Defense verdict follows emerging insurance litigation trend
While the insurance industry relies on warranties for their policies, plaintiff attorneys are trying to throw them out.
Insurance defense lawyers are increasingly contesting the application of warranties in litigation due to the failure of plaintiffs to comply with the conditions for applying the warranties for coverage. A Fort Lauderdale insurance attorney recently had a defense win in an aviation case and he says the case exemplifies this growing trend.
Rory E. Jurman, a partner at Hinshaw & Culbertson and lead attorney for Starstone National Insurance, landed an order granting summary judgment in favor of the defendants in a dispute brought by Neubert Aero Corp. involving an unqualified pilot who claimed damages from an emergency landing.
“The insurance industry relies heavily on warranties and plaintiff attorneys are trying to throw them out,” Jurman said in an email. “Issues include whether or not federal or state law applies. But there is Florida case law about aviation and maritime insurance policies.”
The dispute dates to an off-field emergency landing of an aircraft carrying Neubert Aero President Timothy W. Neubert, the sole occupant and pilot of the airplane, according to court documents.
Neubert’s pilot certificate was for “airplane single-engine land, instrument airplane,” and he received an endorsement in his pilot logbook from a certified flight instructor that mainly certified that he received training “to qualify for solo flying.”
But the aircraft was a multiengine airplane. And the insurance policy specifically noted that Neubert was required to obtain a multiengine rating, as well as additional requirements, before flying multiengine aircraft, court documents show.
Despite damage to the aircraft, the insurance company denied Neubert’s claim, stating that the president failed to meet the special conditions of the policy that “required him to obtain a multiengine rating and an instrument for multiengine aircraft prior to solo flight,” according to court documents.
Ford & Harrison Tampa partner Tracey K. Jaensch, the lead attorney for Neubert Aero, did not respond to a request seeking comment.
But Jaensch argued that the phrase “multiengine rating” was ambiguous and susceptible to interpretation in favor of coverage because of the certificate and the certified flight instructor endorsement. However, U.S. Magistrate Judge Philip R. Lammens, in his report and recommendation, stated Jaensch’s argument was “unavailing.”
Now, U.S. District Judge James S. Moody Jr., who sits in the Middle District of Florida, ruled in favor of the defendants, Starstone National, as well as London Aviation Underwriters Inc. and Southwest Aviation Group of Arizona Inc.
The ruling saved the defendants hundreds of thousands of dollars, as well as being on the hook for plaintiff’s attorney fees, counsel said.
Jurman also identified another case demonstrating this trend of strictly construing warranty terms. In Travelers Property Casualty Company of America v. Ocean Reef Charters, the U.S. Court of Appeals for the Eleventh Circuit rejected the appellees’ argument to invoke application of the warranties, and sent the case back to the U.S. District Court in the Southern District of Florida.
Under Eleventh Circuit precedent, federal maritime law required strict compliance with captain and crew warranties in a marine insurance policy, according to the opinion. And since Ocean Reef breached the warranties, there was no coverage for the loss of the 92-foot Hatteras yacht under its policy.
Jurman, who was not involved in the litigation, said the federal appellate court concluded that there was no entrenched maritime rule governing captain or crew warranties, and that, as a result, Florida law applied to determine the effect of Ocean Reef’s breaches, which lead to the court determining that the denial of coverage was justified.
“The trend is important because the Eleventh Circuit highlighted how important these warranties are and what needs to be reviewed in terms of consistency with Florida law, and if Florida law applies,” Jurman said. “So just because you have a warranty in your policy, whether it be marine or aviation, that doesn’t mean it’s going to be enforced. That was an awakening for the insurance industry.”
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