High Court Finds Nebraska Law Bars Insurance Contract Provision Requiring Valid CDL – Devese v. Transguard Ins. Co. of America

By August 17, 2011 Trucking Laws

As a Missouri tractor-trailer accident attorney, I was interested to read a Nebraska opinion reminding us that insurance companies are uninterested in paying financial recoveries to anyone, including injured truckers as well as people from smaller cars hit by trucks. In Devese v. Transguard Insurance Company of America, the estate of a trucker killed in an accident was granted a chance to recover from the trucker’s occupational accident insurance policy. The trucker, Stephen O’Bryant, was driving with a suspended commercial driver’s license at the time of the crash that killed him, and Transguard denied any recovery. Sylvia Devese, the personal representative of his estate, sued Transguard for breach of contract and bad faith, and the trial court granted summary judgment to Transguard. But the Nebraska Supreme Court reversed, holding that Nebraska law requires a connection between the breach and the loss.
O’Bryant was an independent truck driver participating in a group policy with Transguard. The policy expressly excluded coverage for “any loss occurring while the Insured Person… is operating a vehicle without a valid [CDL].” Separately, O’Bryant’s license was suspended for failure to pay a judgment from an auto accident. Two months later, while driving on the suspended license, he got into the trucking accident that caused his death. His beneficiaries made an insurance claim, but Transguard denied it for breach of the CDL provision, so Devease sued, arguing that Transguard was required to show a connection between the lack of a valid license and the accident. The trial court granted summary judgment to Transguard based on the contract provision, and Devease appealed to the Nebraska Court of Appeals, which affirmed. Because a controlling precedent, Omaha Sky Divers Parachute Club v. Ranger Ins. Co was overturned in the interim, the Nebraska Supreme Court took up the case.
On appeal, Devease argued that the appeals court erred in upholding the trial court and in holding that Omaha Sky Divers was controlling. Omaha Sky Divers was a dispute over insurance in a plane crash; the high court found that the insurance company was not required to show causation between a breach of a medical fitness clause and the accident. It also held that the exclusion did not constitute a warranty or condition under a Nebraska law requiring insurers to pay unless the breach contributed to the loss. However, the court recently overturned this with D&S Realty v. Markel Ins. Co., which found that insurers wishing to deny coverage are required to show a causal connection between a breach of contract condition and the loss. Applying the same principles to the instant case, the Nebraska Supreme Court found that Transguard may not deny coverage unless it can show a connection between the breach — failure to have a valid CDL — and the crash. Transguard was attempting to foreclose liability for accidents caused by unqualified drivers, the court noted, but O’Bryant’s license was suspended for failure to pay a judgment, not bad driving. Transguard was trying to apply an overly broad condition without connection to the loss, a situation it said Nebraska law remedies. Thus, the court reversed and remanded the case to trial court for further proceedings.
Importantly, this opinion does not simply give Devease the insurance judgment she was seeking. Rather, it instructs the lower court to consider whether O’Bryant’s lack of a CDL was connected to the crash. That is, Devease and the estate will get their day in court, but they are still not guaranteed a payout. As a St. Louis big rig accident lawyer, I certainly appreciate it when my clients win big judgments — it’s my goal to win them for injured people — but it’s even more important to establish that injured people have a right to pursue justice in the first place. By establishing judicial scrutiny of contract conditions like Transguard’s, the Nebraska Supreme Court has made it unlikely that victims will be denied insurance for spurious technical violations. As a southern Illinois semi truck accident attorney, I think that’s an important victory for injured people across the state.


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