Mealey's Emerging Insurance Disputes

  • April 24, 2017

    Insurer Did Not Impermissibly Depreciate Labor Costs, 10th Circuit Affirms

    DENVER — The 10th Circuit U.S. Court of Appeals on April 21 affirmed a lower federal court’s finding that a homeowners insurer did not violate its policy when it depreciated labor costs in determining the actual cash value of an insured’s loss following hail and water damage (Margaret Graves v. American Family Mutual Insurance Co., No. 15-3187, 10th Cir., 2017 U.S. App. LEXIS 6980).

  • April 24, 2017

    Business Pursuits Exclusion Bars Coverage For Defamation Lawsuit, Judge Rules

    EAST ST. LOUIS, Ill. — An Illinois federal judge on April 19 found that a homeowners insurance policy’s “business pursuits” and “civic or public activities performed for pay” exclusions bar coverage for underlying defamation and false light claims brought against its insured, declaring that the insurer has no duty to defend or indemnify its insured (Patricia Beil v. AMCO Insurance Co., et al., No. 16-356, S.D. Ill., 2017 U.S. Dist. LEXIS 59757).

  • April 21, 2017

    Panel: Professional Liability Insurer Is Equitably Estopped From Denying Coverage

    DENVER — The 10th Circuit U.S. Court of Appeals held April 18 that an insurer is estopped from denying coverage under a professional liability insurance policy for an underlying arbitration brought against an investment advisor insured, affirming a lower court’s $931,859.59 judgment in favor of the insured (Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003, No. 16-3245, 10th Cir., 2017 U.S. App. LEXIS 6585).

  • April 21, 2017

    Magistrate: Protective Order Not Warranted In Directors, Officers Coverage Dispute

    TRENTON, N.J. — A New Jersey federal magistrate judge on April 17 denied an insured’s motion for a protective order seeking to strike a subpoena's document request for “irrelevant and privileged” material from nonparty Wells Fargo Insurance Services USA Inc. in a directors and officers liability coverage dispute (Benecard Services Inc. v. Allied World Specialty Insurance Co., et al., No. 15-8593, D. N.J., 2017 U.S. Dist. LEXIS 57940).

  • April 20, 2017

    New York Justice Rules Against Insurers In Dispute Over Bear Stearns’ Settlement

    NEW YORK — A New York justice on April 17 ruled against insurers in a lawsuit seeking indemnification from them for claims stemming from Bear Stearns' settlement of Securities and Exchange Commission and New York Stock Exchange (NYSE) regulatory proceedings and private litigation over claims that it facilitated customers' deceptive market timing and late trading activities (J.P. Morgan Securities, et al. v. Vigilant Insurance, et al., No. 600979/2009, N.Y. Sup., New York Co., 2017 N.Y. Misc. LEXIS 1381).

  • April 18, 2017

    Additional Insured’s Coverage Limited To Vicarious Liability For Insured’s Acts

    CHARLESTON, S.C. — A South Carolina federal judge on April 14 denied an electric and gas company’s motion for partial summary judgment in its lawsuit seeking defense as an additional insured under a commercial general liability insurance policy for two underlying personal injury lawsuits (South Carolina Electric and Gas Co. v. Old Republic Insurance Co., et al., No. 16-2468, D. S.C., 2017 U.S. Dist. LEXIS 57261).

  • April 18, 2017

    8th Circuit Finds Settlement Agreement For Defect Claims Violated Cooperation Clause

    ST. LOUIS — A settlement agreement between an association and an insured general contractor over allegations of defective construction violated an insurance policy’s cooperation clause and, thus, is unenforceable, the Eighth Circuit U.S. Court of Appeals affirmed April 17 (James River Insurance Co. v. The Interlachen Propertyowners Association and Kuepers Construction Inc., No. 16-2994, 8th Cir.).

  • April 18, 2017

    No Claim For Wrongful Act; No Coverage, Insurer Argues To Federal Court

    TULSA, Okla. — An insurer recently argued to an Oklahoma federal court that an underlying breach of contract lawsuit brought against its insured by a former business partner fails to allege a wrongful act to trigger coverage under a professional liability insurance policy (Doug Schwegman, d/b/a Schwegman Insurance and Financial Services v. Continental Casualty Co., No. 16-0730, N.D. Okla.).

  • April 18, 2017

    Professional Liability Insurer Fails To Show It Was Prejudiced By Delayed Notice

    DENVER — A Colorado federal judge held April 13 that a professional liability insurer has failed to sufficiently demonstrate that it was prejudiced by a hospital insured’s delayed notice of an underlying medical malpractice dispute (Children's Hospital Colorado v. Lexington Insurance Co., No. 15-01904, D. Colo., 2017 U.S. Dist. LEXIS 56892).

  • April 18, 2017

    Federal Judge Rules In Insurer’s Favor In Coverage Dispute With Zillow Inc.

    SEATTLE — A Washington federal judge on April 17 entered judgment in favor of an insurer three days after granting its motion for judgment on the pleadings in its lawsuit disputing coverage for underlying direct infringement, contributory infringement and vicarious liability claims brought against its insured Zillow Inc. (National Union Fire Insurance Co. v. Zillow, Inc., No.16-1461, W.D. Wash., 2017 U.S. Dist. LEXIS 57496).

  • April 17, 2017

    Majority Affirms Idaho Law Applies, Bars Coverage For Claims Arising From Injury

    SEATTLE — A majority of the Ninth Circuit U.S. Court of Appeals on April 14 affirmed a lower federal court’s ruling that Idaho law applies to bar coverage for claims arising from an eye injury (Gary Butler v. North American Capacity Insurance Co., et al., No. 14-35131, 9th Cir., 2017 U.S. App. LEXIS 6465).

  • April 17, 2017

    In Remanded False Claims Act Suit, Discovery Limited To Identified Properties

    GULFPORT, Miss. — In a case concerning an insurer’s False Claims Act (FCA) violations on Hurricane Katrina claims, a Mississippi federal judge on April 12 granted the parties’ motions to reopen the case, which was remanded after a U.S. Supreme Court ruling, limiting initial discovery on those purported violations to properties previously identified in a list provided by the insurer (United States, ex rel. Cori Rigsby, et al. v. State Farm Fire & Casualty Co., No. 1:06-cv-00433, S.D. Miss.).

  • April 14, 2017

    Federal Judge Grants Voluntary Dismissal Of Professional Liability Coverage Row

    NEWARK, N.J. — A New Jersey federal judge on April 5 granted a stipulation of voluntary dismissal of an insured's lawsuit seeking defense and indemnification from its professional liability insurer for an underlying legal malpractice action (Nagel Rice, LLP v. Allied World Insurance Co., No. 16-3888, D. N.J.).

  • April 14, 2017

    Judge Rules On Indemnity, Coverage Issues In Dispute Arising From FELA Suit

    EAST ST. LOUIS, Ill. — An Illinois federal judge on March 29 ruled on dueling summary judgment motions in a lawsuit arising from a railway company's losses incurred in an underlying lawsuit brought by a former employee under the Federal Employers Liability Act (FELA) (BNSF Ry. v. Gilster-Mary Lee Corp., et al., No. 15-250, S.D. Ill., 2017 U.S. Dist. LEXIS 46894).

  • April 14, 2017

    Judge: Professional Liability Insurer Owes No Coverage For Legal Malpractice Claim

    CLEVELAND — An Ohio federal judge on April 13 found that a professional liability insurer has no duty to defend or indemnify its lawyer insured against a legal malpractice lawsuit (Spiros E. Gonakis, Sr. v. Medmarc Casualty Insurance Co., No. 16-2042, N.D. Ohio, 2017 U.S. Dist. LEXIS 56789).

  • April 13, 2017

    Judge: Insurer Has No Duty To Defend, Indemnify Suits Over Contaminated Medication

    SOUTH BEND, Ind. — An Indiana federal judge on March 31 entered a judgment in favor of an insurer, declaring that it has no duty to defend or indemnify its insureds against underlying lawsuits and medical malpractice complaints stemming from a multistate outbreak of fungal meningitis, lumbar fungal infections and related injuries as a result of patients receiving injections of contaminated epidural steroid medication for pain management (Westfield Insurance Co v. Orthopedic and Sports Medicine Center of Northern Indiana, Inc., et al.,  No. 14-1548, N.D. Ind., 2017 U.S. Dist. LEXIS 46119).

  • April 13, 2017

    Forty Niners’ Insurer Appeals Ruling Ordering It To Equally Contribute To Defense

    PASADENA, Calif. — The San Francisco Forty Niners Football Co.'s primary commercial general liability insurer on April 12 filed a notice of appeal in the Ninth Circuit U.S. Court of Appeals challenging a lower federal court’s finding that it has duty to contribute by equal shares with another insurer to defense costs in an underlying lawsuit against the football team and others (First Mercury Insurance Co. v. Great Divide Insurance Co., No. 17-1511, 9th Cir.).

  • April 13, 2017

    Judge Finds In Insured’s Favor In Coverage Dispute Over Its Employee’s Claims

    SANTA ANA, Calif. — A California federal judge on April 10 granted an insured’s motion for summary judgment in a declaratory judgment lawsuit arising from underlying claims for malicious prosecution and defamation brought by the insured’s employee (KPC Healthcare, Inc. v. Hudson Specialty Ins. Co., No. 16-01483, C.D. Calif., 2017 U.S. Dist. LEXIS 55443).

  • April 12, 2017

    Completed-Work Exclusion Does Not Bar Coverage, 11th Circuit Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on April 4 affirmed a lower federal court’s finding that an insurance policy’s completed-work exclusion does not preclude the insured from coverage for an underlying lawsuit arising from an accident at a railroad crossing, concluding that the lawsuit is another “classic case of the insurer requesting relief from the consequences of the inartfully drafted, yet plain, terms of its insurance policy” (Liberty Surplus Insurance Corp. v. Norfolk Southern Railway Co., No. 16-14767, 11th Cir., 2017 U.S. App. LEXIS 5763).

  • April 12, 2017

    No Coverage For False Advertising Claims Against Insured, 6th Circuit Affirms

    CINCINNATI — The Sixth Circuit U.S. Court of Appeals on April 11 affirmed a lower federal court’s ruling that a business liability policy does not provide coverage for false advertising claims brought against an eye health supplement maker insured by a competitor, finding that the insured failed to demonstrate that the underlying complaint alleged a product disparagement claim (Vitamin Health, Inc. v. Hartford Casualty Insurance Co., No.16-1724, 6th Cir.).