Mealey's Emerging Insurance Disputes

  • July 24, 2020

    Insurer: Virus Exclusion Bars Coverage For COVID-Related Business Losses

    SAN ANTONIO — Dismissal of an insured's claims for business interruption coverage stemming from local and state-mandated stay-at-home orders is warranted because its claims are excluded by the policy's virus or bacteria exclusion, an insurer argues in a July 10 motion to dismiss filed in Texas federal court (Vizza Wash LP v. Nationwide Mutual Insurance Co., et al., No. 20-680, W.D. Texas).

  • July 24, 2020

    Judge Partially Grants Stay Of COVID-19 Coverage Suit Pending JPMDL Ruling

    HARRISBURG, Pa. — A federal judge in Pennsylvania on July 15 partially granted a self-proclaimed “mom and pop” South Carolina restaurant owner’s motion to stay its class action against its all-risk commercial insurer for “swiftly” denying its claim for coverage for its closure due to the COVID-19 pandemic after the insured argued that the insurer will suffer no prejudice if the lawsuit is stayed pending the U.S. Judicial Panel on Multidistrict Litigation’s resolution of two motions to transfer “this and nearly 200 other related cases in 38 federal districts” for centralized pretrial proceedings (Richard Kahn, et al. v. Pennsylvania National Mutual Casualty Insurance Company, No. 20-00781, M.D. Pa.).

  • July 24, 2020

    Retailer Insureds Dismiss 1 Insurer From Coronavirus Coverage Dispute

    KANSAS CITY, Kan. — Retailer insureds on July 23 filed a notice of voluntary dismissal of one of their all-risk commercial property insurers in their federal lawsuit alleging that the insurers are part of an industry that has taken a "uniform approach" to the novel coronavirus pandemic by denying coverage even when the policy does not include an exclusion for losses related to a pandemic or virus (RPR Enterprises, Inc. et al.  v. Continental Western Group, LLC, et al., No. 20-02256, D. Kan.).

  • July 24, 2020

    Pennsylvania Judge Coordinates COVID-19 Coverage Suits In Allegheny County

    ALLEGHENY, Pa. — A Pennsylvania judge on July 23 granted an insured's motion to coordinate four novel coronavirus coverage lawsuits against Erie Insurance Exchange in the Allegheny County Court of Common Pleas, noting that any further similar actions filed against Erie will be transferred and made part of the coordinated proceedings (Joseph Tambellini, Inc. v. Erie Insurance Exchange, No.  GD-20-005137, Pa. Comm. Pls., Allegheny Co.).

  • July 24, 2020

    Insurer Of Fracking Chemical Company Says No Coverage Owed For Underlying Suit

    FORT WORTH, Texas — A commercial general liability insurer says no coverage is owed to its insured fracking chemical distributor for an underlying lawsuit arising out of a business dispute because the underlying suit did not arise out of an occurrence as required by the policy, the insurer says in a July 22 complaint filed in Texas federal court (James River Insurance Co. v. Clearpoint Chemicals LLC, et al., No. 20-761, N.D. Texas).

  • July 24, 2020

    Panel: Related Wrongful Acts Exclusion Bars Coverage For Antitrust Suit Against NCAA

    INDIANAPOLIS — The Indiana Court of Appeals on July 15 affirmed a lower court's ruling that an insurance policy's "Related Wrongful Acts" exclusion precludes coverage for an underlying lawsuit alleging antitrust violations against the National Collegiate Athletic Association (NCAA), finding that the underlying lawsuit and one that was filed nine years prior present "related claims as perceived under the Primary Policies" (National Collegiate Athletic Association v. Ace American Insurance, et al., No. 19A-PL-1313, Ind. App.).

  • July 23, 2020

    Panel Affirms Ruling In Insurers' Favor On Reimbursement, Bad Faith Claims

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on July 22 affirmed a lower federal court's summary judgment ruling in favor of insurers in an assignee of the insureds' lawsuit alleging bad faith and seeking reimbursement of underlying settlement costs (Marvin W. Durment, et al. v. The Burlington Insurance Company, No. 19-55353, 9th Cir., 2020 U.S. App. LEXIS 22862).

  • July 23, 2020

    Panel:  Appellant Cannot Raise Unclean Hands Defense Against Contract Claim

    CINCINNATI — The Sixth Circuit U.S. Court of Appeals on July 22 held that an appellant could not raise an unclean hands defense against a contract claim brought by an insurer's assignee because the insurer did nothing wrong and the assignee did not act inappropriately to deprive him of a right to recovery of $300,000 of a power bill after the appellant and appellee's glass-manufacturing company went bankrupt (North American Specialty Insurance Company v. Heritage Glass, LLC, et al., No. 19-6258, 6th Cir.).

  • July 23, 2020

    No E&O Coverage For Claim Predating City's Membership, Panel Says

    MIAMI — A Florida city is owed no errors and omissions coverage because its claim predated its membership in a self-insured intergovernmental collective risk management program, a state appellate court affirmed July 22, also finding that the city lacked standing to bring a claim against the insurer's reinsurer (City of Florida City v. Public Risk Management of Florida, et al., Nos. 3D18-2175 & 3D19-0983, Fla. App., 3rd Cir., 2020 Fla. App. LEXIS 10391).

  • July 22, 2020

    Federal Judge:  Insurer Has Duty To Defend Against Suit Alleging Faulty Design

    BUFFALO, N.Y. — A federal judge in New York on July 17 held that a professional liability insurer has a duty to defend against an underlying lawsuit arising from the insured's alleged "faulty" design of an anaerobic digester system, finding that the exception to the policy's express warranty exclusion applies to allow coverage (Those Certain Underwriters At Lloyd's, London, v. DVO, Inc., et al., No. 19-00252, W.D. N.Y., 2020 U.S. Dist. LEXIS 127390).

  • July 22, 2020

    Panel Reverses Ruling In Insurer's Favor In Coverage Suit Over Fatal ATV Accident

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on July 20 reversed and remanded a lower federal court's ruling that a homeowners insurer has no duty to defend or indemnify against an underlying lawsuit alleging that its insureds were negligent in failing to supervise and instruct their 10-year-old grandson who died in an all-terrain vehicle accident, finding that the underlying lawsuit "contains allegations within its four corners that potentially constitute a claim within the four corners of the policy" (State Farm Lloyds v. Janet Richards, et al., No. 18-10721, 5th Cir., 2020 U.S. App. LEXIS 22633).

  • July 21, 2020

    Insurer Has No Duty To Defend Trademark Suit, 9th Circuit Affirms

    SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on July 20 affirmed a federal court’s ruling that an insurer has no duty to defend its insured against an underlying trademark dispute (Premier Pools Management Corp. v. Colony Insurance Corp., No. 18-16551, 9th Cir.).

  • July 21, 2020

    COMMENTARY: Reinsurance In The Time Of COVID-19

    By Sam Tacey, Paul Moura and Ben Sharrock

  • July 20, 2020

    Court Refuses To Dismiss Suit Alleging Insurer Wrongfully Denied D&O Coverage

    SAN JOSE, Calif. — A federal magistrate judge in California on July 16 denied a directors and officers liability insurer’s motion to dismiss breach of contract, bad faith and California unfair competition law (UCL) claims, finding that the insurer has failed to show as a matter of law that the insurance policy does not provide coverage for an underlying lawsuit brought against the insured’s former chief executive officer and general counsel (Marius Domokos, et al. v. Scottsdale Insurance Company, No. 20-00336, N.D. Calif., 2020 U.S. Dist. LEXIS 125648).

  • July 17, 2020

    Magistrate Rules Against Insurer In Dispute Over Employer’s Liability Exclusion

    WEST PALM BEACH, Fla. — A federal magistrate judge in Florida on July 13 recommended denying an insurer’s motion for summary judgment in a dispute over the application of a commercial general liability insurer’s employer’s liability exclusion (Southern Owners Insurance Company v. Keep It Simple, Inc., et al., No. 19-81577, S.D. Fla., 2020 U.S. Dist. LEXIS 124405).

  • July 17, 2020

    Not-For-Profit Insurer Sues Law Firm, Adjusters Over Fraudulent Claims

    TALLAHASSEE, Fla. — A not-for-profit organization created by the Florida Legislature to provide property insurance to residents who are unable to obtain coverage through the open market on June 18 filed a lawsuit in state court accusing a law firm, attorney, a claims adjustment company and remediation contractor of submitting fraudulent claims for coverage that were falsely inflated (Citizens Property Insurance Corp. v. Strems Law Firm PA, et al., No. 2020 CA 001156, Fla. Cir., 2nd Jud. Cir., Leon Co.).

  • July 17, 2020

    CGL Insurer Has No Duty To Defend Trademark Infringement Suit, 9th Circuit Affirms

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on July 16 held that underlying claims brought against the insured by its competitor were not potentially covered under a commercial general liability insurance policy's personal and advertising injury coverage or were barred by the policy’s prior publication, known injury and intellectual property exclusions, affirming a lower court’s summary judgment ruling in favor of the insurer (Scottsdale Insurance Company v. PTB Sales, Inc., No. 19-55350, 9th Cir., 2020 U.S. App. LEXIS 22158).

  • July 17, 2020

    Houston Rockets:  Home Court’s Loss Of Function Caused By COVID-19 Is Physical Damage

    PROVIDENCE, R.I. — The Houston Rockets organization on July 15 sued its “all-risk” insurer for declaratory judgment, breach of contract, bad faith and violation of the Texas Unfair Claim Settlement Practices Act in a Rhode Island Superior Court, alleging that the insurer “engaged in a calculated scheme to deny” novel coronavirus related claims and that the loss of function at the Toyota Center caused by COVID-19 is physical damage (Clutch City Sports & Entertainment, L.P., et al. v. Affiliated FM Insurance Company, No. PC-2020-05137, R.I. Super., Providence/Bristol Co.).

  • July 16, 2020

    Judge:  ERISA Exclusion Bars Professional Liability Coverage For DOL’s Lawsuit

    COLUMBUS, Ohio — A federal judge in Ohio on July 15 granted a professional liability insurer’s motion for summary judgment, finding that the policy’s Employment Retirement Income Security Act exclusion bars coverage for an underlying lawsuit brought against the insureds by the former secretary of the U.S. Department of Labor (Gemini Insurance Company v. Thomas E. Potts, Jr., et al., No. 16-612, S.D. Ohio, 2020 U.S. Dist. LEXIS 124027).

  • July 15, 2020

    Judge:  Insured's Summary Judgment Motion Is Premature In COVID-19 Coverage Suit

    JOHNSTOWN, Pa. — A federal judge in Pennsylvania on July 14 said the court will defer ruling on an insured’s motion for summary judgment in a novel coronavirus coverage dispute until after ruling on a motion to certify a class to “avoid the potential unfairness to” the insurer (Windber Hospital v. Travelers Property Casualty  Company of America, No. 20-00080, W.D. Pa.).