Mealey's Emerging Insurance Disputes

  • September 16, 2019

    Judge: Insured Fails To Show Potential For Employment Practices Liability Coverage

    LOS ANGELES — A federal judge in California on Sept. 4 found that a courier company insured’s arguments are “too speculative” to establish a potential for employment practices liability coverage for underlying putative class claims brought by its delivery drivers, finding that the insurer has no duty to defend (Unity Courier Services, Inc. v. Hudson Insurance Co., No. 18-08143, C.D. Calif., 2019 U.S. Dist. LEXIS 151566).

  • September 16, 2019

    Majority: Insured Did Not Follow Professional Liability Policy’s Notice Requirements

    ST. LOUIS — A majority of a Missouri appellate panel on Sept. 3 found that because an “objectively reasonable attorney” would have understood that legal malpractice claims survived a client’s death, an attorney insured had a duty to notify its professional liability insurer of a potential malpractice claim when he applied to renew his policy (Elizabeth A. Ruiz v. The Bar Plan Mutual Insurance Company, No. ED106926, Mo. App., 2019 Mo. App. LEXIS 1381).

  • September 16, 2019

    No Coverage For Suit Alleging Insured Charged Hidden Fees On Vending-Machine Charges

    CHICAGO — A federal judge in Illinois on Sept. 4 held that an underlying putative class action alleging financial loss based on the insured’s practice of charging hidden fees to vending-machine credit or debit card customers fails to trigger coverage under commercial general liability and commercial umbrella insurance policies that were issued to the insured, granting the insurer’s motion for summary judgment in its declaratory judgment lawsuit disputing coverage (AMCO Insurance Company v. Avcoa, Inc., et al., No. 19-480, N.D. Ill., 2019 U.S. Dist. LEXIS 150272).

  • September 16, 2019

    D&O Insurer Has No Duty To Defend, Indemnify Attorney General’s UCL, FAL Suit

    LOS ANGELES —A federal judge in California on Sept. 10 held that under California Insurance Code Section 533.5, a directors and officers liability insurer has no duty to defend or indemnify its insured against an underlying unfair competition and false advertising lawsuit brought against its insured by the California attorney general (Adir International, LLC, et al. v. Starr Indemnity and Liability Company, et al., No. 19-04352, C.D. Calif., 2019 U.S. Dist. LEXIS 155321).

  • September 13, 2019

    Panel Affirms Dismissal Of Suit Against Taiwanese Insurers For Lack Of Jurisdiction

    CHICAGO — The Seventh Circuit U.S. Court of Appeals on Sept. 12 affirmed a lower federal court’s dismissal of an insurer’s lawsuit seeking indemnification for two Taiwanese insurers for a products-liability settlement paid on behalf of a bicycle manufacturer insured, finding that the plaintiff did not establish that the defendants have sufficient minimum contacts with Wisconsin and, therefore, exercising jurisdiction over the defendants would violate due process (Lexington Insurance Company v. Hotai Insurance Company, Ltd., et al., No. 18-1141, 7th Cir., 2019 U.S. App. LEXIS 27483).

  • September 12, 2019

    PLHIGA Act Preempted As To Authority To Assess Premiums Collected By Health Insurers

    HARRISBURG, Pa. — The Pennsylvania Life and Health Insurance Guaranty Association Act (PLHIGA Act) is preempted by federal law to the extent that it authorizes PLHIGA to assess Medicare Part C and D premiums collected by its member insurers, the Pennsylvania Commonwealth Court ruled Sept. 9, finding no error in an order by the state’s insurance commissioner sustaining health insurers’ appeals and reversing challenged assessments (Pennsylvania Life and Health Insurance Guaranty Association v. Pennsylvania Insurance Department, Nos. 940 - 947 C.D. 2018, Pa. Cmwlth., 2019 Pa. Commw. LEXIS 840).

  • September 11, 2019

    Excess Insurers’ Motions To Dismiss Denied In Formaldehyde Laminate Flooring Suit

    MADISON, Wis. — In two separate opinions issued Sept. 9, a Wisconsin state judge denied motions to dismiss filed by excess insurers in a suit regarding coverage for underlying claims arising out of toxic levels of formaldehyde in Lumber Liquidators Inc.’s laminate flooring after determining that a ruling on the applicability of the pollution exclusion in one of the excess insurer’s policies cannot be made at this stage of the litigation and after finding that the insured sufficiently alleged that a primary policy was exhausted by an underlying settlement (Lumber Liquidators Inc. v. American Guarantee & Liability Insurance Co., et al., No. 15-1089, Wis. Cir., Dane Co.).

  • September 10, 2019

    Panel Certifies Question To Texas High Court In Coverage Suit Over ATV Accident

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Sept. 9 certified a question to the Texas Supreme Court to determine whether there’s a policy language exception to Texas’ eight-corners rule after insureds’ appealed a lower federal court’s ruling that their homeowners insurer has no duty to defend or indemnify them against an underlying lawsuit alleging that they were negligent in failing to supervise and instruct their 10-year-old grandson who died while in their care (State Farm Lloyds v. Janet Richards, et al., No. 18-10721, 5th Cir.).

  • September 09, 2019

    Insurer Seeks $734,500 In Equitable Subrogation For Settlement Of Suit Against Law Firm

    LOS ANGELES — A primary and first-excess layer legal malpractice insurer on Sept. 6 sued another excess insurer in the U.S. District Court for the Central District of California, seeking recovery of a portion of the $2.5 million it paid to settle an underlying lawsuit brought against their mutual law firm insured (Certain Underwriters At Lloyd’s, London, et al. v. Scottsdale Insurance Company, No. 19-07730, C.D. Calif.).

  • September 06, 2019

    Insurer Did Not Unreasonably Deny Coverage For Modular Homes Claim, Panel Affirms

    SEATTLE — The Ninth Circuit U.S. Court of Appeals on Aug. 28 affirmed a lower federal court’s ruling that an insurer did not act unreasonably when it denied an insured’s claim, concluding that the insurer “relied on several sources of evidence” in determining that the insured’s loss of five modular homes was caused by a business dispute and not a theft (Clear Creek Retirement Plan II LLC v. Foremost Insurance Company Grand Rapids Michigan, No. 18-35725, 9th Cir., 2019 U.S. App. LEXIS 26451).

  • August 30, 2019

    Panel: Wrongful Employment Practices Exception Negates Insured Vs. Insured Exclusion

    DALLAS — A Texas appeals panel held Aug. 19 that an insured satisfied its burden of establishing that an insurance policy’s wrongful employment practices exception negates the “insured versus insured” exclusion relied on by the insurer to deny coverage, partly reversing and remanding a lower court and rendering a $4,123,382.61 judgment in favor of the insured in a dispute arising from an employee termination (Prophet Equity LP, et al. v. Twin City Fire Insurance Company, No. 05-17-00927-CV, Texas App., 5th Dist., 2019 Tex. App. LEXIS 7302).

  • August 30, 2019

    Criminal Acts Exclusion Bars Coverage For Shooting Death, 6th Circuit Affirms

    CINCINNATI — The Sixth Circuit U.S. Court of Appeals on Aug. 23 affirmed a lower federal court’s ruling that an insurance policy's criminal acts exclusion excuses an insurer from its duty to defend or indemnify its insured, in his individual or official capacities as a constable, against an underlying shooting death, rejecting the appellant’s contention that the exclusion is ambiguous (Atlantic Specialty Insurance Co. v. Bill Stanley, et al., No. 17-308, 6th Cir., 2019 U.S. App. LEXIS 25501).

  • August 29, 2019

    Wisconsin Panel: Location Endorsement Bars Coverage For Medical Negligence Claim

    WAUSAU, Wis. — On remand from the Wisconsin Supreme Court, a Wisconsin appeals panel on Aug. 27 found that a medical malpractice insurer owes no coverage for a medical negligence claim under the policy’s location endorsement because the doctor insured’s liability is “connected with” professional services that he performed in Michigan (David W. Paynter, et al. v. ProAssurance Wisconsin Insurance Company, et al., No. 2017AP739, Wis. App., Dist. 3, 2019 Wisc. App. LEXIS 479).

  • August 29, 2019

    Coverage Barred For Aerial Spraying Of Herbicide, Texas Panel Determines

    HOUSTON — The First District Texas Court of Appeals on Aug. 27 reversed a trial court's ruling that an insurer owes a duty to defend an insured against underlying allegations arising out of the insured’s aerial spraying of a herbicide because an endorsement to the policy’s pollution exclusion clearly precludes coverage (StarNet Insurance Co. v. RiceTec Inc., No. 01-18-00536-CV, Texas App., 1st Dist., 2019 Tex. App. LEXIS 7758).

  • August 29, 2019

    No Coverage Owed For Settlement Of Alleged Grand Theft Scheme, 11th Circuit Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on Aug. 26 affirmed a lower federal court’s ruling that a directors and officers liability insurer has no duty to indemnify its insurance agency insured for settlement payments made to the alleged victims of a grand theft scheme, finding that the insured’s $183,807.87 payment to Miami-Dade Aviation Department is the restitution of ill-gotten gains that is not covered under the policy (Philadelphia Indemnity Insurance Company v. Sabal Insurance Group, Inc., No. 17-14844, 11th Cir., 2019 U.S. App. LEXIS 25542).

  • August 28, 2019

    Panel: Claims Are Potentially Subject To Employment Practices Liability Coverage

    SANTA ANA, Calif. — A California appeals panel on Aug. 27 held that a lower court erred in finding that an employment practices liability insurance policy’s wage-and-hour exclusion bars coverage for an underlying lawsuit brought against the owner and operator of more than 250 Pizza Hut and Wing Street restaurants, finding that many of the underlying allegations are potentially subject to coverage (Southern California Pizza Co., LLC v. Certain Underwriters at Lloyd's, London, No. G056243, Calif. App., 4th Dist., Div. 3, 2019 Cal. App. Unpub. LEXIS 5712).

  • August 28, 2019

    Panel: Insured’s Conduct ‘Cannot Reasonably Be Deemed An Accident’ Under Policy

    FRESNO, Calif. — A California appeals panel on Aug. 27 held that an insured’s conduct “cannot reasonably be deemed an accident,” affirming a lower court’s ruling that a homeowners insurer did not breach its duty to defend against an underlying lawsuit alleging elder abuse, assault with a deadly weapon and intentional infliction of emotional distress against the insured (Michael Komin v. Travelers Property Casualty, No. F075381, Calif. App., 5th Dist., 2019 Cal. App. Unpub. LEXIS 5713).

  • August 28, 2019

    Panel: Insureds Did Not Show They Owned $1.7M In Undelivered Fine Wine

    DENVER — The 10th Circuit U.S. Court of Appeals on Aug. 28 held that there is no insurance coverage for $1.7 million in 2,448 bottles of undelivered fine wine because the insureds did not present adequate evidence that they were the owners of any wine bottles that were not delivered to them, affirming a lower court’s summary judgment ruling in favor of the insurer on different grounds (Malik M. Hasan, et al. v. AIG Property Casualty Co., No. 18-1309, 10th Cir., 2019 U.S. App. LEXIS 25761).

  • August 28, 2019

    Judge: Intellectual Property Exclusion Bars Coverage For Copyright Infringement Suit

    NEW YORK — A federal judge in New York on Aug. 26 held that a commercial general liability insurance policy’s intellectual property (IP) exclusion bars coverage for an underlying copyright infringement lawsuit against an insured, rejecting the insured’s argument that the exclusion’s “advertising exception” applies (Spandex House, Inc. v. Hartford Fire Insurance Company, et al., No. 18-8367, S.D. N.Y., 2019 U.S. Dist. LEXIS 144646).

  • August 28, 2019

    Commissioner Orders State Farm To Stop Imposing Hurricane Duration Deductible

    BATON ROUGE, La. — The commissioner of the Louisiana Department of Insurance on Aug. 20 issued a cease-and-desist order and a notice of proposed regulatory action against State Farm Fire and Casualty Co. after receiving notice of a complaint that the insurer is imposing a hurricane duration deductible on claims made by its insureds for Hurricane Barry losses that allegedly occurred before the hurricane duration period.