Mealey's Emerging Insurance Disputes

  • May 26, 2017

    Judge Refuses To Dismiss Insurers' Class Claims For Damages After Subrogation

    LOS ANGELES — A California federal judge on May 24 denied a motion filed by the makers of a defective dehumidifier that caused fires to dismiss class action claims for violation of California's unfair competition law (UCL) and negligence and other claims and ordered them to show cause as to why they should not be sanctioned for misrepresenting the law as it pertains to insurer's rights to subrogate the rights of insureds (Homesite Insurance Company of the Midwest, et al. v. Gree USA Inc., et al., No. 2:16-cv-06769, C.D. Calif., 2017 U.S. Dist. LEXIS 79809).

  • May 26, 2017

    Notice Of Lawsuit Over Sales Commissions Was Untimely, 8th Circuit Affirms

    ST. LOUIS — The Eighth Circuit U.S. Court of Appeals on May 25 affirmed a lower federal court’s ruling that a food marketing and distribution company insured's notice of an underlying lawsuit brought by its former employee was untimely (Food Market Merchandising Inc. v. Scottsdale Indemnity Co., 16-3427, 8th Cir., 2017 U.S. App. LEXIS 9089).

  • May 25, 2017

    Production Company Owed No Further Defense For Suits Over Fatal Train Accident

    LOS ANGELES — A California federal judge on May 23 granted an insurer’s motion for summary judgment on the remaining claims in a production company insured's lawsuit seeking coverage for damages caused by a train accident that killed a camera technician and injured the film's director and several crew members (Film Allman LLC v. New York Marine and General Insurance Co., Inc., No 14-7069, C.D. Calif., 2017 U.S. Dist. LEXIS 79139).

  • May 25, 2017

    Judge Finds Professional Liability Exclusion Applies To Construction Inspector

    GREENVILLE, S.C. — A federal judge in South Carolina on May 24 awarded summary judgment to State Farm Fire and Casualty Insurance Co., ruling that the professional liability exclusion does not require the insurer to provide coverage to a construction inspection company accused of negligence (State Farm Fire and Casualty Insurance Co. v. Morningstar Consultants, Inc., No. 16-01685-MGL, D. S.C., 2017 U.S. Dist. LEXIS 79371).

  • May 24, 2017

    No Coverage Exists For Vicarious Liability Claim Against Spa Owner, Panel Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on May 24 affirmed a lower federal court’s ruling that a professional liability insurance policy does not cover an underlying vicarious liability claim brought against the owner of a spa (Kalandra Lewis, et al. v. Evanston Insurance Co., No. 16-15109, 11th Cir., 2017 U.S. App. LEXIS 8998).

  • May 23, 2017

    Insurer: Facebook IPO Class Action Not Barred By Professional Services Exclusion

    NEW YORK — An excess errors and omissions (E&O) insurer has asked the Second Circuit U.S. Court of Appeals to reverse a lower court’s holding that a directors and officers (D&O) liability insurance policy's professional services exclusion unambiguously bars coverage for claims in an underlying Facebook IPO class action lawsuit (Beazley Insurance Co. Inc. v. Ace American Insurance Co., et al., No. 16-2812, 2nd Cir.).

  • May 23, 2017

    Business Pursuits Exclusion Bars Coverage, Massachusetts Panel Affirms

    BOSTON — A Massachusetts appeals panel on May 23 affirmed a lower court’s ruling that a homeowners insurance policy’s business pursuits exclusion bars coverage for underlying claims against a civilian employee of the city of Newtown’s chief of police office (Vincent Nguyen v. Arbella Insurance Group, No. 16-P-834, Mass. App., 2017 Mass. App. LEXIS 64).

  • May 22, 2017

    Abuse Exclusion Bars Coverage For Wrongful Death Verdict, 9th Circuit Affirms

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on May 17 rejected a doctor and his wife’s argument that they were entitled to coverage for an adverse verdict in a wrongful death suit because their homeowners insurance policy's abuse exclusion was not applicable, affirming a lower federal court’s summary judgment ruling in favor of the insurer (American Family Mutual Insurance Co. v. Carlos F. Verdugo, M.D., et al., Nos. 16-15687 and 16-15717, 9th Cir., 2017 U.S. App. LEXIS 8828).

  • May 19, 2017

    Credit Union’s Directors Knew Of Employee Dishonesty Well Before Bond Was Issued

    CINCINNATI — A majority of the Sixth Circuit U.S. Court of Appeals on May 18 affirmed a lower federal court’s ruling that the liquidating agent of an insolvent credit union is not entitled to $5 million in employee dishonesty coverage under a fidelity bond issued to the credit union for losses arising from an employee's alleged fraudulent scheme (National Credit Union Administration Board v. Cumis Insurance Society Inc., No. 16-3140, 6th Cir.).

  • May 19, 2017

    No Coverage For Housing Discrimination Charge Against Landlord, Panel Affirms

    CINCINNATI — The Sixth Circuit U.S. Court of Appeals on May 18 affirmed a lower federal court’s ruling in favor of a tenant-discrimination liability insurer in a coverage dispute arising from a housing discrimination charge brought against the residential landlord insured (GMS Management v. Evanston Ins. Co., No. 16-4018, 6th Cir.).

  • May 18, 2017

    Professional Liability Insurer Owes Defense To 2 Of 3 Au Pair Placement Agencies

    DENVER — A Colorado federal judge on May 17 found that a professional liability insurer has a duty to defend two out of three insureds against underlying claims that they operated as a cartel and colluded to fix standard au pair wages (Colony Insurance Co. v. Expert Group International Inc., et al., No.15-02499, D. Colo., 2017 U.S. Dist. LEXIS 75073).

  • May 18, 2017

    Bodily And Personal Injury Coverage Was Not Triggered, Judge Says, Dismisses Suit

    CLARKSBURG, W.Va. — Granting an insurer’s motion for summary judgment, a West Virginia federal judge on May 16 held that the insurer has no duty to defend or indemnify an underlying complaint alleging that a restaurant insured violated the West Virginia Human Rights Act (WVHRA) (Grand China Buffett & Grill, Inc., et al. v. State Auto Property and Casualty Co., et al., No 16-159, N.D. W.Va., 2017 U.S. Dist. LEXIS 74255).

  • May 17, 2017

    Legal Conclusions Out, Rest Of Testimony In, Judge Says In Coverage Row

    MOBILE, Ala. — The legal nature of the opinions of one expert witness for an insurer in a coverage dispute over underlying trademark infringement claims precludes the expert from testifying about such opinions, but the expert’s other opinions, and those of a second expert for the insurer, are admissible under Daubert, an Alabama federal judge held May 12 (Hibbett Patient Care, LLC, et al. v. Pharmacists Mutual Insurance Co., No. 16-0231, S.D. Ala., 2017 U.S. Dist. LEXIS 72786).

  • May 17, 2017

    Prior Acts Exclusion Bars Coverage For Fraudulent Transfer Claims, Panel Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on May 16 held that a directors and officers liability insurance policy’s prior acts exclusion bars coverage for an underlying $15 million settlement arising from claims that a financial corporation's former executive officers breached their fiduciary duties (Clifford Zucker v. U.S. Specialty Insurance Co., 11th Cir., 15-10987, 2017 U.S. App. LEXIS 8585).

  • May 17, 2017

    New York Panel: Fact Issues Exist As To Whether Insurer Timely Disclaimed Coverage

    BROOKLYN, N.Y. — A New York appeals panel on May 3 affirmed a lower court’s denial of an insurer’s cross-motion for summary judgment in a dispute over coverage for an underlying indemnification lawsuit brought against its insured by the state of New York (Evanston Insurance Co. v. P.S. Bruckel, Inc., et al., No. 2015-02584, N.Y. Sup., App. Div., 2nd Dept., 2017 N.Y. App. Div. LEXIS 3426).

  • May 17, 2017

    Insurer Has No Duty To Defend Suit Arising From Overturned Murder Conviction

    BROOKLYN, N.Y. — A New York appeals panel on May 3 affirmed a lower court’s ruling that an insurer has no duty to defend or indemnify its insured against an underlying lawsuit arising from an overturned murder conviction (County of Dutchess, et al. v Argonaut Insurance Co., also known as Argonaut Group, No. 2015-01594, N.Y. Sup., App. Div., 2nd Dept., 2017 N.Y. App. Div. LEXIS 3413).

  • May 17, 2017

    Federal Judge Refuses To Dismiss, Stay Legal Malpractice Coverage Dispute

    WICHITA, Kan. — A Kansas federal judge on May 3 denied a law firm insured’s motion to dismiss or stay an insurer’s declaratory judgment lawsuit disputing coverage for a lawsuit brought by a bankruptcy trustee representing former clients of the insured (The Bar Plan Mutual Insurance Co. v. Christopher W. O'Brien, et al., No. 17-1037, D. Kan., 2017 U.S. Dist. LEXIS 67655).

  • May 15, 2017

    Panel: Claims Seeking Coverage For Alleged Bullying, Harassment Are Timely

    CHICAGO — An Illinois panel on May 10 held that insureds’ counterclaim and third-party complaint against a homeowners insurer and an insurance agent are timely in a coverage dispute arising from underlying bullying and harassment claims, reversing a lower court (American Family Mutual Insurance Co. v. Walter Krop, et al., No. 1-16-1071, Ill. App., 1st Dist., 3rd Div., 2017 Ill. App. LEXIS 310).

  • May 15, 2017

    Insurer Acted Vexatiously, Unreasonably In Denying Coverage, Illinois Panel Affirms

    ELGIN, Ill. — An Illinois appeals panel on May 11 affirmed a lower court’s ruling that held that an insurer acted vexatiously and unreasonably in failing to defend its pet motel insured against an underlying negligence lawsuit that resulted in a $45,000 consent judgment (Sabas Soto v. Country Mutual Insurance Co., et al., No. 2-16-0720, Ill. App., 2nd Dist., 2017 Ill. App. Unpub. LEXIS 943).

  • May 12, 2017

    Insured May Be Able To Recover Against Adjuster In Bad Faith Suit, Judge Rules

    DALLAS — A federal judge in Texas on May 10 ruled that remand of an insurance breach of contract and bad faith lawsuit to state court is warranted because an insured has shown that it may recover against the adjuster for failing to offer a fair settlement on a commercial property insurance claim (Arlington Heights Memorial Post No. 8234 Veterans Of Foreign Wars of the United States, Fort Worth, Texas, v. Covington Specialty Insurance Co., et al., No. 16-3112, N.D. Texas, 2017 U.S. Dist. LEXIS 71125).