Lee v. Universal Underwriters Insurance Company, No. 14-13345 (11th Cir. Feb. 11, 2016) should have been an easy win for the insurer. In fact, so easy that coverage litigation should not have even been brought. And that surely would have been the case if the insurer’s policy had simply used certain tried and true language from a general liability policy. But, instead, the insurer’s policy went off the board. And the insurer paid dearly for it’s creativity- $5.4 million.

The claim is straightforward. In June 2005 Darris Lee had his 2000 Ford Expedition repaired at Terry Holmes Ford. The speed control switch was replaced. On December 11, 2008, Lee was driving the car, with Harold Brenner as a passenger, when he tried to brake as he approached slowing traffic. Lee was unable to stop or slow down. To avoid a collision, he drove onto the grass shoulder. The vehicle rolled over several times. Lee died at the scene and Brenner suffered severe injuries. It was later determined that, during the 2005 repair, the technician bent and damaged the cruise control cable. This eventually caused the vehicle’s throttle to stick open, which caused Lee to lose control of the vehicle.

In June 2005, when the vehicle was repaired, Terry Holmes Ford was insured under a liability policy issued by Universal Underwriters. However, the policy went off the risk on June 1, 2007, a year and a half before the accident.

Under the language contained in the standard ISO commercial general liability policy, this is a hot knife through butter claim for the insurer. Under that form, coverage is only provided for “bodily injury” that takes place during the policy period. Here, as noted, the “bodily injury” took place well outside of the policy period.

However, in Lee, the insurer’s policy used different language than what appears in ISO’s form. The policy provided:

"INSURING AGREEMENT—WE will pay all sums the INSURED legally must pay as DAMAGES . . . because of INJURY to which this insurance applies caused by an OCCURRENCE arising out of GARAGE OPERATIONS or AUTO HAZARD.

The policy defined an “occurrence” as: “OCCURRENCE”, with respect to COVERED POLLUTION DAMAGES, INJURY Groups 1 and 2 means an accident, including continuous or repeated exposure to conditions, which results in such INJURY or COVERED POLLUTION DAMAGES during the Coverage Part period neither intended nor expected from the standpoint of a reasonably prudent person.”

The insurer disclaimed coverage for the Lee and Brenner suits filed against the Ford dealer. Its basis was that the December 2008 accident fell outside the policy period, which ended in June 2007. The claimants entered into a combined settlement with the dealership, for $5.4 million, in exchange for an assignment of policy rights. The claimants filed suit against the insurer. The federal district court found in favor of the claimants. An appeal was taken to the Eleventh Circuit.

The Court of Appeals affirmed, holding that “the policy covered the ‘occurrence’ of the negligent repair that took place during the coverage period, even though the injury did not manifest until after the coverage period.”

The court’s explanation is not a model in clarity: “We agree with the district court that the policy’s plain text is ambiguous about what type of ‘occurrence’ triggers coverage. The policy does not clearly state that it applies only to injuries that occur within the policy period, nor does it state specifically what type of ‘accident’ during the policy period might trigger coverage. The policy also identifies an ‘injury’ as a distinct concept from an ‘occurrence’ or ‘accident’ for coverage purposes, suggesting that the ‘occurrence’ trigger for coverage is not the same as the time of the injury. We hold, as the district court did, that the policy could reasonably be interpreted as requiring either that the accident—here, the negligent repair—occur during the policy period, or that the injury resulting from the accident—here, the car crash—occur during the policy period.”

I believe that the decision was wrongly decided. Even under the policy’s non-traditional definition of “occurrence,” I see only a requirement that there must be injury during the policy period. However, the policy’s use of the definition of “occurrence” that it did opened the door to a decision that it was ambiguous. Again, under the plain old ISO general liability policy language, which does not define “occurrence” in terms of timing, and which makes clear that coverage is only provided for “bodily injury” that takes place during the policy period, I can’t see how the insurer loses this case. Sometimes boring is good.