Takeaways from 2017 CLM Claims College, School of Claims Mediation in Baltimore, MD

I had the pleasure of attending Claims Litigation and Management Alliance’s (CLM) 2017 Claims College in Baltimore, MD last week.  I was a student in CLM’s School of Claims Mediation at Claims College, which brought together Claims Professionals and Litigation Attorneys from all over the country to study and discuss current and emerging claims information together.  Claims College was extremely beneficial and was taught by some of the industry’s most distinguished professionals. Here are a few takeaways from 2017 Claims College, School of Claims Mediation Program:

1. Institutional clients continue to move towards seeking early resolution of claims through pre-suit mediation;

2. Effective resolution of claims requires not just careful attention to written and verbal communications, but also the less obvious nonverbal cues that are being communicated by the other side;

3. There’s still no substitute for sitting down with a client in person, even if email dominates the day in our technologically savvy world; and

4. When trying to settle a difficult claim, remember to think outside of the box.  While monetary incentives are usually a primary focus, often non-monetary contributions and opportunities, like vocational training for an injured claimant, can provide the final incentive for settlement.

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In Georgia, Coverage for Lead Paint Exposure Excluded as Pollutant Under CGL Policy

This month, the Georgia Supreme Court held that a CGL policy did not provide coverage for brain damage to a child as a result of exposure to lead paint in a rental home.

The suit arose out of a toddler suffering brain damage due to exposure to lead paint in a rental home. The home was insured by a CGL policy issued to the landlord, and the insurer filed a declaratory judgment action arguing that there was no coverage for the claim because bodily injuries due to exposure to pollutants were excluded. Summary judgment was granted to the insurer in the trial court, but the Court of Appeals reversed, holding that the policy did not specifically exclude lead paint as a pollutant. On certiorari, the Georgia Supreme Court reversed the Court of Appeals, agreeing with the trial court that the pollution exclusion barred coverage for the claim.

Specifically, the policy excluded coverage for “(1) ’bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured.” “Pollutant” was defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

Ruling for the insurer, the Supreme Court acknowledged that the question of whether lead paint was a pollutant was one of first impression in the State, but it held that prior cases excluding coverage for different pollutants (such as carbon monoxide) under policies with similarly broad language were controlling. In keeping with those cases, the Court held that “lead present in paint unambiguously qualifies as a pollutant” and “the plain language of the policy’s pollution exclusion thus excludes [the claim] from coverage.” Key in this ruling was the Court’s lengthy discussion of the history and purpose of pollution exclusions in CGL policies.

The case discussed herein is Georgia Farm Bureau Mut. Ins. Co. v. Smith, No. S15G1177 (Ga. March 21, 2016). Please contact us if you would like a copy of the case or have any questions.

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Conscientious Tenants Aren’t “Real Estate Managers” Under Homeowner’s Policy

The Eleventh Circuit recently upheld a district court’s grant of summary judgment to an insurer in a coverage dispute regarding the death of a two year old child.  In Moon v. Cincinnati Ins. Co., the homeowner’s policyholder leased the insured home to his son and daughter-in-law.  Moon, 2015 WL 342330 (11th Cir. Jan. 27, 2015).  The daughter-in-law was babysitting a neighborhood toddler, and, while under her care, the toddler drowned in the backyard swimming pool.  The decedent’s parents subsequently filed sued against the son and daughter-in-law.

Initially, the insurer defended the suit under a reservation of rights; however, it later denied coverage and withdrew its defense.  The basis for the denial was that the policy did not cover the son and daughter-in-law vis-à-vis their relationship with the father policyholder.  In the tort action, a judgment was entered in excess of $10 million.

After the denial, suit was brought against the insurer alleging breach of contract and bad faith failure to settle claims, as well as punitive damages and attorneys’ fees.  The basis for the claim was that the son and daughter-in-law were covered by the policy because they were acting as “real estate managers” on behalf of the policyholder.  To support this claim, they proffered evidence that the tenants performed routine maintenance on the home.  Because the term was undefined in the policy, the plaintiffs argued that showing that a person took care of property on behalf of the landowner was sufficient to qualify that person for coverage under the “real estate manager” term.

The district court disagreed with the plaintiffs, and the Eleventh Circuit affirmed.  Specifically, the Court held that “[t]he industry term ‘real estate manager’ implicates real estate transactions rather than routine maintenance.”  Under the definition proffered by plaintiffs, “it would transform every tenant, family member or friend living in another’s home, who cuts the yard or paints a wall, into a covered real estate manager.  This is not a reasonable interpretation of real estate manager.”

Additionally, even if the term “real estate manager” did encompass tenants, no coverage would be afforded under these circumstances because the claims arose out of a babysitting job, not duties being performed in the role of a real estate manager.

This case reflects long-standing Georgia precedent that courts will not strain to find ambiguities that do not exist, even when a policy term is undefined.

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