Mealey's California Insurance : Mealey's : Legal News & Analysis

Mealey's California Insurance

July 13, 2023
Insureds Were Not Withheld Policy Benefits; Bad Faith Claim Fails, Judge Says

LOS ANGELES — A second amended complaint filed by insureds against their homeowners insurers must be dismissed because the insureds’ bad faith claim, the only claim alleged against the insurers, cannot proceed as the insureds were not withheld benefits and the insurers did not cancel the policy despite an initial notice of cancellation.
July 12, 2023
Split Panel Affirms Dismissal Of Insured’s Suit For Unfair Claims Handling

SAN FRANCISCO — A split California appellate panel on July 11 affirmed the dismissal as time-barred of an insured’s putative class action accusing its insurer of violating California’s unfair competition law (UCL) by improperly denying her property insurance claim for replacement of a decayed staircase without investigation, although a dissenting judge said the insured’s UCL claim was not time-barred.
July 12, 2023
Insurers Seek Dismissal Of Suit For Payment Of Gym Fees During COVID-19 Lockdowns

LOS ANGELES — Two California health insurers moved to dismiss a putative class complaint brought by a gym member alleging breach of the implied duty of good faith and fair dealing, negligent representation and violations of California law in continuing to charge fees for gym memberships during COVID-19 lockdowns when the gyms could not be accessed, contending that there was no contractual relationship between the insurers and the gym members regarding their memberships.
July 12, 2023
Panel: Insured Faces ‘Solid Wall Of Precedent’ In Coronavirus Coverage Appeal

SAN FRANCISCO — A California appellate court affirmed a ruling in favor of a commercial property insurer in an Orange County restaurant owner insured’s breach of contract lawsuit arising from the coronavirus pandemic, finding that the insured “faces a solid ‘wall of precedent’ that holds that direct physical loss or damage requires physical alteration of the covered property.”
July 11, 2023
‘No Way To Know’ If Damage To Embryos Occurred Is Fatal To Insureds’ Coverage Claim

SAN FRANCISCO —A California appeals court panel held that the “mere possibility” that insureds’ embryos suffered physical damage is insufficient to create a triable issue of fact to trigger homeowners insurance coverage, affirming a summary judgment ruling in favor of the insurer in a coverage dispute arising from embryos that were deemed “no longer viable” after a cryogenic tank’s temperature failure.
July 06, 2023
Federal Judge Denies Interpleader In Coverage Dispute Over D&O Policy

SAN JOSE, Calif. — A California federal judge denied an insurer’s motion to amend a complaint to add an interpleader in its suit seeking a declaration that a directors and officers (D&O) insurance policy is rescinded because of the insureds’ material misrepresentations or a declaration that it has no duty to indemnify or defend in an underlying action, finding that allowing an interpleader “would be both futile and prejudicial.”
June 29, 2023
California Federal Judge Says Stay Of Water Damage Coverage Suit Not Warranted

RIVERSIDE, Calif. — A California federal judge denied a motion to stay filed by insureds in a water damage coverage suit alleging claims for breach of contract and bad faith after determining that the insureds failed to show that their insurer’s notice of removal to federal court was fraudulent.
June 29, 2023
Panel Rejects Insurer’s Appeal In Subrogation Suit Arising From CIPA Settlement

SAN FRANCISCO — A California appeals panel on June 28 affirmed a lower court’s grant of summary judgment in favor of defendants in an insurer’s subrogation lawsuit seeking to recover defense and settlement costs that it paid in an underlying class action alleging its insured violated the California Invasion of Privacy Act (CIPA), concluding that the defendants had no indemnification obligation because the insured failed to give them control over the defense and settlement of the class action.
June 27, 2023
Insureds Appeal California Court’s Ruling In Insurer’s Favor In COVID-19 Dispute

LOS ANGELES — Insureds filed a notice appealing a Los Angeles County Superior Court’s judgment on a jury’s special verdict in favor of a commercial property insurer in a breach of contract coverage lawsuit arising from the coronavirus pandemic, challenging the jury’s finding that SARS-CoV-2 did not cause any direct physical loss or damage to the insureds’ hotel on or before June 1, 2020.
June 23, 2023
Panel: Restaurants Allege Communicable Disease Event, Direct Physical Loss, Damage

LOS ANGELES — A California appeals panel held June 22 that restaurant insureds sufficiently asserted the existence of a covered communicable disease event and direct physical loss or damage under their property insurance policy, reversing a lower court’s judgment against the insureds in their breach of contract and bad faith coverage lawsuit arising from the COVID-19 pandemic.
June 21, 2023
Federal Judge Dismisses FCA Suit Against PBM, Cites Public-Disclosure Bar

SAN DIEGO — A California federal judge dismissed a relator’s suit asserting that a pharmacy benefit manager (PBM) violated the False Claims Act (FCA) by enrolling beneficiaries of a federal government insurer in automatic delivery, resulting in beneficiaries receiving more drugs than medically necessary, finding that dismissal is warranted under the public-disclosure bar because a newspaper article and a U.S. Department of Defense rule “disclosed the allegedly fraudulent transactions at issue.”
June 20, 2023
Judge Rules On Dismissal Motions In FCA Suit Alleging Fraudulent ACA Upcoding

SAN FRANCISCO — A federal judge in California denied an insurer’s motion to dismiss the federal government’s operative first amended complaint in intervention alleging federal False Claims Act (FCA) violations related to claims under the Patient Protection and Affordable Care Act (ACA) by upcoding, causing the government to overpay, finding that the government “sufficiently pled a factual falsity theory.”
June 20, 2023
California Judge Rules In Insurer’s Favor In Suit Arising From Roof Damage

LOS ANGELES — A California judge granted an insurer’s motion for summary judgment in a condominium homeowners association insured’s breach of contract and bad faith lawsuit arising from alleged storm damage to the roof of a Studio City building that housed 31 luxury condominiums, finding that the insurer has met its burden of establishing that the policy’s water damage and faulty workmanship exclusions applied to bar coverage.
June 19, 2023
Insurer Owes No Coverage For 2 Suits Against Contractor, 9th Circuit Affirms

SEATTLE — The Ninth Circuit U.S. Court of Appeals on June 16 affirmed a lower federal court’s summary judgment ruling in favor of a commercial general liability insurer in a contractor insured’s lawsuit alleging breach of contract and bad faith, finding that coverage was not triggered because the two underlying lawsuits brought against the insured seek liability arising from contractual obligations and debts and not from property damage.
June 16, 2023
Settlement Of Up To $117.7M To Proceed In Life Insurance Cost Increase Suits

PHILADELPHIA — A Pennsylvania federal judge has granted preliminary approval of a class settlement including a fund of up to $117.75 million and a five-year cost of insurance (COI) rate increase freeze that would resolve two similar cases regarding universal life insurance policies.
June 15, 2023
Panel: Insured’s Late Notice Of Theft/Vandalism Claim Actually Prejudiced Insurer

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals held June 14 that an insured’s late notice of its claim seeking coverage for its losses stemming from theft and vandalism following a tenant vacancy actually prejudiced its insurer as a matter of law, affirming a lower court’s grant of the insurer’s motion for partial summary judgment in the insured’s breach of contract and bad faith lawsuit.
June 14, 2023
Vizio Tells 9th Circuit Its 4th Amended Complaint Is ‘More Than Sufficient’

SAN FRANCISCO — Responding to an insurer’s contention that its appeal “merely regurgitates the same failed arguments,” Vizio Inc. tells the Ninth Circuit U.S. Court of Appeals that the allegations in its fourth amended complaint are “more than sufficient” to permit it to proceed past the pleading stage in its lawsuit seeking coverage for an underlying $17 million settlement and defense costs arising from class claims alleging unauthorized collections of consumers’ television viewing data.
June 09, 2023
9th Circuit Partly Reverses Dismissal Of Disability Claims Against Insurers

SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel reversed in part and affirmed in part a California federal judge’s grant of summary judgment against an insured who accused two insurers of breach of contract and violation of California’s unfair competition law (UCL) for refusing to find her totally disabled since 1989 when she developed carpal tunnel syndrome and left her primary career, based on a claim she filed in 2020 after leaving a secondary job due to COVID-19-related health concerns.
June 09, 2023
Federal Judge: CGL Insurer Owes Defense For Tenants’ Suit Against Mutual Insured

OAKLAND, Calif. — A federal judge in California granted an insurer’s motion for summary judgment in its declaratory judgment lawsuit seeking defense from a commercial general liability insurer for an underlying lawsuit brought against their mutual insured, finding that there is no genuine dispute that the underlying lawsuit might fall within coverage under the CGL policy.
June 09, 2023
Panel Affirms Ruling In Insurers’ Favor In Aiding And Abetting Malpractice Suit

LOS ANGELES — A California appeals panel affirmed a lower court’s ruling in favor of insurers in a lawsuit alleging that they conspired with attorneys to force insureds to accept a $750,000 settlement of an underlying lawsuit arising from a failed partnership, finding that the insureds failed to plead any facts to support their contention that the insurers “had actual knowledge of the tortious conduct by the attorney defendants.”
June 08, 2023
Calif. Federal Judge Grants Motion To Compel Arbitration, Stays Bad Faith Claim

SAN FRANCISCO — A California federal judge granted an auto insurer’s motion to compel arbitration of its insured’s breach of contract claim because arbitration is required under California law and further stayed litigation of the insured’s bad faith claim because the result of the arbitration will impact the result of the bad faith claim.
June 06, 2023
California Judge Enters Judgment On Special Jury Verdict In Insurer’s Favor

LOS ANGELES — A Los Angeles County Superior Court judge entered judgment on a jury’s special verdict in favor of a commercial property insurer in the insureds’ breach of contract coverage lawsuit arising from the coronavirus pandemic after the jury found last month that SARS-CoV-2 did not cause any direct physical loss or damage to the insureds’ hotel on or before June 1, 2020.
June 06, 2023
Dismissal Granted In Row Over Medicare Payments Suspended Due To Alleged Fraud

SAN DIEGO — A California federal judge dismissed without prejudice a suit filed against employees of a Medicare contractor accused of violations of the California Insurance Frauds Prevention Act and California unfair competition law after the employees suspended Medicare payments to a pain management clinic for allegations of fraud, finding that dismissal is proper because the clinic failed to exhaust its administrative remedies pursuant to the Medicare Act.
June 06, 2023
Breach Of Fiduciary Duty Claim Against Disability Insurer Not Foreclosed

PASADENA, Calif. — A district court erred in entering judgment in favor of a disability insurer on a breach of fiduciary duty claim because the insurer was acting in a fiduciary function when it miscalculated the claimant’s long-term disability benefits, resulting in a more than $56,000 overpayment to the claimant, the Ninth Circuit U.S. Court of Appeals said in reversing the district court’s judgment.
May 31, 2023
California Panel: Insured’s Direct Physical Loss Claims Are ‘Mere Legal Conclusions’

SAN DIEGO — A California appeals panel on May 30 affirmed a lower court’s grant of a commercial property insurer’s motion for judgment on the pleadings in a coverage dispute arising from the coronavirus pandemic, finding that it is clear that the causes of the insured’s business losses are not attributable to the presence of the coronavirus on its premises but are the purported result of “certain government orders, community infection, and assumption that the virus is ubiquitous.”