Thus, the court concluded, “residence premises” is ambiguous because it lacks a clear description of boundaries, and ambiguities are construed against the drafter. It sent the case back to district court to further consider their Illinois injury lawsuit.


302, 2012

Third Circuit Permits Lawsuit Claiming Uninsured Motorist Benefits for Accident Involving Road Debris – Allstate v. Squires

February 3rd, 2012|Auto Accidents, bad faith|Comments Off on Third Circuit Permits Lawsuit Claiming Uninsured Motorist Benefits for Accident Involving Road Debris – Allstate v. Squires

As a Missouri auto accident attorney, I know uninsured motorist benefits are some of the hardest to get from an insurance company, even if the facts are clearly on the driver’s side. Insurance companies like collecting premiums for uninsured motorist claims, but after an accident, they will often use a hit-and-run or other facts that are hard to verify as an excuse to deny coverage. That was the claim made by Larry Squires in Allstate Property & Casualty Insurance Co. v. Squires, a decision by the Third U.S. Circuit Court of Appeals. Squires was injured after swerving to avoid a box left in the road; the parties stipulated that an unidentified vehicle dropped the box. Allstate received a declaratory judgment in Pennsylvania state court that it did not owe Squires a settlement. The Third Circuit reversed, finding that direct contact with the uninsured vehicle was not necessary under the policy.
Squires put in a claim for uninsured motorist benefits after his accident. The relevant part of the disputed policy says Squires may recover for bodily injury “aris[ng] out of the ownership, maintenance or use of an uninsured auto.” Pennsylvania state law defines an uninsured vehicle to include “an unidentified vehicle that causes an accident resulting in injury,” provided that the victim report it to authorities and his or her insurance company. Allstate filed for a declaratory judgment that it did not owe benefits under the policy; Squires filed counterclaims for insurance bad faith and breach of contract. The trial court granted judgment on the pleadings to Allstate and dismissed the claims by Squires, finding that the sole issue was whether the box-related accident arose out of the “ownership, maintenance or use” of an automobile. It did not, the court said, and found that the policy only applied to accidents caused directly by a vehicle.
Squires appealed, arguing that contact with a vehicle was not necessary under the language at issue. The Third U.S. Circuit Court of Appeals ultimately agreed. Seeking to understand what the Pennsylvania Supreme Court would do, it examined Pennsylvania caselaw and concluded that under the “arising out of” language in his policy, Squires can avoid summary judgment by alleging that the unidentified vehicle’s use caused his injuries. The court cautioned that more may be needed to ultimately make a recovery. It also rejected a case heavily relied on by the district court, in which uninsured motorist benefits were denied to a boy who suffered injures as he bicycled, when another boy intentionally threw hay from the back of a truck. In that case, the injury was caused by the hay-throwing boy, the court said, but in this one, the falling box was a direct consequence of the use of the unknown vehicle to transport cargo. The appeals court noted that Pennsylvania’s auto insurance statute is to be construed liberally and in favor of the insured in close cases. Thus, it reversed and remanded the case.
This ruling is good news for Squires and other Pennsylvania drivers. This decision clears the hurdle of whether the policy language applies to his case. Though the appeals court correctly noted that Squires must still prove his breach of contract and bad faith claims, he can now say his claim for insurance is valid. Thus, he may be able to collect the settlement and move on without worrying about proving the bad faith and breach of contract claims. It’s common, in my experience as a southern Illinois car accident lawyer, for insurers to narrow in on specific policy language as a reason to deny coverage. That’s why it’s important for accident victims to come to a St. Louis car crash attorney like me as soon as possible after realizing they’re not being dealt with fairly. Though negotiations and, when necessary, litigation, we can sometimes reach a fair settlement without the hassle of a trial.


311, 2011

Missouri Court of Appeals Reverses Uninsured Motorist Decision in Fatal Auto Accident – Lero v. State Farm Fire and Casualty Co.

November 3rd, 2011|Auto Accidents, bad faith|Comments Off on Missouri Court of Appeals Reverses Uninsured Motorist Decision in Fatal Auto Accident – Lero v. State Farm Fire and Casualty Co.

Insurance coverage disputes come up frequently in my work as a St. Louis car crash lawyer. Insurance companies exist to make money, like all businesses, and part of the way they do that is by limiting the amount of money they pay to their insureds after an accident creates an insurance claim. Sometimes, this even leads to the insurance company denying coverage it’s required to provide under its own policy. This is a form of breach of contract called insurance bad faith, and insurance clients can and should protect their rights with a lawsuit when they are unfairly denied coverage. Lero v. State Farm Fire and Casualty Co. was an insurance bad faith claim that found its way to the Missouri Court of Appeals. The Leros sought to collect for an uninsured motorist claim on an umbrella insurance policy, but the appeals court found no right to coverage.
Paul and Carolyn Lero are the parents of Denise Greene, who died in October of 2008 when a drunk driver crossed a median and hit her car head-on. They successfully sued the owner of the driver’s car and received a $2 million judgment, but that insurance company denied coverage. The Leros then turned to Greene’s uninsured motorist coverage, which paid the policy limit of $50,000. They attempted to also collect on an umbrella policy Greene had, but State Farm denied that the policy covered accidents with uninsured motorists. The Leros sued State Farm for breach of contract, arguing that the umbrella policy was intended to provide excess coverage over Greene’s auto insurance and also that the uninsured motorist coverage was a prerequisite to the umbrella coverage. After striking several defenses State Farm raised as new defenses, the trial court granted summary judgment to the Leros, and State Farm appealed.
The Court of Appeals reversed, ruling that the stricken defenses were ultimately determinative of whether there was uninsured motorist coverage available. The trial court had found State Farm was estopped from arguing that its only coverage was that listed in a specific place, and that the Leros were impermissibly attempting to shift the burden of proof when they argued that uninsured motorist coverage was not excluded. On the first point, State Farm argued on appeal that estoppel was inappropriate; on the second, that striking the defense essentially created the coverage the Leros sought. The appeals court found that the Leros failed to establish true inconsistency between the initial denial and the later defenses, and therefore that State Farm should not have been estopped from using them. State Farm cited the policy in its denial letter and enclosed the relevant section of the policy. The company consistently asserted this later, it added. Because estopping this defense was inappropriate and created new coverage, the appeals court reversed the summary judgment for the Leros and entered it for State Farm.
As a southern Illinois auto accident attorney, I am disappointed by this ruling. When a family member dies through no fault of her own, families are understandably upset, and pursuing justice through the civil court system may be their only option. It’s disappointing that after the Leros pursued their case through at least three different courts, they were ultimately able to collect only a small part of their $2 million judgment. It would be interesting to know why the family did not pursue coverage from the insurance companies of the at-fault driver and that car’s owner (different people). As an experienced Missouri car wreck lawyer, I would not be surprised to discover that the at-fault driver, who was drunk, was not insured in the first place. This underscores why it’s so vital to buy uninsured motorist coverage — so in the event of a catastrophic crash, you have at least some compensation.