Walmart sues insurers over unpaid settlement in Tracy Morgan crash

By Greg Grisolano, Land Line associate editor | Thursday, October 08, 2015

Walmart has filed a civil suit against six of its insurance providers, claiming the companies failed to pay their portions of a series of settlements to Tracy Morgan and others who were injured in 2014 crash with one of the company’s tractor-trailers.

The Arkansas-based retail giant is suing for breach of contract, failure to settle claim within policy limits, and bad faith out of what the civil complaint describes as “Defendants’ wrongful failure to provide insurance coverage and contribute to a portion of the settlements of covered actions under commercial excess liability policies sold to Wal-Mart.”

The defendants in the suit are: Liberty Insurance Underwriters Inc.; The Ohio Casualty Insurance Co.; QBE Insurance Corp.; St. Paul Fire & Marine Insurance Co.; The Travelers Companies Inc.; and XL Insurance America Inc. A seventh insurance company, Endurance, is named in the complaint, but is not party to the suit due to an arbitration clause in the policy.

At issue are claims arising from the June 7, 2014 fatality crash involving Walmart driver Kevin Roper and a limousine van carrying actor and comedian Tracy Morgan and six others. One passenger, comedian James “Jimmy Mack” McNair, died as a result of the collision and all the other passengers in the limousine sustained injuries.

Walmart announced a settlement with Morgan and other limo passengers on May 27, and with McNair’s family in January. Terms of the settlements have been kept confidential.

The complaint states that the crash “gave rise to numerous tort claims against Walmart” filed on behalf of McNair’s family for wrongful death, Morgan and the other surviving passengers for personal injuries, the wife of one passenger for loss of consortium, as well as personal injury claims by passengers in four other vehicles involved in the crash, and property damage claims made by the vehicle owners and their insurers.

Walmart settled all claims for confidential amounts. However, the suit claims that the named insurers have “in bad faith refused to consent to these settlements and have refused to pay their portions of the settlements under the insurance policies that they sold.”

According to the complaint, Walmart purchased a commercial umbrella liability policy from ACE Property and Casualty Insurance Co., which included a self-insured retention amount, meaning that Walmart agreed to pay an agreed amount out of its own pocket for each occurrence before ACE was obligated to pay any amount on claims.

Along with the umbrella policy, Walmart also purchased excess liability insurance policies from the defendants or their subsidiaries, to be triggered based on the amount of Walmart’s liability. The excess policies obligated the defendants to either pay on the company’s behalf or reimburse Walmart for a portion of the amounts paid as a result of injuries.

According to Walmart’s claims, the defendants acted in bad faith by making “harassing and pretextual demands for more and more information” as part of what they allege was an intentional scheme to avoid paying the claims.

According to an investigation by the National Transportation Safety Board, the failure of Morgan and other passengers in the limo to wear seat belts contributed to the severity of their injuries when the vehicle was rear-ended by Roper’s tractor-trailer. None of the passengers in the back of the 10-seat limo, nor the driver, were wearing seat belts.

The NTSB report also stated that Roper had been awake for at least 28 hours prior to the crash, the fatigue from which resulted in his delayed braking to avoid traffic that was slowing and stopping in an active work zone. Immediately before arriving in Delaware for work, Roper had driven more than 800 miles from his home in Georgia to the distribution center, where he reported for duty without rest, the NTSB investigators stated.

Last month, Roper’s attorney filed a motion in New Jersey court asking for criminal charges against his client to be dropped because he believes the level of media coverage has made a fair trial impossible. He faces one count of death by auto and four counts of assault by auto in connection with the crash.

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