Hello All, 

It’s been an exciting year for us here with the transition to Fusable, the TruckerCloud partnership, and the new product release of our blended CAB-Price Digests enhanced vehicle values tool.

We’ve also launched a new podcast Decoding Risk, hosted by our Marketing Content Manager, Edward Pronley. Check out our first episode where Edward discusses the trend of insurance broker consolidation with Fusable’s Director of Risk Intelligence Jasmine “J” Slaughter.

While our podcast dives into key industry topics, we’re also keeping a close eye on other important industry changes, like the proposed updates to the Safety Measurement System (SMS), to ensure we’re ready to support our customers’ evolving needs.

Fusable has been closely monitoring the proposed changes to the SMS as the FMCSA continues to evolve the program. Given the program’s history of updates, the latest release in the Federal Register has been highly anticipated. We are committed to staying ahead of these changes and are excited to collaborate with our partners to ensure we can continue delivering the integral solutions and data that our customers rely on, while expanding our capabilities to meet future needs.

As we await further details on the final timeline for the rollout, we are proactively preparing our systems to support both the new and current SMS scores. This approach will ensure minimal disruption and provide our partners with ample time to evaluate the new methodology, allowing them to determine the best way to incorporate the changes into their analysis and workflow.

CAB Webinars

Tuesday, December 17^th | 12p EST

Telematics Integration | Pt. 1 – Chad Krueger and Tim Brogan

Fusable’s new telematics integration explained and what it means for you. 45 minutes 

To register for the webinars, click the button below to sign into your CAB account. Then click live training at the top of the page to access the webinar registration.

Register Now

Explore all of our previously recorded live webinar sessions in our webinar library.

Follow us on the CAB LinkedIn page and Facebook.

CAB’s Tips & Tricks

New Product Announcement

Our “One Fusable” transition has allowed us to uncover new analytics by fusing our data together to benefit our clientele. Our first integration incorporates CAB’s and Price Digests’ powerful data within the online CAB report. The combined data in this new product is a key component in the Workbench we’re building to reduce insurance premium leakage.

Here is a quick rundown of the Benefits:

• Audit / Compare the Values (Prices) of VIN’s (Trucks, Trailers, and incidental PPV auto units) on your commercial vehicle schedules against our median Cost New and Retail values
• Identify invalid VINs with errors on fleet schedules and verify year, manufacturer/make, model with values on a fleet and individual VIN data level
• Add high-level fleet insights into your submissions or submission reviews with our stewarded analytics via graphs, charts, and heat maps – gain negotiable intel on each fleet/VIN
• Reduce human errors and enhance the speed at which you identify invalid/erroneous VIN’s / unit data and opportunities to price with better VIN values

All endpoints are also available via API, customized to your systems and needs to seamlessly integrate it into your workflow.

Contact your representative for more details or to set up a demo.

THIS MONTH WE REPORT

FMCSA to Move Ahead with Revamped CSA Scores FMCSA is moving forward with updates to its Safety Measurement System (SMS), including reorganized compliance categories, simplified severity weights, and refined intervention thresholds. The changes aim to enhance carrier prioritization and enforcement. Feedback from a public comment period led to adjustments, such as consolidating violations and renaming “safety categories” to “compliance categories.” Read more…

3 Key Qualities Trucking Operations Should Look for in Their Motor Truck Cargo Insurance Partner Trucking operations require an insurance partner with flexibility, strong customer service, and long-term commitment. Challenges such as supply chain disruptions, driver shortages, and evolving risks make it crucial to have a tailored policy. Insurers should offer adaptable coverage and support to ensure businesses can navigate operational hurdles while minimizing risk. Read more…

Population Shift Will Soon Drive Trucking Tidal Wave, Expert Says At the TCA annual convention, demographer Ken Gronbach highlighted demographic shifts poised to drive trucking’s recovery, citing 170 million Americans under 40 and growing Latino labor force participation. He urged carriers to adapt to changing consumer expectations and workforce diversity. Read more…

Unannounced Hazmat Inspection Blitz Puts 576 Trucks Out-of-Service A summer blitz by the CVSA inspected nearly 4,000 trucks, finding 14.6% with hazardous materials violations, resulting in 576 vehicles placed out of service. Shipping paper violations and loading/securement issues were the most common. Inspections and violations were down significantly compared to 2023. Separately, a Texas operation found 43% of inspected trucks out of service. Read more…

178,000 CDLs Scheduled for Downgrades for Drug, Alcohol Violations Starting November 18, CDL holders in “prohibited” status in FMCSA’s Drug & Alcohol Clearinghouse will face automatic license downgrades until completing the return-to-duty (RTD) process. This marks Phase 2 of FMCSA’s Clearinghouse initiative, tightening enforcement by requiring state agencies to revoke commercial driving privileges for violations. Read more…

How Much Does Detention Time Cost the Trucking Industry? Detention time costs the trucking industry $11.5 billion in lost revenue and $3.6 billion in direct expenses annually, with over 135 million hours of productivity wasted in 2023, according to ATRI. While detention incidents have declined slightly since 2014, 39% of all stops still experience delays. Read more…

FMCSA’s First-Ever General-Freight-Broker Enforcement Blitz Under Way The Federal Motor Carrier Safety Administration (FMCSA) has launched “Operation Protect Your Load,” its first enforcement initiative targeting unlawful brokering in general freight. Active in 17 states, the operation focuses on brokers with repeated lapses in insurance, bonding, or authority and those involved in fraud schemes like double brokering and nonpayment. Read more…

December 2024 CAB Case Summaries
These case summaries are prepared by Robert “Rocky” C. Rogers, a Partner at Moseley Marcinak Law Group LLP.

AUTO

Jessie Lee Shifflett v.. Stephane Routhier, et al., C.A. No. 5:23-cv-00046, 2024 WL 4894866 (W.D. Va., Nov. 26, 2024). This case involves a motor vehicle accident with a tractor-trailer. The Plaintiff brought a direct cause of action for negligence and negligence per se against the truck driver’s employer, arguing certain violations of the FMCSA regulations. The Court found that there was no federal private right of action for plaintiffs to support a negligence per se cause of action based upon regulation violations, and that even if there were, Plaintiff could not properly plead any causation between the motor carrier’s alleged violations and his injuries and thus the negligence cause of action also failed as a matter of law. Plaintiff also brought a claim for Negligent Retention, but the Court found that this claim was not supported by the allegations, as Plaintiff had failed to show that there were any prior violations that were so grave that discharging the driver was the only reasonable response, and that even if there were such allegations, he had failed to show causation between the failure to discharge the driver and his injury. On that basis, the Court granted Defendant’s motion to dismiss the claims against them.

McCleary v. Singh, C.A. Nos. CV-24-08056, 24-08092, 2024 WL 4728649 (D. Ariz., Nov. 8, 2024). In this case involving a motor vehicle accident with two semi-tractor trailers, the Court considered a motion to consolidate two separate tort actions which were filed related to the accident. The first action was brought by a driver and passenger (“First Plaintiffs”) of one of the tractors against the driver of the other tractor trailer, the owner of the other tractor trailer, and the trucking company for which the other tractor trailer was hauling cargo at the time. The second tort action was brought by the insurer for the trucking company for whom the First Plaintiffs were operating at the time of the accident against the owner of the other involved tractor. After the second action was brought, all parties to the second action moved to consolidate the cases, which was granted. Following the cases being consolidated, the plaintiff passenger in the first action filed a motion to reconsider the consolidation. She argued that consolidating the cases might delay her ability to obtain discovery as the other parties and that the two actions had some unique questions of law. The Court disagreed, citing rule 42 of the Federal Rules of Civil Procedure, and finding that even if there were some unique issues of law and fact, the cases called for determination of substantially the same questions. On this basis, the Court denied the motion to reconsider and consolidated the cases.  

Drake v. Old Dominion Freight Line, Inc., C.A. No. 1:22-cv-21-ACL, 2024 WL 4679068 (E.D. Mo., Nov. 5, 2024). This case involved a motor vehicle accident involving a tractor-trailer. The accident occurred after the Defendant’s driver turned left onto the highway and was soon thereafter hit in the rear by Plaintiff. Plaintiff alleged that the driver failed to yield. First, Defendant moved for summary judgment on Plaintiff’s claim for punitive damages. Plaintiff argued that it alleged that Defendant’s driver acted with complete indifference to or conscious disregard for the safety of others when he failed to yield to Plaintiff. The Court found that Plaintiff had not presented evidence supporting a finding that the driver acted with reckless disregard for the safety of others. “Assuming [Plaintiff]’s account of the accident is true, [Defendant] merely did not see [Plaintiff]’s vehicle.” The Court therefore dismissed the claim for punitive damages. Defendant also moved for summary judgment on the negligence claim on the basis that the Plaintiff actually caused the accident. The Court found that there was conflicting evidence on this issue such that it was an issue for the jury. Therefore, the Court granted summary judgment on the claim for punitive damages and denied it for the negligence claims.

Winter v. Cowart and DT Freight, C.A. No. 3:23-cv-352, 2024 WL 4556985 (N.D. Miss., Oct. 23, 2024). This case involved a fatal motor vehicle accident involving a tractor trailer and a minivan which rear-ended the trailer after the trailer merged back onto the highway after having temporarily parked it on the shoulder. The Defendants moved for summary judgment on a number of issues. First, the trucking company Defendant argued that claims against it (which included negligent supervision, entrustment, and hiring) were redundant as it admitted that it was vicariously liable for the acts of its driver, who was also a Defendant. The Court agreed, finding that these causes of action were redundant and possibly prejudicial. The Court dismissed these causes of action in light of the stipulation. Next, the Court considered claims that the Defendant breached safety provisions contained in the FMCSA. Defendant argued that Plaintiff had not shown any evidence that those regulations were breached. Plaintiff countered that it was not intending to introduce those regulations as part of a negligence per se claim. In light of that concession, the Court dismissed any negligence per se claim to the extent it was asserted. Finally, Defendants argued that there was no evidence of punitive damages. Plaintiff withdrew its claim for punitive damages prior to the hearing, which made this issue moot.

BROKER

3SIX5 Logistics, LLC v. Renko, C.A. No. 1:23-cv-0206, 2024 WL 4880388 (Ill. App. 1 Dist., Nov. 25, 2024). This case involved a contract dispute between a transportation logistics company (3SIX5) and Defendants, a group of individual transportation brokers who work as independent contractors. 3SIX5 and the Defendants signed independent contractor agreements which provided that Defendants would broker shipments through 3SIX5. This arrangement continued for a few months, but eventually, the Defendants felt that 3SIX5 was not growing fast enough and began brokering with other companies. 3SIX5 alleged multiple instances of breach of contract. First, 3SIX5 alleged that one of the defendants breached the contract by competing against 3SIX5 and recruiting clients for a new customer. The Court found that nothing in the agreement held that the Defendants must work exclusively with 3SIX5, and that to the contrary, the agreement signaled that the Defendants would remain independent. 3SIX5 pointed to a revised agreement which stated that one of the Defendant’s customers would remain a customer until a loan was repaid. However, the Court found that this provision was unenforceable as it lacked separate consideration. 3SIX5 next argued that even if there was no contract provision breached, that the Defendants owed fiduciary duties to them. The Court disagreed, holding that the Defendants were independent contractors, and that while independent contractors could still be agents in some circumstances, the facts of this case indicated that the Defendants remained independent from 3SIX5. Next, 3SIX5 alleged that one of the individual Defendants tortiously interfered with 3SIX5’s contract with the Defendant company in diverting clients to another entity. That company, Defendant’s sole member, was that individual Defendant. That Defendant argued that since he was the sole member of the company, the allegation essentially amounted to arguing that he interfered with his own contract. The Court declined to reach that issue, and instead held that even if the claim was proper in that respect, that no breach of contract occurred, because the diversion of clients was a result of 3SIX5’s inability to take on new clients due to lack of growth. Finally, the Plaintiff brought a cause of action for tortious interference with a business expectancy, which the Court dismissed because there was no business ever guaranteed in the industry and the clients were free to pursue other brokers.

J.V. & Sons Trucking, Inc. v. Asset Vision Logistics, LLC, C.A. No. 2024 WL 4747209 (8th Cir., Nov. 12, 2024). This case dealt primarily with the enforceability of a non-compete and non-disclosure agreement. Plaintiff was a crude oil hauling company who contracted with Defendant, a logistics broker. After an ongoing relationship was established and a number of loads had already been transported, the Defendant allegedly approached Plaintiff and told them they would have to change the way Defendant paid Plaintiff, which could be argued to be less favorable to Plaintiff, unless Plaintiff signed a Quick Pay Agreement (QPA). The QPA included a non-solicitation agreement which held that Plaintiff could not solicit or accept any business from anyone directly or indirectly introduced to them by the Defendant. It also contained a non-disclosure agreement in which Plaintiff agreed not to use any confidential information for its own benefit. About 6 months after signing this agreement, Plaintiff terminated its relationship with Defendant and requested payment of unpaid invoices. Defendant refused to pay the invoices, arguing both that the rate sheet attached to the invoices was unsigned and that even if the invoices were owed, the amount was entitled to set-off because Plaintiff breached the QPA. This action followed. The Court held that the QPA’s non-solicitation provision was unenforceable because under Texas law, the agreement must be ancillary to another agreement and required separate consideration which was reasonably related to its interests and designed to enforce return promises. The Court found that this was not the case, as the QPA was entered into after numerous loads had already been hauled. The Court held that the non-solicitation agreement could not have been designed to enforce Plaintiff’s return promise, because it changed nothing about the original agreement. “The covenant [not to complete] cannot be a stand-alone promise … lacking any new consideration.” Next, the Court considered the non-disclosure provision, and found that it was also unenforceable because it did not include any reasonable time, geographic, and scope-of-activity limitations. Lastly, the Court considered the issue of the unpaid invoices, and found that even though Defendant had not signed the rate sheet, the parties had carried on business as usual, indicating that they had an implied contract for the rate increases.

McElroy Truck Lines, Inc. v. Moultry, C.A. No. 3:23-cv-01056, 2024 WL 4593852 (M.D. Tenn., Oct. 28, 2024). This case dealt with numerous issues, including an analysis of an agency relationship and FAAAA preemption. Plaintiff McElroy sued to recover for damage to its tractor-trailer and cargo from a crash with a truck driven by Defendant Moultry. Moultry was delivering household appliances from Lowe’s. Lowes had contracted with a broker, Retail Direct, who in turn contracted with Sprout, who in turn contracted with ORHS to hire drivers; ORHS in turn hired Moultry. Lowe’s and Retail Direct filed a joint motion to dismiss the claims against them. First, they argued that they could not be held vicariously liable for the actions of Moultry because they did not employee Moultry. The Court ran through the different ways that a claim for vicarious liability could be shown. It determined that the moving parties had no actual authority over Moultry as they had no control over his work or hiring/firing powers. The Court found that they also had no apparent authority over Moultry. Plaintiff argued that the truck had a Lowe’s logo on it, but the Court found that even if that established authority, Plaintiff had not proven that it detrimentally relied on that logo in any way. The Court then rejected Plaintiff’s argument that all parties were involved in a joint venture, finding that “a chain of contracts does not create a joint venture” and that Plaintiff had failed to allege a common purpose. Plaintiff next argued that Moultry fell under the definition of “employee” found in the FMCSR. The Court found that while he may meet the definition of an employee under the regulations, the moving parties did not fall under the definition of “employer[s]”. Lastly, Plaintiff alleged that Lowe’s was the statutory employer of Moultry. Lowe’s did not address that point in its motion, so the Court allowed that cause of action to stand, finding it could be reasonably be inferred to be true. Next, the Court examined Plaintiff’s claims for Negligent Hiring and Entrustment. The moving parties argued that these claims were preempted by the FAAAA. The Court found that district courts were sharply divided about whether the FAAAA preempts state broker negligence claims. The Court adopted the Morales test and followed a two part test for preemption, whether: 1) a state enacts or attempts to enforce a state law; and 2) the law relates to the preemptive provision’s prohibitions, either expressly or by having a significant economic effect. The Court found that both these elements were easily satisfied, as Plaintiff’s claims have a significant effect on brokers. The Court then examined the safety exception, and found that it did not apply. The Court found that claims for negligence against brokers are not “with respect to motor vehicles.” In conclusion, the Court granted all motions for summary judgment except for the vicarious liability against Lowe’s in respect to Plaintiff’s claims that the driver was a statutory employee.

CARGO

Angela Fuelling, individually and as Personal Representative of the Estate of James Fuelling, v. S&J Logistics LLC, Jason Ricardo Gordon, Echo Global Logistics, Inc., and Echo Global Logistics, Inc., C.A. No. 7:22-cv-00905,2024 WL 4802709 (D.S.C., Nov. 14, 2024). This case involves FAAAA preemption of various claims alleged against a freight broker after a motor vehicle accident involving a motor carrier. Plaintiff brought causes of action for negligence, recklessness, negligence per se, vicarious liability, wrongful death, survival, and negligent hiring, entrustment, training, supervision, and retention against the broker. The Court concluded that these claims were subject to FAAAA preemption because they directly related to the broker’s core services as a broker. The Court then turned to the Safety Exception. The Court found that Congress’s choice of the words “with respect to” in the safety exception implied a different scope than the words “relating to” found in the general preemption provision. Therefore, the Court found that the safety exception had a narrower scope, only applying to claims that have a direct relationship to motor vehicles. The Court stated that because there was no direct link between motor vehicles and allegations of negligent hiring or selection by brokers, the safety exception did not apply and therefore, Plaintiff’s claims were preempted.

Continental Western Insurance Company v. Hilton-Spencerport Express, Inc., 3:23-cv-631, 2024 WL 4785177 (N.D. Ind., Nov. 13, 2024). This case involves assertion of the FAAAA preemption defense. The case involved a motor vehicle accident in which a tractor-trailer driver, operating under the influence of drugs and/or alcohol, caused an accident resulting in a fatality. One of the Defendants, Arrive, argued that it served as the broker for the transaction and that therefore all of the claims against it were preempted by the FAAAA. In support of this motion, Arrive submitted a snapshot of the FMCSA website listing it as a “broker” and a Broker Carrier agreement characterizing Arrive as a “transportation broker”. The Court found that neither of these documents proved that Arrive was operating as a broker during the accident. Specifically, the snapshot did not prove that Arrive was operating as a broker at the time. Similarly there was no evidence that Arrive was operating pursuant to the Broker Carrier agreement at the time. The Court determined that because it could not be definitely determined that Arrive was a broker at the time, it did not need to reach the issue of FAAAA preemption. Arrive also claimed that the claims against it for vicarious liability were not supported by the complaint. The Court agreed, finding that the complaint did not contain any allegation of any agency relationship between Arrive and the driver. The Court denied Arrive’s motion in regards to FAAAA preemption and granted it in regards to the claims for vicarious liability.   

Indemnity Insurance Company Of North America, as subrogee of AT&T Services, Inc., v. Whitehorse Freight LLC And Cargo Team Solutions LLC, C.A. No. 4:23-cv-4585, 2024 WL 4753817 (S.D. Tex., Nov. 12, 2024). This case deals with a claim for cargo damage under the Carmack Amendment. AT&T arranged for Defendant to transport computer equipment, which was then damaged in transit. AT&T filed a claim with Plaintiff, which was paid. Plaintiff, as a subrogee of AT&T, filed the present action against Defendant. Defendant filed a motion to dismiss, arguing that it is not a carrier and thus not liable under Carmack. To support this contention, Defendant noted that it was licensed as a freight broker, not a common carrier, and that it owned no power units. The Court found that Defendants status as a broker was not dispositive, as the definition of freight forwarder specifically contemplated that an entity may use a carrier’s equipment rather than its own. The Court also noted that other jurisdictions had held that licensure, equipment, or personnel was not dispositive. Finding that licensure was not dispositive, the Court found that the Complaint sufficiently alleged that Defendant was a freight forwarder. The Court denied Defendant’s motion to dismiss.

Sema Logistics Incorporated v. Alternative Heavy Towing Incorporated, C.A. No. CV-23-2098, 2024 WL 4680579 (D. Ariz., Nov. 5, 2024). Plaintiff brought Carmack and state law causes of action stemming from Defendant’s towing of Plaintiff’s truck, which was damaged in transit.  Defendant argued that it was not subject to Carmack because Carmack contains an exception for emergency tow companies and that the state law causes of action were preempted by Carmack. The Court agreed that Defendant was not subject to Carmack given the statutory exception, but that due to that same exception, the state law claims were not preempted. The Court then dismissed the claims brought solely under Carmack but kept in the state law claims.

ACE American Insurance Company v. Rhenus Logistics LLC, C.A. No. 4:22-cv-2687,2024 WL 4633474 (S.D. Tex., Oct. 30, 2024). This case deals with a claim for cargo damage under the Carmack Amendment. Defendant was hired by Logicalis Group Storage to arrange for the transportation of equipment which was ultimately destroyed when it caught fire in transit. Logicalis tendered a claim to Plaintiff, who paid the claim. Plaintiff then, as a subrogee of Logicalis, sought to hold Defendant responsible for the amount paid under the Carmack Amendment. Plaintiff argued that Defendant was a freight forwarder subject to Carmack. Plaintiff moved for summary judgment on that basis. The Court went through each element in the definition of “freight forwarder”. The Court found that fact issues existed as to each one. The Court noted that the parties had several contracts with each other, some of which specifically stated that Defendant was not a freight forwarder and was only a logistics provider. The Court also noted that another issue of fact existed as to whether Defendant took responsibility for the transportation of the goods. Plaintiff pointed to some evidence that Defendant was a freight forwarder, including: Defendant’s employee stating in a deposition that they were “responsible” for the shipment, Defendant submitting the claim form on behalf of Logiscalis, and Defendant’s bill of lading bearing a freight logistics logo. The Court found that each of these may be evidence, but were not dispositive and had contradicting elements to them. Finally, Plaintiff argued that Defendant had a broker agreement with another company, which means that Defendant cannot be a broker because its agreement with Plaintiff prohibited double-brokering. Defendant countered that its agreement with Plaintiff prohibited brokering downstream, but not upstream. The Court found that this constituted an issue of fact and that the agreement was in fact silent to upstream brokering. In conclusion, the Court denied Plaintiff’s motion for summary judgment.

COVERAGE

Pamela Hansen v. GMB Transport, Inc., United Specialty Insurance Company and Gurpreet Singh, C.A. No. 24-cv-00255, 2024 WL 4896570 (N.D. Okla., Nov. 26, 2024). This case involved a direct action against an insurance company. The insurance company moved to dismiss. The Court noted that under Oklahoma law, direct actions against insurance companies were not allowed against the insurer of an alleged tortfeasor absent a statutory edict. Plaintiff attempted to point to the Motor Carrier Act’s requirements that all motor carriers of household goods file with the Oklahoma Corporation Commission (OCC). The Court found that in order to make such a claim, Plaintiff must prove that the motor carrier was required to be insured, and that the OCC did not have such a requirement. Since the OCC did not require motor carriers have insurance, Oklahoma law did not allow for a direct action in this case. The Court therefore dismissed the direct action claim against the insurance company.

Canal Insurance Company v. Kim Sammons, et al., C.A. No. 2:23-cv-00737, 2024 WL 4828731 (S.D. W.Va., Nov. 19, 2024). This case involved a court’s determination of coverage in a case involving a tractor-trailer in which a truck driver shot another driver in a road rage incident. The Court had to determine if this incident “arises from the ownership, maintenance, or use of an auto” pursuant to the policy. The Court found that Florida law (which applied), set out a 3 part test to see if an accident “arose” from the use of an auto: 1) whether the accident arose out of the inherent nature of the auto; 2) whether the accident was in the natural territorial limits of an auto, and the actual use, loading, or unloading must not have been terminated; and 3) the automobile must not merely contribute to cause the condition which produces the injury, but must, itself, produce the injury. The Court found that there was no coverage pursuant to this test because the vehicle did not produce the injury. The Court concluded that the Plaintiff owed no duty to defend or indemnify under the policy on that basis.

Safeco Ins. Co. v. Heikka, 2024 WL 4683895 (Fl. Ct. App. Nov. 6, 2024).  In this case, the Florida Court of Appeals ruled an insurer was required to pay the full amount of a judgment entered against its insured, determining the insurer acted in bad faith in responding to an offer to settle prior to the case resulting in a judgment against the insured. Heikka was involved in a motor vehicle accident with Safeco’s insured, following which Safeco’s insured was charged, and later convicted, of driving under the influence of alcohol and leaving the scene of an accident. Safeco had issued an auto liability policy to its insured with $25,000 liability limits. Heikka incurred in excess of $195,000 in medical bills and via counsel issued a policy limits demand to Safeco, but which would have to exclude any claim to punitive damages, entitlement to UIM, and claims against the bar that allegedly served Safeco’s insured prior to the Accident. Safeco’s adjuster sent a fax to Heikka’s counsel the same day, which provided “[t]his letter will serve as confirmation of our agreement to settle the outstanding claim(s) of Rebecca Heikka for the amount of $25,000.00. Payment and acceptance of this sum is in return for a full and final release of all claims arising out of the above captioned accident.” The fax also included a general release. Heikka’s counsel contacted the adjuster in response, explaining he could not accept the release because it did not exclude the specific claims and punitive damages upon which he had conditioned the demand.  Heikka’s counsel made revisions to the proposed release to account for the carveouts and allegedly sent the signed release back to Safeco’s adjuster, which Safeco contended at trial it did not receive. Heikka’s counsel cashed the $25,000 check, then proceeded to sue Safeco’s insured as a predicate to seeking punitive damages. Safeco claimed it had not received the amended release containing the carveouts and moved to enforce the settlement.  Heikka’s counsel responded via letter, indicating if the amended release was not accepted in sixty days, then Heikka would be filing a bad faith claim against Safeco. Heikka also filed a motion to voluntarily dismiss the claim for compensatory damages in the pending action if the court found sufficient evidence for punitive damages. Rather than accepting the amended release under the letter’s terms, Safeco and the insured sought to enforce the full release in a declaratory action. Ultimately the court found there was no “meeting of the minds” as to the prior release, thereby permitting Heikka to pursue compensatory and punitive damages against Safeco’s insured. Following trial, a judgment was entered against Safeco’s insured in the amount of $1,169,292.83 in compensatory damages, but with no punitive damages awarded. After securing the judgment, Heikka moved to amend her complaint to allege statutory and common law bad faith claims against Safeco, which the trial court granted. On appeal, the court noted “[t]he facts most favorable to Safeco show that the claims adjuster tendered the policy limits together with a release of all claims, which [Heikka’s counsel] had already told the adjuster would be unacceptable. After receiving Safeco’s proposed release, [Heikka’s counsel] reiterated that he would not settle without a carve-out for punitive damages and other parties, and that he would revise the release accordingly.” The court further noted that Heikka’s counsel told defense counsel retained to represent Safeco’s insured of the discussions with Safeco’s adjuster regarding the revised release and conditions for settlement, but if Safeco continued to maintain that the revised release would not apply, then the release would be treated as void and he would seek punitive and compensatory damages from Safeco’s insured, yet Safeco failed to settle.  Under these facts, the court determined Safeco did not honor its obligations to the insured. Safeco contended it was in a no-win situation, with its options limited to: (1) to pay out the policy limits, which would protect the insured from an exorbitant excess compensatory damages verdict, but would expose the insured to a punitive damages verdict without Safeco providing a defense; or (2) to refuse to settle, which would expose the insured to both an imminent excess compensatory damages award and a potential punitive damage award, but with Safeco paying the insured’s litigation expenses. However, the court found that Safeco failed to adequately explain these options to its insured, which it was duty-bound to do under existing law. Last, it found that Safeco again failed its duties when it did not accept Heikka’s counsel re-iterated demand to settle on the previously discussed carve out terms after the issue regarding the dispute between the versions of the release was identified in connection with Safeco’s attempt to enforce the settlement. The appellate court summarized its ruling as follows: “Safeco failed to fulfill its duties to act in good faith in accordance with Boston Old Colony when it refused Heikka’s offer to settle her compensatory damages claim for the policy limits, subject to a carve-out for punitive damages. In doing so, Safeco increased the exposure of its insured, as he faced the possibility of both an excess compensatory damages judgment and punitive damages judgment against him.”

WORKERS COMPENSATION

C.R. England Inc. v. Labor Commission, 2024 WL 4795348 (Utah App., Nov. 15, 2024). Johnson, a long-haul truck driver, was injured when his truck was involved in an accident. Johnson claimed rib pain, and after an exam, he was diagnosed with a concussion. A few months later, he suffered a fall in his home. After this fall, a doctor found that he had three rib fractures and fractures of the spine. The doctor opined that these were injuries that occurred during the accident. He also treated with a neurologist for various cognitive issues. The Workers’ Compensation Commission referred the matter to a medical panel, which concluded that the cognitive issues had worsened from the subject accident. The panel noted Johnson’s use of cannabis, which could worsen cognitive issues, but still concluded these issues were caused by the accident. Johnson’s employer appealed, making several arguments. First, they challenged the finding of medical causation. However, the Court found that the Commission’s findings were supported by evidence that each of the claimed conditions were caused by the accident. They next argued that the case should be remanded back to the medical panel since Johnson claimed he had stopped using cannabis. The Court found that the medical panel (which had actually considered the issue twice after it was remanded once before), had reached its conclusion and that there was no evidence suggesting it would change its opinion. Lastly, Johnson requested attorneys’ fees as the result of the “frivolous appeal”. The Court concluded that the Plaintiff’s challenge was meritless and that some of the allegations contained in the challenge were controverted by the evidence. The Court concluded therefore that the appeal was “frivolous” and awarded Johnson attorneys’ fees.