Lerner v. General Ins. Co. of America, 770237

CourtSupreme Court of Virginia
Citation219 Va. 101,245 S.E.2d 249
Docket NumberNo. 770237,770237
PartiesTheodore N. LERNER et al., partners, doing business as Tysons Corner Regional Shopping Center v. GENERAL INSURANCE COMPANY OF AMERICA, trading as Safeco Insurance. Record
Decision Date09 June 1978

William E. Donnelly, III, Fairfax (Gerald R. Walsh; McCandlish, Lillard, Bauknight, Church & Best, Fairfax, on brief), for plaintiffs in error.

Adelard L. Brault, Fairfax (Brault, Lewis, Geschickter & Palmer, Fairfax, on brief), for defendant in error.

Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.

HARMAN, Justice.

This case presents the question of an insurance company's responsibility to reimburse its insured for reasonable attorney fees and other costs expended by the insured in successfully defending a claim for punitive damages.

The case was heard and decided by the trial court upon stipulations of fact and agreed exhibits. Theodore N. Lerner, et al., partners, trading as Tysons Corner Regional Shopping Center (Tysons), are the owners and operators of a large commercial development of retail stores and other businesses in Fairfax County. General Insurance Company of America, trading as Safeco Insurance (Safeco), insured Tysons under a "blanket liability" insurance policy wherein Safeco agreed to pay

". . . on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence. (Safeco) shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient. . . ."

This policy was in full force and effect on August 8, 1973, when Patricia Cassidy and her young daughter, Michelle (the Cassidys), were alleged to have suffered damages. By their stipulations, the parties agreed that the event alleged by the Cassidys constituted an "occurrence" as defined in the policy and that the policy contained "no exclusions from coverage for punitive damages or claims for punitive damages."

The Cassidys filed suit against Tysons on April 30, 1974, seeking to recover compensatory damages in the amount of $50,000 and punitive damages in the amount of $500,000 on account of alleged bodily injury suffered by Michelle Cassidy on August 8, 1973. When notified of this suit, Safeco advised Tysons that it would defend only against the claim for compensatory damages and that Tysons should secure separate legal representation for the punitive damage claim. Safeco further advised Tysons that Safeco "would decline to pay any award for punitive damages."

The stipulations further tell us "Tysons was obliged to secure separate legal representation to raise all matters of defense to the claims for punitive damages." At the conclusion of the Cassidys' evidence at trial of their action, the court held, as a matter of law, that the evidence was insufficient to support the claim for punitive damages and dismissed that claim. Tysons' counsel fees and other expenses in defending the punitive damages claim reasonably amounted to $4111.00.

On the basis of these facts, the trial court held that Safeco had no duty to defend Tysons against the claim for punitive damages because public policy prohibits insurance against indemnity for punitive damages.

We reverse. In doing so, however, we do not reach the public policy question * since decision on that issue, a matter best left to the General Assembly, is unnecessary to our...

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46 cases
  • Builders Mut. Ins. Co. v. Parallel Design & Dev. Llc
    • United States
    • U.S. District Court — Eastern District of Virginia
    • May 13, 2011
    ...is obliged to defend its insured.” Parker v. Hartford Fire Ins. Co., 222 Va. 33, 35, 278 S.E.2d 803 (1981) (quoting Lerner v. Safeco, 219 Va. 101, 104, 245 S.E.2d 249 (1978)) (emphasis added). Therefore, even if the insurance company shows that some of the claims are not covered, if the Cou......
  • Lott v. Scottsdale Ins. Co.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • October 27, 2011
    ...coverage. See VEPCO v. Northbrook Property & Cas. Ins., 252 Va. 265, 268, 475 S.E.2d 264, 265 (1996) ( quoting Lerner v. Safeco, 219 Va. 101, 104, 245 S.E.2d 249, 251 (1978)). This rule, often referred to as the Eight Corners Rule, requires a court to compare the four corners of the insuran......
  • Firemen's Ins. Co. v. Kline & Son Cement Repair
    • United States
    • U.S. District Court — Eastern District of Virginia
    • February 13, 2007
    ...& Power Co. v. Northbrook Prop. & Cas. Ins. Co., 252 Va. 265, 475 S.E.2d 264, 265 (1996) (emphasis added) (quoting Lerner v. Safeco, 219 Va. 101, 245 S.E.2d 249, 251 (1978)). Indeed, "such a provision [to defend] places no obligation on the insurer to defend an action against an insured whe......
  • Liberty Univ., Inc. v. Citizens Ins. Co. of Am.
    • United States
    • U.S. District Court — Western District of Virginia
    • April 16, 2014
    ...by the policy.” See id.; VEPCO v. Northbrook Property & Cas. Ins., 252 Va. 265, 475 S.E.2d 264, 265 (1996) (quoting Lerner v. Safeco, 219 Va. 101, 245 S.E.2d 249, 251 (1978) ). A burden-shifting framework governs duty to defend disputes. First, the insured must establish a prima facie case ......
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1 books & journal articles
  • Punitive damages: when, where and how they are covered.
    • United States
    • Defense Counsel Journal Vol. 62 No. 4, October 1995
    • October 1, 1995
    ...Automobile Association v. Webb, 369 S.E.2d 196 (Va. 1988) (automobile policy covered punitive damages). Lerner v. General Insurance Co., 245 S.E.2d 249 (Va. 1978) (insurer had duty to defend punitive damages claims ancillary to compensatory damages Lipscombe v. Security Insurance Co., 189 S......

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