Mealey's Emerging Insurance Disputes

  • March 16, 2018

    Real Estate Property Managed Endorsement Rendered Policy Excess, 9th Circuit Affirms

    SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on March 13 affirmed a lower federal court’s finding that a real estate property managed endorsement rendered an insurer's policies excess with respect to an underlying personal injury claim and, therefore, the insurer has no duty to defend or indemnity its property manager insured (Atain Specialty Insurance Co. v. Sierra Pacific Management Co., et al., No. 16-17221, 9th Cir., 2018 U.S. App. LEXIS 6232).

  • March 16, 2018

    Excess Insurer Does Not Have To Equitably Contribute To Doctor’s Defense Costs

    SAN FRANCISCO — Rejecting a professional liability insurer’s appeal on March 14, the Ninth Circuit U.S. Court of Appeals found that a captive insurer is not the primary insurer and is not liable for equitable contribution of the defense and indemnity costs incurred by a physician sued for medical negligence (Admiral Insurance Company v. Community Insurance Group SPC Limited, Nos. 16-17321 and 17-15481, 9th Cir., 2018 U.S. App. LEXIS 6325).

  • March 16, 2018

    Insurer Appeals $945,265 Breach Of Contract Judgment, Discovery Ruling In 2nd Circuit

    NEW YORK — An insurer recently asked the Second Circuit U.S. Court of Appeals to reverse a lower federal court's $945,265.11 breach of contract judgment against it and an earlier discovery ruling in a dispute over coverage stemming from underlying sexual misconduct cases brought against its diocese insured (The Hartford Roman Catholic Diocesan Corp. v. Interstate Fire & Casualty Company, Nos. 16-2999 and 17-2484, 2nd Cir.).

  • March 15, 2018

    Relators In Katrina Qui Tam Suit Say State Farm Withheld, Spoliated Documents

    GULFPORT, Miss. — The relators in a 12-year-old qui tam suit accusing State Farm Fire and Casualty Co. of filing false flood insurance after Hurricane Katrina ask a California federal court in a March 12 reply brief to compel the insurer to produce documents it improperly withheld as privileged (United States, ex rel. Cori Rigsby, et al. v. State Farm Fire & Casualty Co., No. 1:06-cv-00433, S.D. Miss.).

  • March 14, 2018

    Utah High Court Admonishes Insured’s Counsel For Saying It Was Biased For Insurers

    SALT LAKE CITY — Denying an insured’s motion for rehearing on the issue of attorney fees in a coverage dispute arising from a jet ski accident, the Utah Supreme Court on Feb. 28 said the insured’s counsel’s rhetoric questioning its motives rather than ideas has no place in filings before any Utah court (Fire Insurance Exchange v. Robert Allen Oltmanns, No. 20160304, Utah Sup., 2018 Utah LEXIS 32).

  • March 14, 2018

    Negligence Claim Triggers Directors & Officers Coverage, Massachusetts Panel Says

    BOSTON — A Massachusetts appeals panel on Jan. 25 found that a directors and officers liability insurer has a duty to defend its insured against an underlying lawsuit brought by trustees of a condominium development, reversing and remanding a lower court (Frank Fodera, Sr. v. Arbella Protection Insurance Company, No. n/a, Mass App. Div., 2018 Mass. App. Div. LEXIS 3).

  • March 13, 2018

    Federal Judge Abstains From, Remands Legal Malpractice Coverage Suit To State Court

    NEWARK, N.J. — A New Jersey federal judge on March 12 abstained from adjudicating an insurer’s declaratory judgment lawsuit disputing coverage for underlying malpractice claims against its attorney insured, remanding the case to the Bergen County, N.J., Superior Court (Craig Swenson v. Carolina Casualty Insurance Co., No. 18-3086, D. N.J., 2018 U.S. Dist. LEXIS 39885).

  • March 13, 2018

    Judge: Collateral Estoppel Applies; Professional Liability Insurer Owes No Defense

    FAIRBANKS, Alaska — Applying Alaska’s four elements of collateral estoppel, a federal judge on March 12 found that the court is bound by the Alaska Supreme Court’s finding in an underlying lawsuit that a law firm insured had knowledge of a potential claim prior to a professional liability insurance policy’s effective date (ALPS Property & Casualty Insurance Company v. Merdes & Merdes, et al., No. 14-00002, D. Ala., 2018 U.S. Dist. LEXIS 39653).

  • March 13, 2018

    Panel Reverses Dismissal Of Claims In Coverage Dispute Over Anti-Semitic Harassment

    BROOKLYN, N.Y. — A New York appeals panel on March 9 reversed a lower court’s dismissal of an insurer’s four claims seeking a declaration that it has no duty to indemnify an underlying lawsuit alleging that its school district insured violated five students’ civil rights by being deliberately indifferent to anti-Semitic harassment and discrimination that was perpetrated by other students (Graphic Arts Mutual Insurance Co. v. Pine Bush Central School District, et al., No. 2015-11565, N.Y. Sup., App. Div., 2nd Dept., 2018 N.Y. App. Div. LEXIS 1553).

  • March 12, 2018

    Court Did Not Err In Enforcing Forum-Selection Clause, 5th Circuit Affirms

    NEW ORLEANS —The Fifth Circuit U.S. Court of Appeals on March 9 affirmed a lower court's dismissal of Louisiana insureds’ lawsuit seeking coverage for 2015 property damage to their food-manufacturing facility, finding that the lower court properly enforced the insurance policy’s forum-selection clause (Al Copeland Investments LLC, et al. v. First Specialty Insurance Corp., No. 17-30557, 5th Cir., 2018 U.S. App. LEXIS 5949).

  • March 12, 2018

    Panel: Restoration Company Has No Standing To Pursue RICO Claim Against Insurer

    RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on March 9 affirmed a lower federal court’s finding that a restoration company’s alleged injury was not proximately caused by an insurer’s conduct and, therefore, the restoration company fails to state a plausible claim under the Racketeer Influenced and Corrupt Organizations Act against the insurer and its consultants (Slay's Restoration, LLC v. Wright National Flood Insurance Company, et al., No. 17-1106, 4th Cir., 2018 U.S. App. LEXIS 5958).

  • March 12, 2018

    Alleged Advertising Injury Is Substantially The Same Over Time, Federal Judge Says

    ELIZABETH, N.C.— A North Carolina federal judge on March 5 found that an alleged advertising injury as to the insured’s use of a trademark is substantially the same over time without any meaningful interruption and, therefore, is not covered under its businessowners liability and commercial umbrella insurance policies (Pennsylvania National Mutual Casualty Insurance Company v. Beach Mart, Inc., No. 14-8, E.D. N.C., 2018 U.S. Dist. LEXIS 36211).

  • March 9, 2018

    Employee Theft Constituted 1 Occurrence Under 1 Policy, Federal Judge Says

    PHILADELPHIA — A Pennsylvania federal judge on March 8 held that a $3 million employee theft against an insured that spanned a decade constitutes only one “occurrence” under only one of the insured’s four consecutive insurance policies, granting the insurer’s motion to dismiss a breach of contract suit (Wescott Electric Company v. Cincinnati Insurance Company, No. 17-4718, E.D. Pa., 2018 U.S. Dist. LEXIS 37938).

  • March 9, 2018

    Georgia Panel Vacates, Remands ‘Long-Standing Insurance Coverage Case’

    ATLANTA — A Georgia appeals panel on March 7 vacated and remanded a lower court’s order in a “long-standing insurance coverage case” arising from for employee forgery and fraud, finding that the trial court exceeded its authority under the state’s Declaratory Judgment Act by issuing a coercive declaratory judgment Georgia Casualty & Surety Company v. Valley Wood Inc., No. A17A2093, Ga. App., 1st Div., 2018 Ga. App. LEXIS 166).

  • March 8, 2018

    9th Circuit Affirms Ruling In Insurer’s Favor In Suit Over Federal Investigation

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on March 7 affirmed a lower federal court’s ruling in favor of a directors and officers liability insurer in a coverage dispute arising from an underlying investigation brought by the U.S. Department of Justice against its health care organization insured (Millennium Laboratories, Inc. v. Allied World Assurance Company [U.S.] Inc., No. 16-55432, 9th Cir., 2018 U.S. App. LEXIS 5782).

  • March 8, 2018

    Majority: ‘Electrical Current’ Exclusion Bars Coverage For Damage To City Property

    DES MOINES, Iowa — A majority of the Iowa Court of Appeals on March 7 affirmed a lower court’s finding that an insurance policy’s “electrical currents" exclusion precludes coverage for damage to equipment at an electrical substation owned by the city of West Liberty, Iowa (West Liberty v. Employers Mutual Casualty Company, No. 16-1972, Iowa App., 2018 Iowa App. LEXIS 221).

  • March 7, 2018

    Claims Sounding In Professional Negligence Are Untimely, Panel Says In Wildfire Suit

    SACRAMENTO, Calif.—A California appeals panel on Feb. 20 affirmed a lower court’s finding that the gravamen of an insured’s breach of fiduciary duty and financial elder abuse claims against its insurance broker is professional negligence and, therefore, the claims are time-barred by California Code of Civil Procedure Section 339, Subdivision 1 (Hank R. Pritchard V. Andy Houghton Insurance Agency, et al., No. C082975, Calif. App., 3rd Dist., 2018 Cal. App. Unpub. LEXIS 1160).

  • March 6, 2018

    5th Circuit Weighing Trigger For Law Enforcement Insurance Liability Policy

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals is set to decide whether law enforcement liability policies issued to a local Mississippi government in the mid-1980s cover claims by three individuals wrongfully arrested and imprisoned in 1980 and later exonerated in 2010 (The Travelers Indemnity Co., et al. v. Ethel Mitchell, et al., No. 17-60291, 5th Cir.).

  • March 6, 2018

    Judge: Public Policy Does Not Excuse Insurers From Indemnifying Insureds’ Fraud

    WILMINGTON, Del. — A Delaware judge on March 1 granted in part and denied in part directors and officers liability insurers’ motion for summary judgment in their lawsuit seeking a declaration that principals in a company are not entitled to coverage for the costs they incurred in negotiating settlements in two lawsuits brought by stock shareholders, saying that although it may strain public policy to permit a director to collect insurance on a purported fraud, it does not appear to be explicitly prohibited by state law (Arch Insurance Company, et al. v. David H. Murdock, et al., No. N16C-01-104-EMD, Del. Super., New Castle Co., 2018 Del. Super. LEXIS 96).

  • March 5, 2018

    Panel: Exclusion For Claims Arising Out Of ‘Unfair Business Practices’ Does Not Apply

    SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on March 2 affirmed a lower federal court’s finding that a professional liability policy exclusion does not bar coverage for an underlying class action lawsuit alleging that a real estate broker insured and individual agents received secret profits while acting as real estate agents (Hanover Insurance Co. v. Paul M. Zagaris, Inc., No. 17-15477, 9th Cir., 2018 U.S. App. LEXIS 5429).