First Circuit holds that whether sexual harassment began before policy period is question for factfinder

I have previously written about a decision of the United States District Court for the District of Massachusetts in the case of  Manganella v. Evanston Ins. Co., 2011 WL 5118898 (D. Mass.).  A Jasmine employee, Burgess, sued Jasmine and another employee, Manganella, on the ground that she had been sexually harassed by Manganella. 

Jasmine sought defense and indemnity under an insurance policy issued by Evanston Insurance.  Evanston denied coverage on the ground that the sexual harassment did not happen in its entirety after the policy period began, as required for coverage under the policy.

The District Court granted summary judgment to Jasmine, holding that Evanston had not met its burden of proving that the harassment began before the policy period.

Evanston appealed to the First Circuit Court of Appeals.  The issue on appeal was whether the finder of fact, rather than a judge deciding a question of law, must conclude that the sexual harassment did or did not begin before the policy period. 

Burgess's complaint alleged that Manganella had subjected her to sexual harassment throughout her employment with Jasmine, which began prior to the policy period.  She later filed an affidavit stating that the harassment did not begin until after the policy period began.  Later she asserted that although Manganella made off-color comments prior to the policy period, she was not threatened by him until after the policy period began.

In Manganella v. Evanston Ins. Co., __ F.3d __, 2012 WL 6217625 (1st Cir.), the First Circuit held that considered in the light most favorable to Jasmine, Burgess's statements do not necessarily show that the conduct giving rise to the discrimination complaint began before the policy period.  The court also held that when considered in the light most favorable to Evanston, the statements could support the inference that the harassing conduct did include the pre-policy period statements.

The court held that the undisputed facts therefore do not entitle either party to summary judgment.  Rather, the issue "is a quintessential question for a factfinder." 

Happy Holidays

Happy holidays from the Ontario Insurance Law Blog.  We'll be back in January with our weekly posts.  We wish you all the best in 2013.

When Has FSCO Mediation Failed - Part 2

Last week, we blogged on the Court of Appeal`s decision in Hurst v. Aviva, which held that insureds may proceed to bring court actions or arbitration proceedings if 60 days have passed since an application for mediation at FSCO has been filed and no mediation has taken place.

The Court released its decision in Younis v. State Farm Insurance Company, 2012 ONCA 836 (C.A.) concurrently with Hurst.  In the Hurst actions, the 60 day period had elapsed prior to the insured filing a court action.  In Younis, however, the claimant applied for mediation on July 14, 2011 and filed a court action a few days later. State Farm`s motion to stay the action took place well after the 60 day period had elapsed.  Justice Sloan refused to stay the action. 

The Court of Appeal allowed the appeal.  The Court held that the insured commenced his action in contravention of the statutory requirement by not waiting 60 days.  Since Younis had not waited until mediation had failed, his action was barred.  To allow otherwise would permit insured person to immediately commence civil actions and the statute did not permit this tactic.

New York times discusses allocation of loss in football concussion lawsuits

The article, here, is a bit overwrought about possible difficulty that youth sports leagues might have in obtaining insurance in the future, but it does nicely describe the issues facing both insureds and insurers at the beginning of long-tail loss claims.

When Has FSCO Mediation Failed - Part 1

We previously blogged on the decision in Cornie v. State Farm, in which Justice Sloan held that insureds may commence claims against their accident benefits carriers if 60 days have elapsed since an application for mediation has been filed, even if mediation itself has not occurred.  The Court of Appeal has now released its appeal decision in Hurst v. Aviva, 2012 ONCA 837 (C.A.).

Section 281(2) of the Insurance Act prevents insured persons from commencing court actions or arbitrations against their insurers unless they first seek mediation and mediation has failed.  The claimants waited 60 days after applying for mediation and when no mediation had taken place, they commenced actions.  FSCO`s position was that the prescribed 60 day time limit for conducting mediation did not begin to run until an application for mediation had been assessed by FSCO and found to be complete.  FSCO refused to issue a report declaring the mediations had failed.  The insurers in four actions brought motions to have the actions stayed on the basis that they were barred by s. 281(2) as mediation had not taken place.  Justice Sloan dismissed the motions and the insurers appealed. 

The Court of Appeal dismissed the appeals.  The Court concluded that the process is intended to be completed with 60 days after an application for mediation has been filed; however, if mediation has not taken place within 60 days, insured persons are free to pursue either court action or arbitration. 

The Court rejected the insurers` arguments that the cost to the industry could be $83 million as a result of the interpretation of the Act that does not require mediation to actually take place.  The insurers submitted statistics that 75% of claims are resolved by mediation at FSCO.  One has to expect a flood of court proceedings as a result of this decision, along with significant costs to insurers.

US District Court holds that for forgery coverage an email promising compensation is not similar to a check, draft or promissory note

Kenneth Engleman alleged that CustomMade and its CFO induced him to leave a lucrative job to work for CustomMade as a partner and co-owner of the company, but then did not follow through with the promises.  

During the course of the underlying suit, CustomMade's CFO realized that a critical email allegedly sent by him to Engleman had been altered.  At least in part as a result, the court dismissed Engelman's complaint.

CustomMade asserted that it was entitled to defense costs under forgery coverage in an insurance policy issued to it by Sentinel.  Sentinel denied coverage for the claim.

In CustomMade Ventures Corp. v. Sentinel Ins. Co., Ltd., 2012 WL 4321060 (D. Mass.), the United States District Court for the District of Massachusetts granted summary judgment to Sentinel.  The court noted that the forgery coverage came within a special property coverage form, and that for it to apply the loss must involve covered property. The  policy defined covered property as "checks, drafts, promissory notes, or similar written promises, orders or directions to pay a sum certain."

CustomMade argued that the email was  a written promise to pay a sum certain and therefore came within the forgery coverage.  The court held that the email was not a "similar written promise" to checks, drafts, or promissory notes. 

Appellate Jurisdiction

Under the Courts of Justice Act, appeals relating to amounts greater than $50,000 must be made to the Court of Appeal.  Appeals of judgments relating to amounts under $50,000 are to the Divisional Court.  Where only a portion of a judgment is appealed, does the jurisdiction change?

In Grammatico v. Chambers, 2012 ONSC 6518 (Div. Ct.), the parties disagreed on whether the proper court to hear an appeal was the Divisional Court or the Court of Appeal.  The substantive judgment involved sums greater than $50,000, the threshold imposed by s. 19(1.2) of the Courts of Justice Act for appeals to the Court of Appeal. The defendant argued that it sought to appeal an interest component relating to costs, rather than the substantive judgment.  Since the amount would be less than $50,000 the defendant's position was that the appeal was to the Divisional Court.

Justice Eberhard held that the appeal was to the Court of Appeal.  The jurisdiction for appeal must be determined by the aggregate of the sums awarded.  The fact that only one part of the decision was under appeal did not determine jurisdiction.

New York state government creates a great resource

The state of New York has set up a website to monitor how insurers are responding to Hurricane Sandy claims.  It includes the average time it takes each insurer to respond to, pay, and resolve claims, and the percentage of complaints out of total claims filed.  This will be a useful resource for anyone choosing a homeowner's insurer.