Mealey's Emerging Insurance Disputes

  • January 03, 2020

    11th Circuit Affirms Dismissal Of Class Action RICO Lawsuit Against Insurers

    ATLANTA — The 11th Circuit U.S. Court of Appeals on Dec. 20 affirmed a lower federal court’s dismissal of a class action lawsuit brought under the Racketeer Influenced and Corrupt Organizations Act against insurers by two auto body collision shops, finding that the plaintiffs have failed to allege any fraudulent or wrongful conduct to demonstrate that there were predicate acts of fraud and extortion (Crawford's Auto Center, Inc., et al. v. State Farm Mutual Automobile Insurance Company, et al., No. 17-12583, 11th Cir., 2019 U.S. App. LEXIS 37964).

  • January 03, 2020

    Au Pair Sponsor’s Request To Apply Notice-Prejudice Rule To Coverage Suit Rejected

    PASADENA, Calif. — The Ninth Circuit U.S Court of Appeals on Dec. 13 rejected a federally authorized au pair program sponsor’s argument that California law requires a not-for-profit entity and directors and officers liability insurer to prove that it was prejudiced by the insured's alleged untimely reporting of an underlying lawsuit brought under the Sherman Act, finding that the notice-prejudice rule does not apply to the policy (EurAuPair International, Inc. v. Ironshore Specialty Insurance Company, No. 18-55933, 9th Cir., 2019 U.S. App. LEXIS 36898).

  • January 02, 2020

    Third Party Can Be Compelled To Arbitrate Coverage Suit, Panel Says In Reversal

    SACRAMENTO, Calif. — A California appeals panel on Dec. 31 held that an insurance policy’s binding arbitration clause applies to a third party, reversing and ordering a lower court to order arbitration of a coverage dispute arising from an underlying injury that occurred at a convention center parking lot (Philadelphia Indemnity Insurance Company v. SMG Holdings Inc., No. C082841, Calif., App., 3rd Dist., 2019 Cal. App. Unpub. LEXIS 8686).

  • December 23, 2019

    City, Employees Argue For Judgment On Pleadings In Sexual Misconduct Lawsuits

    JASPER, Ala. — The city of Jasper and employees on Dec. 19 moved for judgment on the pleadings in two Alabama federal court cases, which also name their insurer, over allegations by former jail inmates of sexual misconduct in a jail because the city’s civil service board is “not legally cognizable nor endowed with the ability to sue or be sued” (Whitley Goodson v. J.C. Poe, Jr., et al., No. 19-1399, Charity Tessener v. J.C. Poe, Jr., et al., No. 19-01314, N.D. Ala.).

  • December 19, 2019

    Professional Liability Insurer Did Not Act In Bad Faith, Massachusetts Court Says

    BOSTON — An insured’s refusal to settle cannot be imputed to a professional liability insurer when the policy at issue includes a consent-to-settle provision, the Massachusetts Supreme Judicial Court said Dec. 16 in affirming a trial court’s ruling that the insurer did not act in bad faith in failing to settle a lawsuit against its insured (Douglas M. Rawan, et al., v. Continental Casualty Co., No. SJC-12691, Mass. Sup., 2019 Mass. LEXIS 710).

  • December 16, 2019

    Juul Insurer Asks Utah Court To Void $5M Excess Policy Due To Misrepresentations

    SALT LAKE CITY — A excess insurer on Dec. 2 filed an amended complaint against e-cigarette maker Juul Labs Inc. (JLI) seeking a Utah federal court’s declaration that a $5 million liability policy is null and void because of alleged misrepresentations made about the discontinuance of candy-flavored vaping pods and about class actions by injured users (Prime Insurance Company v. Juul Labs, Inc., No. 19-925, D. Utah).

  • December 13, 2019

    Illinois Panel: No Coverage Owed For Trade Secret Suit Against Candy Manufacturer

    CHICAGO — An Illinois panel on Dec. 11 affirmed a lower court’s finding that insurers have no duty to defend or indemnify an underlying lawsuit alleging that a candy manufacturer violated a confidentiality agreement by using another company’s trade secrets to manufacture competing products, finding that the underlying action fails to allege violations or injuries that occured during the policy period (Liberty Mutual Fire Insurance Company, et al. v. Ferrara Candy Company, et al., No. 18-1385, Ill. App, 1st Dist., 3rd Div., 2019 Ill. App. Unpub. LEXIS 2244).

  • December 12, 2019

    Judge:  Claim Was Not First Alleged Before Professional Liability Policy’s Inception

    FORT WAYNE, Ind. — A federal judge in Indiana on Dec. 10 held that a claim alleging that a medical malpractice insurer failed to settle a malpractice claim against its doctor insured was not first made before the inception of its professional liability insurance policy and, therefore, the issue should not be submitted to a jury when the case goes to trial next month (The Medical Protective Company of Fort Wayne Indiana v. American International Specialty Lines Insurance Company, No. 13-357, N.D. Ind., 2019 U.S. Dist. LEXIS 213592).

  • December 12, 2019

    Panel: Employees’ Claims Are Not Covered Under Employment Practices Liability Policy

    ATLANTA — The 11th Circuit U.S. Court of Appeals on Dec. 4 held that two employees' workplace tort claims against a medical services company are not covered under a self-described professional employer organization (PEO)’s employment practices liability insurance policy because the medical services company did not have a valid written agreement to lease employees from the PEO (TMH Medical Services, LLLC v. National Union Fire Insurance Company Of Pittsburgh, PA., No. 18-14991, 11th Cir. 2019 U.S. App. LEXIS 35954).

  • December 12, 2019

    Magistrate Sua Sponte Extends Deadline To Respond To Mass Shooting Coverage Suit

    LAS VEGAS — A federal magistrate judge in Nevada on Nov. 18 denied a joint motion for a status conference in a lawsuit alleging that a commercial general liability insurer wrongfully breached its duty to defend MGM Resorts International and others against more than 4,000 claims arising from the Oct. 1, 2017, mass shooting at the Route 91 Harvest Country Music Festival, sua sponte extending the insurer’s deadline to respond to the complaint (MGM Resorts International, et al. v. Zurich American Insurance Company, No. 19-01051, D. Nev.).

  • December 12, 2019

    $5.3M Equitable Garnishment Against Law Enforcement Liability Insurers Affirmed

    KANSAS CITY, Mo. — A Missouri appeals panel on Dec. 10 affirmed a lower court’s $5,354,000 equitable garnishment against law enforcement liability insurers, finding that the insurers have a duty to indemnify the city of Columbia, Mo., for injuries or damages sustained during the policy period by a man who was convicted and incarcerated for robbery and homicide and later discharged from custody (Ryan Ferguson v. St. Paul Fire and Marine Insurance Company, et al., Nos. WD82090 consolidated with WD82197, Mo. App., West Dist., Div. 3, 2019 Mo. App. LEXIS 1944).

  • December 12, 2019

    Liquor Liability Exclusion Bars Coverage For Dram Shop Claims, 11th Circuit Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on Dec. 11 affirmed a lower federal court's finding that an insurance policy's liquor liability exclusion bars coverage for underlying claims that a nightclub violated Florida's Dram Shop Law, rejecting the insured’s argument that the exclusion renders its coverage illusory (AIX Specialty Insurance Company v. Members Only Management, LLC, et al., No. 19-12110, 11th Cir., 2019 U.S. App. LEXIS 36656).

  • December 11, 2019

    Judge: Intentional Act Exclusion Bars Coverage For Suit Arising From Sexual Abuse

    WHITE PLAINS, N.Y. — A federal judge in New York on Nov. 20 granted a homeowners insurer’s motion for judgment on the pleadings in its declaratory judgment lawsuit disputing coverage for a lawsuit alleging that the sexual assault of a minor would not have occurred but for the insureds’ failure to “properly or reasonably supervise” their son, finding that the policy’s intentional acts exclusion bars coverage (Metropolitan Property and Casualty Insurance Co. v. Theresa Colmey, et al., No. 18-9259, S.D. N.Y., 2019 U.S. Dist. LEXIS 202408).

  • December 11, 2019

    Judge Dismisses Insurer’s Malpractice Suit Against Law Firm Representing Insured

    NEWARK, N.J. — A federal judge in New Jersey on Dec. 6 dismissed an insurer’s legal malpractice suit asserting that a law firm failed to competently represent its board of education insured in an underlying personal injury lawsuit that settled for $1 million, finding that the complaint is devoid of facts supporting the insurer’s argument that the firm’s failure to pursue its preferred course of action amounted to legal malpractice (Star Insurance Company v. Irvington Board of Education, et al., No. 19-8677, D. N.J., 2019 U.S. Dist. LEXIS 211259).

  • December 10, 2019

    Panel Reverses Ruling In Insurer’s Favor After Court Answers Certified Question

    SEATTLE — The Ninth Circuit U.S. Court of Appeals on Dec. 9 reversed and remanded a lower federal court’s ruling in favor of an insurer after the Washington Supreme Court answered “yes” to the appeals court’s certified question asking if, under Washington law, an insurer is bound by representations made by its authorized agent in a certificate of insurance with respect to a party's status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage (T-Mobile USA Inc. v. Selective Insurance Company of America, No. 17-35932, 9th Cir., 2019 U.S. App. LEXIS 36414).

  • December 09, 2019

    $1.7M Fraud Loss Triggered Coverage Under Commercial Crime Policy, Majority Affirms

    ATLANTA — A majority of the 11th Circuit U.S. Court of Appeals on Dec. 9 affirmed a lower federal court’s ruling that a commercial crime insurance policy is ambiguous and, as a result, the insurer owes coverage for the insured's $1,717,000 loss caused by computer and funds transfer fraud (Principle Solutions Group LLC v. Ironshore Indemnity Inc., No. 17-11703, 11th Cir., 2019 U.S. App. LEXIS 36350).

  • December 05, 2019

    Judge Refuses To Dismiss Insurer’s Coverage Suit Arising From Fentanyl Overdose

    ST. LOUIS — Noting that a defendant’s motion to dismiss an insurer’s declaratory judgment lawsuit was “steeped solely in the doctrine of abstention,” a federal judge in Missouri concluded Nov. 26 that all six factors in Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994 (8th Cir. 2005), favor hearing the insurer’s declaratory judgment action in federal court (Safeco Insurance Company of America v. Jesse Yount, et al., No. 19-890, E.D Mo., 2019 U.S. Dist. LEXIS 204971).

  • December 05, 2019

    Excess E&O Insurer’s Motion To Intervene Is Untimely, Federal Judge Rules

    PHILADELPHIA — A federal judge in Pennsylvania on Nov. 26 denied an excess errors and omissions liability insurer’s motion to intervene in a primary insurer's lawsuit seeking a declaration as to coverage for underlying claims for federal antitrust violations, finding the motion untimely (Allied World Specialty Insurance Company v. Independence Blue Cross, No.17-1463, E.D. Pa., 2019 U.S. Dist. LEXIS 204878).

  • December 04, 2019

    Insurers’ Motion For Judgment Denied In Coverage Suit Over Real Estate Acquisition

    KANSAS CITY, Kan. — A federal judge in Kansas on Nov. 25 denied primary and excess insurers’ motion for judgment on the pleadings in a lawsuit seeking coverage for an underlying claim that an insured committed tortious interference with existing contractual relations, finding that he cannot determine that the insurer’s coverage theory is “frivolous as a matter of law” in light of the underlying claims and the extrinsic evidence known to the insurers (Michel Schlup, et al. v. Depositors Insurance Company, et al., No. 19-02095, D. Kan., 2019 U.S. Dist. LEXIS 206770).

  • December 04, 2019

    9th Circuit:  USFWS Officer’s Sexual Contact With Employee Was Not ‘Occurrence’

    PORTLAND, Ore. — The Ninth Circuit U.S. Court of Appeals on Dec. 3 held that a former regional field dive officer for the U.S. Fish and Wildlife Service’s sexual contact with a fellow employee was not an occurrence under a homeowners insurance policy, affirming a lower court in part (American Reliable Insurance Company v. Lawrence Lockard, et al., Nos. 18-35758 and 18-35786, 9th Cir., 2019 U.S. App. LEXIS 35869).