This is a good summary judgment ruling from the Davidson County Circuit Court in a slip and fall case. Boykin v. Moorehead Living Trust, 2015 WL 3455433 (Tenn. Ct. App., May 29, 2015). This case came out of Sixth Circuit in Davidson County Tennessee. The Court of Appeal affirmed summary judgment in favor of the property owner after plaintiff tripped and fell on a concrete landing pad in a parking lot. Read more
A new case filed June 15, 2015 in the Circuit Court of Appeals of Tennessee at Knoxville found that vomit on the floor of a Hardee’s restaurant for approximately three minutes was a sufficient length of time to charge defendant with constructive notice of the dangerous condition. The case at issue is styled Kyle Beverly, et al. v. Hardee’s Food Systems, LLC, No. E2014-02155-COA-R3-CV – FILED – June 15, 2015 (Tenn. Ct. App., April 14, 2015).
This appeal followed a successful summary judgment in the trial court, which found there was no evidence to support constructive knowledge on the part of the defendant. The videotape from Hardee’s showed two employees were busy serving customers during the three minute time period the condition existed before the fall. The trial court found (correctly in my opinion) the vomit did not existed on the floor long enough that the defendant, using ordinary care, should have discovered and corrected the unsafe condition.
Under Tennessee law, constructive notice is defined as “information or knowledge of a fact imputed by law to a person because he could have discovered the fact by proper diligence, and his situation was such as to cause upon him the duty of inquiring into it.” See Hawks v. City of West Moreland, 960 S.W.2d 10, 15 (Tenn. 1997). Plaintiff can prove constructive notice by presenting evidence that the condition existed for a length of time that the owner/occupier in the exercise of reasonable care, should have become aware of the condition.
In reversing the Trial Court below, the Court of Appeals found there was evidence in the record that “could potentially” establish constructive notice and, as a result, summary judgment was inappropriate. Specifically, the Court found that there were factual considerations that should have been considered, e.g., the nature of the business, the revolving number of patrons, and the nature of the danger, its location, and the foreseeable consequences. In considering these various factors, the Court found there were sufficient facts from which a reasonable jury could infer the condition existed for such a length of time that one exercising reasonable care would have discovered it.
Not all premise owners will be charged with constructive notice under the same circumstances presented by this case. The fact that Hardee’s is a fast food restaurant definitely played a role in the Court’s decision as to what would be a reasonable response of an employee. Nevertheless, this case reminds all premise owners of its responsibility to have periodic inspections. The frequency of the inspections needs to be tailored to the type of business operation. If you have questions or concerns regarding whether your business’ policies and procedures are adequate to prevent these types of claims, please do not hesitate to contact us directly.
Many insurance policies exclude damages caused by mold and fungi. Whether or not a loss caused by mold is covered under a policy will have to be made on a case-by-case basis. The wording of the policy and the specific facts of the loss will control this determination.
Most policies generally provide coverage for direct physical loss and then specifically exclude coverage for mold. Although the exclusion expressly mentions mold, a court could be persuaded to interpret these exclusions collectively. In other words, if the mold is the result of an otherwise covered loss, this exclusion may not bar coverage.
Part of the “problem” in Tennessee arises out of the doctrine of “concurrent causation.” Here, there will be coverage in a situation where a non-excluded cause is a substantial factor in producing the damage or injury, even though an excluded cause may have contributed in some form to the ultimate result and, standing alone, would have properly invoked the exclusion contained in the policy. Davidson Hotel Company v. St. Paul Fire and Marine Insurance Company, 136 F. Supp. 2d 109 (W.D. Tenn. 2001); Allstate Insurance Company v. Watts, 811 S.W.2d 883 (Tenn. 1991). Thus, damage caused by mold and fungi may still be covered by the policy if the mold is the result of a “covered loss” such as a burst pipe.
As a result, many carriers have changed the language of their mold exclusion to preclude coverage for losses caused by mold or fungi regardless whether said loss was direct, indirect, or concurrent. The United States District Court for the Eastern District of Tennessee examined such an exclusion in Pennsylvania Nat. Mut. Cas. Ins. Co. v. HVAC, Inc., 679 F. Supp. 2d 863 (E.D. Tenn. 2009). It held the exclusion explicitly, unambiguously, and clearly excluded coverage for a loss due to mold. Id. at 874-75.
Some policies provide limited coverage for mold or fungi. For instance, in State Auto. Mut. Ins. Co. v. R.H.L., Inc., 07-1197, 2010 WL 909073 (W.D. Tenn. Mar. 12, 2010), the Court examined a policy which provided coverage where fungi was “the result of a ‘specified cause of loss’ other than fire or lightning.” There, the only potentially applicable “specified caused” of loss was “water damage” caused by leaks in or around the property’s laundry room occurring within the policy period. The insured could not prove “water damage” occurred within the policy period and therefore there was no coverage for the fungi.
Many policies today utilize “anti-concurrent” causation lead in language for certain exclusions to defeat the concurrent causation doctrine. Such language typically excludes losses caused “directly or indirectly” by the excluded peril and applies whether or not any other cause “contributes concurrently or in any sequence” to cause the loss, making it clear that if the excluded peril contributes, there is no coverage. The additional coverage for mold can be very specific and can include and limit coverage for a variety of mold related concerns, including mold testing. Thus, it is important to specifically reference the policy language itself in evaluating coverage for a mold or fungi claim.
The Tennessee Legislature recently amended T.C.A. § 56-7-130, the statute requiring insurance carriers offering homeowner’s insurance in the state to “make available” sinkhole coverage to their insureds. The new statute clarifies sinkhole coverage is optional and available upon request by the insured. This is important because while the prior statute required insurance companies to “make available” sinkhole coverage, disputes arose over whether carriers were required to affirmatively “offer” sinkhole coverage to their insureds. The statute now makes it clear sinkhole coverage is not mandated to be included in homeowner property insurance policies – only that such coverage be available for optional purchase on request by policyholders.
The new statute also adds several helpful definitions such as “building stabilization or foundation repairs”, “covered building”, “homeowner property insurance”, “land stabilization”, “primary structural member”, “primary structural system”, and “structural damage” helpful in interpreting the law. According to the new statute, “sinkhole loss” is further clarified to require coverage for “structural damage” and does not include land stabilization. Without “structural damage”, as defined by the statute, any other cracking, shrinking, and/or expansion damage would not be covered even if actually caused by a sinkhole unless otherwise covered under the terms of the policy.
The statute requires insurers to follow the statute’s investigation standards only if the insured’s policy contained the sinkhole coverage, something that was less than clear in the previous version of the law. If sinkhole coverage is provided, upon a claim for sinkhole loss, the carrier must inspect the property. If structural damage possibly caused by sinkhole activity is present, before a sinkhole claim may be denied, written certification must still be obtained from an engineer or other qualified professional that sinkhole activity did not cause the observed structural damage.
If a loss is covered and determined to be the result of sinkhole activity, the statute speaks directly to how the claim is to be paid. The carriers, through the terms of their policies, may limit recovery to the Actual Cash Value of the loss, excluding the costs for building stabilization or foundation repair, until the insured actually enters a contract for such building stabilization or foundation repair. To receive payment in excess of the aforementioned Actual Cash Value:
– The insured must actually repair the damage in accordance with a repair plan approved by the insurer; and
– The policyholder is required to enter into a contract for foundation and building stabilization repairs within ninety (90) days after the insurer confirms coverage for the loss.
The carrier is required to pay the amounts necessary to begin the repairs and may not require the insured to advance payment for the necessary repairs. Such repairs are required to be completed within twelve (12) months unless there is mutual agreement; the matter is in litigation, appraisal or litigation; or circumstances beyond the control of the insured.
The new law takes effect July 1, 2014. It is a substantial improvement over the previous statute as it provides much needed clarity as to the requirements of insurers in making the coverage available as well as the specific steps required in the event of a covered sinkhole loss.
If you read the news recently, a polar vortex is apparently responsible for the recent extreme cold temperatures throughout the nation. Here in Middle Tennessee, temperatures have been falling into the single digits, with some temperatures near zero. As you might imagine, this extreme temperature has resulted in what is certain to amount to thousands of freezing and water claims. That begs the question – what should be done in handling such claims?
The most frequent scenario involves an insured’s water pipe which freezes, and the insured is only later to learn the pipe has burst and has caused resulting water damage. With respect to both the pipe and resultant water damage, a direct physical loss has occurred as required to initially trigger coverage in most policies. However, many policies have exclusions, limitations or other conditions related to “freezing” that should be considered in evaluating these claims.
After the insured meets his burden of establishing a direct physical loss, it is the insurance company’s burden to prove that the loss is actually due to an exclusion for “freezing.” If the carrier meets this burden, even though there has been a direct physical loss, the exclusion applies and coverage is barred. See Farmers Bank & Trust Co. of Winchester v. Transamerica Ins. Co., 674 F.2d 548, 550 (6th Cir.), cert. denied, 459 U.S. 943, 103 S.Ct. 257, 74 L.Ed.2d 200 (1982); Blaine Const. Corp. v. Ins. Co. of N. Am., 171 F.3d 343, 349 (6th Cir. 1999). However, typical freezing exclusions include an exception to the freezing exclusion when the insured used reasonable care or “best efforts” to maintain the heat in the building or shut off the water supply and drain all systems. If the carrier proves freezing is the cause of loss, it is the insured’s burden to prove the “best efforts” exception applies. See Standard Fire Ins. Co. v. Chester O’Donley & Associates, Inc., 972 S.W.2d 1, 8 (Tenn. Ct. App. 1998). Please note the policy refers to such “freezing” issues in the policy conditions as opposed to policy exclusions, a different analysis will apply.
It is usually quite obvious whether the plumbing systems have been drained. Thus, as you might imagine, most cases deal with maintaining heat at the property. These issues come up routinely with vacant properties. A good tip is to inquire with the insured to find out what specific actions were taken to maintain heat in the building. Did the insured set the thermostat at a certain temperature? Did the insured have a specific procedure for personnel to consider in evaluating the property? Did the insured make regular inspections of the property to make sure that the heating system was working properly? These are the types of questions an insurance carrier will want to ask to in order to fully consider and evaluate whether the insured used reasonable care or used his “best efforts” to maintain heat in the building. Thus, though it’s the insured’s burden to prove that an exception to the exclusion applies, it’s a good practice to investigate the insured’s efforts to maintain heat in the building or otherwise prevent the property from freezing.