The Supreme Court of Alabama has ruled that lost investments are not "property damage" as defined either by a comprehensive general liability or business owner's insurance policy.

This suit arose from the financial collapse of Donald M. Martin and the real estate businesses he controlled. Murray and Roberta Berger began investing money in Mr. Martin's businesses in the late 1970s. American States Insurance Co. provided business owner's CGL insurance to Mr. Martin and his businesses. The policies defined "property damage" as physical injury to "tangible" property. Also, the policies defined "occurrence" as an accident.

The Bergers sued Mr. Martin and his businesses, claiming their security instruments and "properties" were exposed over a long period of time to unsafe financial conditions and that that fact caused the ultimate loss of their investments.

American brought this action in federal court, seeking a declaration that it had no duty to defend or indemnify Mr. Martin or his businesses under either policy. The federal court asked the Supreme Court of Alabama to decide whether, under Alabama law, the insurer had a duty to defend and indemnify Mr. Martin and his businesses.

The Supreme Court of Alabama said tangible property is that that can be felt, touched, seen, weighed, measured and estimated by the physical senses. Purely economic losses are not included in this definition of tangible property, according to the court. The clear basis of the Berger suit, the court noted, was that money was invested with Mr. Martin and lost in those investments.

The court concluded that strictly economic losses such as lost profits, loss of an anticipated benefit of a bargain and loss of an investment, do not constitute damage or injury to "tangible property."

The court ruled in favor of the insurer under both policies.

American States Insurance Co. vs. Martin, Supreme Court of Alabama, May 19, 1995 (BI/01/M.-$10).

Comp covers illegal aliens in Louisiana

The Louisiana Workers' Compensation Act does not exclude illegal aliens from securing workers compensation benefits when justified, according to the Court of Appeal of Louisiana.

Pablo Artiga was hired by M.A. Patout &*Son as a mechanic's helper in 1994 after he presented a "resident alien card" and signed an employment eligibility verification. In July 1994, Mr. Artiga fell about 15 feet on the job, seriously injuring his back. The employer paid workers comp benefits until November 1994, when payment was stopped after the employer was informed by the U.S. Immigration and Naturalization Service that Mr. Artiga was an illegal alien. Mr. Artiga filed a disputed claim for compensation with the Office of Workers Compensation. A*hearing officer held that an illegal alien could be denied the right to pursue benefits.

The appellate court could find no clear indication that the Louisiana Legislature intended to exempt illegal aliens from recovering under the compensation act. The court said that entitlement to benefits under Louisiana law "is dependent upon the employee status of the claimant." Thus, the court said it was clear that Mr. Artiga could not be denied compensation because of his status as illegal alien.

Artiga vs. M.A. Patout & Son, Court of Appeal of Louisiana, April 3, 1996 (BI/03/D.-$10).

These abstracts were prepared by Mayo H. Stiegler. Copies of these decisions are available by sending a $10 check payable to Mayo H. Stiegler, to Business Insurance, 740 N. Rush St., Chicago, Ill. 60611-2590. List the number for ea ch opinion.