In April 2005, Chad Cook bought a home in Anderson, Indiana, and moved in with his pregnant wife and their 1- and 3-year-old children. While Cook noticed spiders during his initial inspection, he assumed they were ordinary household spiders. By August, he began to suspect they were dangerous brown recluse spiders. Experts at Purdue University confirmed his suspicion in September and advised Cook to immediately move his family out of the home.
That month, Cook contacted his insurer, Allstate, requesting coverage — a request he continued to make by telephone and in person over the next eight months, to no avail.
In the meantime, Cook had the home treated by pest control professionals. In December 2005, he moved his family back into the house but, finding more spiders, moved out again the next week. Thereafter, Cook hired various professional exterminators to treat his home, but the brown recluse problem persisted.
On June 23, 2006, Allstate finally responded to Cook’s claim. In the letter, the company denied coverage based on Allstate’s exclusion for losses “consisting of or caused by … insects, rodents, birds, or domestic animals.”
Cook filed suit against Allstate seeking coverage under Allstate’s Deluxe Homeowners Policy for an infestation of brown recluse spiders at his home. Cook claimed that Allstate’s “insect” exclusion did not apply because spiders are not insects, but belong to a class of animals known as arachnids. He cited encyclopedias, a dictionary, and scientific articles to establish that spiders are not insects. For example, spiders have two main body parts; insects have three. Spiders have eight legs; insects have six.
In response, Allstate quoted one Merriam-Webster definition of insects as “any of numerous small invertebrate animals (such as spiders or centipedes) that are more or less obviously segmented.” Allstate also argued that an infestation of brown recluse spiders was not covered under the policy because there was no “sudden and accidental direct physical loss” to the property; in short, no event or disaster caused damage to the home.
How Would You Rule?
In its decision, the court cited Indiana case law establishing that if any ambiguity exists in a policy term, and particularly in an exclusion, the term must be interpreted in favor of the policyholder and ruled that spiders were not excluded and should be covered by Allstate.
The court further found that a physical condition that renders property unsuitable for its intended use constitutes a “direct physical loss” even when the building’s structural integrity remains. “Brown recluse spiders living, breeding, and hunting on and within surfaces of the home are a physical condition that renders the home unsuitable for its intended use. The undisputed evidence is that the brown recluse spiders make it unsafe for Cook and his very young children to live in the home.” The Court entered a partial summary judgment in favor of Cook, but Allstate settled the suit before trial.
—Cook v. Allstate 2007
Addendum: Across the nation, companies are filing insurance claims for business interruption losses due to government-mandated closure of nonessential businesses because of the COVID-19 pandemic. The insurance industry is denying these damage claims because businesses have not suffered any “direct physical loss,” such as from a fire or flood. Businesses are fighting back in court, arguing that the presence of a contaminant — whether a chemical agent or a contagion such as COVID-19 that can survive on doorknobs, faucets, phones, toilets, and other surfaces in buildings — constitutes direct physical loss or damage to the property, triggering business interruption coverage.
This article is featured in the July/August 2020 issue of The Saturday Evening Post. Subscribe to the magazine for more art, inspiring stories, fiction, humor, and features from our archives.
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In 1977, Nebraska businessman and avid golfer Dennis Circo developed an exclusive residential neighborhood dubbed Skyline Woods. Its centerpiece was an 18-hole golf course. As the developer, Circo sold lots, built homes, and transformed the golf course into a country club, adding a clubhouse, pool, and tennis courts. With all of its amenities, buyers paid a premium for home lots.
By 1990, Skyline Woods was well established, with 90 homes built around the country club, and Circo thought the time was right to sell the club to a golf course management company. Unfortunately, the golf pros ran into financial hazards. They ran out of “green,” and the only course of action was for Skyline Woods Country Club to file for bankruptcy in 2004. To pay off debt, the bankruptcy trustee auctioned off the property in 2005. A group of Skyline Woods homeowners tried to buy the club, but were outbid by Liberty Building Corporation, a development company owned by David Broekemeier.
Here’s where things got sticky. The federal bankruptcy court transferred property to Liberty, free and clear of all obligations. Shortly after, Broekemeier met with homeowners and club members to inform them he had no obligation to honor memberships, offering the option to play the course if they paid fees like anyone else.
If that was bad, what happened next was worse. In spring 2006, Broekemeier closed the club, posted “no trespassing” signs, and began cutting down trees to clear land where he planned to build a condominium complex and water park. Teed-off homeowners sued Broekemeier in Nebraska State Court, requesting a restraining order to prevent further damage to the land. They claimed implied covenants as homeowners in the golf community guaranteed the only use of land was as a golf course.
They reasoned Broekemeier might own the golf course free and clear but was free only to use it as a golf course. Homeowners added that no matter how you slice it, Broekemeier was well aware of their covenants, as he had also built a golf community adjacent to Skyline Woods. And, like Circo, he marketed the course’s proximity and views to sell lots. And there were rumors that he was going to redirect the golf course toward his neighborhood, leaving Skyline Woods homeowners with views of condos and a water park.
In response, Broekemeier came out swinging with a motion to dismiss the case. His first argument was that the state court had no jurisdiction to interfere with the federal bankruptcy order. Second, even if the state court did have skin in the game, the covenants were unenforceable because they were never recorded. Finally, he said Nebraska law protects bona fide purchasers from restrictive covenants when there is no notice.
How Would You Rule?
District Court Decision — 2008:
Round one was won by the homeowners. A Nebraska court found that they did indeed have implied restrictive covenants; Broekemeier was aware of the covenants; and finally, the bankruptcy sale of the property did not discharge the covenants because they belonged to the homeowners, not the golf course. The court ordered Broekemeier to either reopen the golf course or maintain it in a fashion that would not devalue the property of homeowners. Broekemeier chose the latter.
Round two: After six years of legal turf wars, the golf course never reopened, eventually becoming an eyesore due to lack of maintenance.
Aftermath — 2012: Game over. The land was sold. At that time, the new owner planned to spend $7 million to build a premier golf course.
This reader favorite originally appeared in the July/August 2012 issue of The Saturday Evening Post and was republished in the May/June 2020 issue. Subscribe to the magazine for more art, inspiring stories, fiction, humor, and features from our archives.
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On August 20, 2012, San Francisco attorney Dawn Hassell signed an agreement to represent Ava Bird in a personal injury claim. Less than a month later, Hassell withdrew her representation because Bird was unresponsive to communications.
On January 28, 2013, Bird posted a one-star Yelp review about the attorney, writing that her case had “fallen through the floor” because Hassell had reneged on their agreement, adding that Hassell’s law firm didn’t “bother to communicate with me, the client, or the insurance company AT ALL” before withdrawing from the case on September 13, 2012.
Hassell sent a message to Bird, requesting she remove “factual inaccuracies and defamatory remarks” from Yelp. Bird refused and shortly after posted another negative review about the attorney’s firm using a fake name.
In response, Hassell posted a reply, stating that she “welcomed constructive criticism from clients” but took issue with Bird’s “malicious and untruthful review,” adding that during the 25 days she represented Bird, Hassell had communicated with her at least 15 times (12 in writing) and spoke to her insurance provider at least twice before withdrawing from the case.
In April 2013, Hassell sued Bird for defamation and intentional infliction of emotional distress. Bird never answered the complaint, but did acknowledge the lawsuit on Yelp.
In January 2014, the trial court held a hearing on a motion for a default judgment against Bird. The judge considered documentary evidence from Hassell and granted a default judgment against Bird for defamation, ordering her to remove the defamatory posts and awarding Hassell $557,918.75 in damages. In addition, the court ordered Yelp to remove Bird’s defamatory posts within five days.
Neither Bird nor Yelp complied with the court order, and to add insult to injury, Yelp highlighted Bird’s reviews. Hassell accused Yelp of “aiding and abetting Bird’s violation of the injunction.”
In May 2014, Yelp appealed to the Court of Appeals of California to overturn the trial court’s entire default judgment against Bird, including the order for Yelp to remove her posts. Yelp argued that Bird had not received proper service of the complaint; that Yelp was not a named party in the lawsuit; and that it was immune from any liability under the Communications Decency Act of 1996 (CDA), which gives websites and social media companies broad immunity from civil cases over the content users publish on their platforms.
How Would You Rule?
The Court of Appeals upheld the default judgment against Bird and ruled that Yelp was not immune from liability because removing the reviews posed no liability on Yelp. Bird was the only one liable for damages.
Yelp appealed to the California Supreme Court, which upheld the trial court’s default judgment against Bird. But in a 4–3 split, the court overturned the removal order against Yelp, finding that forcing a site to remove user-generated posts “can impose substantial burdens” on the online company. In the majority opinion, the chief justice wrote: “Even if it would be mechanically simple to implement such an order, compliance still could interfere with and undermine the viability of an online platform.”
A dissenting judge disagreed, warning, “The internet has the potential not only to enlighten but to spread lies, amplifying defamatory communications to an extent unmatched in our history.”
Bird’s defamatory reviews remain posted on Yelp. Bird has refused to comply with the injunction, and Yelp claims it is under no legal obligation to comply.
This article is featured in the March/April 2020 issue of The Saturday Evening Post. Subscribe to the magazine for more art, inspiring stories, fiction, humor, and features from our archives.
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In April 2004, Frederick Ormsby and Amber Williams started a romantic relationship. Within a month, Frederick moved into Amber’s house, which she had received through her divorce settlement, and in July they became engaged. After moving in, Frederick began making mortgage and property tax payments, soon paying off the remaining mortgage balance of approximately $310,000. In return, Amber gave Frederick title to the house by signing a quitclaim deed that was recorded on December 15, 2004.
The romance began to cool in January when Frederick’s anticipated divorce did not occur. The couple called off marriage plans but continued to live together in the house until March, when, after a disagreement, Amber moved out. On March 24, 2005, the two signed an agreement to immediately sell the house and allocate the net proceeds, with the first $324,000 paid to Frederick to reimburse him for what he had already paid, and anything over that amount would go to Amber. Both parties agreed to share costs equally to maintain the house, and Amber assumed responsibility for real estate taxes.
As winter turned into spring — and before the house could sell — the romance heated up again; the couple tried to reconcile and attended couples counseling.
However, Amber refused to move back into the house unless Frederick granted her an undivided half-interest in it. On June 2, 2005, they signed a second document ostensibly making them equal partners in the house, entitled to equal shares in the event of a split. The new agreement also required Frederick to pay all expenses, taxes, and insurance costs.
What could possibly go wrong?
By April 2007, they were living in separate areas of the house, and although they tried counseling again, Amber ended the relationship in September 2007. The two continued living separately under the same roof until Frederick left in April 2008.
One month later, Amber filed suit against Frederick, seeking a court order forcing him to comply with the June 2005 agreement that vested her a half-interest in the house, or alternatively damages stemming from breach of that contract.
Frederick countersued, claiming he did not owe Amber any damages because both the March 2005 and June 2005 documents were invalid contracts because Amber gave no “consideration” — a legal term referring to the benefit that each party receives or expects to receive when entering into a contract.
Amber argued she did give Frederick valuable consideration, stating “I didn’t pay him anything, no. I thought what was of value was the fact that we were sharing all sorts of things. He had my love. I shared my assets with him, too. We were living together as a couple.”
How Would You Rule?
The trial court didn’t buy Amber’s argument, ruling that the June 2005 agreement which gave Amber half-interest in the home was invalid. She appealed to the Ohio Ninth District Court of Appeals, which reversed the trial court’s judgment, concluding that the agreement was valid since “romantic relationships typically involve some sacrifice by each partner.”
The story didn’t end there, however. The Supreme Court of Ohio reversed the appeals court judgment and ruled in Frederick’s favor. The court found that resuming a romantic relationship did not constitute valuable consideration — both parties must agree to offer something of value.
Bottom line for unmarried couples: To protect your relationship — and your assets — decide how you’ll own the property and check with a lawyer.
– Williams v. Ormsby, 2009
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This article is featured in the January/February 2020 issue of The Saturday Evening Post. Subscribe to the magazine for more art, inspiring stories, fiction, humor and features from our archives.