Mealey's Emerging Insurance Disputes
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March 25, 2019
Federal Judge Finds For Insurer In Errors And Omissions Coverage Dispute
SAN FRANCISCO — A California federal judge on March 22 granted an errors and omissions insurer’s motion for summary judgment in its declaratory judgment lawsuit disputing coverage for an underlying lawsuit alleging that an insurance professional breached its duty of care in procuring insurance coverage for a client (General Insurance Company of America v. INB Insurance Services Corp., No. 18-03372, N.D. Calif., 2019 U.S. Dist. LEXIS 48362).
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March 22, 2019
Judge Refuses To Sever, Stay Action Against Broker In Professional Liability Suit
NEWARK, N.J. — A New Jersey federal judge on March 20 denied an insurance broker’s motion to sever and stay a third-party action against it in a dispute over professional liability coverage, finding that the insurer’s declaratory judgment lawsuit is “indisputably intertwined” with the insured’s third-party claim against the broker (Twin City Fire Insurance Company v. Ovation Fund Services, LLC, et al., No. 18-14944, D. N.J., 2019 U.S. Dist. LEXIS 45805).
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March 22, 2019
Voluntary Payment Cannot Be Recovered By Insurer, 5th Circuit Panel Affirms
NEW ORLEANS — Based on the answer to a certified question to the Mississippi Supreme Court, the Fifth Circuit U.S. Court of Appeals on March 21 affirmed a district court’s ruling that Mississippi’s voluntary payment doctrine bars an insurer from recovering a settlement payment made on behalf of an additional insured that the insurer believed was not covered under the policy because the payment was not made under compulsion (Colony Insurance Co. v. First Specialty Insurance Corp., No. 17- 60094, 5th Cir., 2019 U.S. App. LEXIS 8535).
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March 21, 2019
Judge: Professional Liability Insurer Has No Duty To Defend Malpractice Lawsuit
BILLINGS, Mont. — Adopting a magistrate judge’s report in its entirety, a Montana federal judge on March 18 granted a health organization professional liability insurer’s motion for summary judgment in its declaratory judgment lawsuit challenging coverage under two policy periods for an underlying malpractice lawsuit alleging that its insured failed to properly diagnose a patient’s breast cancer during her annual mammogram (Capitol Specialty Insurance Corporation v. Big Sky Diagnostic Imaging, LLC, No. 17-54, D. Mont., 2019 U.S. Dist. LEXIS 45234).
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March 21, 2019
Florida High Court Asked Whether Insurer Has Standing To Sue Insured’s Counsel
WEST PALM BEACH, Fla. — A Florida appeals panel on March 20 granted an insurer’s motion to certify to the Florida Supreme Court the question of whether it has standing to maintain a malpractice lawsuit against counsel who was hired to represent its insured where it has a duty to defend (Arch Insurance Company v. Kubicki Draper, LLP, No. 4D17-2889, Fla. App., 4th Dist., 2019 Fla. App. LEXIS 4185).
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March 19, 2019
Professional Negligence Claim Not Timely Made And Reported, Federal Judge Rules
KANSAS CITY, Kan. — A Kansas federal judge on March 11 found that professional negligence claim against a land surveyor insured was not made and reported before the expiration of a professional liability insurance policy’s basic extended reporting period, granting the insurer’s motion for summary judgment (Aspen Square, Inc. v. American Automobile Insurance Company, No. 18-2255, D. Kan., 2019 U.S. Dist. LEXIS 38364).
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March 19, 2019
Judge: No Professional Liability Coverage Owed For Claims Against Property Manager
MADISON, Wis. — A Wisconsin federal judge on Feb. 27 found that a professional liability insurer has no duty to defend or indemnify its property manager insured against an underlying lawsuit alleging that the insured was dishonest about their operation and management of a student housing project at an Illinois college (The Hanover Ins. Co. v. BMOC, Inc., et al., No. 18-325, W.D. Wis., 2019 U.S. Dist. LEXIS 30764).
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March 19, 2019
Judge: Insurer Not Liable For $160,000 Default Judgment Against Boston Tavern
BOSTON — A Massachusetts federal judge on March 15 granted an insurer’s motion for summary judgment in a claimant’s lawsuit seeking recovery of a $160,000 default judgment entered against its tavern insured, finding that the insurer has shown that it suffered actual prejudice from the insured’s breach of the policy’s notice provision (Mark Tiede v. Seneca Specialty Insurance Company, No. 17-10074, D. Mass., 2019 U.S. Dist. LEXIS 42185).
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March 19, 2019
Insurers Have Duty To Defend Defamation Suit, Illinois Panel Finds In Reversal
CHICAGO — An Illinois panel on March 15 reversed a lower court in part in finding that homeowners and personal umbrella liability insurers have a duty to defend their insured against alleged defamatory conduct because it is unclear that the purported conduct fell under the business pursuits and intentional acts policy exclusions (Illinois Farmers Insurance Company, et al. v. Gerald Modory, et al., No. 1-18-0721, Ill. App., 1st Dist., 5th Div., 2019 Ill. App. Unpub. LEXIS 418).
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March 19, 2019
Insurer Owes Additional Insured Defense Of Negligence Suit Arising From Fatal Fall
SPRINGFIELD, Ill. — An Illinois appeals court on March 15 affirmed a lower court’s finding that an electrical subcontractor’s insurer has a duty to defend a general contractor against an underlying lawsuit arising from an electrician’s fatal fall at a project site, finding that the general contractor is vicariously liable for torts that the electrical subcontractor committed in the scope of it being the general contractor’s agent (Pekin Insurance Company v. Twin Shores Management, LLC, et al., No. 18-0513, Ill. App., 4th Dist., 2019 Ill. App. Unpub. LEXIS 431).
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March 18, 2019
Federal Judge Stays Professional Liability Coverage Dispute
ALBUQUERQUE, N.M. — A New Mexico federal judge on Feb. 26 stayed a professional liability insurer’s lawsuit seeking a declaration as to its duty to defend and indemnify its credit union insured against an underlying lawsuit, granting the insured’s motion in part (CUMIS Insurance Society, Inc. v. Zia Credit Union, No. 18-0684, D. N.M., 2019 U.S. Dist. LEXIS 30305).
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March 18, 2019
Idaho High Court Vacates $100,000 Judgment Against Insurer In Dishonesty Bond Suit
BOISE, Idaho — The Idaho Supreme Court on March 15 found that there are genuine issues of material fact regarding the amount of losses that an insured sustained under a dishonesty bond, reversing and vacating a lower court’s $100,000 judgment against the insurer in a coverage dispute over an alleged employee theft (Brent H. Greenwald, d/b/a Greenwald Neurosurgical, P.C. v. Western Surety Company, No. 45404, Idaho. Sup., 2019 Ida. LEXIS 65).
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March 18, 2019
Meat Processor Maintained Proper Insurance, Nebraska High Court Determines
LINCOLN, Neb. — The Nebraska Supreme Court on March 15 affirmed a trial court’s ruling that a meat processor maintained the proper insurance according to the terms of a contract with the meat supplier and did not breach the contract by allowing the insurance policy to include an exclusion for E. coli contamination (Meyer Natural Foods LLC, et al. v. Greater Omaha Packing Co. Inc., No. S-18-108., Neb. Sup., 2019 Neb. LEXIS 43).
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March 15, 2019
Intellectual Property, Breach Exclusions Bar Coverage, Federal Judge Rules
NEW YORK — A New York federal judge on March 13 entered a judgment in favor of a commercial general liability insurer one day after finding that the policy exclusions for intellectual property and breach excuse the insurer from its duty to defend an underlying lawsuit against its fashion designer insured (Nanette Lepore, et al. v. Hartford Fire Insurance Company, No. 18-689, S.D. N.Y., 2019 U.S. Dist. LEXIS 39404).
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March 14, 2019
Federal Judge Dismisses Insurer’s Negligence Suit Against Wells Fargo Bank
MIAMI — A Florida federal judge on March 12 granted Wells Fargo Bank’s motion to dismiss an insurer’s negligence lawsuit arising from the alleged fraudulent settlement of an underlying personal injury lawsuit against its insured, finding that the lawsuit is time-barred (Gulf Insurance Company v. Wells Fargo Bank, No. 19-60027, S.D. Fla., 2019 U.S. Dist. LEXIS 39377).
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March 13, 2019
Michigan Panel: Claim 1st Made In Arbitration Complaint; Coverage Triggered
DETROIT — A Michigan appeals panel on Feb. 26 affirmed a lower court’s finding that a claim in an arbitration complaint against an insured triggered coverage under a professional liability insurance policy, rejecting the insurer’s argument that the claim was first made before the policy’s inception (Illinois National Insurance Co. v. AlixPartners LLP, No. 337564, Mich. App., 2019 Mich. App. LEXIS 402).
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March 13, 2019
Judge: Investors’ Claims Are Not Covered Under Errors, Omissions Liability Policy
SALT LAKE CITY — A Utah federal judge on March 1 found that an errors and omissions liability insurer has no duty to defend and indemnify its insured against underlying lawsuits brought by investors alleging that they suffered losses on options trading (Allegis Investment Services LLC, et al. v. Arthur Gallagher & Co., et al., No. 17-515, D. Utah, 2019 U.S. Dist. LEXIS 33328).
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March 11, 2019
CGL Insurer Owes Homeowners Insurer Half Of $900,000 Accidental Death Settlement
DES MOINES, Iowa — The Iowa Supreme Court on March 8 affirmed a lower court’s finding that a commercial general liability insurer, as a co-insurer of a farmhouse property, has a duty to indemnify a homeowners insurer for half of the $900,000 paid to settle an underlying accidental shooting death that occurred on the insured property (Metropolitan Property And Casualty Insurance Company, et al. vs. Auto-Owners Mutual Insurance Company, No. 18-0129, Iowa Sup., 2019 Iowa Sup. LEXIS 20).
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March 11, 2019
Insureds Ask 4th Circuit To Find Insurer Has Duty To Defend Data Breach Suit
RICHMOND, Va. — A cybersecurity provider insured recently asked the Fourth Circuit U.S. Court of Appeals to reverse a lower federal court’s finding that a commercial general liability insurer has no duty to defend it against underlying personal injury claims arising from a credit card breach involving hotel customers, contending that the lower court “incorrectly applied Florida insurance coverage law” (St. Paul Fire & Marine Insurance Co. v. Rosen Millennium Inc., No. 18-14427, 4th Cir.).
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March 11, 2019
4th Circuit Denies Rehearing In Coverage Dispute Over Contaminated Heparin
RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on March 7 denied a petition for rehearing filed by insurers and allowed its decision in favor of insureds in a dispute over coverage for underlying product liability lawsuits involving contaminated heparin to stand (Charter Oak Fire Insurance v. American Capital, 17-2015 and 17-2068, 4th Cir.).