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August 26, 2024
Unambiguous Exclusion Must be Enforced

Wrongful Death of an Insured Excluded
Post 4861

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In B.H., et al v. P.B. and L.B., and Upland Mutual Insurance, No. 126,874, Court of Appeals of Kansas (August 16, 2024) the Court of Appeals resolved a coverage issue.

FACTUAL BACKGROUND

In B.H., Special Administrator of the Estate of C.W.H., a Minor, and B.H., Individually and for and on Behalf of All the Surviving Heirs-at-Law of C.W.H., a Minor v. P.B. and L.B., and Upland Mutual Insurance, No. 126,874, Court of Appeals of Kansas (August 16, 2024) the Court of Appeals needed to resolve a coverage issue when insurer was asked to pay a judgment rendered against its insured.

GARNISHMENT PROCEEDINGS

A garnishment proceeding in Kansas does not create contractual privity between a judgment creditor and the garnishee. A judgment creditor seeking to garnish a judgment debtor’s insurance provider-when the judgment creditor is not in privity of contract with the insurer and is not an intended third-party beneficiary of the insurance policy-may only recover from the insurer to the extent the insured judgment debtor could recover.

FACTUAL BACKGROUND

Mother’s toddler tragically died from drowning in a pond at the child’s foster parents’ home. Mother sought damages from the foster parents, alleging they negligently caused her child’s death. The district court found one of the foster parents- P.B.-80% at fault for her child’s death and awarded Mother damages of $320,000, comprised of $120,000 for the mother’s survivor claim and $200,000 for her wrongful death claim.

P.B. and L.B. were licensed foster parents who received Mother’s child, C.W.H., as a foster placement in December 2015 when C.W.H. was about one month old. In August 2017, when C.W.H. was about 23 months old, he drowned in a tragic accident in a fishpond on the foster parents’ property when only P.B. was home. At the time of C.W.H.’s death, Mother had been working on her reintegration plan and C.W.H. was spending five nights a week with Mother.

The foster parents were insured under a homeowners insurance policy issued by Upland Mutual. The policy contained the following exclusion: “‘bodily injury’ to ‘you’, and if residents of ‘your’ household, ‘your’ relatives and persons under the age of 21 in ‘your’ care or in the care of ‘your’ resident relatives.”

Upland Mutual notified P.B. and L.B. of this refusal to provide coverage and defense, explaining that C.W.H. was under the age of 21 (he was approximately age 22 months old at the date of the incident), was residing in the household and was in P.B and L.B. care. C.W.H. was also an insured under the policy.

After winning that judgment, Mother sued Upland Mutual, P.B.’s homeowners insurer, in the amount of the judgment against P.B. The district court ordered Upland Mutual to pay Mother $200,000, which represents P.B.’s proportional share of fault on her wrongful death claim. The district court agreed with Mother in part, finding no coverage for Mother’s survivor claim but finding the homeowners insurance policy covered Mother’s wrongful death claim because Mother was not an insured under the policy.

DISCUSSION

The only issue on appeal is whether the district court erred in entering a garnishment order against Upland Mutual for Mother’s wrongful death judgment against P.B. When the facts are undisputed the court need not review the district court’s factual findings and can proceed to the second step to review the district court’s conclusions of law .

The District Court Erred in Finding the Foster Parents’ Homeowners Insurance Policy Provided Coverage for the Judgment on Mother’s Wrongful Death Claim

Upland Mutual’s fairly broad coverage provision is limited by a separate provision that states personal liability coverage “does not apply to: a. ‘bodily injury’ to ‘you’, and if residents of ‘your’ household, ‘your’ relatives and persons under the age of 21 in ‘your’ care ….”

The plain and unambiguous policy language excludes from coverage bodily injuries, including death, to persons under the age of 21 that occurred while the injured was in the care of the insured and a resident of their household. The parties did not dispute that C.W.H. resided with the insureds and thus met this definition under either interpretation. Since the exclusion language in the present case is not ambiguous it was applied as written.

It is axiomatic that when the terms of an insurance policy are clear and unambiguous, the court must give effect to the parties’ clear intentions and enforce the contract as made.

Since the policy clearly excluded from coverage damages resulting from C.W.H.’s death because C.W.H. was residing in the insureds’ home, under the insureds’ care, and under the age of 21, the district court’s garnishment order for Mother’s wrongful death judgment was, therefore, reversed.

ZALMA OPINION

The loss of a child is horrible. Judges feel empathy, if not sympathy, to a mother whose child died as a result of a the negligence of others. Judges seldom have empathy for an insurer who refuses to indemnify an insured because of an exclusion. The Trial court ordered the insurer to pay in contravention of a clear and unambiguous exclusion. The Court of Appeals reversed because the exclusion was clear.

THE ART OF ADJUSTING

I will be appearing on the “Art of Adjusting” podcast The link below is a preview of the podcast that will be posted in full next week. https://dropbox.com/scl/fi/ldkfrvc

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:08:43
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14 hours ago
Ambiguity in Insurance Contract Resolved by Jury

Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105

See the full video at https://lnkd.in/gPa6Vpg8 and at https://lnkd.in/ghgiZNBN, and at https://zalma.com/blog plus more than 5100 posts.

Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.

In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.

BACKGROUND

Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....

00:07:02
June 23, 2025
The Clear Language Of The Insurance Contract Controls

Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104

Read the full article at https://lnkd.in/gbcTYSNa, see the full video at https://lnkd.in/ggmDyTnT and at https://lnkd.in/gZ-uZPh7, and at https://zalma.com/blog plus more than 5100 posts.

Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy

In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.

The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS

Parties Involved:

CAEA is insured by Associated Industries Insurance Company, Inc. ...

00:08:22
June 20, 2025
Four Corners of Suit Allows Refusal to Defend

Exclusion Establishes that There is No Duty to Defend Off Site Injuries

Post 5103

Read the full article at https://lnkd.in/geje73Gh, see the full video at https://lnkd.in/gnQp4X-f and at https://lnkd.in/gPPrB47p, and at https://zalma.com/blog plus more than 5100 posts.

Attack by Vicious Dog Excluded

In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)

Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that

1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.

Presently before the Court are two ...

00:08:29
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

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