A federal appeals court on Wednesday overturned a lower court ruling and held a Liberty Mutual Insurance Group unit is entitled to a refund of the $ 1 million deductible fee it paid in a car accident settlement, despite the empty space under "applicable policies "remain in the deductible endorsement of their policies.
In May 2018, Raymond Goodlin, an employee of the trucking company Big Binder Express LLC, based in Union City, Tennessee, was involved in an accident with another vehicle while driving a tractor with a semi-trailer, according to the decision of the 5th U.S. Circuit Court of Appeals in New Orleans in Big Binder Express, LLC; Raymond Goodlin v. Liberty Mutual Fire Insurance Co. v. Darling Ingredients, Inc. The trailer was owned by Darling and leased to Big Binder.
Later that year, two personal injury lawsuits were filed alleging that Mr. Goodlin, Big Binder and Darling had been negligent, according to the decision. Liberty Mutual Fire Insurance Co. had provided coverage to Darling as well as Big Binder and Goodlin who further insured under its policy.
When Liberty Mutual settled disputes, it claimed that it had $ 2 million in limited coverage under its policy, and that Big Binder and Mr. Goodlin was responsible for a deductible of $ 1
In February 2019, Big Binder and Mr. Goodlin sued Liberty Mutual in the U.S. District Court in Oxford, Mississippi and sought a declaration of assessment the insurer's deductible approval was not enforceable because it left the "applicable policies" section of the note blank. Mutually agreed to pay a deductible $ 1 million in the settlement. The district court then ruled that the deductible approval could not be enforced as written, and therefore Liberty Mutual could not get back the $ 1 million it had in advance.
A three-judge appeals board panel reversed the decision on appeal.
applicable policy sections in the approval were blank, the deductible endorsement "applies unambiguously" to the policy, based on other parts of the policy, the panel said.
"More significantly," it added, "the insured's interpretation would render the entire Deductible Endorsement meaningless … for the only thing that Deductible Endorsement does is add a deductible. It is therefore unreasonable for one. insured who agreed to an approval to believe that the endorsement has no effect, which raises the question of why an insurer would include an approval in the first place. "
The panel claimed that because Big Binder and Goodlin were further insured under the Liberty Mutual policy , Darling was obliged to pay the insurer $ 1 million deductible. Liberty Mutual had fronted in the settlement agreement.
A Liberty Mutual lawyer had no comment, while Darling's lawyers did not respond to a request for comment.