INSURANCE-RELATED COURT CASES
Digested from case reports published online
Keep on trucking
David Simons, an agent of Kaiser Trucking, Inc., was involved in an automobile accident with Bianca Spotted Thunder, who was driving an SUV owned by her father and insured under a Liberty Mutual Fire Insurance Company policy. Simons was driving a semi-truck and trailer on a highway in Oglala Lakota County.
The police report indicated that Spotted Thunder’s vehicle crossed over the center line and hit the semi-truck Simons was driving. At the accident scene, law enforcement observed that Spotted Thunder had a strong odor of an alcoholic beverage on her breath, and a preliminary breath test showed that her blood alcohol content registered above 0.1. Some of Spotted Thunder’s statements at the scene suggested that the accident might have been an attempted suicide.
On July 19, 2017, Kaiser Trucking and Simons commenced an action against Spotted Thunder, alleging she was negligent in the operation of her motor vehicle and seeking to recover damages from the accident. She failed to answer, and they received a default judgment against her on December 6, 2019. Kaiser Trucking was awarded $36,977.06 and Simons $146,619.80, and the court awarded both plaintiffs pre- and post-judgment interest. These judgments remain unsatisfied.
On December 1, 2020, Kaiser Trucking and Simons filed a complaint against Liberty Mutual Group, Inc., requesting a declaration that Liberty Mutual be ordered to “pay the judgment entered against its insured, Bianca Spotted Thunder,” and requesting indemnification for the amount of the judgments levied against Spotted Thunder.
On December 30, 2020, Liberty Mutual moved to dismiss Kaiser Trucking’s complaint under a state statute for failure to state a claim on which relief may be granted. Liberty Mutual asserted that, under the statute, an injured party may only bring an action for an unsatisfied default judgment against an insurer “under the terms of the [insurance] policy. …” Liberty Mutual then argued that the complaint did not allege facts showing that the accident with Spotted Thunder came within the coverage of its policy or that Spotted Thunder complied with her obligations under the policy, which Liberty Mutual alleged were conditions precedent to its obligation to defend and indemnify the claim. The Spotted Thunder policy was in effect from August 4, 2015, to August 4, 2016.
On January 25, 2021, Kaiser Trucking filed its response to Liberty Mutual’s motion to dismiss. Kaiser Trucking argued that the issues raised by Liberty Mutual—whether the accident came within coverage of the policy and whether Spotted Thunder provided notice to Liberty Mutual—were invocations of policy exclusions, which the insurer had the burden to prove, not conditions precedent, which Liberty Mutual argued must be pled in the complaint. Kaiser Trucking further argued that it had no obligation to notify Liberty Mutual of the proceeding it filed against Spotted Thunder in which it obtained a default judgment.
It argued that providing notice of the accident to Liberty Mutual was a condition precedent, not an exclusion. Therefore, Kaiser Trucking had the duty to allege in its complaint that notice had been given. Liberty Mutual contended that Kaiser Trucking’s “intentional failure to contact Liberty Mutual was done at their own peril.” Liberty Mutual also emphasized that whether the accident was within the scope of the policy’s coverage was another condition precedent that was not sufficiently pled in the complaint because of the potentially intentional nature of Spotted Thunder’s actions in causing the accident.
On February 22, 2021, the circuit court granted Liberty Mutual’s motion to dismiss. Kaiser Trucking appealed.
On appeal, Kaiser raised an issue of whether the circuit court erred in finding that notice to Liberty Mutual of a claim against its insured was a condition precedent under Liberty Mutual’s insurance policy that must have been alleged in the complaint to state a claim on which relief could be granted.
The supreme court stated that, to plead a claim on which relief can be granted, Kaiser Trucking’s complaint must have been sufficient to “put ‘a person of common understanding’ on notice, ‘with reasonable certainty of the accusations against [them] so [they] may prepare [their] defense.’”
The court stated that its determination was “in accord with notice pleading under which ‘a complaint need only contain “[a] short and plain statement of the claim showing that the pleader is entitled to relief[.]”’” It added that the complaint fully apprised Liberty Mutual of the nature of the claim asserted by Kaiser Trucking. Further, during litigation, Liberty Mutual was not limited or prejudiced in its ability to present any alleged conditions precedent to coverage or other defenses that may exist under the policy.
The court determined that Kaiser Trucking was not required to plead satisfaction of conditions precedent in the policy to sufficiently state a claim on which relief could be granted and avoid a dismissal of its complaint. For this reason, the court reversed the judgment of the circuit court.
Kaiser Trucking v. Liberty Fire Insurance Company—Supreme Court of the State of South Dakota—October 26, 2022—No. 2022 S.D. 64.