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Mealey's California Insurance

  • October 19, 2018

    No Duty To Indemnify Construction Defects Case, Insurer Contends

    LOS ANGELES — In an Oct. 11 complaint filed in a California federal court, an insurer argues that it has no duty to defend or indemnify a contractor and subcontractor because a total pollution exclusion and a professional liability exclusion bar coverage for an underlying construction defects case (Houston Casualty Co. v. Rosebud Ventures LLC, et al., No. 18-8777, C.D. Calif.).

  • October 18, 2018

    Opening Briefs Offered In Suit Over Reimbursement Demands Made To CIGA

    SAN FRANCISCO — In appeals regarding the vacating and setting aside of three reimbursement demands made to the California Insurance Guarantee Association (CIGA), the state insurance guaranty association and U.S. Secretary of Health and Human Services Alex Azar II recently filed their opening briefs with the Ninth Circuit U.S. Court of Appeals (California Insurance Guarantee Association v. Alex Azar II, et al., Nos. 17-56526 & 17-56528, 9th Cir.).

  • October 18, 2018

    9th Circuit Affirms No CGL Coverage For Suit Against Security Company, Cruise Line

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on Oct. 17 affirmed a lower federal court’s finding that a commercial general liability insurer has no duty to defend its security company insured and a cruise line against an underlying lawsuit brought by a security guard who alleged that she was injured while securing deck furniture on the ship (American Guard Services, Inc. v. First Mercury Insurance Company, No. 17-55704, 9th Cir., 2018 U.S. App. LEXIS 29186).

  • October 17, 2018

    Panel Reverses Ruling In Favor Of Life Insurer, Says Carrier Was Not Prejudiced

    LOS ANGELES — The beneficiaries of a life insurance policy are entitled to benefits because the life insurance policy cannot be considered to have lapsed as the insurer failed to show that it was prejudiced by the insured’s failure to timely notify the insurer of a disability that would have entitled her to a deduction waiver under the policy, the Second District California Court of Appeal said Oct. 16 (Marty Lat v. Farmers New World Life Insurance Co., No. B282008, Calif. App., 2nd Dist., Div. 1, 2018 Cal. App. LEXIS 932).

  • October 15, 2018

    Jury Must Decide If Insurer Handled Yahoo Email Scanning Suits In Bad Faith

    SAN JOSE, Calif. — A California federal judge on Oct. 12 held that issues of fact preclude summary judgment as to whether a commercial general liability insurer acted in bad faith in its claims handling of underlying class actions filed against Yahoo! Inc. over its practice of scanning the content of emails (Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 17-00489, N.D. Calif., 2018 U.S. Dist. LEXIS 176115).

  • October 8, 2018

    Bad Faith Claim Against Insurer’s Parent Company Cannot Survive, Judge Says

    SAN FRANCISCO — An insured’s bad faith claim cannot be sustained against the parent company of a homeowners insurer because the insured failed to prove that the parent company acted in bad faith in the handling of her claim for water damages, a California federal judge said Oct. 3 (Tam Vu v. Liberty Mutual Insurance Co., et al., No. 18-3594, N.D. Calif., 2018 U.S. Dist. LEXIS 171347).

  • September 27, 2018

    Insurer Failed To Consider If Claimant Could Perform Job With ‘Reasonable Continuity’

    OAKLAND, Calif. — A disability insurer wrongfully denied long-term disability (LTD) benefits to a plan participant suffering from liver cancer because the insurer failed to consider whether the participant could continue to perform the duties of his job with “reasonable continuity,” a California federal judge said Sept. 19 (Shelley Lyttle v. United of Omaha Life Insurance Co., No. 17-1361, N.D. Calif., 2018 U.S. Dist. LEXIS 160300).

  • September 24, 2018

    No Valid Exception To No-Voluntary Payments Provision Applies To Coverage Dispute

    PASADENA, Calif.— The Ninth Circuit U.S. Court of Appeals on Sept. 20 affirmed a lower court’s ruling that insureds breached an insurance policy’s  “no-voluntary payments” provision by executing an underlying settlement with a former employee without the insurer’s knowledge or consent and that no exception to the provision applies (AMCO Insurance Company v. Jennifer Morfe, No. 17-55383 9th Cir., 2018 U.S. App. LEXIS 26923).

  • September 24, 2018

    Panel Reverses Order Enjoining Insurance Commissioner From Enforcing 3 Regulations

    SANTA ANA, Calif. — A California appeals panel on Sept. 20 reversed a lower court’s order that imposed a preliminary injunction that prohibited the Insurance commissioner’s enforcement of California Code of Regulations, Titles 2695.1(a), 2695.2(l) and 2695.2(y), remanding for the lower court to also reverse its order granting the insurer’s motion for judgment on the pleadings as to its claim for declaratory relief (PacifiCare Life And Health Insurance Company v. Dave Jones, as Insurance Commissioner, etc., No. G053914, Calif. App., 4th Dist., Div. 3, 2018 Cal. App. LEXIS 836).

  • September 21, 2018

    Suit Alleging Auto Insurer Undervalued Total Loss Vehicles Will Move Forward

    SAN FRANCISCO — An insureds’ claims for breach of contract, bad faith, misrepresentation and fraud against an auto insurer accused of undervaluing vehicles that were rendered a total loss will move forward against the insurer because the insured offered sufficient facts to support the claims, a California federal judge said Sept. 19 (Bobby Jones, et al. v. Progressive Casualty Insurance Co., et al., No. 16-6941, N.D. Calif., 2018 U.S. Dist. LEXIS 160313).

  • September 21, 2018

    Panel Stands By Ruling In Dispute Over Legal Fees Arising From Sexual Abuse Claim

    SAN DIEGO — On a motion for rehearing, a California appeals panel on Sept. 20 reaffirmed a lower court's ruling that an insurer has no duty to pay $106,102.63 in legal fees that were purportedly incurred by the insured's general counsel in defending a lawsuit arising from the sexual abuse of a foreign exchange student (Pacific Intercultural Exchange v. Scottsdale Insurance Company, No. D071478, Calif. App., 4th Dist., Div. 1, 2018 Cal. App. Unpub. LEXIS 6432).

  • September 21, 2018

    Judge Affirms $3.5 Million Award To Asbestos Trust Against Fire Brick Insurer

    OAKLAND, Calif. — A California federal bankruptcy judge properly entered a more than $3.5 million judgment against an insurance company in a long-running dispute over the amount of coverage owed to a company’s liquidating trust for asbestos personal injury claims, a federal judge held Sept. 17 in affirming the award, plus a $60,000 penalty for the insurer’s “vexatious and unreasonable conduct” (Continental Casualty Company v. Barry A. Chatz, Nos. 17-cv-05281, 17-cv-06989, N.D. Calif., 2018 U.S. Dist. LEXIS 158352).

  • September 18, 2018

    Insurance Broker’s Former Owners Oppose Reinsurer’s Summary Judgment Motion

    SAN DIEGO — Arguing that there are triable issues of fact, the former owners of an insurance brokerage company in separate Sept. 14 briefs oppose a reinsurer’s request for summary judgment against them for payment of a $3.2 million judgment in a California federal court dispute over breached reinsurance agreements from fraudulent transfers (Odyssey Reinsurance Co. v. Richard Keith Nagby, et al., No. 16-3038, S.D. Calif.).

  • September 18, 2018

    Health Insurer Says ERISA Preempts, Pleading Deficiencies Defeat UCL Claim

    LOS ANGELES — An out-of-network substance abuse services provider’s claims are preempted by the Employee Retirement Income Security Act, and the provider fails to adequately plead its California unfair competition law (UCL) claim, an insurer tells a California federal judge in a reply Sept. 14 (Miriam Hamideh Ph.D., et al. v. Anthem Blue Cross Life and Health Insurance Co., et al., No. 18-3044, C.D. Calif.).

  • September 18, 2018

    Panel Affirms Verdict In Insurer’s Favor In Water Damage Coverage Dispute

    SAN DIEGO — The Fourth District California Court of Appeal on Sept. 17 affirmed a jury verdict entered in an insurer’s favor in a water damage dispute after determining that the trial court did not abuse its discretion in excluding testimony from the insured’s expert regarding whether the water damage occurred suddenly or over a period of time (Robert Dorfman v. State Farm General Insurance Co., No. D072214, Calif. App., 4th Dist., Div. 1, 2018 Cal. App. Unpub. LEXIS 6329).

  • September 14, 2018

    Majority: Insurer Fails To Show Fact Issues Existed As To Cause Of Poinsettia Fire

    SAN DIEGO — A majority of a California appeals court on Sept. 11 held that an insurer has failed to satisfy its burden of demonstrating that there was a triable issue of material fact regarding what caused the Poinsettia Fire that started at the defendant’s golf course and spread to its adjacent insured properties, affirming a lower court (Axis Insurance Company v. Omni Hotels Management Corp., No. D071572, Calif. App., 4th Dist., Div. 1, 2018 Cal. App. Unpub. LEXIS 6210).

  • September 12, 2018

    Insurer Did Not Act In Bad Faith By Accepting Lower Repair Cost Estimate

    SACRAMENTO, Calif. — A California federal judge on Sept. 7 granted an insurer’s motion on a bad faith claim arising out of the insurer’s payment of repair costs for an insured home damaged by a fire after determining that the insurer did not act unreasonably in accepting a lower estimate for the repair costs (Donald Durben, et al. v. State Farm General Insurance Co., et al., No. 16-754, E.D. Calif., 2018 U.S. Dist. LEXIS 153166).

  • September 7, 2018

    No Coverage Owed For Damages Caused By Sewer Line Failure, Judge Says

    SAN FRANCISCO — An insurer has no duty to provide coverage for damages incurred as a result of a sewer line failure to a building that housed an insured restaurant because the policy at issue did not provide coverage for buildings and clearly excluded coverage for damages caused by subsurface water, a California federal judge said Sept. 5 in entering summary judgment in favor of the insurer (Ken Tu, et al. v. Dongbu Insurance Co. Ltd., No. 17-3495, N.D. Calif., 2018 U.S. Dist. LEXIS 151322).

  • September 4, 2018

    Manufacturer Asks U.S. High Court Not To Address Choice-Of-Law Clause

    WASHINGTON, D.C. — In a breach of contract dispute over a reinsurance participation agreement (RPA), a blue jean manufacturing company and its subsidiary in an Aug. 22 brief oppose a petition asking the U.S. Supreme Court to decide whether a choice-of-law clause imports “state substantive law without importing state rules impairing arbitration” or whether the clause incorporates “both state substantive law and state arbitration principles” (Applied Underwriters Inc., et al. v. Citizens of Humanity, et al., No. 18-175, U.S. Sup.).

  • September 4, 2018

    Insured Seeks Reversal Of Choice-Of-Law Ruling In Contamination Coverage Suit

    SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals should reverse a district court’s ruling that California law, rather than Alabama law, applies to an environmental contamination coverage suit because Alabama clearly has the greater interest in applying its law to the coverage dispute, an insured argues in its Aug. 20 appellant brief (Arrow Electronics Inc. v. Aetna Casualty & Surety Co., et al., No. 18-55810, 9th Cir.).