Lemon Law Attorney
Charles A. Weiss’s list of 2005’s top cases.
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Acid Piping Technology Inc. vs. Great Northern Insurance Co., U.S. District Court for the Eastern District of Missouri, No. 4:04-CV-01667-CDP, handed down Nov. 9, 2005. In a case of first impression under Missouri law, Judge Catherine Perry of the U.S. District Court of the Eastern District of Missouri construed the term “loss” under an employee dishonesty insurance policy to mean each fraudulent act resulting in a loss, rather than the entire fraudulent scheme. Acid Piping Technology’s dishonest employee embezzled several hundred thousand dollars from the company by inflating costs on 92 invoices and double-billing freight charges on at least six separate occasions. The insurance policy insured “any loss caused by an employee . . . either resulting from a single act or any number of acts.” The policy stated that “the most we will pay for any one loss is the amount of loss” up to a coverage limit of $5,000, with a deductible of $1,000 which “applies separately to each occurrence.” The insurer contended that the continuing and entire fraudulent scheme constituted one loss which was capped at $5,000. The insured argued that each falsified invoice was a separate loss under the policy. Perry found the policy language to be ambiguous and under Missouri law is to be construed against the insurer. Perry pointed out that there is no policy language that explains the relationship between an “occurrence” and a “loss.” She construed the policy against the insurer and found that each falsified invoice was a separate “loss” under the policy. Perry noted that “an insurance policy with a five thousand dollar limitation for any number of overcharged or double billed invoices, provides little to no protection for an insured whose employees handle up to fifty thousand dollars in a single transaction.” She explained that when the insured purchased its employee dishonesty protection, it reasonably intended to insure against a single “loss” from dishonesty and not a total “scheme” of dishonesty or fraud. 8th Circuit adopts 4th Circuit’s six-factor test to determine abstention Scottsdale Insurance Co. vs. Detco Industries Inc., 8th U.S. Circuit Court of Appeals, No. 04-2633, handed down Oct. 20, 2005. Noting that it has not previously determined the extent of a federal district court’s discretion on deciding whether to abstain from exercising jurisdiction over a declaratory judgment action in which there are no parallel state court proceedings, the 8th Circuit adopts the 4th Circuit’s six-factor test in determining whether to exercise jurisdiction in such instances. |
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