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Judges uphold insurers’ share of settlement liability

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A District judge did not err in how he apportioned liability among three insurers for payment of a settlement between an injured worker and a contractor, the 7th Circuit Court of Appeals held Friday.

Indiana Steel Fabricating hired Central Steel Erectors as a subcontractor on a project. In the course of that work, Brian Colip, a Central Steel employee, fell from a roof and injured himself. He sued ISF and settled for $2.9 million. At issue before the 7th Circuit is how much, if any, should ISF’s insurers, Amerisure Insurance Co. and National Surety Corp., or Central Steel’s insurer, Scottsdale Insurance Co., be liable with regard to the settlement.

U.S. District Judge William Lawrence ultimately found Amerisure and Scottsdale liable for $1 million each and National liable for $900,000.

The appeal relates to Scottsdale’s obligation to contribute to the settlement under its umbrella policy. Central Steel had two policies through Scottsdale: a commercial general liability policy and an umbrella policy. Scottsdale claimed that the umbrella policy contains an explicit exclusion that exempts it from paying; Amerisure and National countered that Scottsdale is estopped from relying on that provision and it doesn’t apply here.

The exclusion says the insurance doesn’t apply to “bodily injury” arising out of a claim or suit brought by any insured against another insured. The judges found a straightforward way of reading this exclusion is as one that applies to lawsuits between two parties covered by the same insurance, and it reflects the intent of Scottsdale and Central Steel not to purchase insurance that would cover personal injury lawsuits between insured parties under the umbrella policy.

The exclusion applies to this case, the 7th Circuit held, so Scottsdale doesn’t have to draw on the umbrella policy to fund the settlement. The appellate court also rejected Amerisure and National’s arguments that Scottsdale didn’t bring up its rights under the exclusion until too late in the game, which constitutes an unfair attempt by Scottsdale to “mend its hold.” The mend-the-hold doctrine prevents a defense in contract litigation from changing defenses midstream without any reason for doing so.

Indiana has only applied this doctrine once – back in 1928 – and the judges declined to use it in this case. In addition, the parties had ample notice of Scottsdale’s intent to assert all defenses to coverage available to it under the policy, Judge Diane Wood wrote.

A typo in some of Scottsdale’s filings regarding how much it seeks to recover does not prevent it from recovering more than $450,000, the judges ruled.

 

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  1. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  2. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  3. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  4. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

  5. "No one is safe when the Legislature is in session."

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