Associated Indus. Ins. Co. v. Mt. Hawley Ins. Co. (S.D.Cal. 2021) 2021 U.S.Dist.LEXIS 93605 Summary: Exclusion for claims arising directly or indirectly out of a breach of contract or warranty applies to tort claims based on the same facts as the excluded contract claims. Discussion: This was a contribution action between two insurance companies that had issued general liability policies to a construction company. A former client sued the construction company for defective construction, asserting claims for (1) breach of the construction contract, (2) negligence, (3) unjust enrichment, (4) breach of an implied warranty that the property would be constructed free from defects and be fit for ordinary purposes, and (5) breach of an implied covenant to perform its work in a competent manner. Mt. Hawley refused to defend the action, relying in part on a Breach of Contract Exclusion in its policies that excluded “any claim or ‘suit’ … arising directly or indirectly out of ” a “[b]reach of express or implied contract” or a “[b]reach of express or implied warranty.” Plaintiff insurer argued the exclusion did not apply to noncontractual claims, while defendant argued that all claims were based on the same facts as the contract claims and therefore all were subject to the exclusion. Because California courts construe the phrase “arising out of ” broadly even when used in an exclusion, and look to the conduct alleged rather than the legal theories relied upon, the court agreed with the defendant that the exclusion applied to the various claims that were all based on the same facts. Otherwise, it observed, claimants might recharacterize their breach of contract claims as noncontractual ones to manufacture coverage where it would not otherwise exist. Finally, the court rejected the plaintiff ’s argument that defendant waived the contract exclusion by failing to mention it in its initial denial letter. California law requires proof of waiver by clear and convincing evidence of an intent to waive a known right. Mere omission does not establish such intent. Accordingly, the exclusion is not waived.
WORKERS’ COMPENSATION CASES
Summaries provided by Randal C. McClendon of Cuneo, Black, Ward & Missler Rosenbrook v. Knight-Swift Transportation Holdings, Inc. 2021 Cal. Wrk. Comp. P.D. LEXIS 16 Summary: A telehealth medical-legal evaluation that satisfies the provisions of Emergency Regulation Section 46.2 is an appropriate alternative to an in-person evaluation during the current Covid-19 pandemic. Discussion: Applicant claimed injury to the low back, urology system, and internal system in the form of diabetes and hypertension on 6/27/2013 while employed as a driver by Knight-Swift Transportation. Defendant accepted the low back but disputed other alleged body parts. The parties obtained a QME panel in internal medicine, and Dr. Bahman Omrani was selected. On 8/21/2020, applicant sent a letter to Dr. Omrani asking if a physical exam was required or if he would agree to proceed with a telehealth appointment. Dr. Omrani agreed to proceed with the evaluation via telehealth. Defendant refused to agree to move forward with the telehealth evaluation, so applicant filed a DOR for an expedited hearing on the issue. At trial, the applicant testified that he lives in Washington State, so for him to attend the QME evaluation in person, he would have to travel to California. He further testified that he has medical conditions that make him high risk, so he was concerned about traveling to an in-person examination. Applicant testified he agreed to proceed with a telehealth examination, and if testing were required, he would go to a local place to complete it. The WCJ issued the Findings & Order stating that defendant’s denial of the QME evaluation via telehealth was unreasonable pursuant to Emergency Regulation 46.2(a)(3)(C), and the parties were ordered to proceed with a telehealth examination with Dr. Omrani. Defendant filed a Petition for Reconsideration asserting that the elements of Section 46.2(a)(3) were not met, and therefore the applicant was required to attend an in-person QME evaluation. The WCAB agreed with the WCJ that defendant unreasonably denied agreeing to a telehealth evaluation per the emergency regulation, that the Page 6
