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Texas Supreme Court Update on Insurance Cases
Posted 9/16/08 William Allred, Cooper & Scully, P.C.
In Zurich American Insurance Co. v. Nokia, ______ S.W.3d____, the majority of the Texas Supreme Court held that the insurers had a duty to defend because the underlying suits sought damages because of bodily injury. The Court modified and affirmed the judgment of the court of appeals.
In the underlying case, Nokia alleged the insurance companies had a duty to defend in several class action suits. The allegations included claims that radiation from wireless phones caused biological injuries and also claims that headsets were not provided with the cell phones. Additionally, some members of the class were future purchasers who had not suffered any injuries. Initially, the insurance companies had agreed to defend claims seeking damages arising from bodily injury; however, they later determined they had no duty to defend Nokia because the plaintiffs were only seeking headsets and not damages because of bodily injury.
In its opinion, the Court discussed whether biological injuries or biological effects, as pled in the class action suits, were considered the same as the term bodily injury outlined in the insurance policies. The Court concluded that the biological injuries as alleged did potentially state claims for damages because of bodily injuries under the insurance policies. The Court compared such injuries to the injuries at the cellular level for people exposed to asbestos.
However, the Court did find that Naquin et. al. v. Nokia, Inc., et al, the insurance companies did not have a duty to defend because the amended complaint only sought warranty based economic loss which was not covered by the insurance policies.
In light of the decision in Nokia, the Supreme Court also held that insurance companies had a duty to defend in Trinity Universal Insurance Company v. Cellular One Group, and Federal Insurance Company v. Samsung Electronics America, Samsung Telecommunications America, Inc. and Samsung Electronics Co., Ltd.
What will this mean to insurance policies in future? One possibility is that insurance companies will be more precise in their policy language as to what qualifies as bodily injury for coverage purposes. Or insurance policies could include language that excludes the term "biological injury" or "biological effects" and possibly limit damage for any future purchasers of a product that could cause "biological injury."
Another point to consider is lawsuits in the future. Will Nokia cause creative pleading as to damages?