Archive | December, 2014

Data Breach Insurance

SJHardybig

Twenty years ago, most companies maintained their files in rows and rows of filing cabinets. In order to access information from a file, it would be necessary for a person to go to the filing cabinet and actually retrieve the document which was being sought. If a third-party wanted to steal a company’s information, it would be necessary for that person to enter the company’s premises and either copy the documents on-site, or figure out a way get those documents out of your office.

In the last decade, technology has revolutionized the way documents and data are maintained. Those millions of pages of documents which were formerly kept in the rows of filing cabinets have been converted to digital data residing in the cyber world. Data is now accessed through computers, iPhones, and tablets.

New risks have accompanied this digital revolution. It seems as though each week’s headlines bring news of data breaches in which electronic information has been stolen from large companies. Information such as social security numbers, health information, bank account numbers, and credit card information are frequently the targets of such cyber-theft. Companies who are victims of these attacks can suffer enormous financial losses as well as damage to their brand names.

 Some companies who were impacted by data breaches were able to obtain coverage from their CGL carriers under section (b) of their policies, which cover claims arising from “personal and advertising injury”. However, newer CGL insurance policies have eliminated coverage for losses arising from data breaches.

 Over the last few years, insurance companies have started selling “cyber insurance”, which is specifically tailored to cover losses associated with data breaches and computer hacking. These policies can provide coverage for loss of digital assets and business interruption. In addition, insurance can be obtained to cover crisis management expenses, and the cost of defending lawsuits filed by those who may have been harmed by the unauthorized release of information.

Any business, large or small, which electronically stores and accesses its data is vulnerable to cyber theft. Losses can be staggering, and today’s CGL policies do not provide coverage for such losses. Cyber threats are a real risk, and prudent businesses would do well to see what sort of insurance programs might best provide the appropriate coverage for their businesses.

Sidney J. Hardy
October 7, 2014

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Christine Caminita v. Laura Cashio, USAA, and General Insurance Company

Christine Caminita v. Laura Cashio, USAA, and General Insurance Company
(September 2014)

Donna Bramlett Wood  tried a jury trial in 24th JDC, that defendants successfully defended on medical causation.   The plaintiff had a long history of back issues emanating from scoliosis. She was involved in the subject rear end accident on February 13, 2012 and a subsequent rear end accident on March 21, 2012. Dr. Rand Voohries performed an SI joint fuse procedure after both accidents but assigned medical causation to the February 13, 2012 accident.  After hearing the evidence and the testimony of Dr. Andrew Todd, defendants’ expert orthopedic surgeon, the jury was swayed that plaintiff could not satisfy her burden of proof that the SI joint injury was caused by the first accident. Plaintiff’s counsel asked the jury for $480,000. and the jury only awarded plaintiff her ER bill from the date of the first accident and $2,000. in pain and suffering for a total jury verdict of $3,710.

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The Importance of Copyright Registration for Authors of Original Creative Works

rGutmannOne of the most important things that an author of original creative works can do is to register his copyrights with the United States Copyright Office. While copyright registration is not required for the author to own the work, copyright registration provides legal benefits of which all authors should be aware.

The most important reason to register with the Copyright Office is that copyright registration provides a public record of ownership. It is a way for the author to formally and publicly claim that he owns all rights in the original creative work and gives him the exclusive right to sell, license, publish or use the work in whatever medium the author so desires. Contrary to popular understanding, copyright registration with the Copyright Office is the only way for authors of original creative works to obtain a public record of their legal right and title to the works.

Copyright registration also provides legal benefits in the event that another person infringes, or improperly uses, any of the author’s original creative works. Under the United States Copyright Act (17 U.S.C. § 101, et seq.), before an author of an original creative work may file a copyright infringement lawsuit, the author must register the work with the United States Copyright Office. If the author registers the work with the Copyright Office within five years of publication, it is presumed that the author is the legal owner and that the certificate of copyright registration is true and correct.

Additionally, timely registration of the author’s creative works may provide the basis for an award of attorney’s fees and statutory damages in the event of a successful infringement lawsuit. Statutory damages are pre-determined monetary awards for each infringement of a copyright protected work. Without timely registration, an author must pay all of his own attorney’s fees for the cost of filing the lawsuit and may be entitled to a lesser award based on the lack of statutory damages. An award of attorney’s fees and statutory damages can be a huge benefit to authors who may be reluctant to file an infringement lawsuit because of the cost.

Finally, copyright registration allows the author to record the registration with the United States Customs Service to protect his creative works globally.

Copyright registration is a $35 investment with the United States Copyright Office to secure an author’s rights in his original creative work and to protect his ability to monetize the work. Registration functions to prevent others from cashing in on the author’s work and creativity. Because of the benefits and protections afforded under copyright law for the registration of creative works, authors should strongly consider the minimal investment required to register creative works with the United States Copyright Office.

Rachel Simes Guttmann
September 29, 2014

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The Defense Wins!

Keith W. McDaniel(Article published in DRI’s The Voice of the Defense Bar)

DRI member Keith W. McDaniel, a partner with McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch LLC in New Orleans, successfully teamed with a colleague to secure a verdict for the Union Parish School Board following a jury trial in Union Parish, Louisiana in March 2014.  Read article

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Shelter Mutual Ins. Co. vs. Rimkus Consulting Group, Inc. of Louisiana, et al., 2013-CC-1977 (La. 7/1/14)

Kathryn T. Trew

The Louisiana Supreme Court recently resolved a split in the intermediate appellate courts and held that forum selection clauses are generally enforceable and not per se violative of Louisiana public policy. This case involved a contract between Rimkus and Shelter for engineering and expert witness services that would be performed in Louisiana. The contract contained a forum selection clause, which provided that any lawsuit arising out of the contract must be heard in state court in Harris County, Texas. A dispute did arise, and Shelter filed a lawsuit against Rimkus in Louisiana state court in Lafayette.

Rimkus sought to have the lawsuit dismissed and transferred to Texas state court pursuant to the forum selection clause. Both the district court and the Louisiana Third Circuit Court of Appeal found the forum selection clause to be unenforceable and reasoned that such clauses violate the strong public policy of Louisiana. Rimkus sought review with the Louisiana Supreme Court.

The Louisiana Supreme Court reversed the lower courts relying on Bremen, a landmark decision by the United States Supreme Court, holding that forum selection clauses are prima facie valid. As the Court found in Bremen, the Louisiana Supreme Court found that forum selection clauses are enforceable in Louisiana unless the resisting party can “clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching… [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.”

The Court next examined whether forum selection clauses violate public policy in Louisiana. The Court noted that the Third Circuit previously found that forum selection clauses are per se violative of the public policy of Louisiana based on La. C.C.P. art. 44(A). The Louisiana Supreme Court rejected this decision and found that article 44(A) only prohibits the waiver of objections to the venue prior to the institution of suit; it does not prohibit forum selection clauses.

The Court further examined provisions of Louisiana law wherein forum selection clauses are prohibited in specific circumstances. It reasoned that if article 44(A) provided for a strong public policy against forum selection clauses, then these provisions prohibiting forum selection clauses in specific circumstances are redundant. The Court further found that it is clear that the legislature has only declared forum selection clauses unenforceable and against public policy in very limited circumstances and rejected a “blanket application” of the public policy stated in these statutes to every contractual forum selection clause.

The Louisiana Supreme Court further noted that it has long recognized that the freedom to contract is important public policy and found that this includes the power to agree to bring suit under the contract in a particular form. It reasoned that upholding the lower courts’ rulings would “undermine the ability of the parties to freely contract and would thereby impair the ability of companies to do business in this state.” The court further noted that “the elimination of uncertainties relative to the location of litigation by agreement in advance on an acceptable forum to both parties is an indispensible element of trade, commerce and contracting.”

 Although the Court noted that the legislature does have the authority to enact a statute providing for the prohibition of forum selection clauses, it ultimately found that no such statute has been passed to date. Given the resolution of this issue by the Louisiana Supreme Court, it would be prudent to pay particular attention to any forum selection clause in any proposed or existing contracts to which you or your business may be a party. In the event that litigation may arise out of such agreement, the location and venue of such suit may be controlled by the forum selection clause and not the place where the services were performed.

 

Kathryn T. Trew
August 18, 2014

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Pollution Exclusion upheld by the United States Court of Appeals, Fifth Circuit

Pollution Exclusion upheld by the United States Court of Appeals, Fifth Circuit:

Liberty Mutual Insurance Co. v. Linn Energy, L.L.C.; Linn Operating Inc., 2014 WL 2925162

 

Shannon Howard-EldridgeIn an unpublished opinion issued by the Fifth Circuit Court of Appeals on June 30, 2014, the Court considered a declaratory judgment action filed by Liberty Mutual Insurance Company against its insureds, Linn Energy, L.L.C and Linn Operating Inc. (collectively “Linn”).  The district court had summarily determined that the commercial insurance policy issued by Liberty Mutual to Linn did not require Liberty Mutual to defend and indemnify Linn in a lawsuit pending in Louisiana state court where the complainants alleged that Linn’s pipeline leaked saltwater, brine and other contaminants, polluting complainants’ property.

Linn challenged the district court’s ruling that an endorsement to the policy (Underground Resources and Equipment Coverage) did not supersede the Total Pollution Exclusion in the policy. The Total Pollution Exclusion excludes coverage for “property damage” that “would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” The Underground Resources and Equipment Coverage endorsement extended coverage for property damage to specific types of underground resources.

The Court of Appeal affirmed the district court’s ruling. Applying Texas law, the Court considered that two provisions of an insurance policy are irreconcilable only when they contradict to the point that one would completely negate or render superfluous the additional coverage provided by the other.  In the Louisiana case against Linn, the Total Pollution Exclusion did not render the Underground Resources and Equipment Coverage meaningless because the Underground Resources and Equipment Coverage provided coverage for non-pollution property damage. The Court of Appeals found that the two policy endorsements co-exist in harmony and that allowing the Underground Resources and Equipment Coverage endorsement to trump the Total Pollution Endorsement would rob the Total Pollution Endorsement of its meaning.

Although the decision applied Texas law, the reasoning of the Court would likely apply in other States. Generally, the Total Pollution Exclusion is enforced to exclude coverage where the circumstances of the claim evidence that coverage was clearly and unambiguously excluded under the policy. The coordination of the Underground Resources and Equipment Coverage endorsement to extend coverage for those damages NOT excluded by the Total Pollution Exclusion is likely demonstrative of how other Courts would handle similar issues.

Shannon Howard-Eldridge
July 2, 2014

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Professional Services and the Duty to Defend

As a business owner, do you know whether your CGL policy provides indemnity if you get sued? Do you know whether that CGL policy also requires the insurer to provide you a defense, or if you would have to pay to defend the suit using business funds? In Wisznia Co., Inc. v. Gen. Star Indem. Co., 13-31125, — F.3d — (5th Cir. July 16, 2014), the Fifth Circuit re-visited the analysis of when an insurer’s duty to defend is triggered, and perhaps more importantly, when an insurer may decline to provide a defense. Wisznia Company, Inc. brought suit against General Star Indemnity, Co. to recover costs of defense for a lawsuit initiated by its former client, Jefferson Parish. Jefferson Parish alleged that Wisznia negligently designed a building, and Wisznia sought a defense from General Star pursuant to two insurance policies. General Star, however, maintained that the suit involved the rendering of professional services, or failure to render the same, and accordingly, the professional services exclusion in the policies absolved General Star of not only its duty to indemnify, but also its duty to defend.

 The Court reiterated that, as is well settled in Louisiana law, the duty to defend is broader than the duty to indemnify. Moreover, the Court reinforced that a duty to defend is determined using the “eight corners rule,” wherein the policy is compared to the allegations in the petition. Any equivocal language or vague terms are construed against the insurer and in favor of coverage. Unless the policy unambiguously excludes coverage, an insurer remains obligated to defend its insured. The most relevant consideration in the Court’s application of the eight-corners rule is the fact that under Louisiana law, courts look only to the factual allegations of the complaint, not any conclusions therein. Although a plaintiff may allege negligence by repeated use of the word, it is the facts giving rise to such a claim which are relevant to the Court’s analysis.

 This was the issue before the Court in its interpretation of the General Star policies issued to Wisznia. Jefferson Parish’s petition for damages alleged that Wisznia was negligent by designing a defective set of plans and specifications, failing to coordinate with consultants, failing to design with sufficient and accurate detail, failing to provide specifications that were definite in concept, under-designing the project, and any and all negligent acts and omissions to be proven at trial. In short, Jefferson Parish claimed that its damages were due to a failure of Wisznia’s professional skills, but also used the word negligence. Wisznia clung to the use of the word in asserting its entitlement to a defense from General Star. The Court, however, remained unpersuaded.

 The Court acknowledged that where a petition’s factual allegations give rise to a claim for negligence, the duty to defend survives the professional services exclusion. The duty to defend has been held to exist where a plaintiff alleged negligent supervision in a case in which a construction employee came into contact with power lines while rendering a professional service. The duty to defend has also survived where a failure to report unsafe conditions during the rendering of professional services allegedly caused an elevator to fall, killing one worker and injuring two. Through the Court’s examples, a dividing line seems to be suggested; allegations regarding safety and bodily injury will sustain the duty to defend, while allegations regarding deficiencies in a final product move the claim within the scope of the professional services exclusion. Such was the case for Wisznia. Although Jefferson Parish used the word “negligence,” the facts pleaded indicated that the Parish was dissatisfied with the work done by Wisznia. Accordingly, Jefferson Parish’s allegations concerned Wisznia’s professional services, and not any general negligence. The Fifth Circuit agreed that the professional services exclusion applied, and affirmed that General Star did not have a duty to defend Wisznia.

 The Court’s decision underscores the importance not only in drafting insurance policies, but also pleadings in civil actions. Will plaintiffs seeking remuneration for arguably shoddy professional services take care to draft their petitions and complaints in a manner that will keep insurers in the suit? Will insurers be more aggressive in attempting to limit their duty to defend where there are no bodily injuries or unsafe practices involved? Though those questions will largely depend on the parties involved, it seems likely that business owners will take the brunt of this decision by way of needing additional policies to be sure that any future litigation costs won’t be on the business dime.

 Meghan B. Shumaker
July 28, 2014

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Claims-Made-And-Reported Policy Limitation

Shannon Howard-EldridgeClaims-Made-And-Reported Policy Limitation is Enforceable Against Third Parties:
Joyce Gorman v. City of Opelousas, Et. Al., No. 2013-C-1734, Louisiana Supreme Court, 07/01/14

 The Louisiana Supreme Court recently reversed a ruling of the Third Circuit Court of Appeal, reinstating the ruling of the trial court in St. Landry Parish and finding no coverage for a third party claimant under a “claims-made-and-reported policy” issued by Lexington Insurance Company (“Lexington”), thus resolving a split in the state Circuit Courts of Appeal.  Some Courts of Appeal had held that enforcement of the limitation deprived third parties of their rights under the Direct Action Statute, but several others held that the claims-made policy limitation was not per se invalid as against public policy. The Supreme Court found that the reporting provision in Lexington’s claims-made-and-reported policy is a permissible limitation on the insurer’s liability as to third parties and that such a limitation did not violate the Louisiana Direct Action Statute.

Lexington’s policy insured the City of Opelousas and its police department (“the City”) and extended coverage for claims against the City first made and reported in writing during the policy period.  Plaintiff’s claim against the City was not made within Lexington’s relevant policy period. The trial court originally granted summary judgment in Lexington’s favor on that basis. However, the Louisiana Third Circuit Court of Appeal reversed the trial court and, relying upon an earlier decision from that Circuit, held that the Louisiana Direct Action Statute gave Gorman a vested right at the time a tort was committed and that her right against Lexington could not be taken away because the insured failed to notify its own insurer – a condition over which the plaintiff had no control.

The Louisiana Supreme Court considered the facts and the clear conditions of Lexington’s policy issued to the City and determined that the risk of a claim incurred but not made, as well as a claim made but not reported, is shifted to the insured. The claims-made-and-reported policy is intended to provide a certain date after which the insurer has assurance that it can no longer be held liable and can close its books on that policy. A claims made policy differs from an occurrence policy in that respect. Because the claim was not reported to Lexington until after the policy period of the relevant policy had elapsed, Lexington’s policy extended no coverage to Gorman for any liability of the City.  Although the Direct Action Statute gives an injured third party the right to file suit against an insurer, it does not extend the protection of liability coverage to a risk that is not otherwise covered or that is excluded by the policy (at least in the absence of statutory mandatory coverage provisions). Three Justices of the Court dissented in favor of coverage for the third party claimant on the basis that the notice requirement would destroy the claimant’s rights against an insurer in an otherwise timely filed suit which the dissenting Justices determined to be against the law and policy behind the Direct Action Statute.

Given the majority ruling, it will be interesting to see whether claimants and their attorneys issue written demands and request proof that the insurer of a defendant has been put on notice of a claim even before suit is filed.  Given the Court’s ruling, such a demand for reporting and written proof of the reporting of the claim seems prudent.

Shannon Howard-Eldridge
July 8, 2014

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Public Adjusters

Shannon Howard-EldridgeHurricane Season for the Gulf Coast starts June 1. Although the experts have predicted a quiet year, it only takes one storm to make a difference to your home and business. Whether you are a property owner, claim handler or adjuster, it is likely that you will have some interaction with a public adjuster. Recent legislation has provided structure and standards applicable to public adjusters.

Louisiana law defines a “public adjuster” as an insurance adjuster who does not work for any insurance company, but works for the insured to assist in the investigation, appraisal, evaluation and reporting of the claim. A “company adjuster” is an adjuster who is an employee of an insurance company. An “independent adjuster” is an adjuster hired on a contract basis by an insurance company to represent the insurance company’s interests. Company adjusters and independent adjusters are paid by the insurance company. A public adjuster is paid by the insured.

To ensure loyalty to the insured who may retain a public adjuster, public adjusters are prohibited, while licensed as a public adjuster by the Louisiana Department of Insurance, to represent or act as a company adjuster or independent adjuster in Louisiana. A public adjuster may only provide services with a property damage claim for a first party insured against that insured’s insurer.

Public adjusting has only been regulated in Louisiana since Hurricane Katrina. Prior to that time, there were few public adjusters working in the State. However, it is now often the case that there are groups of persons who chase storms, such as Hurricane Isaac and Hurricane Sandy. With the intention of regulating public adjusting, and presumably to protect unsophisticated insureds, the Louisiana legislature passed regulations that govern licensing, contracts with insureds and practices of those working as public adjusters in this State.

Public Adjusters must meet certain standards of conduct including serving with objectivity and complete loyalty to the interests of the insured, to best serve the insured’s insurance claim interests. The public adjuster may not have a direct or indirect financial interest in any aspect of the claim, other than the compensation established in the written contract with the insured. The public adjuster must ensure that all contracts for his/her services are in writing and set forth all terms and conditions of the engagement.

The contract between an insured and a public adjuster must include details identifying the public adjuster (legible full name of the adjuster signing the contract, as specified by the Department of Insurance records; permanent home state business address and phone number; and license number). The document must be entitled “Public Adjuster Contract” and shall state details identifying the insured (name, address, insurance company, and policy number).  The loss must be described as well as the services that are to be provided to the insured. The public adjuster and the insured must sign and date the contract. A public adjuster must attest, in the contract, that he has satisfied the financial responsibility requirements of Louisiana. If applicable, the contract must acknowledge the existence of a mortgage and the mortgage holder’s right as an additional insured. A Public Adjusting Contract may not preclude the insured from pursuing civil or judicial remedies.

The public adjuster may charge the insured a reasonable fee. Most importantly, the Public Adjuster Contract must state “the full salary, fee, compensation, or other considerations the public adjuster is to receive for services.” No public adjuster may solicit for or enter into a contact or arrangement with an insured that provides for payment of a fee to the public adjuster that is contingent upon or calculated as a percentage of the amount of any claim or claims to be paid to or on behalf of an insured by the insurer. Any such contract is against public policy and is null and void. The law provides detailed provisions and limitations as to how a public adjuster should be compensated, with the obvious intention being to protect the insured from predatory or unprofessional practices.

A public adjuster may not act as an attorney or engage in the unauthorized practice of law by filing or recording on behalf of an insured client any complaint in any court of record or agency of the State of Louisiana. A public adjuster is prohibited from rendering legal advice to the insured, including but not limited to legal advice regarding the policy provisions or coverage issues. This is often an issue when counsel becomes involved to defend a claim against an insurer and the insured is being “represented” by a public adjuster who is giving advice to the insured on the claim and coverage issues.

As relates to litigated and non-litigated claims, it is good practice to review the applicable statutes on public adjusters and to check their licensing with the Louisiana Department of Insurance. Further, it would be wise to request a copy of the contract between the public adjuster and the insured and to confirm with the insured their intention to have the public adjuster assist in the claim process. As to this issue and other aspects of the claim process, it is imperative that an insurer keep an open line of communication with its insured. Licensing information and applicable statutes are available on the website for the Louisiana Department of Insurance.

Shannon Howard-Eldridge
June 11, 2014

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Walker v. Winn Dixie, et al

Walker v. Winn Dixie, et al
(June 2014)

Thomas Anzelmo and Craig Canizaro obtained summary judgment on behalf of the City of Westwego and two Westwego Police Department deputies.  Plaintiff alleged he suffered neck, shoulder, and elbow injuries as a result of excessive force and battery, as well as mental anguish as a result of racial profiling by the deputies who responded to an alleged theft at a grocery store.  Plaintiff brought claims pursuant to 42 U.S.C. § 1983 for violations of his 14th Amendment rights, as well as state law claims for battery.  The defense submitted that plaintiff lacked any evidence of a custom, policy or practice resulting in the violation of a constitutional right, that the officers were entitled to qualified immunity, and that plaintiff lacked any evidence of excessive force, a battery, or racial profiling by the deputies.  The Court sided with the defendants, noting the lack of evidence of wrongdoing by the officers and the lack of any custom, policy or practice by the city that lead to a violation of constitutional rights.  Accordingly, all claims were dismissed.

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