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On Tuesday, President Donald Trump nominated Judge Neil M. Gorsuch of the U.S. Court of Appeals for the Tenth Circuit (located in Denver, Colorado) for the position of associate justice on the U.S. Supreme Court. The nine-member court has had only eight justices since the death last February 13 of Associate Justice Antonin G. Scalia, as the U.S. Senate did not formally consider the candidacy of Judge Merrick Garland, whom then-President Barack Obama nominated on March 16.
The Senate will debate Judge Gorsuch's nomination as it pertains to a number of legal and constitutional issues. I thought it would be interesting to see how the judge has come down on insurance cases during his 10-plus years on the Court of Appeals. I got 152 hits when I did a search on Google Scholar using the terms "insurance coverage Gorsuch". That number includes a lot of cases where he joined an opinion but did not write it. I want to focus on those opinions he wrote so we can get a sense as to how he approaches insurance issues and how he writes about them. Insurance cases that reach the U.S. Supreme Court are quite rare, but Judge Gorsuch is only 49 years old. If confirmed by the Senate, he may well serve for three decades or more. At least some insurance cases will come across the court's docket during that time.
Here are summaries and quotes from some of his opinions:
A property insurance policy did not cover costs incurred to maintain a natural liquid gas pipeline. MarkWest Hydrocarbon, Inc. v. Liberty Mut. Ins. Co. (2009)
"To read the policy as covering MarkWest's costs of complying with safety regulations would be to convert the parties' policy against unforeseen fortuities into a maintenance contract. The insurance companies would be responsible for MarkWest's costs in testing the entire stretch of pipeline for any 'integrity threatening conditions' — including normal wear and tear — and then repairing those conditions. A pipeline operator could run the least-safe, least-modern, and least well-run pipeline in the country, a pipeline in violation of every regulation in the books. Yet, under MarkWest's reading of the contract, if an accident exposed these problems to the OPS, the insurers would be on the hook for repairing and modernizing the entire pipeline. Though we do not at all suggest MarkWest ran its pipeline in this manner, the result it seeks would create strange incentives indeed, encouraging insureds to tighten their wallets and brush off their regular maintenance obligations. Construing an all-risk policy in the manner MarkWest suggests thus would misallocate the ordinary costs of doing business from the company to the insurer."
An insured had to reimburse insurers for the defense costs they spent under a reservation of rights before they denied coverage. Valley Forge Ins. V. Health Care Management (2010)
"Regardless whether the Colorado courts situate the rule in equity, contract, policy, rule of court, or someplace else — whatever doctrinal pigeonhole best fits — one thing is clear: Colorado permits insurers to recoup defense costs in the circumstances before us. We need not venture more than that to decide this case. Judicial restraint, after all, usually means answering only the questions we must, not those we can."
A coverage denial was permissible, even where the insured argued that a modifying clause in the wrong place in an Employment Practices Liability Policy changed the policy's meaning. Payless Shoesource, Inc. v. Travelers Companies, Inc. (2009) I think it's accurate to say that the judge had some fun with this one.
"But while misplaced modifiers are syntactical sins righteously condemned by English teachers everywhere, our job is not to critique the parties' grammar, but only, if possible, to adduce and enforce their contract's meaning. Here, a punctuation peccadillo notwithstanding, the meaning of the parties' contract is unambiguous."
An escape clause in a Markel liability policy covering a haunted house attraction was ambiguous. Western World Ins. Co. v. Markel American Ins. Co. (2012) He had some fun with this one, too.
"Haunted houses may be full of ghosts, goblins, and guillotines, but it's their more prosaic features that pose the real danger. Tyler Hodges found that out when an evening shift working the ticket booth ended with him plummeting down an elevator shaft. But as these things go, this case no longer involves Mr. Hodges. Years ago he recovered from his injuries, received a settlement, and moved on. This lingering specter of a lawsuit concerns only two insurance companies and who must foot the bill. And at the end of it all, we find, there is no escape for either of them. …
Viewed in isolation, the clause seems to suggest (that it lets Markel escape liability). It provides that '[t]his insurance shall not apply to any entity that is already an insured under any other insurance provided by any company....' This seems a clear statement (or as clear a statement as one is likely to find in a densely drafted commercial insurance contract) disclaiming liability in the very circumstances we face.
But like so much else about this case, things are not always as they first appear. …
If the immediate context casts a shadow over Markel's reading of the escape clause, surrounding context darkens it. …
Yet under Markel's interpretation of the contract, the escape clause absolves it of all liability when another insurer is lurking about — an interpretation rendering Section IV's 'Other Insurance' provision more apparitional than corporeal. And that has to be a serious strike against Markel's interpretation given contract law's abhorrence of words without meaning and other superfluities. …
Put differently, when a policy's escape hatch is less a clearly marked exit than it is a hidden trap door, the reasonable expectations of an insured who has read and become familiar with the policy language supplies the rule of decision. …
Markel's five page letter to Brewer explaining its decision to deny coverage rehearsed many other arguments — arguments it gave up the ghost on long ago — but the letter never once mentioned the escape clause."
Lexington had to cover an oil rig owner's liability for injuries to an employee. Lexington, which had sold two liability insurance policies to the rig owner, claimed that Wyoming's anti-indemnity statute prohibited oil and gas companies from transferring their liabilities to insurance companies. Lexington Insurance Co. v. Precision Drilling Co. (2016)
"Instead of supplying a case for textual ambiguity, Lexington asks us to override the statute's admittedly plain text simply on the basis of speculation about the Wyoming legislature's textually unexpressed intentions. But that's a guessing game both sides can almost always play — and certainly can here. Maybe someone somewhere in the legislative process inserted Wyoming's more generous language about insurance contracts with the hope of promoting sales to the insurance industry. Maybe the author of the Anti-Indemnity Statute didn't care to limit that particular industry's liabilities. Maybe someone along the way concluded that insurance companies are better suited than oil and gas companies to assess and price risk. Or maybe someone thought that oil and gas firms with insurance, even if purchased by a third party, will still internalize the risk of accident sufficiently to exercise appropriate care. Maybe, too, no one in the Wyoming legislature thought about any of this, and Lexington might prevail on them to do so now. The fact is the task of trying to discern the textually unexpressed intentions of (or really attribute such intentions to) a legislative body composed of scores or often hundreds of individuals is a notoriously doubtful business — and precisely never enough to trump the unambiguous text a majority of legislators actually adopted."
These are but five opinions Judge Gorsuch wrote over the past 10 years. It would be foolhardy to draw sweeping conclusions from them. He ruled in the insurers' favor in three of them, in the insured's favor in one, and forced a reluctant insurer to contribute in a fifth. I think I can say with certainty that he has a way with words. The late Justice Scalia had a certain style in his written opinions, and it appears that his potential successor has the same quality. I will watch his confirmation hearings with great interest.