Settlement Bars Lightning-Struck Worker’s Suit, 9th Circ. Says

Law360 (July 21, 2022, 2:34 PM EDT) — A Hawaii man who was struck by lightning while on the job can’t sue a Liberty Mutual unit over the insurer’s alleged bad faith handling of his bid for workers’ compensation, the Ninth Circuit ruled, agreeing with a lower court that a settlement clearly released such claims.

in an unpublished review Wednesday, a three-judge appellate panel said a 2015 settlement agreement between Lonnie E. Larson and Liberty Mutual Fire Insurance Co. contained a “broad release” that unambiguously precludes Larson from bringing bad faith and other tort claims against the insurer. In 2019, Larson filed the latest of many suits against the insurer related to his yearslong battle for workers’ compensation stemming from a 2002 incident where he was struck by lightning.

“The 2015 agreement’s plain language resolves all claims relating to the handling of Larson’s workers’ compensation claim, excluding only the workers’ compensation claim itself,” the panel said.

The appellate judges said since all Larson’s claims in the instant action, for bad faith and intentional infliction of emotional distress, relate to Liberty Mutual’s “handling” of his workers’ comp claim, they’re barred by the sides’ agreement.

The panel also agreed with a Hawaii federal judge’s finding that Larson’s claims are time-barred by the state’s two-year statute of limitations on tort claims, because the settlement was signed in March 2015 and he didn’t bring the instant action until four years later.

According to case filings, Larson’s dispute with Liberty Mutual began in 2002, when he was struck by lightning while performing work for a general contractor. Larson, who was employed by Altres Staffing Inc., filed for workers comp under the temporary staffing agency’s policy with Liberty Mutual.

After Larson filed five lawsuits against Liberty Mutual between 2008 and 2012 alleging the insurer wrongly denied his claim for workers’ comp coverage and was generally acting in bad faith, the sides reached a release, settlement and indemnification agreement in May 2015.

In return for $5,000, Larson agreed to release all claims he had or could have against Liberty Mutual “arising out of [its] handling of [his] claim for workers’ compensations benefits” under the Other policy, according to language from the agreement included in court filings.

In March 2017, Larson settled the underlying workers’ comp claim with Liberty Mutual and Altres, according to Wednesday’s appellate opinion.

Larson filed the instant action against Liberty Mutual in March 2019, again asserting bad faith and intentional infliction of emotional distress claims against the insurer for allegedly interfering with his ability to receive workers’ compensation coverage and payment of his medical bills.

In July 2020, US District Judge Jill A. Otake granted Liberty Mutual’s motion for summary judgment, finding that the 2015 agreement unambiguously barred all current and future Larsen claims could bring against the insurer related to its handling of his workers’ comp claim. Only claims related to the workers’ comp claim itself were excluded from the release, the district court judge said.

On Wednesday, the Ninth Circuit panel agreed, refusing to consider new arguments that it said Larson raised “for the first time on appeal.”

Larson alleged that Liberty Mutual’s attorneys defrauded him into accepting a settlement that he didn’t understand by using confusing language, according to the panel. He also contended that Hawaii public policy counsels against settlements that release future claims, the appellate opinion said.

“Unless there are exceptional circumstances, this court does not consider arguments raised for the first time on appeal,” the panel said. “Here, there are no such circumstances.”

Larson’s argument that the statute of limitations shouldn’t have started in 2015 but instead should’ve been tolled until March 2017, when Liberty ultimately paid his workers’ comp claim, is without merit, the panel said, citing the Hawaii Supreme Court’s 1981 ruling in Hun v. Center Properties.

Nor can Larson win on his argument that Hawaii’s six-year statute of limitations for breach of contract should apply instead of the state’s two-year rule for tort claims.

“Because Larson did not make this argument before the district court or in his opening brief, this argument was forfeited,” the panel said.

A spokesperson for Liberty Mutual declined to comment on the ruling.

Representatives for Larson didn’t immediately respond to requests for comment Thursday.

US Circuit Judges Morgan Christen and Daniel A. Bress and Chief US District Judge Barbara MG Lynn, sitting by designation, sat on the Ninth Circuit panel.

Larson is represented by Richard L. Antognini of the Law Office of Richard L. Antognini.

Liberty Mutual is represented by Steven L. Goto and Jeffrey HK Sia of Chong Nishimoto Sia Nakamura & Goya LLLP.

The case is Lonnie Larson v. Liberty Mutual Fire Insurance Co. et al., case number 20-16496, in the US Court of Appeals for the Ninth Circuit.

–Editing by Neil Cohen.

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