BSCR Firm News/Blogs Feed

Illinois Court of Appeals Affirms Denial of Loss of Business Coverage Caused by COVID-19

11 Aug 2022

In the recent decision of State & 9 Street Corporation et al. v. Society Insurance; the Appellate Court of Illinois First Judicial District affirmed the circuit court’s judgment on the pleadings in favor of Society Insurance Company, finding the restaurant company plaintiffs were not entitled to business income, extra expense, civil authority, or contamination provisions in their property damage policies.

The pertinent facts are as follows: Plaintiffs own and operate 14 taverns in Illinois; On March 16, 2020 Governor Pritzker issued several executive orders in response to the COVID-19 pandemic, including a suspension of on-premises consumption of food and beverage; Society issued plaintiffs a “Businessowners Policy” that included a “Businessowners Special Property Coverage Form” that provided covered loss of business income coverage caused by or resulting from a “Direct Physical Loss;” the Society policy also contained an exclusion for loss or damage caused by the enforcement of an ordinance or law that regulated the use of the property.

Plaintiffs filed a Complaint for Declaratory Judgment, seeking a declaration that COVID-19, and Governor Pritzker’s executive actions, triggered loss of business income coverage under the Society policy. Society filed a countercomplaint against plaintiffs seeking a declaration that there was no coverage under the policy. The circuit court entered an order granting Society’s motion for judgment on the pleadings, and Plaintiffs appealed the decision.

The Appellate Court determined that COVID-19, and executive order regarding the same, caused economic loss and not a “physical loss” to the covered properties. Without an allegation of a change to the physical nature of the existing property, the court found plaintiffs’ allegation insufficient to establish a physical loss; as a further basis to deny coverage the Appellate Court found plaintiffs failure to allege their properties needed to be physically repaired or replaced evidenced no physical loss had occurred.

The Appellate Court also denied coverage under a contamination provision of the Society policy. Plaintiffs alleged that COVID contamination resulted in governmental authorities prohibiting access to the restaurants. The Appellate Court found no coverage relying upon Governor Pritzker’s expressed intent of ensuring the maximum number of people self-isolate, while enabling essential services to continue. The Governor’s limitation on the use of the restaurant premises was not a prohibition of access to the premises required to trigger the contamination provision of policy.

Plaintiffs’ Complaint included claims for Bad Faith under section 155 of the Insurance Code (215 ILCS 5/155). The Appellate Court found that the determination of no coverage against plaintiffs meant their bad faith claims must fail as a matter of law. An insurer cannot act vexatiously or unreasonably with respect to a claim when no coverage applies.

The Appellate Courts decision creates a cautionary tale for both insurers, and those seeking insurance coverage. Insurers need to remain cognizant that policies are generally construed in favor of coverage when ambiguous, and therefore extra caution needs to be taken in writing policy provisions to ensure coverage and exclusions precisely detail the coverage intended to be available.

While the pandemic may have been unforeseeable, those seeking insurance should closely evaluate their needs and routinely review their policies with an expert to confirm that they have the coverage they need to avoid the next pandemic level event.

Doug Hill and Brandy Simpson Participate in 2022 IADC Trial Academy

10 Aug 2022

Baker Sterchi Members Doug Hill and Brandy Simpson participated in the International Association of Defense Counsel’s (IADC) 48^th Annual Trial Academy held at Stanford University in Palo Alto, California.

The IADC Trial Academy is the preeminent defense trial advocacy training program, involving seven days of intensive programming that blends small group faculty instruction and demonstration with individual student participation. Hill and Simpson joined the ranks of the more than 4,100 students who have attended IADC’s Trial Academy since 1973.

Hill focuses his practice on product liability and personal injury defense. He is a member of Claims and Litigation Management Alliance’s Construction Community, Construction Claims Magazine Committee and Construction Claims College Conference Committee. Hill received his Juris Doctor from the Southern Methodist University Dedman School of Law and is admitted to practice in Missouri and Kansas.

Simpson’s practice is primarily focused on medical malpractice defense. She is a member of the Defense Research Institute Medical Liability and Health Care Law Committee and is also a co-chair of the firm’s Healthcare Practice Group. Simpson earned her law degree from the University of Dayton and is licensed to practice in Missouri, Illinois, Kentucky and West Virginia.

The IADC has been serving a distinguished membership of corporate and insurance defense attorneys and insurance executives since 1920. Its activities benefit the approximately 2,500 invitation-only, peer reviewed members and their clients, as well as the civil justice system and the legal profession.

Lammert and Odom Recognized by Missouri Lawyers Media as 2022 Up & Coming Honorees

08 Aug 2022

Baker Sterchi attorneys Megan Sterchi Lammert and Greg Odom have been recognized by Missouri Lawyers Media as 2022 Up & Coming honorees, joining a class of 53 attorneys practicing in Missouri to receive the award.

Lammert’s practice focuses on personal injury, premises liability and product liability defense matters. She has practiced in the firm’s Kansas City and St. Louis offices. While located in St. Louis, she served on the Bar Association of Metropolitan St. Louis (BAMSL)’s Young Lawyers Division Board, including as service chair from 2018-2020. She earned the BAMSL President’s Award in 2020 and the BAMSL Young Lawyers Division Award of Merit in 2019. In addition to being involved with various local bar associations, Lammert is a member of ALFA International’s Future Leaders Forum, the Product Liability & Complex Torts Steering Committee, and the Women’s Initiative Steering Committee. She received her Juris Doctor from the University of Missouri-Columbia School of Law and is admitted to practice in Missouri and Kansas.

Odom focuses his practice on the defense of toxic torts, personal injury, product liability, premises liability, environmental law and commercial litigation. He is heavily involved with the Illinois Association of Defense Trial Counsel (IDC), serving on the Board of Directors from 2017 to the present. Additionally, Odom founded the IDC Toxic Torts Committee and served as chair from 2019-2021. Throughout his membership in the IDC, he has organized various community service activities and fundraisers on behalf of the organization. He is a recipient of numerous IDC awards, including the President’s Commendation, Rising Star Award, Meritorious Service Award, and President’s Award. Odom is also involved with the Jefferson, Saline, Madison, and St. Clair County Chambers of Commerce, often speaking and publishing on issues of importance to the business community. He received his law degree from Southern Illinois University School of Law and is admitted to practice in Missouri and Illinois.

Conferred on early-career lawyers who have demonstrated professional accomplishment and community leadership beyond their years, Up & Coming honorees will be recognized at an awards luncheon in October.

Laura Beasley to Moderate Panel at IDC/MODL Defense Seminar

02 Aug 2022

On August 12, Baker Sterchi Member Laura Beasley will moderate a panel titled “Views from the Bench” at the Defense Law Seminar co-hosted by the Illinois Defense Counsel (IDC) and the Missouri Organization of Defense Counsel (MODL). The session will provide valuable insights for new attorneys and seasoned litigators, allowing attendees an opportunity to pose questions to a joint panel of Missouri and Illinois judges.

Beasley focuses her practice on manufacturing, insurance, transportation, pharmaceuticals, and medical device. She is a member of several bar associations and is the immediate past president of the IDC. She earned her law degree from Southern Illinois University School of Law and her undergraduate degree in environmental geography from Austin Peay University. She is licensed to practice in Illinois and Missouri state and federal courts.

The IDC was organized in 1964 with a mission to advance the interests of the defense bar by ensuring civil justice with integrity, civility, and professional competence. MODL is an organization established in 1984 to help civil litigation defense attorneys provide the highest quality representation for clients throughout Missouri

The Defense Seminar is being held at Busch Stadium in St. Louis and includes a cocktail reception, dinner, and one ticket to the St. Louis v. Milwaukee Brewers game. For more information or to register for the seminar, click here.

Court of Appeals Reaffirms Arbitration Award in Sec. 537.065 Case Where Insurer Not Present; Though All is Not Lost

01 Aug 2022

In the recent decision M.O. v. Geico General Insurance Company and Government Employees Insurance Company, the Missouri Court of Appeals for the Western District upheld a judgment against Geico affirming an award from an arbitration that only the insured participated in with the tortfeasor.

The pertinent facts are as follows: the driver had consensual sexual relations with the plaintiff in his vehicle, which allegedly resulted in the transmission of a sexually transmitted infection. The insured driver failed to disclose to plaintiff that he had this transmissible illness, and the plaintiff brought a claim against the insured and his insurer claiming that such failure to disclose was negligent. After an investigation, the insurer determined that the claim was outside of the driver’s insurance policy and denied coverage. The insured and plaintiff entered into a §537.065 agreement, and then arbitrated the claim pursuant to that agreement, where the plaintiff was awarded $5.2 million dollars.

Plaintiff then filed a petition in the circuit court to affirm the award. At that time, the insurer attempted to intervene to reduce or set aside the arbitration award. The court entered a judgment affirming the award and then, subsequent to the entry of judgment, granted intervention. The insurer moved to set aside, amend, or alter the judgment, which the court summarily denied. On appeal, the court of appeals held that the law grants insurers the right to intervene; but that right does not guarantee anything more than intervention, with the intervener having to accept the action as he finds it at the time of intervention.

This holding is troubling, but while this case was pending, the Missouri legislature amended the relevant statutes to guarantee not only an insurer’s right to intervene, but also guarantees that insurers are able to meaningfully develop facts and arguments in the case before entry of any judgment. This amendment to the statute guarantees an insurer the ability to adequately defend its interests, provided the insurer timely intervenes (the statute still requires intervention within 30 days of notice).

In sum, while the recent amendments to the statute limit this case’s precedential effect, the key lesson remains that the law does not reward those who sit on their rights. The statute now permits an insurer a guaranteed right to be able to develop its case, but an intervening party must still accept the litigation as it finds it at the time of intervention. For this reason, early and continuous engagement in or monitoring of any matter in which an insurer might wish to intervene is essential to protecting that insurer’s interest.

Summary Judgment Obtained on Bad Faith Claim for Insurance Carrier

29 Jul 2022

On July 19 Baker Sterchi and out-of-state co-counsel obtained summary judgment in a case pending in the Circuit Court of Johnson County, Missouri alleging bad faith failure to settle against their insurance carrier client.

According to the court’s order, the original plaintiff’s policy limits settlement demand did not constitute a reasonable opportunity to settle the case because it was conditioned on the insured’s acceptance of a 537.065 agreement. The court further concluded that the post-judgment agreement between the original plaintiff and the insured protected the insured from execution of the underlying judgment, such that the agreement could not constitute evidence of damages sustained by the insured. The court was also persuaded by the insurance carrier’s “timely and repeated [offers] to pay policy limits to effectuate a settlement of the underlying claims.”

If affirmed by the court of appeals, this case could serve to defuse a tactic frequently deployed to set up bad faith claims against liability carriers.

Josh Davis to Present at PLRB Tech Conference on Telematics

28 Jul 2022

On July 29, Baker Sterchi Member Josh Davis will co-present on telematics at the Property & Liability Resource Bureau (PLRB) Technology & Claims Symposium, scheduled for July 28-29 in Denver, CO. Davis' presentation, titled “Telematics: Understanding the Catalysts and Technology Accelerating Claims and Utilizing the Data in Evaluations and Litigation,” will focus on understanding and interpreting telematics data in claims investigation, assessment, and litigation.

Davis is a civil litigation defense attorney, with nearly all his cases rooted in insurance litigation, including third-party defense, first-party litigation, and insurance coverage. He works in personal and commercial lines dealing with property, casualty, and liability matters, routinely representing clients in catastrophic injury and property cases.

PLRB is a trade association supporting insurance companies and underwriting organizations licensed to do property or casualty business in the United States through live and online education and training and to provide other resources relevant to property and casualty businesses.

Missouri Court of Appeals Doubles Down on Its Strict Application of 180-day Time Limit to Investigate Employment Discrimination

27 Jul 2022

Background

Jeannette Layton, a physician’s office manager for Mercy Health East Community (“Mercy”), filed a complaint against Mercy with the Missouri Commission on Human Rights (“the Commission”), alleging age discrimination. Under § 213.111.1 RSMo., if the Commission fails to complete administrative investigation on alleged discrimination, the Commission must issue a right-to-sue notice upon the aggrieved party’s request in writing. Layton requested a right-to-sue notice in writing approximately 185 days after the filing of her complaint. Without issuing the requested notice, the Commission sent Layton correspondence about a month after her request, stating that the agency was still conducting investigation on the matter. More than 300 days after the filing of the complaint, the Commission issued Layton a notice of termination of proceedings indicating that the agency lacked jurisdiction over the matter. The termination notice stated that Mercy is owned or operated by a religious group and therefore exempt from the Missouri Human Rights Act prohibiting discrimination based on age. Following her receipt of the notice of termination, Layton filed a petition for a writ of mandamus requesting the circuit court to compel the Commission to rescind the termination and issue her a notice of right to sue. The Circuit Court of Cole County granted the writ and ordered the Commission to rescind and set aside the termination and issue a right-to-sue letter to Layton. The Commission and Mercy appealed, and the Court of Appeals affirmed.

On appeal, the Commission and Mercy (collectively the “appellants”) raised two main points. First, the appellants argued that the circuit court erred in directing the Commission to issue a right-to-sue notice because the Commission was “required to make a determination regarding its jurisdiction pursuant to [§] 213.075.1 and was not bound by the 180-day time limit prescribed by [§] 213.111.1.” Second, the appellants contended that Layton’s complaint failed to allege discrimination by an “employer” because Mercy is not an “employer” under the Act. The court, relying on Najib v. Missouri Comm'n on Hum. Rts., 645 S.W.3d 528 (Mo. Ct. App. 2022), another recent case with similar facts, rejected both arguments.

Holding

The Court of Appeals affirmed the circuit court judgment in favor of Layton. Denying the appellants’ first point, the court explained that, while the Commission is not required to complete its administrative processing or determine the merits of a complaint under § 213.111.1, the Commission must issue the right-to-sue notice if the complainant requests a notice of her right to sue following the Commission’s failure to complete the administrative processing within 180 days.The court added that under the appellants’ argument, a claimant could potentially have the right to a civil action foreclosed before having had a chance to bring such an action if the Commission does not determine jurisdiction within the two-year statute of limitations. The court further rejected the notion that whether Mercy is an “employer” falls under the jurisdictional determination process described in § 213.075.1. The court stated that the statutory purpose of the jurisdictional determination is to ensure the timeliness of complaints, and not any other issues affecting the jurisdiction.

The court also rejected the appellants’ second point, reasoning that the mere fact that an allegation necessary to entitle the claimant to a remedy was disputed does not deprive the Commission of its authority over the complaint. Because the Commission did not make its determination as to the disputed allegation that Mercy is an “employer” under the Act within 180 days, the Commission lost authority to continue its processing of Layton’s complaint when she requested a right-to-sue notice.

Implications

The Missouri Supreme Court recently elected not to accept the Najib case for review and is likely to do the same in Layton. The Commission should now be squarely on notice that if they see a possible jurisdictional problem in a complaint filed with the agency, they must act within 180 days, or risk losing the ability to rule on that issue. And the message for employers is clear: if you detect a jurisdictional problem with a charging party’s complaint, it is imperative that you (firmly but politely) ride herd over the Commission to rule on that jurisdictional flaw before 180 days have passed.

* Ryan Sim, Summer Law Clerk, assisted in the research and drafting of this post. Sim is a rising 3L student at Washington University School of Law in St. Louis.

John Watt Serves as Program Co-Chair of ALFA 2022 Construction Law Seminar

26 Jul 2022

Baker Sterchi Member John Watt (Kansas City) is the program co-chair of the ALFA International (ALFA) 2022 Construction Law Seminar, scheduled for July 27-29 in Santa Barbara, California.

The program, titled Sometimes the Third Time’s a Charm: Using Hindsight and Perseverance to Build Into the Future, focuses on the stops and starts of construction projects over the past two years and how hindsight and perseverance can benefit contractors and those in the industry to build better in the future.

Watt’s program co-chair responsibilities include, among other things, vetting program topics, recruitment of moderators and panelist speakers, creating the program outline, assigning client speakers, and hosting the event on-site.

“ALFA is the premier organization for educating our clients on the cutting-edge topics in construction law. I’m very excited to see old friends, make new ones and share this spectacular program with all our guests,” said Watt.

A Steering Committee Member of ALFA's Construction Practice Group for several years, Watt has served as a speaker and moderator for past seminars attended by ALFA member firm attorneys and invited clients in the construction industry. His practice includes the defense of clients in multi-million-dollar litigation involving product liability, construction, and toxic torts.

ALFA International was the first and continues to be one of the largest and strongest networks of independent law firms, with 140 member firms worldwide. Baker Sterchi is the ALFA member firm in the Greater Kansas City Metropolitan Area; Western Half, Central and Southwestern Missouri; and Northeast Kansas.

The ALFA Construction Practice Group includes construction lawyers from every region of the United States and internationally with firsthand experience working for owners, developers, contractors, designers, product suppliers, insurers, and sureties on issues related to virtually every type of construction project.

Dismissal Secured for Leading National Propane Supplier Client in Fire Explosion Case

25 Jul 2022

On July 14, 2022 Baker Sterchi secured a dismissal with prejudice for a leading national propane supplier client in the United States District Court for the Central District of California. Plaintiff rented an Airbnb in Indio, California and suffered burn injuries resulting from a grill fire/explosion while at the property. Plaintiff made negligence and product defect claims regarding the LP gas delivery system against the client. Our investigation demonstrated that there were no problems with the LP gas delivery system, and that no act or omission of the client could have caused or contributed to cause the incident; Plaintiff’s counsel agreed to a dismissal with prejudice after demonstration of the same.