Matthew Ferrie, Partner, is back again to host the newest episode of the Subro Sessions podcast. Bert Davis, Principal for Romauldi, Davidson, & Associates and BDA Engineering, joins Matt for the second episode on investigating residential electrical fires entitled, “Investigating Residential Electrical Fires Part II – Arcing and Arc Mapping.” Bert and Matt dive into arc mapping and how it assists in identifying the area of origin and fire spread in subrogation cases involving residential electrical fires.
Category Archives: Subrogation
Subrogation Waiver Unconscionable in Residential Fuel Delivery Contract
In a matter of first impression, the Superior Court of Connecticut (Superior Court), in American Commerce Ins., Co. v. Eastern Fuel Corp., No. CV-206109168-S, 2024 Conn. Super. LEXIS 380, held that a waiver of subrogation provision in a consumer fuel service/delivery contract violated public policy. The Superior Court overruled the motion for summary judgment filed by Eastern Fuel Corporation (Eastern) and determined that the clause was impermissible as the contract was entered into by two parties with unequal bargaining power.
American Commerce Insurance Company (American) provided property insurance to Arlene and James Hillas (the Insureds) for their home in Woodbridge, Connecticut. The Insureds hired Eastern to service their heating system on or around October 25, 2018. The service work at the property included inspecting the oil filters and flushing the fuel lines. On November 1, 2018, when the Insureds turned the heating system on for the first time that season, the two oil tanks on the property were allegedly full. After a series of deliveries, claims that the oil levels were lower than expected, discovering oil staining on the floor and Eastern’s replacement of the oil lines, Eastern delivered another 429 gallons. However, after the delivery, additional leaks were discovered relating to the oil line replacements. Ultimately, the Insureds submitted a claim to American and American paid in excess of $59,000 for the damage incurred.
Missouri Protects Subrogation Rights
The point at which an insurance carrier possesses the equitable right of subrogation is an issue on which the states have differed. Some allow carriers to pursue rights of subrogation immediately upon payment and some have taken stricter approaches. Missouri falls into the latter group. By not allowing the carrier the right to file suit against third-party tortfeasors until the insured provides its carrier with an assignment of all its rights, Missouri’s approach has opened the door for challenges to subrogation rights.
In Megown v. Auto Club Fam. Ins. Co., 2024 Mo. App. LEXIS 82, the plaintiff-insureds Michael and Jane Megown (the Megowns) suffered a house fire on February 8, 2016. Their insurance carrier, Auto Club Family Insurance Company (Auto Club) reimbursed the Megowns for their property damage in the amount of $722,433.56. Subsequently, the Megowns sued Auto Club for breach of contract and later amended their complaint to add claims against Tyberius Enterprises, LLC d/b/a Crag Electric (Craig Electric), the third-party tortfeasor, for direct negligence, alleging both property damage and personal injuries. Auto Club intervened in the Megowns’ claim against Craig Electric to protect its interest as subrogee for its property damage payment to the Megowns. Craig Electric settled prior to trial, paying $1,000,000.00 to both the Megowns and Auto Club, to be allocated at a later date. After a bench trial that apportioned the settlement with $722,433.56 paid to Auto Club and $277,566.44 paid to Megowns – and a jury trial awarding no further damages – the Megowns appealed.
Pursuing Claims Against Minors and Their Parents
Chris Konzelmann, Partner, hosts the newest episode of the Subro Sessions podcast entitled: “Pursuing Claims Against Minors and Their Parents.” In this episode, Chris revisits a case and discusses the problems that may arise when subrogation efforts are targeted towards children and their parents and whether either can be held responsible for tort claims.
A Matter Judged: Subrogating Insurers Should Beware of Prior Suits Involving the Insured
In New Jersey Mfrs. Ins. Co. v. Lallygone LLC, No. A-2607-22, 2024 N.J. Super. Unpub. LEXIS 120, the Appellate Division of the Superior Court of New Jersey (Appellate Division) considered whether New Jersey Manufacturers Insurance Company (the carrier) could bring a subrogation action after its insured, Efmorfopo Panagiotou (the insured), litigated and tried claims related to the same underlying incident with the same defendant, Lallygone LLC (the defendant). The Appellate Division affirmed the trial court’s finding that the prior lawsuit extinguished the carrier’s claims. Continue reading
Stop Suing Yourself: A Brief Discussion on the Anti-Subrogation Rule
The newest episode of the Subro Sessions podcast is out now. This episode is entitled, “Stop Suing Yourself: A Brief Discussion on the Anti-Subrogation Rule” and is hosted by Gus Sara, Partner, and Katherine Dempsey, Associate. Gus and Katherine share their expertise on the Anti-Subrogation Rule by discussing its history, purpose and how it applies in various states across the country.
Fine Art Losses – “Canvas” the Subrogation Landscape
If a fire or flood destroys a high-net-worth client’s fine art collection, an insurer who pays out a claim related to the loss has an incentive to pursue subrogation. This article explores some of the issues an insurer should “canvas” before pursuing subrogation for these types of claims.
Damage to fine art can occur in a number of ways. For instance, fine art may be damaged in a natural disaster – such as a flood or a wildfire. Artwork may also be accidentally damaged because of a transportation-related incident physically damaging the art. In addition, artwork may suffer fire or smoke damage from a fire within a building. Another possibility is that the artwork suffers damage because of renovations either to the insured’s home or a neighboring property. For example, a renovation contractor may damage artwork due to vibrations or leaking water. A construction worker, moreover, may turn with a tool in his hand, or trip and fall, damaging the artwork.
Investigating Residential Electrical Fires – Part 1
Matt Ferrie, Partner, is returning to host the newest episode of Subro Sessions. This episode is the first part of a series entitled “Investigating Residential Electrical Fires.” Joining Matt is Bert Davis, Principal for Romauldi, Davidson & Associates and BDA Engineering. Matt and Bert address common misconceptions and factors to consider when investigating property damage subrogation cases in residential electrical fires.
Reasonable Expectations – Pennsylvania’s Case by Case Approach to the Sutton Rule
In Mutual Benefit Ins. Co. a/s/o Michael Sacks v. Koser, No. 1340 MDA 2023, 2023 Pa. Super. LEXIS 574, 2023 PA Super 252 (Mutual Benefit), the Superior Court of Pennsylvania discussed whether a landlord’s property insurer could file a subrogation action against tenants that had negligently damaged the landlord’s property. Despite there being more than one clause in the lease holding the tenants liable for the damages, the court held that because there was a provision requiring the landlord, not the tenants, to insure the leased building, the insurer could not subrogate against the tenants.
In Pennsylvania, a tenant’s liability for damage to a leased premises in a subrogation action brought by a landlord’s insurer is determined by the reasonable expectation of the parties to the lease agreement. Under this approach, to determine if subrogation is permitted, the court considers the circumstances of the case and examines the terms of the lease agreement. Continue reading
The Sounds of Silence: Pennsylvania’s Sutton Rule
In Westminster Am. Ins. Co. a/s/o Androulla M. Toffalli v. Bond, No. 538 EDA 2023, 2023 Pa. Super. LEXIS 626, 2023 PA Super 272, the Superior Court of Pennsylvania (Appellate Court) recently discussed the impact of silence on the Sutton Rule with respect to the landlord, Androulla M. Toffalli (Landlord), securing insurance. After holding that the tenant, Amy S. Bond (Bond) t/a Blondie’s Salon – who leased both commercial and residential space in the building pursuant to written leases – was not an implied “co-insured” on Landlord’s insurance policy, the Appellate Court reversed the decision of the trial court.
In this case, Bond rented the ground floor of a property located in Monroe County pursuant to a written commercial lease (Commercial Lease) and operated Blondie’s salon out of the leased location. In addition, Bond rented and lived in a second-floor apartment pursuant to a residential lease (Residential Lease). Both leases required the tenants (Tenants) to obtain insurance for personal items. The leases, however, did not require Landlord to obtain fire insurance for the property.