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A federal appeals court has overturned a lower court decision and ruled in a Berkshire Hathaway Inc. unit’s favor in a dispute with a OneBeacon Insurance Group LLC unit over a combine harvester that became inoperable after it fell off a trailer.
The combine’s owner, Murray, Kentucky-based Hutson Inc., had hired Jackson, Tennessee-based Digit Dirt Worx Inc., the defendant, through an intermediary to transport the combine by truck, according to Monday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Atlantic Specialty Insurance Co. a.s.o. Hutson Inc. v. Digit Dirt Worx Inc.; National Indemnity Co. of the South.
Less than a mile into its trip, the combine fell off the side of the trailer during a turn, rendering it inoperable, according to the ruling. Hutson filed a claim with its insurer, Atlantic Specialty, a unit of Minnetonka, Minnesota-based OneBeacon, which paid Hutson $237,520.40 based on the combine’s $239,000 value plus the $3,520.40 cost of reloading it after the fall minus a $5,000 deductible. It then filed suit against Digit in U.S. District Court in Miami to recover its losses.
Digit, which was insured by Berkshire Hathaway unit National Indemnity, defended the lawsuit on the grounds the accident was caused by Hutson’s negligence, not its own, and its liability, if any, was limited to $100,000.
The District Court ruled in OneBeacon’s favor, but was overturned by a unanimous three-judge appeals court panel on appeal.
The lower court abused its discretion “by considering new evidence raised by Atlantic in a reply brief and denying Digit an opportunity to respond,” said the ruling. “We therefore vacate the grant of summary judgment and remand to give Digit that opportunity,” it said.
The appeals court also held that “summary judgment should not have been granted to Atlantic on the issue of whether Digit and (the transportation broker) agreed to a liability limitation of $100,000.”
“Atlantic’s contention that Hutson or (the transportation broker) had no reasonable opportunity to choose between two or more levels of liability is belied by the evidence,” said the ruling.
Berkshire Hathaway attorney David W. Smith of Lawrence J. Roberts & Associates PA in Coral Gables, Florida, said in a statement, “We feel vindicated in obtaining a reversal and remand of the erroneous grant of summary judgment in favor of the Plaintiff.”
“Enforcing carrier limitations is essential not just to the shipping and transportation industry, but to the economy as a whole, as carriers base their freight charges to shippers upon the risk that they are undertaking when they transport a certain commodity,” said the statement.
“Carriers must be permitted to rely upon the representations of the value of a commodity being shipped in order to properly affix their own rate based upon risk and their own insurance needs.”
OneBeacon’s attorney did not respond to a request for comment.
A Berkshire Hathaway Inc. unit was entitled to deny coverage in a case in which a settlement was paid without its prior consent, says a federal appeals court in upholding a lower court ruling.