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Insurance companies have very deep pockets, and when you sue for benefits their team of attorneys can seem very intimidating. However, it is important to know that attorneys are uniformly responsible for providing their clients with zealous representation regardless of wealth or resources.
Gulf Underwriters Ins. Co. v. Burris is a case that arose when Lowell Burris fell from a ladder and was seriously injured. Burris sued the manufacturer (“Versa”) of the ladder and the retailer who sold the ladder. Gulf Underwriters Insurance Company (“Gulf”) was the company that provided a commercial general liability insurance policy to the manufacturer and retailer. In addition to the policy, there was a “Self-Insured Retention” endorsement (“SIR”) in the amount of $50,000.
Gulf argued that the plaintiff was not entitled to sue for recovery under the terms of the policy they issued to Versa and retailer because Versa was not meeting their obligations under the SIR policy. Versa dissolved after expiration of the policy and Gulf argued this was a material breach of Gulf’s contract with Versa, therefore releasing Gulf from its obligations under the policy. This question of whether a third party claimant would be deprived of coverage where the insured produced or sold a defective product was controlled by the definition of key terms in the policy.
However, after a careful reading of the policy the court found a statement that stipulated that all of the terms of the general liability insurance policy apply regardless of the SIR. The policy went on to explain that the amount of coverage provided would change with the SIR but the fact that third parties were entitled to coverage in liability actions remained constant.
Although the court here stated that they believed the policy drafters knew that coverage remained the same, it goes on to further explain why a third- party was entitled to coverage in this case. The distinction is held in the definitions of “termination” and “cancellation” in terms of insurance policies. Because these two words were used interchangeably in the policy, the court found there was ambiguity and confusion that must be resolved in favor of the insured. Therefore, in this case Versa is the insured and the policy must be interpreted in a way as to protect Versa from losing coverage.
The next question the court addresses is the type of contract this policy and the SIR are. Gulf argued that these contracts were executory, which means the contract needed more performance by one of the parties in order to be legally executed. The problem here was the precedent in Vandeveer which “every court in the country” has followed and which states that, “insurance policies for which the policy periods have expired and the premium has been paid are not executory contracts.” In re Vanderveer Estates Holding, LLC, 328 B.R. 18, 26 (Bankr. E.D.N.Y 2005).
The court here dismissed Gulf’s action for declaratory judgment in this case with prejudice, and remanded the case to the lower court to be heard. This court went so far as to suggest sanctions to Gulf’s attorneys for failing to present to the court statutes and cases that countered their position.
All attorneys have a duty to provide case law and statute that support their arguments, as well as case law and statute that counter.
The Ferraro Law Firm represents people injured by recalled or defective products throughout the country. Call (888) 554-2030for a free and confidential consultation. Offices in Miami, Washington, D.C., and New York City.
Gulf Underwriters Ins. Co. v. Burris, et al., No. 11-1967 (8th Cir. Mar. 27, 2012).
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