Five months after the effective date of Southeast's insurance through CNA, one of Southeast's employees sustained a traumatic arm amputation while working on a rock crushing machine owned by Powerscreen (the plaintiff's insured). The injured worker brought a product liability and negligence suit against Powerscreen. It was then discovered that Southeast's policy, issued through the defendant, did not include Powerscreen as an additional insured. The plaintiff maintained that the lease required Southeast to provide additional insurance for Powerscreen and that the defendant knew or should have known of that fact.
The plaintiff settled the underlying personal injury action against its insured, Powerscreen, for approximately $380,000, including $250,000 in compensatory damages and $130,000 in attorney fees. Powerscreen and Southeast both assigned their rights against the defendant to the plaintiff. The plaintiff stressed that the defendant had mailed a certificate of insurance to Powerscreen and, therefore, was aware that Powerscreen was leasing equipment to Southeast. The plaintiff also claimed that the defendant was told that Southeast would be leasing rock crushing equipment and was given a copy of the lease agreement with Powerscreen.
The defendant argued that the representative of Southeast never told its agents of the lease with Powerscreen and it was unaware of the agreement. The defense argued that it had a thick file of documents pertaining to Southeast's coverage and no lease agreement was contained in the file. In addition, the defendant argued that the representative of Southeast was asked, on the telephone, at the subsequent meeting and on the insurance application, if Southeast rented equipment and he consistently responded "NO." The defendant's agent testified that a question on the application regarding additional insured was left blank, he questioned Southeast's representative about an additional insured at the time and the representative indicated that there was no additional insured to be named on the policy. The defendant additionally stressed that the certificate of insurance mailed to Powerscreen included a blank space for "additional insured", yet Powerscreen never questioned the omission.
After a three day trial, the jury found that the defendant was not negligent. The defendant claimed entitlement to attorney fees and costs based on a proposal for settlement in the amount of $1,000.
Reference
Plaintiff's insurance expert: David Goodwin from Surfside, FL. Defendant's insurance agent expert: William Feldhaus from Atlanta, GA.
Universal Underwriters vs. Cecil Powell and Company. Case no. 2005 CA 003238; Judge Barnard Nachman, 2-22-08.
Attorney for plaintiff: George K. Brew in Jacksonville, FL. Attorneys for defendant: Richard Ramsey, and Holly Howanitz of Wicker, Smith, O'Hara, McCoy & Ford, P.A. in Jacksonville, FL.
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