Earlier this year, the U.S. Department of Transportation launched a $7 million advertising campaign to warn drivers about the dangers of railroad crossings. The DOT noted that while the total number of railroad incidents have been in decline over the past decade, a person or vehicle is still hit by a train roughly every three hours. In 2016, there were 232 reported deaths due to railroad crossing accidents.
Liberty Surplus Insurance Corp. v. Norfolk Southern Railway Co.
Recently the U.S. 11th Circuit Court of Appeals in Atlanta dealt with a personal injury lawsuit arising from a 2011 railroad crossing accident. The victim was severely injured when a train struck her. She claimed she could not see te approaching train due to “overgrown and improperly maintained vegetation at the railroad crossing.”
The victim sued not only the railroad operator but also the contractor hired to spray pesticide at the crossing. The contractor, in turn, had a railroad liability policy to insure it against possible lawsuit damages.
But as is often the case when dealing with a potentially large personal injury award, the insurer tried to escape responsibility. Although the insurer initially agreed to pay half the cost of defending the lawsuit, it later balked and instead filed a separate lawsuit against the railroad company and the contractor. The insurer basically asked for a judicial declaration the victim’s lawsuit was beyond the scope of the policy.
A federal judge in Georgia rejected the insurer’s claim. On appeal, the 11th Circuit affirmed that rejection. The insurer’s argument, the appeals court explained, came down to how the policy defined the term “work.”
The policy stated the insurer was not liable for personal injury that occurred once the contractor’s work of spraying the crossing with pesticides had been completed. The insurer noted the pesticide spraying had taken place 90 days before the victim’s accident. Ergo, the “completed work” exclusion in the insurance policy applied.
Not so fast, the 11th Circuit said. The railroad’s contract was not for a series of one-time sprayings, but rather created a “continuous maintenance and monitoring obligation” on the part of the contractor. Even the insurance company acknowledged this fact.
The insurance company argued that somehow, after each individual spraying was complete, the insurance policy ceased to apply until the next spraying began. This ignored the plain language of the contract. The railroad was paying for ongoing services over a fixed period of time.
The insurer tried in vain to convince the 11th Circuit that there were “different concepts of work” that supported its decision to exclude coverage. However, the appeals court explained it is not the function of judges to rewrite poorly written insurance contracts. To the contrary, Georgia law imposes a duty to strictly construe any ambiguous language in an insurance policy “in favor of coverage.” There is no “curious, hidden meaning” in an insurance contract. The insurer can therefore be held liable should the victim prevail in her personal injury claim against the pesticide contractor.