U.S. Court of Appeals for the Fifth Circuit, A&T Maritime Logistics v. RLI Insurance Co., Docket No. 23-30078

Admiralty & Maritime Law

 

Interpretation of a Policy of Marine Insurance

 

Federal Law

 

 

 

 

Federal law generally “governs the interpretation of a policy of marine insurance.” Elevating Boats, Inc. v. Gulf Coast Marine, Inc., 766 F.2d 195, 198 (5th Cir. 1985). If there is no federal statute or general maritime law on an issue, “the law of the state where the marine insurance contract was issued and delivered is the governing law.” Id. The parties agree that Louisiana law, which requires an insurer to demonstrate actual prejudice resulting from delayed notice before it can deny coverage on that ground, provides supplemental rules of decision here. See id. (applying the Louisiana rule).

 

 

As an aside, “traditionally, the term ‘admiralty’ refers to the courts, jurisdiction, and procedure of maritime law, and ‘maritime’ refers to the substantive law itself.” Poincon v. Offshore Marine Contractors, Inc., 9 F.4th 289, 294 n.2 (5th Cir. 2021) (citing David W. Robertson, Steven F. Friedell & Michael F. Sturley, Admiralty and Maritime Law in the United States 4 (3d ed. 2015)). “That distinction has faded over time, and ‘admiralty’ and ‘maritime’ are now used largely synonymously.” Id. (Fn. 6).

 

 

 

 

(U.S. Court of Appeals for the Fifth Circuit, Feb. 4, 2025, A&T Maritime Logistics v. RLI Insurance Co., Docket No. 23-30078)

 

Supreme Court of Texas, The Ohio Casualty Insurance Company v. Patterson-UTI Energy, Inc.; and Marsh USA, Inc., Docket No. 23-0006

Insurance Law

 

Interpretation of an Excess-Insurance Policy

 

Do We Look to the Underlying Policy?

 

Texas Law

 

 

 

On Petition for Review from the Court of Appeals for the Fourteenth District of Texas

 

 

We must decide whether the excess-insurance policy in this case covers the insured’s legal-defense expenses. Excess policies provide coverage that becomes available when an underlying insurance policy’s limits have been exhausted. Logically enough, therefore, the underlying policy often features prominently in excess-coverage disputes, especially when the excess policy is a “follow-form” contract—one that can be shorter and simpler than the underlying policy because it embraces many of the underlying policy’s terms. But even for follow-form excess policies, the contract that governs a dispute about excess coverage is the excess policy, not the underlying policy. As in any contractual case, therefore, we begin with the excess policy’s text and look to the underlying policy only to the extent that the parties consented to incorporate its terms. The court of appeals inverted this process: “We start from the ground up, first examining the terms of the underlying policy and then looking to the excess policy to determine coverage.” 656 S.W.3d 729, 734 (Tex. App.—Houston [14th Dist.] 2022). This mistaken approach led to an erroneous result: while the underlying policy covered the insured’s defense expenses, the excess policy does not. We therefore reverse the court of appeals’ judgment, render judgment in part, and remand to the trial court for further proceedings.

 

 

Each year, Patterson buys insurance to protect itself from costs arising from any incident that might occur during drilling operations involving its rigs. Patterson covers its risk by building an “insurance tower,” which consists of a primary policy that underlies multiple layers of excess coverage. For the 2017–2018 policy year, Patterson bought several lines of insurance through its broker, respondent Marsh USA, Inc. One of those lines—the “underlying policy” in this case—was an umbrella policy from Liberty Mutual Insurance Europe, Ltd. Patterson also obtained various additional excess policies through Marsh, including the one from Ohio Casualty at issue here.

 

 

(…) Patterson then sued Ohio Casualty and Marsh. In its live petition, Patterson alleged that Ohio Casualty’s refusal breached the contract and violated the Insurance Code. In the alternative (and assuming that the excess policy did not cover defense expenses), Patterson alleged that Marsh violated the Insurance Code and committed negligence, negligent misrepresentation, fraud, and breach of contract by failing to procure an insurance policy that did cover defense expenses.

 

 

The parties filed competing motions for summary judgment regarding whether the Ohio Casualty policy covers defense expenses. The trial court granted Patterson’s motion and denied Ohio Casualty’s. The court determined that “the defense costs sought by Patterson are covered under the Ohio Casualty policy at issue in this case because the Ohio Casualty policy did not clearly and unambiguously exclude the coverage for defense costs provided by the underlying primary policy.” To expedite resolution of the case, the parties jointly moved for entry of an agreed final judgment, which the trial court signed. Ohio Casualty appealed.

 

 

The court of appeals affirmed. It noted the parties’ agreement that the underlying policy covers defense expenses. Id. at 734–35. The excess policy, the court then noted is a “follow form” policy that does not unambiguously exclude defense expenses. Id. at 735–37. Therefore, the court reasoned, the excess policy necessarily also covers those expenses. Id. at 738. We granted Ohio Casualty’s petition for review and now reverse.

 

 

“As early as 1886, this Court recognized as ‘a cardinal principle of...insurance law’ that ‘the policy is the contract; and if outside papers are to be imported into it, this must be done in so clear a manner as to leave no doubt of the intention of the parties.’”  ExxonMobil Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 672 S.W.3d 415, 418 (Tex. 2023) (quoting Goddard v. E. Tex. Fire Ins. Co., 1 S.W. 906, 907 (Tex. 1886)). In other words, “we begin with the text of the policy at issue; we refer to extrinsic documents only if that policy clearly requires doing so; and we refer to such extrinsic documents only to the extent of the incorporation and no further.” Id. at 418–19. We have applied this principle in the context of follow-form excess-insurance policies. See RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015).

 

 

At all times, the excess policy itself remains the contract that governs a dispute about its coverage. The court of appeals should have first “looked to the excess policy to determine coverage” rather than “first examining the terms of the underlying policy.” 656 S.W.3d at 734.

 

 

(…) “damages”—a term that, without more, does not include defense expenses. See Corral-Lerma, 451 S.W.3d at 387.

 

 

In other words, the excess policy confines its coverage to sums paid to an adverse party, like the personal-injury claimants who sued Patterson after the drilling-rig incident. Cf. In re Farmers Tex. County Mut. Ins. Co., 621 S.W.3d 261, 270–71 (Tex. 2021) (stating that either a judgment or a settlement may trigger a duty to indemnify). Attorney’s fees could fall within that scope. For example, if a fee-shifting statute led to a judgment requiring Patterson to pay the adverse party’s attorney’s fees, Ohio Casualty would presumably be obligated to indemnify Patterson for that amount because Patterson would be legally obligated to pay it as part of the satisfaction of a claim. But the excess policy does not cover fees that Patterson paid its own attorneys.

 

 

 

 

 

 

 

(Supreme Court of Texas, Dec. 20, 2024, The Ohio Casualty Insurance Company v. Patterson-UTI Energy, Inc.; and Marsh USA, Inc., Docket No. 23-0006)

Supreme Court of Texas, The Ohio Casualty Insurance Company v. Patterson-UTI Energy, Inc.; and Marsh USA, Inc., Docket No. 23-0006

Interpretation of Legal Texts

 

Surplusage Canon

 

Texas Law

 

 

 

 

The surplusage canon “has its exceptions.” Whole Woman’s Health v. Jackson, 642 S.W.3d 569, 581 (Tex. 2022). “Like all canons of construction, the surplusage canon ‘must be applied with judgment and discretion, and with careful regard to context.’” Id. at 582 (quoting Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 176–77 (2012). And “we have repeatedly recognized, when faced with legal language that appears repetitive or otherwise unnecessary, that drafters often include redundant language to illustrate or emphasize their intent.” Id. For example, in Philadelphia Indemnity Insurance Co. v. White, the tenant pointed out “an apparent redundancy” in a lease. 490 S.W.3d 468, 477 (Tex. 2016). The lease included “catchall” language providing that the tenant would be responsible for losses not caused by the landlord’s negligence or fault but also specifically provided that the tenant would be responsible for particular types of damage. Id. We noted that “though we strive to construe contracts in a manner that avoids rendering any language superfluous, redundancies may be used for clarity, emphasis, or both.” Id.

 

 

 

 

(Supreme Court of Texas, Dec. 20, 2024, The Ohio Casualty Insurance Company v. Patterson-UTI Energy, Inc.; and Marsh USA, Inc., Docket No. 23-0006)

 

 

 

California Court of Appeal, Yaffee v. Skeen, Docket No. C097746

Hospital Lien Act (HLA)

 

Lien Upon the Damages Recovered

 

Workers’ Compensation

 

California Law

 

 

 

 

With the HLA, “the Legislature established one mechanism through which hospitals that provide emergency services can recoup costs from an entity other than a patient’s health care service plan.” (Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th 971, 985.) Section 3045.1 states, every person or entity “maintaining a hospital licensed under the laws of this state which furnishes emergency and ongoing medical or other services to any person injured by reason of an accident or negligent or other wrongful act not covered by workers’ compensation shall, if the person has a claim against another for damages on account of his or her injuries, have a lien upon the damages recovered, or to be recovered, by the person... to the extent of the amount of the reasonable and necessary charges of the hospital and any hospital affiliated health facility, as defined in Section 1250 of the Health and Safety Code, in which services are provided for the treatment, care, and maintenance of the person in the hospital or health facility affiliated with the hospital resulting from that accident or negligent or other wrongful act.”

 

 

When a hospital receives payment from a patient and his health insurer at a reduced negotiated rate under a prior agreement in which the hospital agreed to accept that payment as “payment in full” for its services, the hospital cannot assert a lien under the HLA to “recover the difference between its usual and customary charges and the amount received from the patient and his insurer.” (Parnell, supra, 35 Cal.4th at p. 598.) (Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595, 604.) However if, “hospitals wish to preserve their right to recover the difference between usual and customary charges and the negotiated rate through a lien under the HLA, they are free to contract for this right” when negotiating their contracts with insurers. (Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2014) 229 Cal.App.4th 549, 554.)

 

 

We agree with defendants that the plain language of section 3045.1 requires a hospital to provide emergency services before the hospital can assert a lien under the HLA, and to the extent the trial court found otherwise, it erred.

 

 

(…) Thus, the Legislature contemplated the amendments would cover nonemergency services that flow from the provision of emergency services when patients remain in the hospital.

 

 

(…) The issue in Parnell was whether a hospital could assert a lien under the HLA to recover the difference between its usual and customary charges and the amount received from a patient and its insurer when the hospital had agreed to accept the amount the patient and insurer paid as “payment in full” for its services. (Id. at p.598.) Our Supreme Court concluded the hospital could not. (Ibid.)

 

 

 

 

 

(California Court of Appeal, Dec. 17, 2024, Yaffee v. Skeen, Docket No. C097746, Certified for Publication)

 

 

 

California Court of Appeal, Yaffee v. Skeen, Docket No. C097746

Personal Injury Complaint

 

Complaint in Intervention

 

Damages for Past Medical Expenses

 

Collateral Source Rule

 

Future Non-Economic Damages

 

California Law

 

 

 

 

Appeal from a judgment of the Superior Court of Sacramento County. Reversed in part and affirmed in part.

 

 

A jury awarded plaintiff, David Yaffee, $3,299,455 in damages for past and future economic earnings and noneconomic loss for injuries he received when his vehicle was hit from behind in 2015 by a truck driven by defendant Joseph Skeen while Skeen was driving for his employer KLS Transportation, Inc. (KLS). National Liability & Fire Insurance Company (National) appeared on behalf of KLS in the litigation. We hereafter refer to National and Skeen as defendants.

 

 

Trial Court Proceedings: Plaintiff filed a personal injury complaint against Skeen and KLS. National filed a complaint in intervention as KLS’s liability insurance carrier. The court considered various motions in limine the parties filed prior to trial.

 

 

A plaintiff seeking compensatory damages for the cost of past medical services must establish that the charges for those services were reasonable. (Moore v. Mercer (2016) 4 Cal.App.5th 424, 436-437 (Moore); Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70, 73.)

 

 

A plaintiff must satisfy a two-step burden to prove the reasonableness of charges for past medical services. (Moore, supra, 4 Cal.App.5th at pp. 436-437.) “First, plaintiff must prove that she actually incurred the medical expenses and the amount of the patient’s liability for the expenses caps her potential recovery. ... Second, plaintiff must prove the reasonable value of the medical services but is entitled to no more than the expenses the patient actually incurred.” (Id. at p. 437.) In Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal. 4th541(Howell) our Supreme Court considered the proper measure for calculating past medical expenses of a plaintiff with private health insurance and held, “that an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial.” (Id. at p.566.)

 

 

The collateral source rule precludes deduction of compensation the plaintiff has received from a source independent of the tortfeasor to reduce recoverable damages and evidence of such payments is inadmissible for that purpose. (Howell, supra, 52 Cal.4th at pp. 548, 552.)

 

 

An injured party may collect damages for detriment “certain to result in the future.” (§ 3283.) California decisional law has noted that, “the ‘requirement of certainty... cannot be strictly applied where prospective damages are sought, because probabilities are really the basis for the award.’ (6 Witkin, Summary of Cal. Law, supra, Torts, §1552, p.1027.) Still, ‘“‘there must be evidence to show such a degree of probability of their occurring as amounts to a reasonable certainty that they will result from the original injury.’[Citations.]”’ (Bellman v. San Francisco H. S. Dist. (1938) 11 Cal.2d 576, 588.)” (Behr v. Redmond (2011) 193 Cal.App.4th 517, 533.) With respect to future medical damages, an injured plaintiff “is entitled to recover the reasonable value of medical services that are reasonably certain to be necessary in the future.” (Cuevas v. Contra Costa County (2017) 11 Cal.App.5th 163, 182; see also Bermudez, supra, 237 Cal.App.4th at p.1326 [stating a jury instruction according to this principle was correct].)

 

 

Future Non-Economic Damages: “‘“Non-economic” damages are such “subjective, non-monetary losses as pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.”’ [Citation.] ‘To recover future damages, a plaintiff must prove that his or her detriment is reasonably certain to result in the future.’ [Citation.]” (Audish v. Macias (2024) 102 Cal.App.5^th 740, 752.) “‘While there is no clearly established definition of “reasonable certainty”, evidence of future detriment has been held sufficient based on expert medical opinion which considered the plaintiff’s particular circumstances and the expert’s experience with similar cases.’ [Citation.] However, expert testimony is not required in all cases. For example, it is unnecessary if the injury is such that the jury could conclude, based on all the evidence and relying upon its own experiences and common knowledge, that the future harm is reasonably certain to occur. ... Courts have affirmed a jury’s finding of future damages based on the plaintiff’s testimony of continued pain and suffering at the time of trial.” (Colucci v. T-Mobile USA, Inc. (2020) 48 Cal.App.5th 442, 460.) “The amount of damages to be awarded is a question of fact committed, first to the discretion of the trier of fact, and then to the discretion of the trial court on a motion for new trial.” (Fernandez v. Jimenez (2019) 40 Cal.App.5th 482, 490.) We give great weight to the jury and trial court’s determinations. (Ibid.) “The amount to be awarded is ‘a matter on which there legitimately may be a wide difference of opinion.’” (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 508.) We will interfere if the verdict is so large that, “at first blush, it shocks the conscience and suggests passion, prejudice or corruption on the part of the jury.” (Id. at p.507.)

 

 

 

 

(California Court of Appeal, Dec. 17, 2024, Yaffee v. Skeen, Docket No. C097746, Certified for Publication)

California Court of Appeal, Yaffee v. Skeen, Docket No. C097746

Principles of Statutory Construction

 

Interpretation (Statute)

 

California Law

 

 

“We review questions of statutory construction de novo.” (John v. Superior Court (2016) 63 Cal.4th 91, 95.) “‘“Our fundamental task in interpreting a statute is to determine the Legislature’s intent so as to effectuate the law’s purpose.”’ [Citations.] ‘“‘We begin with the plain language of the statute, affording the words of the provision their ordinary and usual meaning and viewing them in their statutory context, because the language employed in the Legislature’s enactment generally is the most reliable indicator of legislative intent.’ [Citations.] The plain meaning controls if there is no ambiguity in the statutory language. [Citation.] If, however, ‘the statutory language may reasonably be given more than one interpretation, “‘“courts may consider various extrinsic aids, including the purpose of the statute, the evils to be remedied, the legislative history, public policy, and the statutory scheme encompassing the statute.”’”’”’” (Center for Biological Diversity v. Department of Conservation, etc. (2019) 36 Cal.App.5th 210, 231-232.)

 

 

“Statutory language susceptible to more than one reasonable interpretation is regarded as ambiguous .... Whether statutory language is ambiguous is a question of law subject to an independent determination on appeal.” (Merced Irrigation Dist. v. Superior Court (2017) 7 Cal.App.5th 916, 925.) “When statutory language is susceptible to more than one reasonable interpretation, courts must (1) select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute and (2) avoid an interpretation that would lead to absurd consequences.” (Ibid.)

 

 

(…) (People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183, 199 [courts must assume that when enacting a statute the Legislature was aware of existing related laws and intended to maintain a consistent body of rules].)

 

 

 

(California Court of Appeal, Dec. 17, 2024, Yaffee v. Skeen, Docket No. C097746, Certified for Publication)

 

California Court of Appeal, Yaffee v. Skeen, Docket No. C097746

Hearsay

 

California Law

 

 

 

Under Sanchez, 63 Cal.4th at page 686, “what an expert cannot do is relate as true case-specific facts asserted in hearsay statements, unless they are independently proven by competent evidence or are covered by a hearsay exception.” (See also In re Marriage of Lietz (2024) 99 Cal.App.5th 664, 673 [applying the Sanchez findings re state evidentiary rules to civil actions].) Despite the limit Sanchez placed on using experts to testify to the truth of hearsay statements it remains true that, “it is not improper under Sanchez for an expert to consider and rely on case-specific hearsay in forming his or her opinions. (Sanchez, supra, 63 Cal.4th at p.685.) ‘The limitations that Sanchez placed on expert testimony concern case-specific information that an expert relates to a jury, not materials upon which the expert relies.’ (People v. Camacho (2022) 14 Cal.5th 77, 128.)” (People v. Curiel (2023) 15 Cal.5th 433, 458.) (Op., p. 36-37).

 

 

(…) An expert’s opinion is conclusory when it is “unaccompanied by a reasoned explanation connecting the factual predicates to the ultimate conclusion ....”  (Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114 Cal.App.4th 1108, 1117.)

 

 

 

 

(California Court of Appeal, Dec. 17, 2024, Yaffee v. Skeen, Docket No. C097746, Certified for Publication)