Mealey's Emerging Insurance Disputes

  • December 12, 2017

    Insurers: Federal Court Has ‘Unflagging Obligation’ To Exercise Jurisdiction

    SAN FRANCISCO — Primary and first-layer excess insurers argue in a recent brief to the Ninth Circuit U.S. Court of Appeals that because they raised a “facially non-frivolous” and “compelling” argument in favor of arbitration, a federal district court should have fully adjudicated their motion to compel arbitration instead of remanding the lawsuit to California court (SFA Group v. Certain Underwriters at Lloyds London, et al., No. 16-56467, 9th Cir.).

  • December 12, 2017

    Coverage Barred For Claims Arising Out Contaminated Pet Food, Insurer Asserts

    CHICAGO — No coverage is owed to an insured manufacturer of pet food for underlying claims alleging damages caused by pet food manufactured by the insured and contaminated with pentobarbital because the insured made material misrepresentations in its application for insurance and because the policies at issue clearly preclude coverage for the underlying claims, an insurer asserts in a Dec. 5 complaint filed in Illinois federal court (Colony Insurance Co. v. Evanger’s Dog and Cat Food Co. Inc., et al., No. 17-8756, N.D. Ill.).

  • December 7, 2017

    Professional Liability Insurer Has Duty To Defend Attorney, Illinois Panel Affirms

    MOUNT VERNON, Ill. — An Illinois appeals panel on Dec. 6 held that underlying claims against an attorney and his law firm can be rationally said to fall within coverage of a professional liability insurance policy, rejecting the insureds’ argument that coverage is barred by the policy’s’ business enterprise exclusion (Bruce A. Wiley, et al. v. Minnesota Lawyers Mutual Insurance Co., et al., No. 14-144, Ill. App., 5th Dist.).

  • December 6, 2017

    Dishonesty Exclusion Bars Coverage, 5th Circuit Affirms

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Nov. 20 affirmed a lower court’s ruling that an insurance policy’s dishonesty exclusion bars coverage for a restaurant owner insured’s loss, rejecting the insured’s argument that the exclusion's exception for “acts of destruction” by “employees” applies to establish coverage (Maldonado Investments, L.L.C. v. State Farm Fire & Casualty Co., No. 16-31206, 5th Cir., 2017 U.S. App. LEXIS 23585).

  • December 6, 2017

    Insured’s Suit Against Adjuster In Hurricane Ike Coverage Dispute Is Untimely

    GALVESTON, Texas — A Texas federal judge on Dec. 5 found that an insured’s breach of contract and negligence lawsuit against an adjuster is time-barred by a two-year statute of limitations, granting the adjuster’s motion for summary judgment in Hurricane Ike coverage dispute (Gracie Reese v. Aftermath Public Adjusters, Inc., et al., No. 16-273, S.D. Texas, 2017 U.S. Dist. LEXIS 199527).

  • December 6, 2017

    Insurer Asks 2nd Circuit To Find Wire Transfer Theft Is Not Covered Under Policy

    NEW YORK — An insurer asked the Second Circuit U.S. Court of Appeals on Dec. 5 to reverse a lower court’s finding that coverage for a firm's multimillion-dollar loss due to a fraudulent wire transfer scheme existed under the computer fraud provision of the company's executive protection insurance policy (Medidata Solutions Inc. v. Federal Insurance Co., No. 17-2492, 2nd Cir.).

  • December 6, 2017

    Insurer Fails To Show Policy Excuses It From Defending Insured, Judge Reiterates

    PHILADELPHIA — A Pennsylvania federal judge on Nov. 29 denied a homeowners insurer’s motion to reconsider an April 5 ruling that denied its motion for judgment on the pleadings in a coverage dispute arising from underlying assault and battery and negligence claims (Unitrin Direct Insurance Company v. Michael Esposito, No. 16-5239, E.D. Pa., 2017 U.S. Dist. LEXIS 195739).

  • December 6, 2017

    Judge: CGL Insurer Has No Duty To Defend Construction Company Against Counterclaims

    ASHLAND, Ky. — A Kentucky federal judge on Nov. 28 held that a commercial general liability insurer has no duty to defend its construction company insured against counterclaims arising from a dispute over the final price of the construction of a home (Owners Insurance Co. v. Frontier Housing, Inc., et al., No. 16-40, E.D. Ky., 2017 U.S. Dist. LEXIS 195011).

  • December 5, 2017

    Tennessee Panel Reverses Ruling In Employee Dishonesty Coverage Dispute

    NASHVILLE, Tenn. — A Tennessee appeals panel on Nov. 22 held that a lower court erred in finding that a commercial general liability insurance policy’s employee dishonesty provision was ambiguous, reversing and remanding to enter a judgment that the policy limits for an underlying employee embezzlement claim is $15,000 and not $30,000 (Tennessee Clutch and Supply, Inc. v. Auto-Owners (Mutual) Insurance Co., No. M2016-02195-COA-R3-CV, Tenn. App., 2017 Tenn. App. LEXIS 761).

  • December 5, 2017

    Judge: Any Evidence Of Insurer’s Nonpayment Of Claims Is ‘Irrelevant, Prejudicial’

    MISSOULA, Mont. — On remand from the Ninth Circuit U.S. Court of Appeals, a Montana federal judge on Dec. 4 granted in part and denied in part a commercial general liability insurer’s motions in limine in a coverage dispute over claims that a beauty school insured expelled students after they filed complaints of unprofessional conduct, sexual harassment, occupational health and safety, violations of internal policies and procedures, licensing rules and regulations and curriculum (Breanne Walden, et al. v. Maryland Casualty Co., No. 13-222, D. Mont., 2017 U.S. Dist. LEXIS 198973).

  • December 5, 2017

    Pennsylvania Court: Complaint Alleges Injuries Caused By Unintentional Conduct

    PHILADELPHIA — A Pennsylvania Superior Court on Nov. 22 found an underlying personal injury complaint alleges injuries that were caused by unintentional conduct, reversing and remanding a lower court’s ruling in favor of an insurer (Erie Insurance Exchange v. Tracy L. Moore, et al., No. 869 WDA 2016, Pa. Super., 2017 Pa. Super. LEXIS 957).

  • December 4, 2017

    Judge Refuses To Dismiss Coverage Suit Arising From Failed Business Relationship

    MOBILE, Ala. — An Alabama federal judge on Nov. 29 held that an underlying claimant’s lawsuit seeking to recover a lost investment in its relationship with an insured is sufficient, at the present stage, to plausibly state a claim that the damages fall outside the policy coverage for the “physical injury to tangible property” (Acadia Insurance Co. v. SouthernPointe Group, Inc., et al., No. 17-01368, N.D. Ala., 2017 U.S. Dist. LEXIS 195581).

  • December 4, 2017

    Pennsylvania Judge Vacates No Coverage Ruling In Dispute Over Racetrack Death

    PHILADELPHIA — A Pennsylvania judge on Nov. 30 found that a lower court erred in finding that a commercial umbrella liability insurer has no duty to indemnify its insured against $2.6 million in punitive damages that it paid to settle an underlying wrongful death and survival action, vacating and remanding for an entry of summary judgment in favor of the insured on the breach of contract claim and for reinstatement and further proceedings on the bad faith claim (Bensalem Racing Association, Inc., et al. v. Ace Property and Casualty Insurance Co., No. 530 EDA 2017, Pa. Super.).

  • December 1, 2017

    Judge Stays Class Action Challenging Insurance Practices After Settlement Announced

    JEFFERSON CITY, Mo. — A Missouri federal judge in a Nov. 29 text order granted a joint motion to stay a class action alleging that a homeowners insurer committed breach of contract when it unlawfully applied a policy's $1,000 deductible to an actual cash value (ACV) payment in a hailstorm coverage dispute after the parties announced that they reached a settlement (Jean Heckmann v. Liberty Mutual Fire Insurance Co., No. 14-04147, W.D. Mo.).

  • November 30, 2017

    Panel: No Indemnity Obligation Owed To Target In Relation To Personal Injury Suit

    CINCINNATI — The Sixth Circuit U.S. Court of Appeals on Nov. 29 held that an indemnification arrangement involving Target Corp. and hamper suppliers is not an “insured contract” pursuant to an insurance policy issued to one of the suppliers, affirming a lower court’s grant of summary judgment in favor of the insurer in a coverage dispute over an alleged eye injury caused by a pop-up laundry hamper that was purchased at Target in 2010 (Northern Insurance Company of New York v. Target Corporation, et al., No. 16-2222, 6th Cir., 2017 U.S. App. LEXIS 24156).

  • November 29, 2017

    North Dakota Supreme Court: Fact Issues Exist As To Whether Exclusions Bar Coverage

    BISMARCK, N.D. — The North Dakota Supreme Court on Nov. 16 held that there are material fact issues as to whether a commercial general liability insurance policy’s "assault and battery" and "liquor liability" exclusions bar coverage of a negligence claim against an insured bar, reversing a lower court in part (Carol Forsman v. Blues, Brews and Bar-B-Ques, Inc., et al., No. 20170088, N.D. Sup., 2017 N.D. LEXIS 273).

  • November 29, 2017

    Judge: CGL Insurer Has No Duty To Defend Against Class Action Over Data Breach

    TAMPA, Fla. — A Florida federal judge on Nov. 17 held that a commercial general liability insurer has no duty to defend against a putative class action alleging that an insured failed to adequately protect the plaintiffs’ personal private information (PPI) and timely disclose a data breach to end users (Innovak International Inc. v. The Hanover Insurance Co., No. 16-2453, M.D. Fla., 2017 U.S. Dist. LEXIS 191271).

  • November 29, 2017

    Insurer, Plastics Company Dispute Scope Of Coverage For Packing Products Case

    CHICAGO — A plastics company and insurer recently submitted their arguments to the Seventh Circuit U.S. Court of Appeals, disputing whether a trial court erred when it found that the insurer was not liable to provide coverage in relation to an underlying lawsuit stemming from faulty laminate made by the company (Berry Plastics Corp., n/k/a Berry Global Inc. v. Illinois National Insurance Co., No. 17-1815, 7th Cir.).

  • November 28, 2017

    Specific Matter Exclusion Bars Coverage For Alleged Scheme, Federal Judge Rules

    LOS ANGELES — A California federal judge on Nov. 16 held that an insurer has no duty to defend or indemnify against underlying lawsuits alleging that an insured’s directors and officers participated in a scheme to transfer encumbered properties to their relatives while avoiding banks' interests in the properties (Ocean Towers Housing Corporation v. Evanston Insurance Co., No. 15-6461, C.D. Calif., 2017 U.S. Dist. LEXIS 190738).

  • November 28, 2017

    Judge: No Coverage For Claims Alleging HIV Infection From Adult Film Work

    OAKLAND, Calif. — A California federal judge on Nov. 27 found that the State Insurance Compensation Fund has no duty to defend against underlying claims that adult film stars became infected with the human immunodeficiency virus (HIV) while they were performing in films that were being produced by the insured, finding that the non-intentional tort claims are preempted by the exclusive remedy provision of workers' compensation and the intentional tort claims are barred under a policy exclusion (Seneca Insurance Company Inc. v. Cybernet Entertainment LLC, et al., No. 16-06554, N.D. Calif., 2017 U.S. Dist. LEXIS 194441).