Subrogation & Recovery Law Blog : Insurance Subrogation Lawyer & Attorney : Cozen O'Connor Law Firm : Property Damage & Insurance Commentary

Measure of Damages

A critical part of any subrogation analysis is the determination of what damages are legally recoverable from a potentially liable third party. Unique to equine claims, the owner of the horse will often choose to insure the horse for less than its fair market value to avoid higher premiums. For this reason, the insured value rarely, if ever, equates to what is legally recoverable. In most jurisdictions, the fair market value of the horse is the proper measure of damages. To prove fair market value at trial, there must be a well supported opinion given by a qualified expert in the field. Although a third party may be liable for injuring the horse and rendering it incapable of performing its intended purpose, the horse may still have a significant residual value as a breeding horse or performing a new purpose. That residual value will likely be subtracted from the overall damages recoverable through litigation. In today’s climate of frequent expert challenges, choosing the right expert who can properly evaluate these issues is essential.

In addition to seeking the fair market value of the horse, an owner often asks whether he or she may seek pain and suffering or emotional distress damages for their loss. In the vast majority of jurisdictions, these types of damages are not recoverable because there is no physical manifestation of an injury to the policy holder. The owner will be limited to economic damages, which may include a claim for business interruption, loss of future breeding rights or loss of future value. 

First Dollar Out

With many horses being underinsured, first dollar out questions often arise in equine subrogation claims. It is important to be aware of the policy language and any first dollar out rules in your jurisdiction. In addition, there is no penalty for underinsuring a horse.   A proration agreement is one way to effectively handle what could be a sticky situation with the insured after litigation begins.  Such an agreement also provides a platform for the carrier and the policy holder to discuss the actual recoverable damages before litigation ensues. Having these discussions up front helps to manage the sometimes unreasonable expectations of the policy holder who is devastated by the loss of their equine companion. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In recent years, technology and the internet have fostered a new trend in social media with websites such as Youtube, Facebook, and Twitter.  This undeniably stems from the desire for instant information.  How can technology and the internet assist in maximizing subrogation cases?  Consider these examples:

Youtube/Online Video:  Recently I received a new fire loss days after the fire occurred.  I began searching online for information and came across multiple Youtube videos of the fire still burning.  Some of the videos were taken from a helicopter by a major news organization and others were local/online reporters and bystanders documenting the fire spread.  One video even included an interview with the local fire department chief discussing the status of the fire.  These videos can be used to assist fire cause and origin investigators in their evaluation of where the fire started, how it spread and even identifying witnesses. 

E-Mailing Notice Letters:  The process of placing a potential defendant on notice of a new loss, and receiving a response, can often take weeks.  However, most companies have websites with e-mail contact information.  By utilizing their e-mail addresses, you can ensure (1) reasonable notice and (2) faster notification to liability carriers.  Further, you can activate the "Return Receipt" feature on your email to verify that the notice was actually received.  

Video-Conferencing:  Whether you are conducting a roundtable conference with subrogation counsel, interviewing an insured or even listening to a deposition, a simple telephone call may not always provide all of the details.  If a picture is worth a thousand words then video-conferencing is the equivalent of a dictionary.  Video-conferencing allows you to assess facial expressions and body language.  In essence, it puts you in the room.  Video-conferencing is readily available in most law firms and there are many inexpensive alternatives available, such as Skype which allows video calls over the internet to other Skype users. 

These are just a few examples of how technology and the internet can assist in maximizing subrogation recoveries. These tools should be utilized for effective and efficient handling of subrogation losses.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Subrogation cases often involve the pursuit of manufacturers in foreign countries.  Generally, service of process on those foreign manufacturers must be made pursuant to the requirements of the Hague Convention.  These requirements are time-consuming and costly, however, according to a recent California Appellate Court decision they may not always be necessary.

In Yamaha Motor Co., Ltd. v. Sup. Ct., the California Court of Appeal recently held that under certain circumstances a party may serve a foreign corporation by serving the corporation's American subsidiary.  The court considered factors including whether (1) there is ample regular contact between the local representative and the foreign defendant, (2) the likelihood that the local representative will notify the foreign defendant of the service, and (3) the overall relationship between the two companies.

The court concluded service on Yamaha-Japan was effectuated via service on Yamaha-American as this domestic entity was the “general manager in this state” and was the American face of the Japanese company.  Yamaha-America had (1) an exclusive arrangement to sell the foreign manufacturer's products, (2) provided warranty service and English owner manuals, (3) performed testing and marketing, and (4) received complaints about the manufacturer's products.  As a result, the court concluded that service of Yamaha-American was effective service for Yamaha-Japan under California law.  

Cases involving service of process on foreign manufacturers should be evaluated on a case-by-case basis to determine whether service on its American subsidiary will suffice.  If so, it will save time and money in the pursuit of your subrogation recovery.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

One of the first things to do upon receipt of a new subrogation loss involving a product is to check to see if there are any recalls of that product.  Ultimately, if your cause and origin investigator determines the product is the cause of the loss, the recall can greatly strengthen your subrogation case.  It provides effective cross-examination of the manufacturer’s employees and experts, as well as substantial leverage in settlement discussions. 

The United States Consumer Product Safety Commission (“CPSC”) regularly advises the public of product recalls and is an excellent resource.  Recently, the CPSC issued the following product recalls which may be relevant to future subrogation claims:

On July 30, 2008, Frigidaire announced a voluntary recall of clothes washers due to a fire hazard.  An internal defect in the washers’ drain pump case overheats and presents a fire hazard.  This recall involves several models within the six brands manufactured by Frigidaire which were sold nationwide between February 2009 and May 2009.  The Frigidaire brands subject to this recall include Crosley, Frigidaire, Kelvinator, Kenmore, Wascomat and White-Westinghouse. 

On July 21, 2009, Fiesta Gas Grills announced a voluntary recall of its Blue Ember grills, which are fueled by propane.  These gas grills are manufactured by Unisplendor Corporation and Keesung Corporation, both in China. Fiesta is the national importer.  The hose of the gas tank can get too close to the firebox, exposing it to heat and creating a fire hazard. The grills were sold nationwide between November 2006 and June 2007 and in Canada between November 2006 and May 2009. 

On August 11, 2009, Griffin International issued a voluntary recall on Wii battery recharge stations.  Psyclone Essentials and React Wii 4-dock battery recharge stations are recalled due to a fire hazard. The battery pack can overheat, creating a fire hazard. The battery packs subject to this recall were sold at Target, Toys R Us and on amazon.com from January 2008 to July 2009.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 Just like property damage claims, it is vital to hire the right experts and conduct a thorough and timely investigation. But unlike a typical property damage claim, with equine mortality claims it is often impractical and difficult to maintain the deceased horse for days or weeks to allow for all interested parties to retain experts and examine the horse. Many times, the board of health will not allow the horse to be retained. Nonetheless, immediate notice should be given in writing to any potentially responsible third parties. DNA samples should be collected and preserved to prove that the deceased horse is in fact the insured horse. If it is believed that a third party caused the death, it is also recommended that a full post mortem examination be conducted at either a university or a diagnostic laboratory in order to conclusively establish the cause of death. Photographic documentation and the appropriate records from an equine veterinarian are also helpful in combating any claims of spoliation.

In an equine injury situation, a veterinary expert will be necessary to causally connect the potential defendant’s conduct to the injury. Similar to a personal injury case, the right medical experts and records are needed to support such a claim. Notice to responsible third parties should be given immediately, and the injury should be properly documented with photographs, x-rays, blood tests, or the like. Taking things a step further, the subrogation professional may wish to consult with the veterinarian before a report is finalized to make sure the report is thorough, admissible at trial, and easily understood by an opposing adjuster, judge or jury.

Consideration should also be given to whether the treating veterinarian is qualified to serve as a litigation consultant and testify at trial. Many veterinarians, like medical doctors, may be hesitant to testify against others in their industry. When there is a potential malpractice claim against a veterinarian, this issue should be addressed up front with the treating veterinarian. If a new expert is needed, it is best to give him or her an opportunity to examine the horse in question as close as possible to the time of the injury. Often times the insurance company will hire a separate veterinarian to avoid any conflict of interest for the insured’s veterinarian, which gives the subrogation professional a choice of experts.

• Email This
• Print
• Comments
• Trackbacks
• Share Link