CLAIM DENIED A Publication of the Lowenstein Sandler PC Insurance - PDF document

CLAIM DENIED A Publication of the Lowenstein Sandler PC Insurance Law Practice Group October 2006 COURT BROADLY CONSTRUES “BODILY INJURY” IN CELLULAR PHONE CASE By Jennifer J. McGruther, Esq. Demonstrating the trend toward a very defend on the basis that its policies injury’ include damages claimed by any broad definition of “bodily injury,” the provided coverage when an “occur- person or organization for care, loss of United States District Court for the rence” causes a “bodily injury” which services or death resulting at any time Northern District of Texas recently held results in “damage.” According to St. from the ‘bodily injury’” but gave no that allegations of biological or cellular Paul, allegations of “health risks” did instruction as to whether the headsets damage, in the form of exposure to not constitute bodily injury; and even would meet that definition. Quoting radio frequency radiation (“RFR”) from if they did, the damages sought did the Ninth Circuit Court of Appeals’ the use of wireless handheld phones not result from a bodily injury. St. Paul decision Voicestream Wireless Corp. v. (“WHHP”), triggered an insurer’s duty also argued that the policy exclusion Federal Insurance Company, 112 Fed. to defend under a commercial general relating to “expected or intended” Appx. 553 (9th Cir. 2004), the Court liability policy. Ericsson, Inc. v. St. Paul injuries precluded coverage. held “[t]o the extent that seeking Fire and Marine Insurance Company, damages, in part, in the form of a The Court held that St. Paul was 423 F. Supp. 2d 587 (N.D. Tex. 2006). headset neither clearly falls within a required to defend Ericsson in the policy provision, nor is clearly excluded Underlying Ericsson were several class class actions “because the allegations by the text of the policy, the policies action suits claiming that usage of potentially stated a cause of action are ambiguous.” within the coverage of the policies.” WHHPs had exposed the class plaintiffs The Court determined that although to RFR, presenting a health risk and Finally, the Court summarily disposed of causing current and possibly future it was unclear from the class plaintiffs’ St. Paul’s argument that the “expected bodily injury. Specifically, the plaintiffs allegations whether they currently suf- or intended injury” exclusion precluded alleged bodily injury in the form of, fered adverse health effects or merely its duty to defend. Although the class among other things, (1) exposure to had an increased risk of future injury, plaintiffs alleged that Ericsson knew or RFR, which increased their “risk of they had alleged a present injury of expected the resulting damages, the damage, injury to their health and biological and/or cellular effects, which plaintiffs also alleged negligence by well-being, and unexpected changes in turn constituted “bodily injury” Ericsson, which the Court held is not to their physiology” ; (2) exposure to within the policies’ definitions. a basis for precluding claims under health risks including cellular damage; the exclusion. ■ Additionally, the Court found that, (3) exposure to RFR’s biological effects due to an ambiguity in the policy, the and risks to human health; and (4) plaintiffs’ sought-after damages — increased risk of biological injury. The headsets or their monetary equivalent plaintiffs sought relief including WHHP — qualified as “damages resulting from headsets or funds to buy headsets. bodily injury.” The policies provided St. Paul denied any obligation to that “damages because of ‘bodily

CLAIM DENIED APPELLATE DIVISION FINDS MULTIPLE- GUNSHOT SHOOTING OF POLICE OFFICERS CONSTITUTES ONE OCCURRENCE FOR INSURANCE PURPOSES INSIDE THIS ISSUE The New Jersey Appellate argued that each gunshot should be Division recently affirmed that in considered a separate occurrence, thus terms of insurance coverage, an OCTOBER 2006 entitling them to a total of $300,000. incident where two policemen The defendant insurer did not dispute Appellate Division Finds were hit with a total of three coverage, but took the position that That Multiple-Gunshot ... gunshots constitutes one there was only one occurrence in the occurrence. case — the parents’ negligent Court Denies Coverage for supervision of their son. Damage from Faulty In the case Bomba v. State Farm Fire Computer Chips The Appellate Division began its and Cas. Co., 379 N.J. Super. 589 analysis by noting that for purposes Mitchell J. Decter, Esq. (App. Div. 2005), the victims brought of determining the number of occur- Ericsson, Inc. v. suit against the parents of the lone rences, “ … the term must be construed St. Paul Fire ... gunman, as well as against the parents’ from the point of view of the cause or insurer, seeking a declaration of the Jennifer J. McGruther, Esq. causes of the accident rather than its breadth of coverage offered by the When Signing Applicant effect.” Applied to the facts before it, applicable homeowners’ policy. Earlier, Knows of Material this test resulted in there being only one the victims had sued the parents, Misrepresentations ... occurrence — the parents’ negligent alleging that they had negligently supervision of their son. The Court Appellate Division Expands supervised their son by, among other reasoned that “the fact that there were Definition of Physical things, permitting him access to the two victims or several injuries when the Damages … weapon used in the crime. homeowners’ son fired his gun multiple David G. Tomeo, Esq. times is not relevant, for coverage The Court reasoned that “the purposes, for determining the cause fact that there were two victims of for identifying the covered event.” or several injuries when the While the effect of its holding was homeowners’ son fired his gun harsh, the Court noted that acceptance multiple times is not relevant, of the victims’ argument that the for coverage purposes...” gunshots were the “cause” of the injuries would result in coverage being The policy at issue featured a $100,000 barred by the policy’s criminal acts per-occurrence limit and defined exclusion. By instead construing the “occurrence,” in pertinent part, as “ parents’ negligence as the “cause” … an accident, including exposure to of the officers’ injuries, the Appellate conditions, which results in … bodily Division permitted the victims the only injury; or … property damage during recovery possible under the policy, the policy period.” The definition also albeit one-third of the total amount stated that “[r]epeated or continuous that they sought. ■ exposure to the same general conditions is considered to be one occurrence.” Based on this language, the victims