Insurer may have duty to defend in wrongful death case

An insurer may have to indemnify the owner of a plumbing company in a wrongful death lawsuit filed by the estate of a worker.

In Maxum Indemnity Co. v. Massaro, a three-judge panel of 11th U.S. Circuit Court of Appeals on Friday reversed a district court’s decision that the company’s liability and workers compensation policy exclusions barred coverage of those claims.

Pedro Jose Sanchez, who worked for 3rd Generation Plumbing, was fatally injured while completing mechanical work on a trailer for his employer. His widow, Maria Del Carmen Solis, received workers compensation benefits on behalf of Mr. Sanchez’s estate. The estate then sued James Massaro, 3rd Generation’s president, in state court for wrongful death, arguing that Mr. Sanchez’s death was due to Mr. Massaro’s actions as an officer and director of the company. The estate argued that Mr. Massaro inadequately supervised the company’s operations, altered machinery to bypass safety features, failed to perform adequate safety inspections and did not provide sufficient training.

Mr. Massaro sought coverage from the company’s commercial general liability policy from Maximum Indemnity Co. Maxum agreed to defend Mr. Massaro in the wrongful death action “under a complete reservation of rights, including the right to seek reimbursement for attorney’s fees and costs.”

Maxum sought a declaratory judgment as to whether, under the terms of its policy, it owed a duty to defend or indemnify Mr. Massaro in the wrongful death action. The insurer argued that the policy contained an employer’s liability exclusion and a workers’ compensation exclusion, and that those policy exclusions barred coverage.

Before the case went before a court, Mr. Massaro settled the wrongful death action for $3.75 million, assigning all his rights under the policy to the estate in exchange for the estate’s agreement not to execute judgment against him. The court said it would not resolve issues related to the settlement until after it ruled on the policy exclusion issue.

The U.S. District Court for the Southern District of Florida agreed with Maxum, holding that the insurer had no duty to defend Mr. Massaro on the basis that the policy’s workers compensation exclusion barred coverage. 

The circuit court reversed the district court’s decision and remanded the case. The circuit court held that since Mr. Sanchez worked for 3rd Generation, not Mr. Massaro, when he was injured, claims against Mr. Massaro do not “clearly bring the claim within the employer’s liability exclusion.”

The court also dismissed Maxum’s argument that the estate’s claims were barred by workers compensation law, holding the Florida Supreme Court has stated that a policy’s workers compensation exclusion would not necessarily bar every claim related to Florida’s Workers Compensation Law. “Given the allegations in the wrongful death complaint, any judgment in the action against (Mr.) Massaro would not be an obligation imposed under Florida’s Workers’ Compensation Law,” the court said.

The circuit court, therefore, held that Maxum had a duty to defend Mr. Massaro because the insurer failed to establish that the estate’s claims fell under either policy restriction, and remanded the case back to the district court.