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The
San Diego Defense
Lawyers Update
December, 2004
 Insurance
Law
James M.
Roth, The Roth Law Firm
Common
sense seems to have reared its ugly head. Recent decisions by the
Appellate Courts have generally favored insurance carriers. It’s
reassuring to know that good facts can make good law.
WORKERS’ COMPENSATION CARRIER HAD
STANDING TO SUE A THIRD PARTY TORTFEASOR:
In Fremont Compensation Ins. Co. v.
Sierra Pine, Ltd., (2004) 121 Cal.App.4th 389, the California Court of
Appeal, Third Appellate District, held that under Labor Code §3852, a
workers’ compensation insurer had standing to sue a third party
tortfeasor despite the fact that the insurer had paid a death benefit to
the worker’s former wife (they were divorced at the time of the worker’s
death). The Workers Compensation Appeals Board (“WCAB”) ordered an
insurer to pay death benefits to the former wife of an employee killed
on the job. The insurer sued the third party tortfeasor to recoup the
money under Labor Code §3852.
The trial court ruled that the insurer
did not have a right to sue to recoup compensation benefits from the
third party tortfeasor because §3852 subrogated the insurer to the
rights of the former wife, and she had no standing to sue for wrongful
death.
The trial court sustained a demurrer
without leave to amend and the insurer appealed. Because the insurer
could have sued to recoup benefits paid to the worker while alive and
because recoupment actions survive a worker’s death (see Labor Code
§3851), the fact compensation was paid as a death benefit, rather than
vocational rehabilitation or medical benefits, makes no difference. To
allow tortfeasors to escape liability due to the happenstance that the
WCAB ordered benefits to be paid to someone who had no standing to file
a wrongful death action would conflict with the letter and spirit of
§3852.
LEAD CONTAMINATION IN A MUNICIPAL WATER
SYSTEM IS “PROPERTY DAMAGE” WHEN THE DEFECTIVE COMPONENT PHYSICALLY
INJURES SOME OTHER TANGIBLE PART OF THE LARGER SYSTEM OR THE SYSTEM AS A
WHOLE:
In Watts Industries, Inc. v. Zurich
American Ins. Co., (2004) 121 Cal.App.4th 1029, the California Court of
Appeal, Second Appellate District, affirmed the trial court’s grant of
an insured’s motion for summary judgment holding that its insurer owed a
duty to defend a suit by municipalities seeking
damages and injunctive relief for
alleged lead contamination in their water systems. The court rejected
the insurer’s contentions that no “property damage” was alleged, that
the relief sought was purely prophylactic, and that coverage was
excluded by the impaired property exclusion.
The insured owned a waterworks parts
manufacturer which sold parts to municipalities for use in their water
systems. The municipalities sued the insured alleging the parts wore out
too quickly and caused lead to leach into the water supply. The
municipalities also claimed defective parts at thousands of sites needed
to be replaced. The court rejected the insurer’s contention that no
“property damage” was alleged because the municipalities did not claim
physical injury to other parts of the water systems.
The court noted incorporation of a
defective component or product into a larger structure or system does
not constitute “physical injury to tangible property,” unless the
defective component physically injures some other tangible part of the
larger system or the system as a whole. It further noted that where
products or work containing hazardous materials are incorporated into
other products or structures, other property is immediately physically
injured at the moment incorporation occurs. Here, the municipalities
alleged the defective parts were built into municipal water systems,
leaching lead into water supplies and threatening public health and
safety. Moreover, the parts were not easily removable, as they had to be
dug up and replaced. The court concluded these allegations raised a
sufficient prima facie showing of physical injury to tangible
property.
DOG BITE OCCURRING WHEN DOG ESCAPED FROM
AUTOMOBILE WAS NOT “CAUSED BY AN ACCIDENT RESULTING FROM THE OWNERSHIP,
MAINTENANCE OR USE OF” THE INSURED VEHICLE:
In State Farm Mut. Ins. Co. v. Grisham,
(2004) 122 Cal.App.4th 563, the California Court of Appeal, Third
Appellate District, affirmed the trial court’s decision that State Farm
had no duty to defend or indemnify its
insured under an auto liability
policy against a dog bite claim because plaintiff’s injury was not
“caused by an accident resulting from the ownership, maintenance or use
of” the insured vehicle. The insured’s dog bit plaintiff’s leg after
escaping from the insured’s parked pickup truck. The court recognized
that California interprets the word “use” in auto liability policies to
require “some minimal causal connection” between the use of the vehicle
and the accident.
It applied the “predominating
cause/substantial factor” test under which the use of the vehicle must
contribute in some way to the injury beyond merely serving as the
location of the injury. Something involving the vehicle’s operation,
movement, maintenance, or its loading or unloading must be a
contributing cause of the injury. Applying these principles, the court
determined that plaintiff’s injury did not result from the use of the
insured vehicle. The vehicle did not contribute to the injury beyond
merely transporting the dog to a place near the injury site. Plaintiff
’s injury did not result from, or in the course of, the vehicle being
operated, moved, maintained, loaded or unloaded. Plaintiff was bit 20 to
25 yards from the vehicle, well beyond any unloading zone or activity.
The vehicle had also been parked for some time prior to the insured’s
dog escaping and biting plaintiff.
James M. Roth is a shareholder in The
Roth Law Firm. Mr. Roth’s practice includes representing TPAs and
insurance carriers in coverage, SIU, extra-contractual liability, and
third party defense matters. |
