Mealey's Emerging Insurance Disputes

  • August 13, 2019

    Panel Reverses Attorney Fees Awarded To Insured For Insurer’s Removal Of Suit

    SEATTLE — The Ninth Circuit U.S. Court of Appeals on Aug. 12 reversed and remanded a lower federal court’s award of attorney fees to an insured for the insurer’s removal of its class action lawsuit challenging the insurer's practices involving personal injury protection (PIP) coverage,finding that the lower court did not find the insurer’s arguments for removal “objectively unreasonable” (Stan Schiff v. Liberty Mutual Fire Insurance Co., et al., No. 18-35116, 9th Cir., 2019 U.S. App. LEXIS 23955).

  • August 13, 2019

    Excess Insurer Did Not Control Insured’s Defense, 8th Circuit Says In Reversal

    ST. LOUIS — The Eighth Circuit U.S. Court of Appeals on Aug. 12 reversed and remanded a lower court’s summary judgment ruling in favor of a child care facility operator insured in an excess insurer’s lawsuit disputing coverage for an underlying $6,032,585 jury award that exhausted the primary insurer's policy limits, finding that the excess insurer did not control the underlying defense and must be given an opportunity to establish that the jury award included damages for noncovered and covered claims (RSUI Indemnity Company v. New Horizon Kids Quest, Inc., No. 17-3567, 8th Cir., 2019 U.S. App. LEXIS 23943).

  • August 13, 2019

    Insurer, Massage Therapist Settle Coverage Suit Over Inappropriate Sexual Acts

    LAS VEGAS — An insurer and its massage therapist insured announced Aug. 5 that they reached a settlement “globally resolving” the insured’s breach of contract, bad faith and declaratory judgment coverage lawsuit arising from underlying allegations that he engaged in inappropriate sexual acts while he was performing a massage (Limmie Young, III, et al. v. Starr Indemnity & Liability Company, No. 14-00239, D. Nev.).

  • August 13, 2019

    Insured ‘Incurred Exorbitant Attorneys' Fees At Its Own Risk,’ Federal Judge Says

    SALT LAKE CITY — A federal judge in Utah on Aug. 1 determined that a business liability insurer had no duty to reimburse its law firm insured for the difference between the rates charged by the firm defending the insured against an underlying lawsuit and the rates that were approved by the insurer, denying the insured’s motion for partial summary judgment (Hartford Casualty Insurance v. Swapp Law, PLLC, et al., No. 17-01130, D. Utah, 2019 U.S. Dist. LEXIS 129664).

  • August 09, 2019

    Judge: $550,000 Judgment Covered Under Business, Management Indemnity Policy

    SEATTLE — A federal judge in Washington on Aug. 8 held that a plaintiff’s claim for double damages and attorney fees against her ex-husband’s former employer triggered coverage under a business and management indemnity policy, finding that the insurer has a duty to defend against the entire underlying $550,000 undifferentiated judgment against the employer (Susan Peder v. Scottsdale Indemnity Company, et al., No. 17-1868, W.D. Wash., 2019 U.S. Dist. LEXIS 133793).

  • August 09, 2019

    Insurer Has No Duty To Defend Against Billing Fraud Claims, Federal Judge Rules

    CHICAGO — A federal judge in Illinois on Aug. 5 held that an insurer has no duty to defend against Aetna Inc.’s claims that insureds bilked more than $21 million out of Aetna, employers and Aetna members through “an extensive health care billing fraud scheme,” finding that coverage is barred by the “interrelated wrongful acts” and “healthcare services” policy exclusions (Arch Insurance Company v. PCH Healthcare Holdings, LLC, et al., No. 18-02691, N.D. Ill., 2019 U.S. Dist. LEXIS 130681).

  • August 08, 2019

    Special Employee Theft Exclusion Bars Coverage, Federal Judge Rules

    UTICA, N.Y. — A federal judge in New York on Aug. 7 found that an insurance policy’s special employee theft exclusion bars coverage for a hotel owner insureds’ claim that their former manager’s stole more than $700,000 from them, granting the insurer’s motion for summary judgment and dismissing the breach of contract and declaratory judgment complaint in its entirety  (Albany Airport HIE, LLC, et al. v. The Hanover Insurance Group, Inc., et al., N.D. N.Y., 2019 U.S. Dist. LEXIS 132021).

  • August 08, 2019

    Suit Alleging ‘Interest Taking’ Scheme Against Insurers Is Untimely, Panel Affirms

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Aug. 7 affirmed a lower federal court’s ruling that an insured’s class action complaint alleging that life insurers participated in an “interesting taking” scheme in the 1990s is time-barred (Debe Olson v. Farmers New World Life Insurance Co., et al., No. 18- 20521, 5th Cir., 2019 U.S. App. LEXIS 23571).

  • August 08, 2019

    Employee Theft, Forgery Coverage Was Not Triggered, 8th Circuit Affirms

    ST. LOUIS — The Eighth Circuit U.S. Court of Appeals on Aug. 6 affirmed a lower federal court’s finding that a crime insurance policy’s “employee theft” and “forgery” coverage were not triggered by an underlying claim arising from $820,000 stolen over several years from two commercial rental property owners (C.S. McCrossan Inc. v. Federal Insurance Company, No. 18-1949, 8th Cir., 2019 U.S. App. LEXIS 23484).

  • August 06, 2019

    University Seeks Coverage For Hundreds Of Sexual Abuse Claims Against Professor

    NEW YORK — The Rockefeller University on Aug. 4 sued its primary and excess commercial general liability insurers in the New York County Supreme Court for breach of contract, bad faith and deceptive business practices and sought a declaration as to coverage for several hundred underlying claims alleging that its former employee sexually abused children for a span of 40 years (The Rockefeller University v. Aetna Casualty & Surety Company, et al., No. 654425/2019, N.Y. Sup., New York Co.).

  • August 06, 2019

    Trustee Appeals Dismissal Of Coverage Suit Over SEC Investigation Against Insured

    BOSTON — A trustee for a bankrupt investment advisory company recently asked the First Circuit U.S. Court of Appeals to reverse a lower federal court’s dismissal of his complaint seeking excess insurance coverage for $7.7 million in attorney fees arising from a formal order of investigation brought by the Securities and Exchange Commission (Craig R. Jalbert v. Zurich Services Corporation, et al, No. 18-2244, 1st Cir.).

  • August 06, 2019

    Private-Label Manufacturer Appeals No-Coverage Ruling For Suit Against Wal-Mart

    SAN FRANCISCO — A private label manufacturer for Wal-Mart Inc. recently asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court’s ruling in favor of a commercial general liability insurer in its lawsuit seeking coverage for an underlying trademark infringement action brought against Wal-Mart, arguing that disputed issues of material fact preclude a summary judgment ruling (Hybrid Promotions LLC v. Federal Insurance Co., No. 18-56658, 9th Cir.).

  • August 06, 2019

    Appellant Says He Has Standing To Sue Publisher’s Insurer For Defamation Damages

    PHILADELPHIA — A man who obtained a default judgment and $1.5 million damages in a defamation lawsuit against Journal Register East Inc. (JRE) recently asked the Third Circuit U.S. Court of Appeals to find that he has standing to sue the publisher’s insurer to recover the damages, arguing that a lower federal court erred in finding that he was not the insured’s assignee (Thomas A. Riley Jr. v. Mutual Insurance Company Ltd., No. 19-1321, 3rd Cir.).

  • August 05, 2019

    No Coverage For Suit Arising From Equity Purchase Agreement, Panel Affirms

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on July 30 affirmed a lower federal court’s ruling that a profit management liability insurer has no duty to defend its insureds against underlying claims that they made false representations during negotiations of and in an equity interest purchase agreement (Julie Gleason, et al. v. Markel American Insurance Co., No. 18-40850, 5th Cir., 2019 U.S. App. LEXIS 22546).

  • August 05, 2019

    Majority Affirms Ruling In Insurer’s Favor In Suit Arising From Employment Dispute

    NEW ORLEANS — A majority of the Fifth Circuit U.S. Court of Appeals on Aug 2 affirmed a lower federal court's finding in favor of an insurer in a dispute over directors and officers liability coverage for underlying claims that a technology firm insured failed to pay overtime and improperly categorized employees as "exempt" under the Fair Labor Standards Act (FLSA) (ADI WorldLink, L.L.C. v. RSUI Indemnity Company, No. 17-41050, 5th Cir., 2019 U.S. App. LEXIS 23235).

  • August 05, 2019

    Prior Publication Exclusion Does Not Bar Coverage, 4th Circuit Says In Reversal

    RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Aug. 1 reversed and remanded a lower court’s ruling that its businessowners liability and commercial umbrella insurance policies’ prior publication exclusion excused an insurer’s duty to defend an alleged advertising injury as to the insured's use of a trademark, finding that the insured’s “prior and subsequent publications differ in substance” (Pennsylvania National Mutual Casualty Insurance Co. v. Beach Mart, Inc., No. 18-1285, 4th Cir., 2019 U.S. App. LEXIS 22972).

  • August 02, 2019

    Insured Asks 5th Circuit To Reverse Ruling In Suit Arising From Hail, Wind Damage

    NEW ORLEANS — A church insured recently asked the Fifth Circuit U.S. Court of Appeals to reverse a lower federal court’s summary judgment ruling in favor of an insurer in its lawsuit alleging that the insurer breached the contract and acted in bad faith when it replaced roofing materials with lesser quality materials after the insured's property sustained hail and windstorm damage to its roof (University Baptist Church of Fort Worth v. Lexington Insurance Company, 18-11415, 5th Cir.).

  • August 01, 2019

    Federal Judge Allows Professional Liability Coverage Dispute To Proceed To Trial

    FORT WAYNE, Ind. — In a case remanded from the Seventh Circuit U.S. Court of Appeals, a federal judge in Indiana on July 29 held that a malpractice insurer’s breach of contract lawsuit against its professional liability insurer should proceed to trial after finding that the professional liability insurer is not entitled to summary judgment (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 125671).

  • July 31, 2019

    Panel:  Prior Known Acts Exclusion Bars Coverage For Suit Against Board Of Education

    PHILADELPHIA — The Third Circuit U.S. Court of Appeals on July 26 affirmed a lower federal court’s finding that a commercial general liability insurer has no duty to defend its board of education insured against an underlying lawsuit arising from sexual abusive acts alleged by students against a former teacher (Montville Township Board Of Education v. Zurich American Insurance Company, No. 18-3073, 3rd Cir., 2019 U.S. App. LEXIS 22375).

  • July 31, 2019

    Judge: Insurer Has Duty To Defend In Coverage Dispute Over Hacked Credit Cards

    HOUSTON — On remand from the Fifth Circuit U.S. Court of Appeals, a senior federal judge in Texas on July 23 granted a specialty retail chain insured’s motion for partial summary judgment as to its request for a declaration that its insurer owes coverage for demand letter claims and an underlying litigation arising from the hacking of its credit card network but denied the motion as to the insured’s TexasInsurance Code claim and claims for attorney fees and prejudgment interest (Spec's Family Partners, Ltd. v. The Hanover Insurance Company, No. 16-438, S.D. Texas, 2019 U.S. Dist. LEXIS 122310).