Yesterday I posted about an appellate case in Florida, Discover Property & Casualty v. Beach Cars, that contained an analysis of policy ambiguity that not every court would agree with. A case from Georgia shows yet another approach to ambiguity — defining a term belonging to her husband’s business, Carver Services, Inc. Tragically, she a single-car accident and killed, along with an adult passenger, Joey Allen Daniels. Carver’s daughter, Haley Mosley, and Joseph Patrick Daniels, both minors, were injured in the crash. In the resulting lawsuit by the Daniels family, the issue was whether Shana Carver was an insured under the policy or a rental that was uncovered. As it turned out, she apparently intended to rent the car, but never paid a rental fee. The trial court found that both the company’s primary and excess policies covered Ms. Carver as an insured. The issue on appeal was the excess policy only.
The appeals court found the excess policy also provided coverage because it failed to define the word “rent,” and the common dictionary definition of rent is that evidence of payment must exist. That is an unusual methodology — most courts follow a framework that can result in undefined words being labeled as ambiguous, and if two reasonable interpretations are offered, the insurer loses. This court skipped a couple of steps, but its result is one that many, but not all courts, would have arrived at anyway. It will be interesting to see if the case is appealed to the Georgia Supreme Court.
For this blog and for other reasons, I read a ton of insurance coverage cases. On most days, I at least take a look at every coverage case in the country published the day before by Westlaw. Out of all of those, my favorite type of cases to read are the ones about ambiguities in a policy, because it’s like listening to a debate over who are the five greatest centers in the history of the NBA: you can have your own opinion, but you never know what different courts will say.
A promise to redeem resigning employees’ stock prices at a certain level was an uncovered breach of contract, not a covered wrongful employment act, the U.S. District Court for the Eastern District of Wisconsin ruled. The case is Krueger International v. Royal Indemnity Co., 2006 WL 1440852 (May 19, 2006).
A jury in the underlying case found a company official promised four employees if they quit before December 31, their stock would be redeemed at the share price effective on September 30. Instead, the company paid them the value as of December 31, which was a lot lower. The jury found the official had the authority to bind the company, and awarded damages of about $4 million.
In the coverage case, the company argued the officer’s promise was covered under the plain terms of the policy’s definition of the “Employment Wrongful Act,” which included breaches of employment contracts and employment-related misrepresentation. The court disagreed and found the type of breach of contract at issue in the underlying case is not related to employment. The court said that ordinary breaches of contract are usually not covered by insurance, because it would encourage people to do the very thing covered by insurance. I think the court’s analysis was basically sound, but obviously, the policy plainly does cover some breaches of contract (it is in the definition above), so the court could have better explained the difference between employment-practices breaches and ordinary course of business breaches.
