Updates on Insurance Coverage, Construction Defect
and Commercial Auto Law Developments
in North and South Carolina
Greetings from Evans & Co. Counselors and Litigators, with our October edition of our Case Notes series. As I write this Hurricane Matthew is getting ready to mess up Florida, South and North Carolina and our thoughts and prayers go to those who are or will be inconvenienced or damaged by that terrific force of nature.
We write with our regular updates on insurance, construction defect[1], and commercial auto law in the states of North Carolina and South Carolina, which we last visited in May. We attach twenty-four pages presenting and analyzing the cases we mention below.
Please recall that our past Case Notes are archived at and we would be pleased to bring current the decisions on which we've reported previously, at your request.
The North Carolina Court of Appeals hands down two cases discussing insurance coverage for public entities – one primary, one excess of a large SIR – where the insured and the insurers argued for the same outcome.  Sovereign immunity is better than insurance!
In a third Court of Appeals decision, we learn how many injuries arise from changing a light bulb: in this case two, the second for (possibly improper) use of crutches causing a second injury. Perhaps there are thousands of opiate dependency tag-along claims to be filed secondary to orthopedic injuries, under this precedent.
A Federal District Court, applying North Carolina law, considered whether an employee leasing company could have liability for failure to properly hire and supervise a truck driver whose negligence was said to cause plaintiff’s injuries.  This is consistent with the continuing efforts of truck claim plaintiffs’ attorneys to expand the scope of exposure, and resulting insurances, beyond the truck owner and operator – and the attempt was rejected by this court.
We digest two Federal District Court cases, applying North Carolina law, which offer very useful support in regards exercise of jurisdiction by the federal court in declaratory judgment actions – these are “must reads” regarding coverage litigation in North Carolina.
You will recall that last month we digested a case where a claims adjuster’s deposition testimony resulted in the waiver of attorney-client privilege in coverage litigation: this month the United States District Court for South Carolina, applying South Carolina law, weighs in on the same subject and again finds a waiver. This time it is based on the rather ordinary assertion in a pleading, that the defendant insurer had a duty of good faith and that it fulfilled that duty. Since a bad faith defense will just about always involve the insurer’s assertion that it did its job properly, it is difficult to find a “bright line” where any insurer’s defense of a bad faith claim will not similarly cause a waiver of the attorney-client privilege.  So insurers either need to litigate this subject further, seeking reasonable limitations not provided in this case, or assure their files, and their counsel’s files, are and remain squeaky clean regarding their coverage evaluations and deliberations.  
[1]   Once again these courts have not graced us with construction defect decisions during the relevant recent period.  We do digest a case construing indemnity for sole fault of the indemnitee which will likely bear on similar language in construction contracts. 

Click here for our Case Notes for both states. (24 pages)

Click here for North Carolina only. (17 pages)

Click here for South Carolina only. (7 pages)

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