UM/UIM Coverage

Sposito appeals from a judgment granting summary judgment to Nationwide Insurance Company over the issue of whether the uninsured/underinsured (UM/UIM) motorist coverage exclusion applies to an insured driver when he was driving a vehicle provided for his regular use by his employer. This case is Sposito v. Krzynowek, 2014 WL 1347992.

The original complaint was filed by Sposito alleging that he was injured when Krzynowek, driving negligently and under the influence of alcohol, collided into the rear of Sposito's parked motor vehicle. Included in the complaint was a charge against Nationwide that the insurer refused Sposito's claim for UM/UIM coverage.

Sposito said that he was working as a mail carrier for the post office when his parked vehicle was struck from behind by Krzynowek, causing Sposito to suffer injuries to his neck. Sposito said that his vehicle was a post office vehicle that he used daily for mail deliveries.

Nationwide filed a motion for summary judgment, arguing that Sposito was not entitled to UM/UIM coverage since he was occupying a vehicle provided to him by his employer and the policy excluded UM/UIM coverage for the insured while driving or occupying a vehicle furnished to him for his regular use.

Sposito filed a brief in opposition to the insurer's motion, arguing that the exclusion was in violation of public policy.

The trial court ruled in favor of Nationwide and this appeal followed.

Sposito argued that the purpose of UM/UIM coverage is to protect people, not vehicles, and that the “available for regular use” exclusion was unenforceable and void as against public policy. He said that since he was operating a government-owned vehicle, which he had no ability to insure, his own insurance should cover him. Nationwide countered that under Ohio law, insurers were authorized to limit UM/UIM coverage under certain circumstances.

The appeals court said that Sposito's insurance policy contained the exact exclusion that is permitted by state law. The exclusion denied coverage when the insured was operating a vehicle available for regular use, but not covered under his insurance policy, and the statute allows exclusions for vehicles not listed in the insured's policy Based on the existing Ohio case law and the statute, the court rejected Sposito's argument that UM/UIM coverage should cover all vehicles, as well as his contention that this result is unfair because he was unable to insure his work vehicle. Sposito provided no case law in support of his contention that the exclusion is against public policy.

The ruling of the trial court was affirmed.

Editor's Note: The Court of Appeals, Eleventh District, rules that the UM/UIM exclusion adheres to state law. Ohio permits insurers to exclude UM/UIM coverage under certain circumstances and the Nationwide exclusion met the standards set by statute. The exclusion as stated did not violate public policy.

                                                                        Cow Manure as a Pollutant

This is an appeal from a judgment of the circuit court for Washington County, Wisconsin. This case is Wilson Mutual Insurance Company v. Falk, Appeal No. 2013AP691 (2013). The issue raised in this appeal is whether cow manure is a pollutant under a farmowners

policy issued by Wilson Mutual Insurance Company to Robert and Jane Falk. That policy defined a pollutant as an irritant or contaminant, including waste.

The Falks own and operate a dairy farm with over 600 head of cows/cattle. Wilson Mutual wrote a farmowners policy for the Falks that promised to pay all sums that the Falks become liable by law because of property damage or bodily injury caused by an occurrence. The policy expressly excludes losses resulting from the discharge, dispersal, migration, or escape of pollutants into or upon land, water, or air.

The Falks used cow manure as a fertilizer for their fields pursuant to a nutrient management plan prepared by a certified crop agronomist. The county notified the Falks that manure from the farm had polluted a local aquifer and contaminated the neighbors' water wells. Several neighbors demanded compensation and the Falks notified Wilson Mutual of the claims.

Wilson Mutual commenced this action seeking a declaration that it had no duty to defend or indemnify the Falks for any damages arising out of the water well contamination since manure is a pollutant as defined in the policy. The trial court sided with the insurer and the Falks appealed.

The Court of Appeals said that the question on appeal is straightforward: does cow manure fall within the definition of a pollutant? The court said that it would interpret the policy language according to its plain and ordinary meaning as understood by a reasonable insured.

Based on this, the court said that it might conclude that manure is a pollutant. Manure is certainly gaseous, often liquid or solid, and it can be both an irritant and a contaminant. However, the court went on, the state supreme court instructed lower courts in the state that they had to do more than rely on the undeniably broad and virtually boundless language such as in that definition since there is virtually no substance or chemical in existence that would not irritate or damage some person or property. Thus, the reach of the pollution exclusion has to be circumscribed by reasonableness, lest everyday incidents be characterized as pollution and the contractual promise of coverage be reduced to a dead letter.

The court then reviewed previous court rulings on the subject and found inconsistent results. However, the better approach according to this court was that a substance may or may not be a pollutant under the terms of a policy exclusion depending on the context or environment in which the substance is involved. Applying this principle to the facts of the case, the court concluded that the pollution exclusion does not apply to manure used as fertilizer on a farm.

The court said that a reasonable farmer would not consider manure to be a pollutant, an irritant, a contaminant, or waste. Manure is an everyday, expected substance on a farm that is not rendered a pollutant under the policy merely because it may become harmful in abnormally high concentrations or under unusual circumstances. Manure in normal, customary use by a farmer is not seen as an irritant or a contaminant; it is a nutrient that feeds the farmer's fields that in turn feeds the cows so as to produce quality grade milk. Manure in the hands of a dairy farmer is not waste; it is a natural fertilizer.

Examining the definition of pollutant in the Wilson Mutual policy as it is understood by a reasonable person in the position of the insured (that is, a dairy farmer), the court concluded that manure is a nutrient and not a pollutant. Moreover, the insurer's argument that cow manure is a pollutant is belied by its very act of covering property with the express purpose of pumping, storing, and spreading that manure. Wilson Mutual clearly understood that part of the normal operations of dairy farming is the spreading of manure, and it cannot now seriously contend that paying claims related to the manure spreading is a risk it did not contemplate and for which it did not receive a premium.

The judgment of the trial court was reversed.

Editor's Note: The Wisconsin Court of Appeals made a ruling that may sound unreasonable to most people. After all, if manure is not an irritant or a contaminant, then what is it? However, as most court today do, this court looked at the broad scope of the definition of pollutant in insurance policies, and applied it to the facts of the case and the reasonable expectations of the insured and decided that manure is not a pollutant.

Use of an Auto

This is an appeal from the U.S. District Court for the Western District of Texas. The case pertains to a claim for injury sustained by a person while being placed in an ambulance. The case is National Casualty Company v. Western World Insurance Company, 669 F.3d 608 (2014). (Note that the Fifth Circuit has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth by the court.)

Two emergency medical technicians employed by Preferred Ambulance were attempting to transport Rigsby from a dialysis center to her home by ambulance. They place her on a rolling gurney and rolled her toward an ambulance. When they arrived at the ambulance, one of the technicians placed the gurney into load position and opened the vehicle doors. While the wheels of the gurney were still on the ground, they caught on something, the gurney tipped over, and Rigsby fell to the ground, fracturing her right shoulder. She died later on due to complications. Her daughter filed a wrongful death lawsuit.

At the time of the accident, Preferred Ambulance was insured by National Casualty and Western World. The National Casualty policy covered injuries caused by an accident and resulting from the ownership or use of a covered auto. The Western World policy applied to damages caused by a professional incident. The National Casualty policy excluded damages due to professional services and the Western World policy excluded damages due to the use of any auto. Both insurers sought a declaratory judgment holding that the other has the sole duty to indemnify Preferred Ambulance.

The U.S. District Court ruled that both insurers had a duty to defend but found the indemnification issue to be unripe for adjudication. This appeal by both insurers followed.

The United States Court of Appeals for the Fifth Circuit noted that the issue in this case is whether Rigsby's injury resulted from the use of an auto as that phrase is used in the National Casualty policy. The court found that under Texas law, an injury relates to the use of an auto if the accident arose out of the inherent nature of the auto, if the accident arose within the nature territorial limits of the auto and the actual use had not been terminated, and if the auto did not merely contribute to cause the condition that produced the injury,, but itself produced the injury.

National Casualty and Western World agreed that the first two conditions were satisfied by the facts of the incident, but National Casualty argued that if a person is injured while being loaded into an ambulance, the ambulance itself does not produce the injury. The court declared that the sole purpose of the alleged attempt to place Rigsby in the ambulance was to use the ambulance. The court said that the attempt to load her into the ambulance directly caused her injury and attempting to load a patient into an ambulance is not an unexpected or unnatural use of the vehicle.

The court concluded that the injury occurred while Rigsby was being placed into the ambulance. The undisputed facts showed that the medical technicians had reached the ambulance, had placed the gurney into its load position, and had opened at least one of the ambulance doors at the time of the injury. The process of loading Rigsby into the ambulance clearly had begun and so, the court ruled that Rigsby's injuries resulted from the use of an auto.

The Circuit Court expressed no opinion on the ultimate question of indemnity under either policy, but it did vacate the judgment of the district court and remanded the case for further proceedings consistent with the holding as to the use of an auto.

Editor's Note: This case is presented not so much for a ruling on how the exclusions on the two policies affected coverage, but more so for the court's discussion of the “use” of an auto. The court used Texas law to help in the clarification of what is meant by the use of an auto when it comes to insurance coverage. This issue is still being litigated in courts around the country.

Statutory Employer Status under WC Act

A subcontractor brought a negligence action against the general contractor to recover for injuries sustained at a work site when the injured party fell. This case is Patton v. Worthington Associates, 2014 WL 1236499.

Worthington Associates was engaged as the general contractor for an addition to a church. Worthington in turn entered into a standard form subcontract with Patton Construction. (Earl Patton is the sole shareholder and employee of Patton Construction.)

While working at the site, Patton fell and sustained injuries to his back. A lawsuit was then filed against Worthington, alleging failure to maintain safe conditions at the job site. Worthington moved for summary judgment on the basis that it was Patton's statutory employer and so was immune from suit under the state workers comp statutes. The trial court ruled against the motion and this appeal followed.

When the case got to the Pennsylvania Supreme Court, that court noted that, given the fact that Worthington contracted with Patton Construction, Inc. and not with Earl Patton in his personal capacity, Patton himself had no contract whatsoever with Worthington and could not be denominated as an independent contractor. Moreover, Patton was not an employee of Worthington; rather, he was an employee of Patton Construction, Inc.

Worthington argued that it maintained an ordinary contractor/subcontractor relationship with Patton Construction and this was a classic statutory employer situation. Patton argued that the circumstances do not entail a classic statutory employer situation since Patton was not only the injured employee of the subcontractor, but was also the independent subcontractor as it related to Worthington.

The Supreme Court found that a conventional relationship between a general contractor maintaining control of a jobsite and a subcontractor implicates the statutory employer concept relative to employees of the subcontractor working there. Conventional subcontractors are dependent contractors, not independent ones, for purposes of the workers compensation statutes and for these purposes, their employees are not contractors at all, nor are they employees of the general contractor. In this instance, Patton Construction, Inc. was a subcontractor and not an independent contractor since it is undisputed that the company's contract was with the general contractor (Worthington) and not with the owner of the church.

The court said that whether Patton acted in a personal or corporate capacity, Patton's relationship with the owner was undeniably a derivative one, arising per a conventional subcontract with a general contractor. Under longstanding precedent, neither Patton Construction nor Earl Patton was an independent contractor relative to Worthington. The statutory employer concept was upheld and the order of the trial court was reversed.

Editor's Note: Statutory employer status is based on courts' interpretation of state workers compensation laws. As a statutory employer, the employer is immune from a worker's lawsuit arising out of an injury on the job site and workers compensation is the exclusive remedy. The Pennsylvania Supreme Court in this case said that if statutory employer status reflects poor public policy, it is up to the state legislature to change the policy.