Yusuf Murad appealed against a decision of the Jefferson Circuit Court granting a summary judgment in favor of GEICO Indemnity Insurance Company ("GEICO"). Murad argued that the district court erred in not concluding that Appellee had an obligation to defend the complainant in a third party subrogation claim, that the obligation to defend was not dependent on the complainant's ownership of the vehicle involved in a collision and that the court must interpret the policy language for the benefit of the appellant. Since a previous panel of that court found that the insurance policy was invalid from the beginning by law, there was nothing wrong with the Jefferson Circuit Court's conclusion that Appellee had no obligation to defend the complainant. I Yusuf Murad v. Geico Indemnity Insurance Co., NO. 2020-CA-0518-MR, Commonwealth of Kentucky Court of Appeals (28 May 2021) Murad sought defense and bad faith because GEICO refused to defend.
On September 14, 2008, Abdalla Suleiman was working on a Mitsubishi Eclipse when it collided with a motor vehicle powered by Abdullahi Said. At the time of the alleged collision, the Mitsubishi Eclipse was listed as a covered vehicle on a motor vehicle insurance issued to Murad by GEICO in April 2008. Murad is Suleiman's father. The motor vehicle that Said was driving was insured by the Liberty Mutual Fire Insurance Company. The police were not called to the accident; rather, a civilian traffic collision report was completed by Said.
Liberty Mutual paid a total of $ 39,776.94 to its insured as a result of the accident. It finally sought subrogation from GEICO. GEICO informed Liberty Mutual that the claim was "denied" due to fraud and collaboration between Murad and Suleiman.
Liberty Mutual then sued Suleiman and Murad. Neither Suleiman nor Murad submitted a response and eventually the district court granted Liberty Mutual's claim for bankruptcy and ruled that Suleiman and Murad were jointly and severally liable for the sum of $ 39,776.94. that on Liberty Mutual's subrogation claim, which claimed negligence from Mr. Suleiman's cause of the accident and in addition, Liberty Mutual claimed a claim against Mr. Murad on a theory of substitute liability, and claimed that Murad did not have motor insurance that covers the Mitsubishi Eclipse.
GEICO retained attorney Todd Page to represent Suleiman and Murad in the document filed by Liberty Mutual. On January 27, 2012, Page participated in an appearance as a co-consultant for Suleiman and Murad. Suleiman and Murad also continued to retain a privately employed advisor. The district court then partially granted Suleiman and Murad's request for a summary judgment against Liberty Mutual and rejected all claims made by Liberty Mutual except for a claim made against Suleiman.
GEICO sued its insured for an explanatory ruling. GEICO claimed that the motor vehicle policy issued to Murad did not cover the motor vehicle accident that occurred on September 14, 2008. Specifically, GEICO claimed that Murad made materially incorrect information about the application for insurance coverage and that Suleiman made false statements regarding accidents and GEICO hidden facts.
Following a jury reversal of a judgment against GEICO, it appealed against the unfavorable judgment on the part of the two-part claim. A panel that the Court of Appeal revoked the Circuit Court's ruling regarding the coverage part of the divided claim. The panel decided that the insurance policy could only be valid and enforceable if Murad had an insurable interest in the vehicle at the time of the accident. After finding no insurable interest due to the fact that Murad did not own the vehicle at the time of the accident, the panel concluded that the policy claiming to insure the vehicle was invalid from the outset .
THE ARGUMENTS AND ANALYSIS
GEICO claimed that because there was no valid insurance due to the holding in GEICO Indemnity Co . v . Murad above GEICO had no obligation to defend. The Jefferson Circuit Court found this argument convincing and issued an opinion and decision on March 13, 2020 in support of GEICO's proposal.
The Jefferson Circuit Court upheld GEICO's draft summary judgment based on its recognition that a panel of that court had previously found There is no enforceable insurance policy between Murad and GEICO. When the Supreme Court of Kentucky denied discretionary review, it became the law of the law.
A final decision of an appellate court, whether right or wrong, is the law of the court and is decisive for the issues there resolved. The case law is an "iron rule, generally accepted", and considers that appeal decisions are binding on subsequent trials and appeals as to how erroneous the opinions or decisions may have been.
Murad puts forward several arguments in support of his claim that GEICO acted in bad faith by not defending him in the subrogation claim. He claims that the "obligation to defend" in the insurance entitled him to a defense; that GEICO's obligation to defend was not dependent on his ownership of the Mitsubishi Eclipse; that the language of insurance must be interpreted in favor of the insured; that he had a reasonable expectation of coverage; and that GEICO refrains from denying the obligation to defend. Murad did not submit evidence of a second, insured vehicle, and it is clear that the vehicle, if anything, was not involved in the accident in question. In the end, the Court of Appeal was limited by the holding in GEICO Indemnity Co . v . Murad supra .
When he viewed the record in a light that was most favorable to Murad and resolved any doubts in his favor, the Court of Appeal concluded that GEICO was entitled to a summary judgment. The alleged insurance coverage for the Mitsubishi Eclipse was determined to be invalid. This decision is the trial. As there was no valid insurance policy at the time of the accident, it follows that GEICO had no obligation to defend Liberty Mutual's subrogation claims.
Regardless of the lack of coverage, GEICO retained attorney Todd Page to defend Murad in Liberty Mutual's subrogation claim. and the defense succeeded. The summary judgment applies because there was no policy and no obligation to defend or indemnify existing ones.
Some people seem to believe that when an insurance company refuses to defend or replace an insured, they automatically become rich by suing the insurance company for bad faith. The appellants in this case, with "chutzpah" (unlimited bile), sued an insurer for bad faith after a court of appeal concluded that the policy was invalid from the beginning and the Supreme Court refused to try the case and made the decision the law of the case. The only weakness of the decision is that the court did not punish the plaintiffs and their lawyers for bringing a frivolous case because the issue of coverage was always the law of the law.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance claims and insurance fraud almost equal insurance . He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims handling and more than 52 years in the insurance industry. He can be found at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become insurance claims staff.
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