Oakland/East Bay Office Prevails in Motion for Summary Judgment Against BART in Federal Court

January 4, 2022

Senior Counsel Christopher Hogan recently prevailed in a motion for summary judgment against plaintiff Bay Area Rapid Transit (BART) in a hotly-disputed insurance coverage suit in U.S. District Court for the Northern District.  BART filed suit against various of their excess insurance carriers, including our client, Westport Insurance Corporation, seeking coverage for a worker’s compensation claim filed by a BART employee who had been diagnosed with myeloma during the course of his employment.  The underlying worker’s compensation claim was settled by BART, who tendered the claim to various excess insurance carriers.  After the defendants initial FRCP Rule 12(b)(6) motions to dismiss were denied, both BART and the defendants filed cross-motions for summary judgment under FRCP Rule 56 on three disputed legal issues:

  1. Whether BART is entitled to pre-tender and/or post-tender fees of any and all insurance policies that it alleges may provide coverage, including whether these pre-tender fees and/or the entire action are barred by “voluntary settlement” provisions, “no-action” clauses, or the “Notice-Prejudice” Rule;
  2. Whether BART’s claims are barred by the applicable statue of limitations; and
  3. Whether the cancer presumption found in Cal. Labor Code § 3212.1(d) applies for purposes of insurance coverage under defendants’ policies.

The court found that defendants’ insurance policies included clauses that prohibited BART from entering into voluntary settlements involving loss to Defendants without Defendants’ consent.  That BART entered into a voluntary settlement with their employee without defendants’ consent.  BART’s voluntary settlement with their employee now involved loss to Defendants and no special circumstances applied that bar the applicability of defendants’ no-voluntary-settlement provisions.  Because defendants are issuers of third-party insurance policies, they are not required to prove they were prejudiced by BART’s failure to comply with the consent provisions of their insurance policies; and, therefore, BART is precluded from pursuing claims for coverage against Defendants because BART failed to comply with the no-voluntary-settlement provisions of the policies.

Christopher J. Hogan is Senior Counsel in the Firm’s Oakland/East Bay office and a member of the Firm’s Insurance Coverage Practice Group.  He can be reached by email at CHogan@ericksenarbuthnot.com or by phone at (510) 832-7770.