Technology Helping Us Walk Into Subrogation Recovery

Technology is advancing and so are subrogation investigations.  We are seeing investigations of losses and presentations for recovery make use of new technology, including laser scanning, 3D imaging, Lidar, drones, etc.  Some tech can come at a high expense, but as the tech becomes more available, it will become standard use in the industry.  For example, Matterport has developed over the years and more and more cause and origin investigators use it with every loss at a very reasonable cost.

We have seen how helpful and commonplace Google Maps 360 has become, assisting in investigations by identifying the neighboring properties and vehicles in the driveway, as well as measuring distances to gas meters, fences, etc.  Matterport provides a similar 3D image of inside the loss site.  If you have not yet seen a demonstration of Matterport (or other technologies), Cozen O’Connor can coordinate one for you with an expert.

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How is there no recovery? Let me count the ways…

There are what seems like countless hindrances to subrogation recovery.  With a spin on Elizabeth Barrett Browning’s famous love poem for the title of this article, we delve broadly into the legal bars for recovery.  The non-exhaustive list below outlines some of the main legal doctrines barring recovery in insurance claims.  Hopefully, these simple definitions can assist in evaluating your next loss.  Please note, the definitions are not state specific and just provide a general overview of the doctrines; subrogation counsel will have state specific rules, exemptions, and variations that could apply.

Statute of Limitations: Each state sets a time bar (commonly 1, 2, 3, or 4 years) from the date of the incident in which the carrier must file a civil lawsuit for damages.  Any suit filed after the required time frame will be barred.

Statute of Repose: In addition to the Statute of Limitations, each state also sets a time bar (commonly 6, 8, or 10 years) for claims against a contractor for negligent construction, service, repair, installation, maintenance, etc.  The time clock will begin either on the date of the service or the date the damage is discovered, depending on the type of service.

Economic Loss Doctrine: This doctrine states that a party cannot recover in a tort action against the manufacturer for product defect if the only damage is to the product itself (i.e., no personal injury or no other property damaged).  For example, if a defect in an automobile or lawnmower caused fire damage to the product itself (the automobile or lawnmower) as well as the residence or neighbor’s fence, then this doctrine would not apply to bar pursuit of the manufacturer.

Implied Co-Insurance: Depending on the language of the lease agreement, some states provide that a tenant of a rental property is considered a co-insured under the landowner’s insurance policy.  Combined with the Anti-subrogation principle stating that an insurance carrier has no right to assert a claim against its own insured, the carrier would be barred from pursuing any “co-insureds” or “additional insureds.”

Government Immunity: Despite apparent negligence of a fire department, police department or municipality in causing or contributing to a loss, state codes governing these agencies commonly provide immunity for their actions or inactions, thus barring pursuit for a loss.

Comparative Fault:  Sometimes the insured’s own actions or inactions contribute to a loss.  Each state sets a bar or modification to the amount of recovery against a third party tortfeasor depending on the amount of fault of the insured.  Some states bar recovery completely if the insured was at fault, others only bar recovery if the insured was 50 percent or more at fault, and other states reduce the amount of recovery against the third party tortfeasor by the amount of the insured’s fault.

Of course, the “depth and breadth and height” (to steal a line from Browning’s poem) of these legal doctrines cannot be analyzed without the state specific laws and circumstances of the particular loss.  Because most subrogation matters cannot be evaluated with a poetic ring, we leave you with the full text of Browning’s poem below.


How do I love thee? Let me count the ways

by Elizabeth Barrett Browning

(March 6, 1806 –June 29, 1861)


How do I love thee? Let me count the ways.
I love thee to the depth and breadth and height
My soul can reach, when feeling out of sight
For the ends of Being and ideal Grace.
I love thee to the level of every day’s
Most quiet need, by sun and candle-light.
I love thee freely, as men strive for right;
I love thee purely, as they turn from praise,
I love thee with the passion put to use
In my old griefs, and with my childhood’s faith.
I love thee with a love I seemed to lose
With my lost saints -I love thee with the breath,
Smiles, tears, of all my life! -and, if God choose,
I shall but love thee better after death.

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Is Media Coverage Good for Subrogation?

The world is watching live updates of the destruction, as flames take over the Norte Dame Cathedral fire in Paris, France.  Not every building fire or water loss captures media attention, not even the local news broadcast.  However, conducting a search for newspaper articles, news broadcasts, fire department facebook updates, police department twitter feeds, etc. can be beneficial to subrogation investigations large and small.  Photographs and eye witness accounts can assist an investigator in identifying an area of origin, potential ignition source, responsible parties, etc.

National and international media coverage generated by huge losses (e.g., losses caused by the 2019 unprecedented rain and flood season), catastrophic circumstances (e.g., 2017-2018 California wildfires), or historical landmarks (e.g., 4/15/2019 Norte Dame Cathedral fire in Paris, France) garners a lot of attention.  The benefits of extra eyes on the scene and different viewpoints can be quickly and heavily outweighed by the public’s pressure and impatience for their immediate consumption of information.  The volume of media articles, videos, and posts can consume an investigation team.  The pressure placed on investigators, adjusters, and counsel by the public and/or government authorities can cause the investigation to be rushed, unfairly scrutinized, and potentially handled without the best care.

Like the rest of the world, we are eager to know what caused the 4/15/2019 fire in Paris and if there is any subrogation potential (latest information reveals that France is self-insured for the church), but we first and foremost hope no one was injured; secondly thank the first responders for their service; and lastly, respect the time of all those involved to perform the needed investigations and repairs of the treasured cathedral.


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Posted in Experts, Legal and Evidentiary Issues

N.Y. Court of Appeals: No Difference Between “Private” and “Public” Posts in Discovery

A 2018 N.Y. Court of Appeals case has shed light on the limitations of privacy settings on social media accounts. Previously, a user might have thought that marking a post or photo “private” would be sufficient to shield it from prying eyes, even in the event of a lawsuit. But that’s not necessarily the case. Last month, the N.Y. Court of Appeals took the opportunity in Forman v. Henkin to hold that social media posts are subject to the same discovery rules as any other discoverable information – whether or not they are marked “private” by the poster.

The case before the Court, Forman, involved a personal injury plaintiff who alleged she was no longer able to sustain her active lifestyle after physical and cognitive injures caused by a fall from a horse she alleged the Defendant failed to properly equip. The plaintiff raised the issue of her Facebook posts during her deposition, referring to them as evidence of her former active lifestyle. She also testified that following the accident, she had difficulty using the computer and sending emails.

Following her deposition, defense counsel sought authorization to view the plaintiff’s entire Facebook profile, including instant messages, and posts marked private. When plaintiff refused, the defendant moved to compel on the basis that the photographs of her lifestyle before and after the accident, and her ability to use the social media website, were relevant evidence regarding her injuries. The trial court granted the motion in limited part, directing Plaintiff to produce all photographs pre-accident she intended to use at trial, all post-accident photographs with the exception of any depicting nudity or romantic encounters, and authorization for defendants to receive website information related to the frequency and length of her posts.

The plaintiff appealed, and the Appellate Division, First Department, limited the trial court’s order to only the photographs plaintiff intended to produce at trial. The Appellate Division further stated that the Defendant needed to “establish a factual predicate for their request by identifying relevant information in plaintiff’s Facebook account – that is, information that contradicts or conflicts with plaintiff’s alleged restrictions, disabilities, and losses and other claims.”

On appeal, however, the New York’s highest state court disagreed. The Court of Appeals reversed, finding that there was no “heightened threshold for production of social media records that depends on what the account holder has chosen to share on the public portion of the account.” The Court instead found that information found on social media profiles was governed by the same discovery rules as any other discoverable material. They noted that New York’s “well-established rules”—which require courts to “consider the nature of the event giving rise to the litigation [and] the injuries claimed” could and should be applied to the instant case and any other involving social media postings.

Given the facts of the case in Forman, the Court held that “given plaintiff’s acknowledged tendency to post photographs representative of her activities on Facebook, there was a basis to infer that photographs . . . posted after the accident might be reflective of [plaintiff’s] post-accident activities and/or limitations,” and that “it was reasonably likely that the data revealing the timing and number of characters in posted messages would be relevant to plaintiffs’ claim that she suffered cognitive injuries that caused her to have difficulty writing and using the computer.”

While the Court acknowledged that Facebook and social media sites like it are a rather recent phenomena, it also noted that “there is nothing so novel about Facebook materials that precludes application of New York’s long-standing disclosure rules to resolve this dispute.” Accordingly, the Appellate Division was reversed, and the trial court order reinstated.

New York practitioners should keep in mind that ultimately, that the Court of Appeals reaffirmed New York’s standard discovery procedures, in which all requests are considered on a “case by case” basis. Regardless of the status of a particular post’s privacy settings, it is still discoverable if it is “reasonable calculated to yield relevant information.” However, it is also noteworthy that while the Court did order the production of photos and posts marked private, it stopped short of ordering the complete production of all social media accounts, simply due to the existence of the personal injury lawsuit. Ultimately, subrogation attorneys and all litigators should take note – social media posts, even those designated private – remain fair game.

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Oregon Court Orders Teen to Repay $37M for Starting Wildfire

In September 2017, a 15-year-old threw two fireworks into Oregon’s Eagle Creek Canyon, sparking a huge wildfire that destroyed several homes and impacted tourism in the area. The teenager pleaded guilty to reckless burning of public and private property, and was sentenced to community service and probation. The fire’s victims, which included homeowners and the U.S. Forest Service, also sought restitution to cover the costs of restoring the damaged homes and land, as well as the significant firefighting costs. In total, the claimants pursued restitution totaling $36,618,330.24.

At a court hearing, the teenager’s lawyer urged the judge to reduce the restitution award to a “reasonable and rational” penalty—that it was “absurd” to award multi-million dollar restitution against a minor. Although the judge agreed that the claimants were seeking “an extraordinary amount” of restitution, he nevertheless awarded the full, nearly $37M figure. Oregon law allows garnishment of the teenager’s bank accounts or paychecks, though the judge’s order notes that payments may be halted after 10 years if certain conditions are met.

For subrogating insurers, this case offers a reminder of both the challenges and possibilities for recovery in losses caused by the intentional acts of minors. Such cases may turn on whether the given jurisdiction has statutory or case law regarding parental liability for acts of minor children (as Oregon does), but careful planning and strategy may still lead to a successful subrogation action.

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Snow: A Skier’s Delight, a Rooftop’s Demise

As winter approaches and snow and ice begin to cover parts of the nation, property owners in the affected areas will begin to rely upon snowmelt systems to keep roofs free of snow and ice. In recent years, to avoid the eyesore of heat cable running along the rooftop, snowmelt systems that can be installed underneath roofing shingles have been developed.

These hidden snowmelt systems, however, can turn a snow laden roof into a ball of fire. The components of the system are relatively simple: a conductive material capable of generating heat (typically resembling a mesh screen or traditional heat cable), a power source and an activation device. When the device detects the presence of snow on the roof, current flows through the conductive material which then generates heat to melt the snow or ice.

Although the components of the snowmelt system are simple, installation of the system is technical. Care must be taken to avoid penetrating the conductive screen or cable and any metal flashing or drip edge material with roofing nails or other fasteners. If that happens, a short in the system can follow and areas of high resistant heating can ignite combustible roofing materials.

Oftentimes, manufacturers will include safety mechanisms to de-energize an electrical system if a short is detected. At least one manufacturer of these snowmelt systems, however, has failed to include any ground fault protection in its system, claiming that its internal calibration system detects any ground faults. Not only does the lack of ground fault protection violate the National Electric Code, but the internal calibration system is not fool-proof as the short can be programmed into the system if the calibration is done while there is a penetration present that is causing a short.

If you have a fire loss and the potential cause is not readily apparent, be sure to look under the shingles for this potential ignition source. The cause of the fire may be attributable to defects in the product, the installation of the system, or a combination of the two, so be sure to invite the manufacturer and any installer to a joint scene examination. Additionally, it would be prudent to determine if any roofing repairs were done following the original installation of the system as a subsequent roofer may be unaware of the danger lurking beneath the roof’s covering. Following a scene inspection, the artifacts should be examined in a lab, where an x-ray can highlight any penetrations through the mesh and metal flashing, which results in the short. The control panel, transformer and activation device should also be collected to avoid potential spoliation arguments and solidify your theories of recovery against the responsible parties.

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Fire Prevention Week – Reflection on the Great Chicago Fire of 1879

As part of Fire Prevention Week (October 7-13), it is timely to reflect on NFPA’s video on the Great Chicago Fire of 1879.  The link to the video can be found here.  While many lessons have been learned in fire prevention, fire spread, insurance coverage, and subrogation recovery since 1879, there are still many challenges and legal issues when it comes to catastrophic fire incidents. We encourage subrogation professionals to take a moment this week to learn what fire prevention programs are taking place in your area.  As one example, our San Diego office showed support for the San Diego Fire Rescue Foundation this weekend in their charity 5k run.  Check out NFPA’s Fire Prevention Week’s website for more information.

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Oregon Supreme Court Clarifies Product Liability Statute of Repose

In a 2014 blog post, I reported on Oregon’s expanded product liability statute of repose (“SOR”). The point of that previous blog post was that in 2009 the Oregon legislature made an important revision to its SOR. First, the legislature extended the SOR from 8 years to 10 years. Second, and more importantly, the legislature added a “look away” provision which allows a claimant to extend the SOR further if the state where the product was made or imported into has a SOR longer than 10 years. ORS 30.905(2), as amended in 2010, reads as follows:

A product liability civil action for personal injury or property damage must be commenced before the later of:
(a) Ten years after the date on which the product was first purchased for use or consumption; or
(b) The expiration of any statute of repose for an equivalent civil action in the state in which the product was manufactured, or, if the product was manufactured in a foreign country, the expiration of any statute of repose for an equivalent civil action in the state into which the product was imported.

Accordingly, if a product in Oregon is more than 10 years old, the “look away” language in subsection (b) above requires that a determination of the SOR for the State in which the product was manufactured or imported into be made in any product liability claim. If the manufacturing/importing state has a SOR longer than 10 years, the claim in Oregon is not barred. Interestingly, 5 states have SORs longer than Oregon’s and 32 states do not have product liability SORs at all. A question therefore existed regarding what SOR time period to apply if the state where the product was manufactured/imported does not have a SOR.

In Miller v Ford Motor Co., the Oregon Supreme Court was recently asked to resolve this issue. The case was heard on certification from the Ninth Circuit Court of Appeals. In order to determine how to interpret the statute, the Oregon Supreme Court analyzed the legislative history of ORS 90.305. In a well-reasoned decision, the Oregon Supreme Court adopted Miller’s interpretation of the statute and held that under ORS 30.905(2), when an Oregon product liability action involves a product that was manufactured/imported in a state that has no statute of repose for an equivalent civil action, then the action in Oregon also is not subject to a statute of repose (Miller v. Ford Motor Co., June 7, 2018, Nelson, A.). The Court noted that Oregonians in Miller’s position already could sue in the state of manufacture if that state’s statute of repose—or lack thereof—permitted it. The Court held that it was not the legislature’s intent to significantly expand liability, but to allow Oregon plaintiffs to bring their claims involving out-of-state manufacturers in Oregon courts. Allowing an Oregon plaintiff to bring the same action in Oregon that could be brought in the state of manufacture met this goal.

Thus, subrogating carriers in Oregon that have cases involving products more than 10 years old are no longer time barred if the state where the product at issue was manufactured/imported has no statute of repose.


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The Insured Was On Vacation When…

After handling any sizeable amount of subrogation claims involving water damage, you may have asked yourself, “why is the insured always on vacation when a loss occurs?” In fact, most of the loss descriptions on the Notice of Loss will start with the sentence, “The insured was on vacation when…” It seems by a superficial look that whether the insured leaves the home for a weekend getaway or long vacation that is the time the water loss will occur. While coincidence and cosmic phenomenon may play a role, there are more practical reasons for these events.

A large portion of water losses involve a failed water line. The causes of these losses range from improper installation, material defects, surges in water pressure, etc. While water pressure surges may be rare occurrences, these others are not. Whether the insured is at home or not, water is always flowing through the plumbing and adding pressure to the water lines, hoses, filters, etc. If a water line is improperly installed or there is a defect in the material of the water line or its connections, the water line is bound to fail at some point in time. Of course the most obvious reason for the loss is that the insured was not at home to observe any imminent issues with the water line and preempt significant water damage. When the water line fails while the insured is at home, the insured has ample opportunity to turn off the water and have the water line repaired. Water line failures do otherwise seem relatively opportunistic.

In reviewing failed water line loss, the primary targets for liability are the third party installers, plumbers, maintenance workers, product manufacturers, and negligent users. However, with the idea that the occupants are often away from the home when the losses occur, there is a potential liability claim against the occupants for failing to turn off the water before a long trip away. Some lease agreements and homeowner association policies advise occupants to turn the water off in the residence if the occupants will be away for a period of time (usually longer than 3 days). These types of policies recognize the potential water issues that may arise while the occupants are away and places some responsibility on them to adhere to the rules and prevent potential property damage. These policies are more prevalent in condominium complexes. Reliance on such policies is not a guarantee of subrogation recovery, but one avenue to investigate.


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High Court in England and Wales Rules on Waivers of Subrogation in Construction Project

High Court in England and Wales holds that project insurers can bring a subrogation claim against a sub-contractor on a project where the sub-contractor has expressly agreed to obtain separate insurance cover for the project.  Haberdashers’ Aske’s Federation Trust v Lakehouse Contracts & Ors [2018] EWH 558 (TCC)

It is common practice in the construction industry for the contracting parties on a project and the sub-contractors to be covered jointly for specified loss and damage by project insurance (often referred to as Contractors’ All Risk insurance). The project insurance will cover specified loss or damage arising whether caused by one party’s fault or not, so as to avoid potential litigation between the parties.

Such was the case in these proceedings, where it was a term between the main contractor (and First Defendant), Lakehouse Contracts Ltd (“Lakehouse”), who had been contracted by the Claimants to undertake major work at a school, that project insurance would be taken out to cover the parties and the sub-contractors, and that the project insurers would waive all rights of subrogation against any insured party.
Lakehouse subsequently entered into a number of sub-contracts, including with the Second Defendant, Cambridge Polymer Roofing Ltd (“CPR”) who were to carry out roofing works. It was an express term of that sub-contract that CPR would obtain its own liability insurance for £5 million.

Following hot works undertaken by CPR, a fire broke out causing extensive damage to the building, its contents and the works totaling £11 million. The Claimants subsequently issued proceedings against Lakehouse and a settlement of £8.75 million was paid by the project insurers. The project insurers then sought to recover £5 million (being the policy limits of CPR’s policy) from CPR by way of a subrogated claim in the name of Lakehouse.

CPR’s insurers argued that CPR was a co-insured under the project insurance because the project policy was effectively a standing offer by the project insurers to cover anyone who subsequently became a sub-contractor on the project as a co-insured, and therefore Lakehouse was barred from pursuing a subrogation claim against those sub-contractors.

The project insurers accepted that the sub-contractors who Lakehouse contracted with, both before and after the inception of the project policy, would be covered under the project policy, however they argued that there was an exception to this position in the case of CPR, as there was an express term in the sub-contract that required CPR to take out its own liability insurance. As a result, CPR were not co-insureds under the project insurance, and the project insurers were therefore free to pursue them by way of a subrogated claim.

After analysing the ways in which cover becomes available to a sub-contractor under a Project Insurance policy, the Judge agreed with the project insurers that the project policy is a standing offer to insure unnamed contractors who, on the execution of a relevant sub-contract, become co-insureds and beneficiaries of the project policy and are implicitly protected from subrogation claims brought by the main contractor. In examining the contention that CPR was nevertheless still liable, the Judge held that regardless of any “standing offer”, the intention of the parties is key. In this instance, the express term in the sub-contract requiring the sub-contractor to obtain its own insurance meant the sub-contractor would have intended to rely on its own insurance rather than the project insurance. CPR had no right to rely on a waiver of subrogation clause under the project policy.

It is worth noting that in this case, the subrogating project insurers only sued CPR for £5million (being CPR’s indemnity under its own insurance policy) rather than the full £8.75 million it had paid out under the policy. However, the Judge indicated that the £3.75 million which fell outside the scope of CPR’s own cover would not have been recoverable from CPR, because it would not have been the intention of the parties to expose the sub-contractor to the whole liability for losses arising out of the occurrence of an insured event under the project policy, without regard to the sub-contractors own insurance policy.

Comment: This Court’s finding serves as useful guidance on the question of whether or not a sub-contractor is a co-insured on a Contractors’ All Risk policy and whether the policy insurers can subrogate against that particular sub-contractor. It comes as welcome news for subrogating insurers, who have now been given the means to circumvent their way around a defence of co-insurance in subrogated claims against sub-contractors, if they can demonstrate that such a defence would be contrary to the express terms of the sub-contract. However, the decision will be unwelcome news for sub-contractors who will want to avoid any specific insurance obligations in the sub-contracts, or at least ensure that the terms of the sub-contracts are consistent with any Contractors’ All Risk policies in place so that they are considered to be co-insured.

The official transcript can be found here:

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