As a Missouri defective product lawyer, I know that winning a financial settlement or verdict is often not the end of the story. The verdict or settlement must still be paid, and sometimes, defendants just don’t have the money. That’s why a business, which is almost certainly insured, is often a better bet than an individual — but only if the insurer does not try to wiggle out of its obligations. In Gulf Underwriters Insurance Co. v. Burris et al., Gulf Underwriters Insurance Co. sued for a declaration that its policy did not create an obligation to cover any claims made by Lowell and Joyce Burris in their product liability lawsuit against Versa Products and Menard Inc. Lowell Burris fell from a ladder manufactured by Versa and sold by Menard, and sued those two companies alleging defects in the ladder. The district court granted summary judgment to Gulf, but the Eighth U.S. Circuit Court of Appeals reversed.
Burris sustained serious injuries when he fell from the ladder in 2001, but that accident was not described. In 2003, his injury attorney wrote to Versa asserting a claim for product liability. At that time, Versa was a named insured on a Gulf policy; Menard was an additional insured. The policy also included a $50,000 self-insured retention (SIR) endorsement. The Burrises sued in 2007 and ended up in federal court, where Gulf started a new action seeking a declaratory judgment on its obligations. In a summary judgment ruling, the court agreed that Gulf need not cover Versa or Menard for the Burrises’ claims. It found that because Versa dissolved after the policy expired, it cannot meet its obligations under the SIR. This is a material breach that would end Gulf’s obligations under the policy, the court said. Burris appealed.
The Eighth U.S. Circuit Court of Appeals reversed, finding the summary judgment for Gulf in clear contradiction of the text of the policy. While the policy does say the contract terminates when the insured stops paying, including in bankruptcy, the Eighth noted that it also says “all the terms of this policy… apply irrespective of the application of the Self-Insured Retention.” And of course, the terms of the policy must include restrictions on coverage, the court said. It said while the amount of coverage available depends on the amount of the SIR, which is affected by Versa’s payments, the existence of the coverage is defined exclusively by the policy’s Commercial General Liability Coverage form. Thus, the SIR does not affect coverage for third-party liability, the court found. In further support, the Eighth noted that Gulf supplied no admissible evidence that Versa had breached the contract. It went on to find that the case should be dismissed with prejudice, because the SIR is void as against Wisconsin public policy, and because Gulf failed to disclose that its suit was not ripe under Wisconsin law. On remand, t suggested that the district court may want to consider awarding attorney fees to the Burrises.
As a St. Louis product defect attorney, I enjoy reading about this kind of victory for plaintiffs. It appears from the Eighth Circuit’s final few paragraphs that the appeals court was displeased with Gulf for pursuing this argument at all, and particularly for omitting several pieces of information that made its case substantially weaker. It acknowledged that Gulf may have legitimate arguments on other issues, but found the insurance company’s conduct so dishonest that it warranted the penalty of not being able to assert any more defenses unless and until the Burrises are successful in their claim. This may be an extreme case, but in general, it’s not uncommon for insurers to outspend and out-legal-maneuver individuals facing them in court. Defending injured people from this kind of attack is part of my job as a southern Illinois dangerous product lawyer.
If you or someone you love was injured in Missouri or southern Illinois, don’t hesitate to call Carey, Danis & Lowe for help. To set up a free, confidential case evaluation, send us an email or call toll-free at 1-877-678-3400.
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