Mealey's Emerging Insurance Disputes
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February 26, 2021
Insurer Owes Defense For Prisoner Injunctive Relief Suits, Illinois Panel Affirms
CHICAGO — An Illinois appeals panel on Feb. 23 affirmed a lower court’s ruling that a professional liability insurer has a duty to defend against three underlying class actions brought by and on behalf of incarcerated individuals who seek injunctive relief to implement changes in the medical or mental health care they receive while in prison.
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February 26, 2021
Judge: Verizon Owed $24M In Defense Costs Incurred In Fraudulent Transfer Suit
WILMINGTON, Del. — A Delaware judge on Feb. 23 held that Verizon Communications Inc. can recoup approximately $24 million in defense costs it incurred in defending against an underlying fraudulent conveyance lawsuit that settled for $95 million, further finding that the insurers failed to demonstrate that coverage is unavailable under Verizon’s tower policies as a matter of law.
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February 25, 2021
Montana Supreme Court Affirms No Professional Coverage Owed For Malpractice Suit
HELENA, Mont. — The Montana Supreme Court on Feb. 23 affirmed a lower court’s summary judgment ruling in favor of a professional liability insurer in its declaratory judgment lawsuit disputing coverage for underlying legal malpractice claims, finding that coverage is barred because an insured knew of the basis for the underlying claim prior to the policy’s inception.
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February 25, 2021
Judge Allows Business Interruption Claims To Proceed In COVID-19 Bellwether Cases
CHICAGO — A federal judge in Illinois on Feb. 22 refused to dismiss business interruption coverage and bad faith claims brought against an insurer in three bellwether lawsuits arising from the governmental shutdown of hospitality businesses in the wake of the novel coronavirus pandemic, finding that a reasonable jury can find that the insureds suffered “a direct ‘physical’ loss of property on their premises.”
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February 24, 2021
Insurers Request Dismissal Of California Camp Fire Suit Against PG&E
SACRAMENTO, Calif. — Four insurers standing in the shoes of their Butte County, Calif., insureds on Feb. 2 requested that a California court dismiss with prejudice their lawsuits alleging that PG&E Corp. and/or Pacific Gas & Electric Co.’s “well-documented disregard for safety regulations and risk management practices” and “blind eye towards the use of effective maintenance and inspection practices for their facilities and equipment” triggered various factors that caused and/or contributed to causing the “most destructive and deadly wildfire California has ever experienced."
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February 24, 2021
9th Circuit Damages Ruling In Bad Faith Suit Will Not Get High Court Review
WASHINGTON, D.C. — The U.S. Supreme Court on Feb. 22 declined review of a Ninth Circuit U.S. Court of Appeals ruling that an insured’s assignee lacked standing to seek consequential damages after obtaining a $3.5 million default judgment against the insurer in a breach of contract and bad faith lawsuit because the assignee’s default judgment against the insured expired and was, thus, unenforceable.
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February 24, 2021
Insurer Seeks Dismissal Of Class Action Alleging It Uses Unqualified Expert Witnesses
HOUSTON — An insurer on Feb. 19 asked a federal court in Texas to dismiss a law firm’s fraud and civil conspiracy class action alleging that it repeatedly hires “unqualified people to prepare so-called controverting affidavits in areas” in which “they have no knowledge, skill, training, education, or experience,” arguing that the law firm’s own pleadings and Texas law disprove that the insurer and three of its expert witnesses knowingly made false representations.
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February 23, 2021
Potential Coverage Exists For Challenge To McDonald’s Steps To Contain COVID-19
CHICAGO — A federal judge in Illinois on Feb. 22 denied a commercial general liability insurer’s motion to dismiss a breach of contract and declaratory relief lawsuit brought by McDonald’s Corp. and former and current franchise owners seeking coverage for an underlying class action injunction alleging that they are taking inadequate steps to contain COVID-19 in the workplace.
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February 23, 2021
Judge: Dentist Fails To State Claim Against Insurer In COVID-19 Coverage Suit
EAST ST. LOUIS, Ill. — A federal judge in Illinois on Feb. 18 granted in part a commercial insurer’s motion to dismiss a dentist insured’s lawsuit seeking coverage for its lost income arising from the novel coronavirus pandemic, finding that the insured fails to state a claim, but allowed the insured to amend his complaint and conduct discovery into his alter-ego theory.
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February 22, 2021
Exclusion Bars Coverage For $9.5M Settlement In Municipal Tax Dispute
COLUMBUS, Ohio — An Ohio appeals court panel on Feb. 18 held that a municipal corporation insured cannot recoup a $5 million self-insurance pool policy limit for an underlying $9.5 million settlement arising from a class action alleging the insured required the use of a tax form that resulted in the overpayment of municipal taxes by city residents.
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February 22, 2021
High Court Denies Review Of Insured’s Petition In Gas Well Damage Suit
WASHINGTON, D.C. — The U.S. Supreme Court on Feb. 22 denied an insured’s petition for writ of certiorari in an oil and gas well damage suit, refusing to review the Fifth Circuit U.S. Court of Appeals’ dismissal of the insured’s appeal for lack of jurisdiction.
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February 22, 2021
Minor League Baseball Teams Seek Reversal Of Dismissal Of COVID-19 Coverage Suit
SAN FRANCISCO — Small businesses that own and operate Minor League Baseball (MiLB) teams on Feb. 8 asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court’s dismissal of their breach of contract and declaratory judgment lawsuit seeking business interruption coverage for their losses arising from the novel coronavirus pandemic.
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February 19, 2021
Quadriplegic Woman’s $66M Judgment Found Not Covered By Tribunal, Insurer Says
MIAMI — An insurer on Feb. 17 filed notice in a Florida federal court, where it is being sued by a quadriplegic woman and her husband to indemnify an insured Caribbean excursion operator and related entities, that a Hong Kong tribunal recently ruled that the insureds’ policy would not cover a $66.5 million judgment in favor of the couple.
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February 19, 2021
Federal Judge Dismisses Ohio Restaurant Owner’s Coverage Suit Arising From COVID-19
AKRON, Ohio — Granting an insurer’s motion to dismiss a breach of contract and bad faith lawsuit, a federal judge in Ohio on Feb. 17 held that although a restaurant owner insured plausibly alleged that governmental shutdown orders and the possible or actual presence of the novel coronavirus interfered with its intended use of its restaurant properties, the properties were not materially or perceptibly destroyed, harmed or ruined and remain in the insured’s possession.
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February 19, 2021
LTCI Policies’ Rate-Increase Caps Are Invalid, New Hampshire High Court Rules
CONCORD, N.H. — The New Hampshire Supreme Court on Feb. 17 held that amended regulations that retroactively limited rate increases for long-term care insurance (LTCI) policies exceeded the New Hampshire Insurance commissioner's mandate “because they are not reasonable rules that either promote premium adequacy or protect policyholders in the event of substantial rate increases” and, therefore, are invalid, reversing and remanding a lower court’s ruling on a life insurer’s ultra vires claim against the New Hampshire Department of Insurance.
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February 18, 2021
Arizona Majority Answers Certified Question In Dispute Over Backdating Litigation
PHOENIX — Answering a question certified from the Ninth Circuit U.S. Court of Appeals in a dispute over whether an insurer was obligated to fund a settlement reached in underlying backdating litigation, a majority of the Arizona Supreme Court held on Feb. 17 that the court should assess the objective reasonableness of the insurer’s decision to withhold consent to the insured’s settlement with shareholders from the perspective of the insurer.
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February 18, 2021
New York Justice Dismisses Bus Contractor’s COVID-19 Coverage Suit Against Insurer
GOSHEN, N.Y. — A New York justice on Feb. 12 dismissed a bus contractor insured’s breach of contract lawsuit seeking coverage under an “all risk” commercial property insurance policy for its business interruption losses and extra expenses incurred as a direct result of governmental shutdown orders in response to the novel coronavirus pandemic, finding that under state law, there is no “business income/extra expense” coverage in the absence of “direct physical loss or damage” to the insured’s premises.
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February 18, 2021
Judge Rules For Insurers In Dental Practices’ Class Action Over COVID-19 Coverage
ST. LOUIS — A federal judge in Missouri on Feb. 16 held that “the great weight of authority supports” insurers’ argument that “direct physical loss of” requires that “some physical event” occurs on the insureds’ properties, granting the insurers’ motion for judgment on the pleadings in a breach of contract and bad faith coverage lawsuit arising from the novel coronavirus pandemic.
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February 17, 2021
Roundup Of Latest Complaints, Briefs Over Coronavirus Coverage
From United Policyholders’ “especially vital” amicus curiae brief in support of an insured to a second coverage lawsuit brought by “New York State’s largest health care provider and private employer,” Mealey Publications takes a look at the latest pleadings relating to insurance coverage for COVID-19.
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February 16, 2021
No Coverage For Settlement, Consent Judgments Over Allegedly False SEC Filings
NEW YORK — A New York justice on Feb. 2 granted directors and officers liability primary and excess insurers’ motion for summary judgment declaring that they owe no coverage for settlements and consent judgments in three underlying actions alleging false and misleading Securities and Exchange Commission filings by a publicly traded real estate investment trust but denied the insurers’ request for their costs and reasonable attorney fees.