Auto insurance policies typically provide for insureds to be reimbursed for expenses they incur in assisting in the defense of a lawsuit against the insured that is being defended by the insurer.  Some putative class actions have been brought on the theory that insurers fail to proactively determine whether these expenses are incurred and pay them even where insureds have not  requested reimbursement.  (See my October 11, 2011 post for more on this.)  The Pennsylvania Superior Court (that state’s intermediate appellate court) recently held, in a 2-1 decision, that under the language of Erie Insurance Exchange’s policy, the plaintiff could not recover without making a request for reimbursement. 

In Albert v. Erie Insurance Exchange, 2013 PA Super 59, 2013 Pa. Super. LEXIS 146 (Pa. Super. Ct. Mar. 20, 2013), the auto policy provided that the insurer would pay for “reasonable expenses [of] anyone we protect may incur at our request to help us investigate or defend a claim or suit.  This includes up to $100 a day for actual loss of earnings.”  Id. at *2.  The trial court dismissed the complaint (on the equivalent of a motion to dismiss) based on the plaintiff’s failure to allege that she made any request for reimbursement under this provision.  It appears that the plaintiff did not want to make that allegation because it would be detrimental to pursuit of a class action (perhaps on the assumption that many insureds do not request reimbursement under this coverage, and those who do request it likely receive it).  The Pennsylvania Superior Court majority agreed with the trial court’s reasoning that the insurance policy did not require Erie to advise the plaintiff of the terms of the policy, which the plaintiff had read and signed.  The court also relied upon a policy provision requiring that the insured notify the insurer or insurance agent “when a loss happens,” concluding that this provision required an insured to make a claim for the reimbursement of litigation expenses.  Id. at *8.  The court cited with approval the Ohio Supreme Court’s decision in a similar case, Kincaid v. Erie Ins. Co., 944 N.E.2d 207 (Ohio 2010).  The court also rejected arguments that an obligation to advise the insured about the availability of this coverage was created when Erie hired counsel to defend the insured.  The court found no basis for bad faith liability where there was no duty to inform the insured about the policy provision, and no duty to provide reimbursement without a request.  Id. at *17. 

Judge Colville dissented with respect to the breach of contract and declaratory judgment claims. The dissent would have held that the policy was silent with respect to whether a request for reimbursement is required.  To the extent that the policy required the insured to provide notice to the insurer “[w]hen there is an accident or loss,”  Judge Colville concluded that a claim for reimbursement of litigation expenses would not be an “accident” or a “loss,” and thus this policy provision was inapplicable.

Although appellate courts in both Ohio and Pennsylvania have now ruled in favor of insurers on this issue, insurers may wish to continue to monitor this issue and review their own policy language that governs this type of claim.  There is of course no assurance that a court in some other jurisdiction would not agree with the dissent in this case.  It also might be good business to pay this coverage proactively – it may create goodwill and not cost very much to pay $100 to those insureds who actually testify at a deposition or trial.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.