The Superior Court of New Jersey, Appellate Division, handled an appeal from a dog sitter after the trial court ruled that her lawsuit cannot go forward. This case is Aiges v. Fuccillo, 2012 WL 6632768.

Aiges is a self-employed, full-time photography agent. As a side activity to earn extra income, Aiges occasionally performs dog sitting at her home. The Fuccillos are neighbors and friends of Aiges. In December 2010, the Fuccillos asked Aiges to dog sit their dog and Aiges agreed. The parties orally agreed that Aiges would take care of the dog at her own house while the Fuccillos were away on vacation and that Aiges was to be paid about $300. Pursuant to this arrangement, the Fuccillos paid Aiges an advance sum of $100.

While Aiges was watching the dog, it bit her. A lawsuit followed and the trial court denied motions for summary judgment. The court said that Aiges was an independent contractor and as such, could not take advantage of the state's absolute liability provision when it comes to dog bites. Aiges appealed.

The appeals court took note of the state legislative adoption of a general rule of absolute liability under the dog bite statute. However, the court said, the strict liability rule is subject to some limitations. One of the limitations is that an assumption of risk defense may be available to negate absolute liability under the statute in a situation where the plaintiff is or is employed by an independent contractor caring for the dog.

It was true that Aiges was not in a full time business that involved caring for dogs. Moreover, her dog sitting activity for the Fuccillos arose from Aiges' relationship with the Fuccillos. The court saw the arrangement between Aiges and her neighbors as something like reciprocity, as the Fuccillos' son had apparently walked Aiges'own dogs in the past after school. Also, the arrangement between the parties was unwritten and informal. The court recognized that Aiges was paid a fee for caring for the dog, but the receipt of that fee alone was not seen by the appeals court as dispositive of the independent contractor analysis.

The determination of the trial court was reversed and the matter was remanded for trial.

Editor's Note: Independent contractor status is the subject of many disputes over insurance coverage. Usually, the matter turns on the issue of control, control over how the work is to be done, who supplies the tools and material, whether and how a contract is involved, etc., etc. In this instance, the appeals court noted the independent contractor exception to absolute liability under the state's dog bite statute but would not conclude that Aiges fell under that exception. As the court said, “teenagers and neighbors commonly earn modest sums as dog walkers and dog sitters, and we discern no intent of the legislature to exclude such persons from the protection of the statute.”

Multiple Occurrences or One Occurrence?

The District Court of Appeal of Florida, Fifth District, took an appeal to decide whether the insurance policy covered multiple occurrences or just one occurrence. This case is Citizens Property Insurance Corporation v. Cook, 93 So.3d 479 (2012).

Cook, Oliver, and Brown, all minors, attended a party at the Meek residence, a home insured by Citizens Property Insurance. According to the complaint filed in the case, the Meeks served or allowed alcoholic beverages to be served to the minors. The minors became intoxicated, drove away from the party, and were involved in a serious car crash. Cook and Oliver died and Brown was severely injured.

The personal representatives of Cook and Oliver filed a declaratory judgment action against Citizens and the Meeks seeking a judicial decree interpreting the term “occurrence” in the homeowners policy. The representatives contended that under the policy, the $100,000 per occurrence limit applied to each drink consumed by each of the deceased minors in addition to a separate occurrence for the negligence of the Meeks in allowing the minors to become intoxicated and then leave the party operating a car. The insurer disagreed and said there was only one occurrence, the car crash. The trial court ruled that the complaint alleges multiple occurrences and this appeal followed.

The appeals court noted that the dispute centers on what constitutes an occurrence under the insurance policy. The court then discussed the cause theory that holds that the proper focus should be on the immediate cause, the act that causes the damage. Using this theory, the court said that the immediate cause of the deaths was the car crash, not the Meeks' underlying activity of allowing alcohol to be consumed by the minors. There was only one occurrence causing the deaths, and that was the car crash.

The ruling of the trial court was reversed.

Editor's Note: The cause theory used in determining the number of occurrences is favored by the majority of courts around the country. In this case, the court found that the immediate cause, the act that caused the deaths, was the car crash. The serving of alcoholic beverages to minors and then allowing them to drive away certainly was a factor in the deaths, but the actual cause was the car crash.

Requirements of Insurer When Renewing Policy

A resort and its owner brought an action against its commercial general liability insurer, seeking coverage in connection with a motor vehicle accident. This case is Schupp v. United Fire & Casualty Company, 821 N.W.2d 824 (2012).

Schupp is the owner and sole shareholder of Northern Pine Lodge. Beginning in 2003, the lodge purchased a general liability policy from United Fire & Casualty. A separate automobile policy was maintained through a different insurer.

Schupp testified at his deposition that he received and read a complete copy of his general liability policy when it was first issued and that he would page through the renewal documents each year. United Fire did not give Schupp a full copy of its policy with every applicable form when it renewed the coverage each year. The insurer, instead, provided the insured with a declarations page and with copies of any forms that changed or modified the policy. Moreover, all the declarations and forms for the lodge's policy were available at all times on United Fire's website.

In 2009, Schupp was driving a minivan insured under his auto policy. He collided with a motorcycle and killed the riders. The auto insurer paid the claims but the deceaseds' next of kin sought additional amounts to settle the claims. The insured sought the additional coverage from United Fire for the damages arising from the auto accident. United Fire, citing the auto exclusion on the general liability policy, denied coverage. Schupp sued and the district court concluded that United Fire could not enforce the exclusion against Schupp because the insurer did not comply with statutory requirements when it renewed the policy in 2009. The insurer appealed.

The appeals court said the question was whether Minnesota law requires an insurer to physically attach every term and condition of the insured's policy upon renewal. The statute actually read as follows: a statement in full of the conditions of insurance shall be incorporated in or attached to every policy, and neither the application of the insured nor the bylaws of the company shall be considered as a warranty or a part of the contract, except in so far as they are so incorporated or attached. The court read this as requiring the insurer to comply with the statute each time it renewed the policy.

However, the court continued, the question remains as to whether a statement in full of the conditions of insurance was incorporated in or attached to the renewal documents that United Fire sent to the lodge in 2009. The court decided that the statute does not require an insurer to physically attach each and every term and condition of insurance to a renewal policy; rather, the insurer may comply with the section by incorporating terms and forms by reference.

Applying this construction, the court found that the policy that contained the auto exclusion was clearly incorporated in the renewal documents by specific reference on the declarations page. This page specifically listed the commercial general liability coverage form and since there was no asterisk appearing next to the title of the form, an insured would have noticed that the form remained unchanged from the previous. In reviewing the renewal of the policy, Schupp had only to look at the dec page, note that the general liability form still applied to the coverage, and refer back to that form, a copy of which he received twice. In the alternative, Schupp could have visited United Fire's website and viewed the entire current policy.

The court said that where the policyholder is presumably familiar with the policy, requiring an insurer to physically send the insured all coverage forms, endorsements, schedules, and amendments each year could effectively drown the insured in paper, and make it less likely that the insured is notified of key changes to the policy. Moreover, the court said, the goals of access and transparency are furthered in this case where complete policy documents are available twenty-four hours a day, seven days a week on the website.

The ruling of the district court was reversed. United Fire properly renewed the insured's policy and may enforce the auto exclusion to preclude coverage for damages arising out of the auto accident.

Editor's Note: The Court of Appeals of Minnesota declared in this case that a person who accepts and retains the possession of an insurance policy is bound to know its contents; ignorance will not relieve a party from his contract obligations. The court decided that Schupp knew or should have known that the general liability policy contained an auto exclusion.

The actions of the insurer in renewing the policy were found to be in compliance with state law. Thus, the auto exclusion in the general liability policy was applicable under the terms of the renewal process.

What Are the States Doing?

The following information comes from the Insurance Journal magazine.

Maine has adopted a new, uniform standard for who can be classified as an independent contractor for workers compensation and other employment-related cases. The standard lists several criteria to establish the status of a worker, with the essential element being that an independent contractor must be free from the essential direction and control of the employing party. More information on the independent contractor determination can be found at maine.gov/labor/misclass/legal.shtml.

Florida's state-backed property insurer, Citizens Property Insurance Corporation, and Florida regulators have clarified the HO-8 policy by limiting it to low-value older homes. Citizens was required by law to start making the HO-8 policy available by January, but the insurer said that this would make Citizens less competitive with the private market by offering a more austere policy. State regulators agreed to restrict the eligibility for purchasing the coverage to consumers whose property has a replacement value of $200,000 or less and is 51 years or older. This action was seen as resolving the insurer's concern that the policy could attract widespread consumer interest, mostly a population of policies that would be associated with a residual market. The policies are expected to become available sometime in mid-to-late February.

Beginning in January, Alabama will begin implementing a new law that will crack down on uninsured drivers that do not follow the state's mandatory insurance law.

In Colorado, a new law requires a vendor of portable electronics to hold a limited license to sell or offer portable electronics insurance. The commissioner of insurance is required to prescribe an application for insurance and accept applications from the vendors.

Under the motor vehicle personal injury protection (PIP) insurance law, Florida requires that accident victims report an auto-related injury and seek treatment within 14 days. The law also requires two coverage limits for PIP medical benefits, based on the severity of the individual's medical condition. Policyholders could receive up to $10,000 in benefits for emergency medical care and $2,500 for other less serious injuries. In addition to these benefits, $5,000 in death benefits is offered.

Hawaii now excludes benefits paid or incurred under the workers compensation law from the covered motor vehicle covered loss deductible. The law also establishes provisions for the sale of portable electronics insurance. The statute requires vendors to hold a limited lines license to sell of offer coverage under a policy; establishes sanctions for violations; establishes requirements for termination of insurance; and establishes fees for licensing.

Idaho jumps on the portable electronics bandwagon and requires that portable electronics insurers and insurance produces that sell, solicit or negotiate the offer or sale of such insurance be supervised and regulated by the state department of insurance. Portable electronics vendors may sell or offer portable electronics insurance to customers, provided that the vendors obtain a limited lines license to authorize its employees to sell or offer such insurance.

Idaho also has rewritten qualifications for adjusters licenses to go into effect July 1, 2013. The law now requires that the insurance department director shall not issue, continue, or permit to exist any license as an adjuster as to any person not meeting specific qualifications, including: being trustworthy; being of good character and reputation; being able to pass a written examination to test knowledge of the duties and responsibilities of an adjuster and of matters involved in transactions under an adjuster's license; and must be a salaried employee of a licensed adjuster, or must have had experience or special education or training.

Mississippi requires the licensure of any vendor to sell, solicit, or negotiate coverage under a policy of portable electronics insurance.