Category Archives: Subrogation

Gavel

New York Court Holds That the “Lesser of Two” Doctrine Limits Recoverable Damages in Subrogation Actions


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In New York Cent. Mut. Ins. Co. v. TopBuild Home Servs., Inc., 2019 U.S. Dist. LEXIS 69634 (April 24, 2019), the United States District Court for the Eastern District of New York recently held that the “lesser of two” doctrine applies to subrogation actions, thereby limiting property damages to the lesser of repair costs or the property’s diminution in value. Continue reading

This entry was posted in Damages, Damages - Real Property, New York, Subrogation and tagged , , .
Fire

Property Owner’s Defense Goes Up in Smoke in Careless Smoking Case


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Property owners owe a duty of reasonable care to avoid causing harm to neighboring properties. When a property owner knows or should know about a condition that poses a risk of danger to neighboring properties, the property owner must exercise reasonable care to make the condition safe. The Court of Special Appeals of Maryland recently held that, where hundreds of discarded cigarette butts had accumulated in a bed of mulch over an extended period of time prior to the fire at issue, the owner of the property with the mulch beds owed a duty of care to its neighbors to prevent a foreseeable fire. Continue reading

This entry was posted in Experts, Maryland, Negligence, Premises Liability, Subrogation and tagged , , , , .
Meeting Handshake

Insurers Subrogating in Arkansas Must Expend Energy to Prove That Their Insureds Have Been Made Whole


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Arkansas employs the “made whole” doctrine, which requires an insured to be fully compensated for damages (i.e., to be “made whole”) before the insurer is entitled to recover in subrogation.[1] As the Riley court established, an insurer cannot unilaterally determine that its insured has been made whole (in order to establish a right of subrogation). Rather, in Arkansas, an insurer must establish that the insured has been made whole in one of two ways. First, the insurer and insured can reach an agreement that the insured has been made whole. Second, if the insurer and insured disagree on the issue, the insurer can ask a court to make a legal determination that the insured has been made whole.[2] If an insured has been made whole, the insurer is the real party in interest and must file the subrogation action in its own name.[3] However, when both the insured and an insurer have claims against the same tortfeasor (i.e., when there are both uninsured damages and subrogation damages), the insured is the real party in interest.[4] Continue reading

This entry was posted in Arkansas, Made Whole, Parties, Subrogation and tagged , , , .
Product Fire

When an Insurer Proceeds as Subrogee, Defendants Cannot Assert Contribution Claims Against the Insured


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In Farmers Mut. Ins. Co. of Mason County v. Stove Builder Int’l, 2019 U.S. Dist. Lexis 46993 (E.D. Ky.), the United States District Court for the Northern Division of the Eastern District of Kentucky, by adopting a Magistrate Judge’s report and recommendations, see Farmers Mut. Ins. Co. v. Stove Builder, Int’l, Inc., 2019 U.S. Dist. LEXIS 48103 (E.D. Ky. Feb. 11, 2019), considered whether to allow the defendants to file a third-party complaint against the plaintiff’s insureds-subrogors. Finding that the defendants could not pursue contribution claims against the plaintiff’s insureds-subrogors, the court denied the defendant’s motion to file a third-party complaint. Continue reading

This entry was posted in Contribution-Apportionment, Kentucky, Subrogation and tagged , , , .
Gavel

California Court Invokes Equity to Stretch Anti-Subrogation Rule Principles


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By: Gus Sara and William L. Doerler

In Western Heritage Ins. Co. v. Frances Todd, Inc. 2019 Cal. App. Lexis 299, the Court of Appeals of California, First Appellate District, addressed whether a commercial condominium association’s carrier could subrogate against the tenants (aka lessees) of one of its member unit owners. After examining the condominium association’s declarations, as well as the lease terms between the owner and the lessees, the court held that the association’s carrier could not subrogate against the lessees because they were implied co-insureds on the policy. To reach its decision, the court explained that an insurer steps into the shoes of its insured, not the party with whom it is in privity. Although the first-party property portion of the association’s insurance policy did not, as required by the association’s declarations, have the owner listed as an additional named insured, the court held that it would be inequitable to treat the association as the sole insured for purposes of determining Western Heritage’s right to bring a subrogation action. Continue reading

This entry was posted in Anti-Subrogation Rule, California, Landlord-Tenant, Subrogation, Sutton Doctrine and tagged , , .
Fire

Tenants Who Negligently Cause Fires in Florida Beware: You May Be Liable to the Landlord’s Insurer


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In Zurich Am. Ins. Co. v. Puccini, LLC, 2019 Fla. App. LEXIS 1487, 44 Fla. L. Weekly D 383, Florida’s Third District Court of Appeals considered whether a landlord’s carrier, Zurich American Insurance Company (Zurich), was precluded from pursuing a subrogation claim against the landlord’s tenant, Puccini, LLC (Puccini), for fire-related damages. After the fire, Zurich paid its insured, Lincoln-Drexel Waserstein, Ltd. (Lincoln), over $2.1 million. Zurich then proceeded with an action against Puccini. Puccini filed for summary judgment arguing that it was an additional insured under the Zurich policy. The trial court agreed with Puccini and dismissed the action. Zurich then appealed the case to Florida’s Third District Court of Appeals. Finding that the lease contemplated both liability on the part of the tenant and indemnification in favor of the landlord, the court held that the tenant was not an implied co-insured under Zurich’s policy. Thus, the court allowed Zurich’s subrogation action. Continue reading

This entry was posted in Anti-Subrogation Rule, Florida, Subrogation and tagged , , , , .
Signing Agreement

District Court of Missouri Limits Whining About the Scope of Waiver of Subrogation Clauses in Wine Storage Agreements


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In Netherlands Ins. Co. v. Cellar Advisors, LLC, 2019 U.S. Dist. Lexis 10655 (E.D. Mo.), the United States District Court for the Eastern District of Missouri considered the scope of a waiver of subrogation clause in two wine storage agreements. The court held that the subrogation waivers were limited in scope and, potentially, did not apply to the damages alleged in the pleadings. This case establishes that, in Missouri, waivers of subrogation are narrowly construed and cannot be enforced beyond the scope of the specific context in which they appear. Continue reading

This entry was posted in Contracts, Missouri, Subrogation, Waiver of Subrogation and tagged , , .
Large Property Loss

Indiana Court of Appeals Holds That Lease Terms Bar Landlord’s Carrier From Subrogating Against Commercial Tenant


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In Youell v. Cincinnati Ins. Co., 2018 Ind. App. LEXIS 497 (2018), the Court of Appeals of Indiana considered whether a landlord’s carrier could bring a subrogation claim against a commercial tenant for fire-related damages when the lease, which did not reference subrogation, explicitly required the landlord to maintain fire insurance coverage for the leased premises. The court held that subrogation was barred because the provision requiring the landlord to maintain fire insurance established an agreement to provide both parties with the benefits of insurance. The Youell case establishes that, in Indiana, if the lease explicitly states that the landlord will maintain fire casualty insurance for the building, the lease evidences an agreement by the parties to shift the risk of loss to the insurer. This agreement bars a landlord’s insurance carrier from subrogating against a commercial tenant in the event of a casualty. Continue reading

This entry was posted in Contracts, Indiana, Landlord-Tenant, Subrogation and tagged , .
Gavel

Minnesota Reaffirms Statutory Anti-Subrogation Rule


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In Depositors Ins. Co. v. Dollansky, 919 N.W.2d 684 (Minn. 2018), the Supreme Court of Minnesota considered whether the anti-subrogation rule set forth in Minn. Stat. §60A.41(a) precluded a motor home lessor’s insurer, Depositors Insurance Company (Depositors), from proceeding against the motor home lessee. Finding that the lessee was an insured under the lessor’s policy, the court held that Depositors could not pursue subrogation. Continue reading

This entry was posted in Anti-Subrogation Rule, Minnesota, Subrogation and tagged , , .
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California Court of Appeals Holds Subrogating Carrier Cannot Assert Claims of Its Suspended Insured


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In Travelers Prop. Cas. Co. of Am. v. Engel Insulation, Inc., 29 Cal. App. 5th 830 (2018), the Third District Court of Appeals of California addressed whether a subrogating carrier can assert the rights of its corporate insured while the insured is suspended and thus barred from doing so itself. The court rejected the argument that Cal. Rev & Tax Code § 19719(b) (1998), which exempts subrogating carriers from the penalties for asserting the rights of a suspended corporation set forth in its own subsection (a), eliminated the prohibition against carriers bringing an action based on the subrogation rights of its suspended insured. Because Travelers’ claims were based solely on its derivative rights of subrogation and its corporate insured was suspended, the Court of Appeals affirmed the trial court’s ruling that Travelers had no right to bring its suit. The court’s holding reaffirms California case law that denies subrogating carriers any rights greater than those of their insureds. See Truck Ins. Exch. v. Superior Court, 60 Cal. App. 4th 342 (1997). Continue reading

This entry was posted in California, Parties, Subrogation and tagged .