Mealey's Emerging Insurance Disputes

  • July 26, 2019

    Specific Litigation Exclusion Does Not Bar Coverage For Securities Class Action

    WILMINGTON, Del. — A Delaware judge on July 23 held that wrongs asserted in two underlying securities lawsuits implicated “entirely distinct misrepresentations of very different health risks associated with Celebrex,” rejecting excess directors and officers liability insurers’ argument that the specific litigation policy exclusion excuses their duty to defend (Pfizer Inc. v. Arch Specialty Insurance Company and U.S. Specialty Insurance Company, N18C-01-310, Del. Super.; 2019 Del. Super. LEXIS 345).

  • July 26, 2019

    Delaware Judge Refuses To Reconsider Ruling In Professional Liability Coverage Suit

    WILMINGTON, Del. — A Delaware judge on July 25 denied primary and excess insurers’ motion to reargue to challenge a ruling last month that found a civil investigative demand issued by the Texas attorney general against an insured constitutes a claim for nonmonetary relief that alleged a wrongful act and triggered professional liability coverage (Conduent State Healthcare, LLC, et al. v. AIG Specialty Insurance Company, No. N18C-12-074, Del. Super.).

  • July 26, 2019

    Panel:  CGL Insurer Owes Defense, Indemnification For Construction Site Injury Suit

    BROOKLYN, N.Y. — A New York appeals panel on July 24 affirmed a lower court’s ruling that a commercial general liability insurer has a duty to defend and indemnify additional insureds against an underlying personal injury lawsuit arising from a construction site injury and to reimburse them for all underlying defense costs (AVR-Powell C Development Corp., et al. v Utica First Insurance Company, No. 2016-11075, N.Y. Sup., App. Div., 2nd Dept., 2019 N.Y. App. Div. LEXIS 5786).

  • July 25, 2019

    Panel Reverses Ruling As To Faulty Workmanship Exclusion, Statutory Bad Faith

    DENVER — The 10th Circuit U.S. Court of Appeals on July 24 reversed and remanded a lower court’s finding that a professional liability insurance policy’s faulty workmanship exclusion precluded coverage for a lawsuit alleging that the insured poorly designed and constructed a fisheries enhancement project and the court’s grant of summary judgment on the insured’s claim of statutory bad faith but affirmed the dismissal of the insured’s common-law bad faith claim (Rockhill Insurance Company v. CFI-Global Fisheries Management, et al., Nos. 18-1201 & No. 18-1207, 10th Cir., 2019 U.S. App. LEXIS 22049).

  • July 25, 2019

    Panel: Assault And Battery Exclusion Bars Coverage For Human Trafficking Suit

    PHILADELPHIA — The Third Circuit U.S. Court of Appeals on July 22 affirmed a lower federal court’s finding that an insurer has no duty to defend or indemnify its motel owner insured against underlying claims that it was negligent in failing to prevent human sex trafficking from occurring at its property because the "assault and battery" exclusion precludes coverage (Nautilus Insurance Company v. Motel Management Services, Inc., et al., Nos. 18-2290 & 18-3436, 3rd Cir., 2019 U.S. App. LEXIS 21680).

  • July 24, 2019

    Judge: Breach Of Contract Claim Does Not Constitute Negligent Act, Error Or Omission

    FORT LAUDERDALE, Fla. — A federal judge in Florida on July 10 held that a lawsuit alleging that an insured breached an employment contract by failing to pay for a former employee’s vested annual leave does not constitute a negligent act, error or omission to trigger coverage under an insurance policy, finding that the insurer has no duty to defend against the underlying lawsuit (Palm Beach Leisureville Community Association, Inc. v. Evanston Insurance Company, Inc., No. 19-60399, S.D. Fla., 2019 U.S. Dist. LEXIS 115552).

  • July 24, 2019

    No Coverage For DOJ Antitrust Investigation, 11th Circuit Affirms

    ATLANTA — The 11th Circuit U.S. Court of Appeals on July 23 affirmed a lower federal court's finding in favor of an executive and organization liability insurer in an insured’s lawsuit seeking coverage for an underlying criminal investigation conducted by the Antitrust Division of the U.S. Department of Justice (DOJ) (Crowley Maritime Corp. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 18-10953, 11th Cir., 2019 U.S. App. LEXIS 21874).

  • July 23, 2019

    California Panel Affirms No Coverage For Tenant’s Theft Of Insured’s Property

    SAN DIEGO — A California appeals panel on July 22 affirmed a lower court’s ruling that a homeowners insurance policy unambiguously excludes coverage for the theft of the insured’s personal property by one of her tenants, rejecting the insured’s argument that the exclusion does not apply or is ambiguous (Shirley Pearson  v. State Farm General Insurance Company, No. D074426, Calif. App., 4th Dist., Div. 1; 2019 Cal. App. Unpub. LEXIS 4829).

  • July 23, 2019

    Excess Policy’s $250,000 Sublimit For Physical Abuse Claims Applies, Panel Affirms

    CHICAGO — The Seventh Circuit U.S. Court of Appeals on July 19 affirmed a lower federal court’s ruling that an insurer owes only $250,000 under its excess insurance policy toward a $4 million settlement that its foster care provider insured reached with the administrator of the estate of a toddler who was murdered after being placed in a foster home by the insured (Philadelphia Indemnity Insurance Company v. The Chicago Trust Company, et al., Nos. 18-3181 and 18-3241 7th Cir., 2019 U.S. App. LEXIS 21539).

  • July 22, 2019

    Insurer Asks Panel To Find No Coverage Owed For Sexual Assault Suits Against Pastor

    NEW ORLEANS — An insurer recently asked the Fifth Circuit U.S. Court of Appeals to reverse a lower federal court’s finding that it has a duty to defend its pastor insured against three underlying lawsuits alleging that he sexually assaulted three parishioners, arguing that the lower court’s construction of its policies’ sexual or physical abuse or molestation coverage “neither mentions nor distinguishes case law interpreting those same policy provisions in a manner that precludes a duty to defend” (Philadelphia Indemnity Insurance Company v. Terry R. Knighten, No. 18-50832, 5th Cir.).

  • July 22, 2019

    Judge Denies Preliminary Injunction To Pennsylvania Underwriting Association

    HARRISBURG, Pa. — A Pennsylvania federal judge on July 17 ruled that the Pennsylvania Professional Liability Joint Underwriting Association (JUA) has not identified an imminent threat supporting the “extraordinary remedy” of preliminary injunctive relief with regard to the passing and signing of recent legislation that affects it (Pennsylvania Professional Liability Joint Underwriting Association v. Tom Wolf, No. 19-1121, M.D. Pa., 2019 U.S. Dist. LEXIS 118517).

  • July 19, 2019

    3 Exclusions Apply To Bar Coverage For Defamation Judgment, 9th Circuit Affirms

    SEATTLE — The Ninth Circuit U.S. Court of Appeals on July 18 affirmed a lower federal court’s ruling that policy exclusions for “knowing violation of the rights of another,” “material published with knowledge of its falsity” and “knowledge of falsity” excused an insurer’s duty to indemnify a defamation judgment obtained against its insured (Bradley Stephen Cohen, et al. v. Berkley National Insurance Company, No. 17-16960, 9th Cir., 2019 U.S. App. LEXIS 21324).

  • July 19, 2019

    Board Members Deliberately Breached Policy’s Cooperation Clause, Panel Affirms

    TRENTON, N.J. — A New Jersey appeals panel on July 15 affirmed a judge’s “cogent written opinion” that rejected a borough insured’s argument that it did not commit a material and deliberate breach of an insurance policy’s cooperation clause, finding that the borough’s contentions are “without sufficient merit to warrant further discussion in a written opinion” (Jacquelyn Ferentz v. Mayor Herbert Frederick, et al., No. A-5628-17T2, N.J. Super., App. Div., 2019 N.J. Super. Unpub. LEXIS 1620).

  • July 18, 2019

    Insured’s Assignment Of Tort Claims Was Invalid, New Jersey Panel Says, Reverses

    TRENTON, N.J. — A New Jersey appeals panel on July 15 held that an insured’s assignment of its tort claims against its insurance broker was invalid, reversing a lower court’s $500,000 ruling against the broker in a lawsuit alleging that it procured inadequate business interruption insurance (AII1, LLC v. Pinnacle Insurance Solutions, LLC, et al., Nos. A-2241-17T4 and A-2291-17T4, N.J. Super., App. Div., 2019 N.J. Super. Unpub. LEXIS 1617).

  • July 17, 2019

    9th Circuit:  Insurer Breached Contract When It Denied Coverage Under War Exclusions

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on July 12 reversed a lower federal court’s finding that war exclusions in a motion picture/television producers portfolio insurance policy bar coverage for the expenses a production company incurred in postponing and subsequently relocating the production of the television show "Dig" from Israel because of conflict in summer 2014, finding that the insurer breached the policy when it denied coverage by defining the conflict as “war” and “warlike action by a military force” (Universal Cable Productions LLC, et al. v. Atlantic Specialty Insurance Co., No. 17-56672, 9th Cir., 2019 U.S. App. LEXIS 20704).

  • July 17, 2019

    School District Coverage Suit Arising From Harassment, Retaliation Claims Dismissed

    PINE BLUFF, Ark. — A federal judge in Arkansas on July 12 held that a math teacher’s Equal Employment Opportunity Commission charge and subsequent lawsuit alleging sexual harassment and retaliation constitute a single claim that was “first made” against a school district insured  during a 2015 policy period, finding that there is no coverage because the insured did not timely report the claim to the insurer (Pine Bluff School District v. ACE American Insurance Company, No. 18-00185, E.D. Ark., 2019 U.S. Dist. LEXIS 116167).

  • July 17, 2019

    Assault And Battery Exclusion Bars Coverage For Shooting, Federal Judge Says

    BIRMINGHAM, Ala. — A federal judge in Alabama on July 9 found that a restaurant insured breach an insurance policy’s notice provisions by failing to timely report a claim arising from an underlying shooting, further finding that the policy’s assault and battery exclusion further bars coverage (Evanston Insurance Company v. The Break I, Inc., et al., No. 18-01197, N.D. Ala., 2019 U.S. Dist. LEXIS 113109).

  • July 17, 2019

    Prior Acts/Prior Notice Exclusion Does Not Bar Coverage, Delaware Judge Rules

    WILMINGTON, Del. — In an opinion filed under seal, a Delaware judge on July 9 held that a health care facility’s concurrent excess liability insurance policy’s prior acts or prior notice exclusion does not preclude coverage for an underlying class action challenging the constitutionality of an insured’s subsidiary's private probationary services because the class action is significantly different from one filed five years before (Providence Service Corporation v. Illinois Union Insurance Company, No. 18C-06-114, Del. Super.).

  • July 17, 2019

    Assignee Appeals Ruling That TCPA Violations Arise Out Of ‘Invasion Of Privacy’

    WEST PALM BEACH, Fla. — An insured’s assignee on July 2 filed a notice of appeal to the 11th Circuit U.S. Court of Appeals challenging a federal district court’s finding that coverage for an underlying $60,413,112 consent judgment entered against the insured in a Telephone Consumer Protection Act (TCPA) violation dispute is barred by the insurance policy's "invasion of privacy" exclusion (Jacob Horn, et al. v. Liberty Insurance Underwriters, Inc., No.18-80762, S.D. Fla.).

  • July 17, 2019

    Judge: Failure To Provide Suitable Prosthetic Leg Does Not Qualify As ‘Occurrence’

    LOUISVILLE, Ky. — A federal judge in Kentucky on July 11 held that an insured’s alleged failure to provide a customer with a suitable prosthetic leg does not qualify as an “occurrence” under a commercial general liability insurance policy and dismissed the insured’s lawsuit seeking coverage for the underlying claims (Matthew Hayden, et al. v. Benchmark Insurance Company, et al., No. 19-00154, W.D. Ky., 2019 U.S. Dist. LEXIS 115948).