Womble Carlyle attorney Gemma Saluta recently discussed the complex insurance issues surrounding the Colony Tire Corp. v. Fed. Ins. Co. case with North Carolina Lawyers Weekly.

Colony Tire Corp. experienced a nearly $500,000 loss when the owners of a company hired to manage some of Colony’s bookkeeping allegedly embezzled from the tire company. Colony had an employment practices liability insurance policy, but its insurance provider, Federal Insurance, denied the claim.

The question was whether or not the company owners, James and William Staz, should be considered employees of Employee-Services.net for purposes of the insurance policy.  U.S. District Court Judge Louise Flanagan (E.D.N.C.) ruled that the Stazes were employees of Employee-Services.net which, in turn, was acting on behalf of Colony. Thus, Colony was eligible to be reimbursed by the insurance company for its losses, Judge Flanagan decided.

“In the end, the court used reasoning that was almost in line with piercing-the-corporate-veil analysis to determine that ESN and the Stazes were one and the same,” Saluta told N.C. Lawyers Weekly. “It was a unique set of facts. But you might see the company rewrite its crime coverage provisions going forward.”

Gemma Saluta defends large insurance carriers in first-party bad faith litigation.  She has handled claims involve property, liability, automobile, directors’ and officers’, errors and omissions, and UM/UIM policies. She has defended cases involving dishonesty exception, insured contract provisions, water exclusions, alleged misconduct of third-party vendors, claims handling, wrongful procurement, and valuation of settlements.  Saluta practices in Womble Carlyle’s Winston-Salem, N.C. office.