TIPS 75th Anniversary

Tort & Insurance Law Journal
Fall 1997
Volume 33, Issue 1

Table of Contents

On the Use and Abuse of Custom and Usage in Reinsurance Contracts
William Hoffman

The Standard Mortgage Clause in Porperty Insurance Policies
John W. Steinmetz, Stephen E. Goldman, and Daniel F. Sullivan

Will the Internet Abrogate Territorial Limits on Personal Jurisdiction?
Charles H. Fleischer

Judicial Innovation in Asbestos Mass Tort Litigation
Joseph F. Rice and Nancy Worth Davis

The Economic Loss Rule: Deconstructing the Mixed Metaphor in Construction Cases
F. Malcolm Cunningham, Jr., and Amy L. Fischer

Aidsphobia: A National Survey of Emotional Distress Claims for the Fear of Contracting AIDS
Eric S. Fisher

The ADA and Life, Health, and Disability Insurance: Where Is the Liability?
Daniel A. Engel

Commercial General Liability Coverage of Faulty Construction Claims
Gregory G. Schultz


Tort & Insurance Law Journal
Fall 1997 (33:1)

F. Malcolm Cunningham, Jr. and Amy L. Fisher, The Economic Loss Rule: Deconstructing the Mixed Metaphor in Construction Cases, 33 Tort & Ins. L.J. 147 (1997).

The economic loss rule provides that economic damages are not ordinarily recoverable in negligence actions when unaccompanied by physical property damage or bodily injury. Most jurisdictions have recognized at least three distinct applications: (1) the rule prohibits recovery of economic loss in tort without accompanying personal injury or property damage; (2) the rule prohibits recovery in tort of economic losses that are also compensable by way of a breach of contract claim; and (3) the rule prohibits plaintiffs from going forward with both contract and tort claims for economic losses only, unless the tort is "separate and independent" from the alleged breach of contract. This article attempts to offer a general and necessarily vague definition of the rule, explore the exceptions or circumstances under which a party would expect the rule to apply but it does not, and offer some specific examples of the rule's application and inapplicability in various construction settings.

Daniel A. Engel, The ADA and Life, Health, and Disability Insurance: Where Is the Liability?, 33 Tort & Ins. L.J. 227 (1997).

Escalating health care costs and the concomitant increases in the cost of medical and other insurance coverages have led insurers and employers alike to make great efforts to reduce coverage costs. This is often accomplished by increasing premiums and employee contributions, limiting various coverages such as those for substance abuse and mental health disorders, or eliminating coverages altogether. Insurance companies may also limit coverage for particular kinds of treatments (cosmetic surgery and experimental therapies). Moreover, based on a prospective insured's medical history, an insurer may refuse to provide the requested coverage, limit or eliminate coverage for the known medical condition, or charge the prospective insured a higher premium. Insureds, prospective insureds, and employees have contested these actions by claiming that they violate the statutory protections of the Americans with Disabilities Act. This article explores the viability of such claims in light of Title I, Title III, and section 501 (c) of Title V of the Act.

Eric S. Fisher, Aidsphobia: A National Survey of Emotional Distress Claims for the Fear of Contracting AIDS, 33 Tort & Ins. L.J. 169 (1997).

This article serves two goals. First, it provides a national survey of all published Aidsphobia cases to assist practicing attorneys in developing or defending Aidsphobia or similar cases. Given the novelty of Aidsphobia cases and the evolving science of HIV and AIDS, a practicing attorney should approach each Aidsphobia or similar case as an opportunity to create new precedent or change the existing law in a given jurisdiction. The national survey is intended to serve as a resource for practicing attorneys in their efforts to navigate the uncertain waters of Aidsphobia litigation. The second and more academic goal of this article is to distill the cases in this national survey and offer a suggested judicial approach to Aidsphobia cases. The judicial approach suggested here balances the science of HIV and AIDS against the need for reasonable methods of recovery for emotional distress for the fear of contracting this deadly disease due to the negligence of others.

Charles H. Fleischer, Will the Internet Abrogate Territorial Limits on Personal Jurisdiction?, 33 Tort & Ins. L.J. 107 (1997).

This article considers how the "minimum contracts" doctrine, as a basis for the exercise of personal jurisdiction, applies where the contacts within the forum state are wholly or partly by computer. The article reaches the conclusion that, of fifteen reported cases in which personal jurisdiction was asserted based in whole or in part on computer contacts within the forum state, twelve appear to be consistent with Supreme Court precedent, and three appear to represent an expansion of personal jurisdiction.

William C. Hoffman, On the Use and Abuse of Custom and Usage in Reinsurance Contracts, 33 Tort & Ins. L.J. 1 (1997).

At common law, a litigant asserting that industry practice or trade usage affects the meaning of a contract must prove inter alia that the practice or usage prevailed in the relevant market at the time the contract was made. This proof requirement is critical for proof of usage in reinsurance contracts, which often rely on practice and usage for their meaning. However, a few American have misapplied and even ignored these standards in recent reinsurance cases, creating questionable precedent for future cases. This article analyzes the proof requirements applicable to reinsurance usage and then takes an in-depth look at two areas in which American market reinsurance usages have been an issue.

Joseph F. Rice and Nancy Worth Davis, Judicial Innovation in Asbestos Mass Tort Litigation, 33 Tort & Ins. L.J. 127 (1997).

The rising tide of asbestos personal injury and property damage cases filed in state and federal courts in the 1970s and 1980s continued into the 1990s. This article examines the imaginative and sometimes radical approaches used by courts to the management of asbestos litigation, including the use of standard pretrial rulings, issue preclusion, coordination among state and federal courts, bifurcation, trifurcation, reverse bifurcation, consolidation of clusters of cases, and aggregation of large groups of claims into class actions. This article discusses problems faced by the courts when confronted with asbestos mass tort litigation and reviews the efforts of some courts to solve the problems. The article concludes with a discussion of the two landmark cases: Amchem Products Inc. v. George Windsor, 117 S. Ct . 2231 (1997), and Gerald Ahearn v. Fibreboard Corp., 162 F.R.D. 505 (D.C. Tex. 1995).

Gregory G. Schulz, Commercial General Liability Coverage of Faulty Construction Claims, 33 Tort & Ins. L.J. 257 (1997).

This article examines the case law regarding coverage of faulty construction claims made by owners, subrogated insurers, and others against contractors under commercial general liability insurance policies (CGL policies), both for their own negligent work and that of their subcontractors. Particular attention is paid to the 1993 coverage part form and how decisions construing analogous provisions in the earlier policies may affect coverage outcomes under the 1993 coverage form. Coverage of these claims turns primarily on the meaning of the "business risk" or "work product" exclusions, although a number of courts have reached coverage decisions based on the meaning of the terms "property damage" and "occurrence." Most prominent of the exclusions is the new Damage to Your Work exclusion, which explicitly applies to completed operations and removes claims arising from faulty work performed by an insured's subcontractor from the scope of the exclusion. However, the definitions and other business risk exclusions continue to deserve consideration, particularly where the claims are made by those in privity with an insured contractor.

John W. Steinmetz, Stephen E. Goldman, and Daniel F. Sullivan, The Standard Mortgage Clause in Property Insurance Policies, 33 Tort & Ins. L.J. 81 (1997).

This article examines recent decisions on the standard mortgage clause, which was developed to protect mortgagees from mortgagors' acts and neglect. Most courts have held that the standard clause creates a separate and independent contract of insurance between the insurer and the mortgagee, and that a mortgagor's misconduct will not defeat the mortgagee's recovery. The article also examines the disagreement among the courts with respect to: (1) whether a creditor that does not hold a mortgage can recover under the standard mortgage clause; (2) whether the mortgagee can recover if the mortgagor does not have an insurable interest in the insured property; (3) whether the mortgagee can recover where the policy is void ab initio as to the mortgagor; (4) whether the mortgagee is bound by an appraisal in which it did not participate; and (5) whether the mortgagee can recover foreclosure costs under the standard mortgage clause.