WORKERS COMPENSATION IMMUNITY AND THE INTENTIONAL TORT EXCEPTION

 

shutterstock_251422126In prior articles, I discussed the benefit of workers compensation immunity for contractors.  Arguing around workers compensation immunity under the “intentional tort exception” is really hard – borderline impossible, in my opinion.  Nevertheless, injured workers still make an attempt to sue a contractor under the intentional tort exception to workers compensation immunity.  Most fail based on the seemingly impossible standard the injured worker must prove to establish the intentional tort exception.  A less onerous standard (although certainly onerous), as a recent case suggests, appears to be an injured worker suing a co-employee for the injury.

 

Florida Statute s. 440.11 discusses the intentional tort exception to workers compensation immunity.   Workers compensation shall be the exclusive remedy to an injured worker UNLESS the injured worker can establish a claim against the contractor or fellow-employee under the intentional tort exception as statutorily set forth below:

 

440.11 Exclusiveness of liability. – 

(1) The liability of an employer prescribed in s. 440.10 shall be exclusive and in place of all other liability . . . except as follows:

. . . .

(b) When an employer commits an intentional tort that causes the injury or death of the employee. For purposes of this paragraph, an employer’s actions shall be deemed to constitute an intentional tort and not an accident only when the employee proves, by clear and convincing evidence, that:

1.  The employer deliberately intended to injure the employee; or

2. The employer engaged in conduct that the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.

 

The same immunities from liability enjoyed by an employer shall extend as well to each employee of the employer when the employee is acting in furtherance of the employer’s business and the injured employee is entitled to receive benefits under this statute. Such fellow-employee immunities shall not be applicable to an employee who acts, with respect to a fellow employee, with willful and wanton disregard or . . . with gross negligence when such acts result in injury or death or such acts proximately cause such injury or death . . . .

 

In Ramsey v. Dewitt Excavating, Inc., 43 Fla. L. Weekly D1366a (Fla. 5th DCA 2018), an employee was cleaning a cement-mixing pugmill with a fellow employee.  An accident happened while the employee was inside the mixing box causing his death.  While he was inside, his fellow-employee turned on the mixing box causing his death.  The employee’s estate sued both the employer and the fellow-employee for the wrongful death and argued under the intentional tort exception to get around workers compensation immunity.  

 

The trial court granted summary judgment on the issue of workers compensation immunity finding that the immunity barred the estate’s claims against the employer and the fellow-employee.

 

Intentional Tort Exception as to Employer

 

The appellate court affirmed the summary judgment as to the employer because the employee could NOT prove the virtually impossible burden in establishing the applicability of the intentional tort exception.

 

Three elements must be proved to establish the intentional tort exception to worker’s compensation immunity, and the failure to prove any one of the elements will prevent the exception from applying.  The elements are:

1) employer knowledge of a known danger . . . based upon prior similar accidents or explicit warnings specifically identifying the danger that was virtually certain to cause injury or death to the employee;

2) the employee was not aware of the danger . . . because it was not apparent; and

3) deliberate concealment or misrepresentation by the employer . . . preventing employee from exercising informed judgment as to whether to perform the work.

 

Ramsey, supra (internal citation omitted).

 

There was no evidence to suggest that the employee was not aware of the danger involved in cleaning the inside of the cement mixing box and that he had to be aware based on working on the machine in the past, which was inherently dangerous in of itself.  This alone supported the application of the workers compensation immunity and there likely would have been a lot more facts (or facts the employee’s estate would not be able to prove) supporting the immunity.

 

Intentional Tort Exception as to Fellow-Employee

 

The appellate court, however, reversed the summary judgment as to the fellow-employee finding that a jury could find that the fellow-employee acted with gross negligence causing the death of the employee.

 

In order to establish that Gubbins [fellow-employee] acted with gross negligence when he turned on the pug mill while Ramsey [employee] was still inside, the parents [representatives of estate] were required to present evidence as to each of the following three elements:

1) circumstances constituting an imminent or clear and present danger amounting to a more than normal or usual peril [;]

2) knowledge or awareness of the imminent danger on the part of . . . [Gubbins;] and

3) an act or omission [on the part of Gubbins] that evinces a conscious disregard of the consequences. 

Ramsey, supra.

 

 

 

The estate had evidence that the fellow-employee directed the decedent-employee inside the cement mixing box and then activated the box without utilizing any safety system or checking to see if the decedent-employee was still inside.  Based on this evidence, a jury could conclude that the fellow-employee was grossly negligent in activating the mixing box.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

COMPETING EXPERT WITNESSES IN AN INSURANCE COVERAGE DISPUTE

shutterstock_363608708Oftentimes, insurance coverage disputes involve competing expert witnesses.  The experts render different expert opinions regarding a topic that goes to coverage and/or damages.  An example of competing expert witnesses can be found in the recent property insurance coverage dispute, Garcia v. First Community Ins. Co., 43 Fla.L.Weekly D671a (Fla. 3d DCA 2018). 

 

In this case, an insured submitted a claim under her homeowner’s policy for water damage due to a roof leak.  She claimed her damage was approximately $23,000.  The insurer denied coverage and an insurance coverage dispute ensued.

 

The insured’s policy, akin to many homeowner’s policies, contained exclusions for loss caused by:

 

h. Rain, snow, sleet, sand or dust to the interior of a building unless a covered peril first damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

 ***

i. (1) Wear and tear, marring, deterioration;

 

The insurer sent an engineer to inspect the insured’s property and the engineer (expert) opined that the water intrusion was not covered under the policy based on the aforementioned exclusions.  Her opinion was that the water intrusion through the roof was the result of deterioration from age, tree branch abrasions, and construction defects based on how nails were installed into the shingles.  Based on this opinion, the insurer was denying coverage based on the (i) wear and tear, marring and deterioration exclusion and (ii) rain intruded through the roof based on a peril (construction defect) that was not covered under the policy.

 

The insured, as expected, had a competing expert that opined that a hail impact or high wind uplift (covered peril) in the days leading up to the rain event caused water to intrude through the roof and cause interior damage.   Under this opinion, the insured was presenting an expert opinion for coverage and why the insurer’s exclusions were inapplicable.

 

In this case, surprisingly, the trial court granted summary judgment in favor of the insurer.  However, this was reversed on appeal because the competing opinions as to coverage and the cause of the insured’s loss created a genuine issue of material fact.  Summary judgment cannot be granted if there are genuine issues of material fact.  See Garcia, supra, (“Given this conflict in the material evidence as to the cause of the loss, the trial court erred in entering final judgment in favor of First Community [insurer].”).

 

Another argument the insurer raised was that its engineer inspected the property within months after the date of loss whereas the insured’s expert is basing an opinion on an inspection that occurred three years after the fact.   This fact, albeit true, does not create a genuine issue of material fact.  Rather, it goes to the credibility of the experts at trial.  Which expert is more credible regarding the cause of the loss:  the insurer’s expert that inspected the property a few months after the loss or the insured’s expert that inspected the property years after the loss.  Well, the issue of credibility and how a jury / trier of fact weighs this in consideration of other evidence is not appropriate in determining a motion for summary judgment. See Garcia, supra.

 

Experts are an important part of construction disputes including insurance coverage disputes and it is not uncommon for there to be competing expert opinions as to the cause of a loss, a defect, and, of course, damages.   

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

PROPERTY INSURANCE EXCLUSION FOR CONSTANT OR REPEATED LEAKAGE OF WATER

shutterstock_196921499A property insurance policy, no different than any insurance policy, contains exclusions for events that are NOT covered under the terms of the policy.  One such common exclusion in a property insurance policy is an exclusion for damages caused by “constant or repeated seepage or leakage of water…over a period of 14 or more days.”  

 

The application of this exclusion was discussed in the recent opinion of Hicks v. American Integrity Ins. Co. of Florida, 43 Fla. L. Weekly D446a (Fla. 5th DCA 2018).  In this case, while the insured was out of town, the water line to his refrigerator started to leak.  When the insured return home over a month later, the supply line was discharging almost a thousand gallons of water per day.  The insured submitted a property insurance claim.  The property insurer engaged a consultant that opined (likely, correctly) that the water line had been leaking for at least five weeks.  Based on the above-mentioned exclusion, i.e., that water had been constantly leaking for over a period of 14 days, the insurer denied coverage.  This denial led to the inevitable coverage dispute.

 

The trial court granted summary judgment in favor of the insurer in the insurance coverage lawsuit.  The insured argued at trial and then on appeal that this exclusion only applies to losses caused by water on day 14 and after.  For this reason, the insured attempted to calculate his water damage losses that occurred during the first 13 days of the supply line leaking. The appellate court agreed with the insured:

 

In light of the general principle that insurance policy provisions susceptible to more than one interpretation should be construed liberally in favor of the insured and strictly against an insurer, and that exclusionary clauses should be read even more narrowly, we hold that an insurance policy excluding losses caused by constant or repeated leakage or seepage over a period of fourteen days or more does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less.  It is not unambiguously clear that a provision excluding losses caused by constant leakage of water over a period of fourteen or more days likewise excludes losses caused by constant leakage of water over a period of less than fourteen days. And ambiguous insurance provisions — those susceptible to more than one meaning, one providing coverage and the other denying it — must be construed against the insurer and in favor of coverage. 

Hicks, supra (internal citations omitted).

 

This is a favorable ruling for an insured as it established coverage within the first 13 days of the water supply line leaking. The damages associated with that loss is a material issue of fact to be determined by the jury (or judge if it is a bench trial).  But, importantly, the ruling established coverage under this exclusion, meaning the insurer could not categorically bar coverage because the leak constantly occurred for 14 or more days; rather, the insured’s damages, if any, would be limited to the first 13 days of the leak.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

CONTRACTORS: CONSULT YOUR INSURANCE BROKER REGARDING YOUR CGL POLICY

shutterstock_601853483Contractors:  do yourself a favor and consult your insurance broker regarding your commercial general liability (CGL) policy.   Do this now, especially if you subcontract out work.

 

CGL policies contain a “your work” exclusion.  The CGL policy is written such that it excludes “‘property damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations hazard.’” This exclusion will be raised in the post-completion latent construction defect scenario. (There are other exclusions that will be raised to a defect discovered during construction.)  Certain policies will contain a subcontractor exception to this “your work” exclusion.  You WANT this exception- no doubt about it so that this exclusion does not apply to work performed by your subcontractors.  Without this subcontractor exception, truth be told, this “your work” exclusion is a total back-breaker to contractors.   It will give your insurer an immediate out for many latent defect property scenarios since excluded from coverage is property damage to your work including work performed by your subcontractors.

 

In a recent opinion, Mid-Continent Casualty Co. v. JWN Construction, Inc., 2018 WL 783102 (S.D.Fla. 2018), an owner discovered water intrusion and damage at his property.  He sued the general contractor and the general contractor’s insurer filed a separate action for declaratory relief claiming it had NO duty to defend or indemnify its insured—the general contractor—in the underlying suit.  The court agreed because the contractor did not have the subcontractor exception to the “your work” exclusion.

 

If work was performed by JWN [contractor] or on JWN’s behalf-here by a subcontractor-then the “your work” exclusion applies.  Historically, insurers could be liable under commercial general liabilities policies resembling the policy in the instant case for certain types of damages caused by subcontractors….Nonetheless, insurers do possess the right to define their coverage as excluding damages arising out of a subcontractor’s defective work by eliminating subcontractor’s exceptions from the policy. An insurer is only liable for a subcontractor’s defective work when the “your work” exclusion does not eliminate coverage for work performed by a subcontractor….In conclusion, the insurance policy in this case excluded coverage for work performed not only by JWN, but also by JWN’s subcontractors.

JWN Construction, Inc., supra, at *4.

 

 

This ruling meant that the general contractor’s CGL insurer had no duty to defend or indemnify its insured—again, the contractor—for the defects or resulting water damage.  A total killer illustrating the absolute importance of the subcontractor exception to the “your work” exclusion in your CGL policy.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.