Wisconsin law, would cover the suit and the two parties settled. However, the
court deemed it could not decide Travelers’ involvement due to those policies
stemming from Texas jurisdiction.
CNH argued that the relationship between J.I. and Travelers was “direct,
extensive, and centered in Wisconsin and independent of Travelers’ relationship
with Tenneco.” However, Tenneco found within its policies general requirements
for several of its major divisions and how these requirements were to be applied
to its subsidiaries. Within these clauses, it argued that J.I.’s relationship with
Travelers was not “independent of Travelers’ relationship with Tenneco,” and
therefore the Texas law would govern the ruling.
Travelers pointed back to the clause on anti-assignments and relied on the lack
of notice from either J.I. and Tenneco, and the court ruled in the insurer’s favor.
SCORECARD: CNA Financial will cover defense costs for the underlying
asbestos-exposure suit against CNH, but Travelers is off the hook.
TAKEAWAY: When a company holds facilities in multiple jurisdictions, an
insurer is most prepared when it defines under which jurisdiction its policies
INJURED EMPLOYEE BARRED FROM NEGLIGENCE CLAIM
Victor campos fell ill during his shift as a Department of Public Works (DPW) employee and decided to head home early to recover. Campos was working on site at City Hall, and in order to clock out
early, he had to return to the DPW to file proper paperwork with his supervisor.
Unfortunately for Campos, another city worker, police officer Miguel Cruz, ran
a red light and hit Campos’s vehicle on his way to the DPW. Campos filed for
workers’ compensation a few weeks later.
He received workers’ comp benefits for the accident. Then, almost two years
after the accident, Campos filed a
lawsuit against both the city and
Cruz. A trial court, however, said
the complaint was barred, because
Campos already received benefits
for his injury and therefore could
not sue the others for damages.
Campos brought the case to
appellate court, arguing that he
was not acting in the scope of his
employment while driving back to
the DPW. He said he decided to
return to the DPW for his own sake to fill out the paperwork to go home.
He further argued the trial court was wrong in its assessment that his lawsuit
was barred by already receiving workers’ comp benefits; he insisted a settlement of
his claim did not bar a third-party claim against his employer.
The appellate court reviewed the circumstances. They concluded, “[Campos]
left [City Hall], not to go home, or to go to lunch, or to accomplish some personal
errand. He left the City Hall location to go to the DPW office, to submit
paperwork in order to take a half-day off.”
This, the court said, was in the scope of Campos’s employment. The
employer’s protocol was to file paperwork if a worker were to leave early.
“That plaintiff was not physically at his workplace when the accident occurred
EMPLOYEE’S SEXUAL MISCONDUCT COVERED UNDER POLICY
is thus of no moment,” said the court. “Indeed, as a DPW worker, plaintiff could
have been working in any part of the City when he was involved in the accident.”
As for Campos’s claim that a settlement did not bar a third-party claim against
his employer, the court determined that since Campos received workers’ comp
benefits, he could not pursue a negligence claim for damages resulting from the
What happens when a third party sues an employer for the negligent hiring of an employee who intentionally injured that third party? Is the lawsuit considered an “occurrence” under the employer’s general liability
policy? Should the insurer be on the hook? One California court had to decide.
Ledesma & Meyer Construction Company, Inc., (L&M) had a contract with
the San Bernardino Unified School District. L&M was tasked with a construction
update at a San Bernardino middle school and hired Darold Hecht as the project’s
A young girl, age 13, filed a
lawsuit against Hecht, alleging
sexual abuse. Jane Doe also
brought a claim against L&M for
negligently hiring, retaining and
supervising Hecht in the first place.
L&M turned to its commercial
general liability insurer, Liberty
Surplus Insurance Corporation and
Liberty Insurance Underwriters
Inc., for defense. The insurer, in
return, agreed to defend L&M under a reservation of rights. However, it also
sought declaratory relief, because it did not believe it had any obligation to defend
or indemnify L&M in the underlying suit.
In court, Liberty argued its commercial general liability policy only “applies to
‘bodily injury’ and ‘property damages’ only if … the ‘bodily injury’ is caused by an
‘occurrence,’ ” which the policy defined as “an accident, including continuous or
repeated exposure to substantially the same general harmful conditions.”
L&M was tasked with defining Hecht’s actions as an accident.
The company argued its retention of Hecht was not the injury-causing act;
Hecht’s decision to act inappropriately was in no way a foreseeable event, L&M
said, and therefore an accident in the eyes of the company.
“California law … recognizes the cause of action even when the employee
acted intentionally,” the court opinion read.
“The requirements for liability of this kind are not easily met, but they are well
established. Absent an applicable exclusion, employers may legitimately expect
coverage for such claims under comprehensive general liability insurance policies,
just as they do for other claims of negligence.”
It ruled in favor of L&M; Liberty would have to pay for the underlying suit.
SCORECARD: Liberty can’t deny coverage for the negligent hiring underlying
suit. Instead, it must insure L&M for damages under its general liability policy.
TAKEAWAY: Insurance policies may provide coverage for negligent hiring
claims, unless there is an express exclusion for such claims. Without these
exclusions, insurers might be required to defend malevolent deeds.
UNDERLYING ASBESTOS-EXPOSURE SUIT NOT COVERED
In 1970, tenneco, an oil and gas corporation headquartered in Houston, acquired J.I. Case, which primarily did business out of Wisconsin. At the time, J.I. held insurance coverage through CNA Financial. When the CNA
policies expired in 1972, Tenneco added J.I. to its general insurance policies under
Travelers Indemnity Company.
These policies covered Tenneco and all its wholly-owned subsidiaries with an
anti-assignment provision that stated, “Assignment of interest under this policy
shall not bind the company until its consent is endorsed hereon.”
J.I. assigned certain assets and liabilities to CNH Industrial America, which
also primarily did business out of Wisconsin. CNH believed insurance coverage
to be a part of the agreement, however neither J.I. or Tenneco informed Travelers
of the assignments.
When CNH found itself in an asbestos-exposure suit, it sought coverage for
defense costs and losses. CNH turned to both CNA Financial and Travelers, yet
the two insurers denied duty to defend.
A Wisconsin court quickly ruled that CNA Financial’s policies with J.I., under
SCORECARD: Victor Campos cannot pursue a negligence claim against his
employer, because he already received workers’ compensation.
TAKEAWAY: When workers’ comp is awarded, negligence claims cannot be
pursued for the same incident. Employers need to document each claim to
eliminate any doubt in case an employee decides to take further legal action.