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Mealey's Emerging Insurance Disputes

  • June 20, 2018

    Federal Judge: Sexual Molestation, Lewd Conduct Was Intentional; No Coverage Owed

    OKLAHOMA CITY — An Oklahoma federal judge on June 13 granted an insurer’s motion for summary judgment in its declaratory judgment lawsuit disputing coverage for an underlying sexual molestation lawsuit brought against its insured, finding that there is no coverage because the insured committed intentional acts of molestation and lewd conduct and intended to cause the purported harm to two minors (Shelter Mutual Insurance Company v. Daniel Phillips, et al., No. 17-1237, W.D. Okla., 2018 U.S. Dist. LEXIS 100049).

  • June 20, 2018

    Insureds Object To Magistrate’s Recommendation In Dispute Over $1.8M In Fine Wine

    DENVER — Insureds on June 19 objected to a magistrate’s recommendation to deny their renewed motion for leave to amend their complaint in a dispute over coverage for more than $1.8 million in undelivered fine wine, contending the magistrate constructed an excuse for the insurer and then relied upon it to support his recommended dismissal (Malik M. Hasan, M.D., et al. v. AIG Property Casualty Co., No. 16-02963, D. Colo.).

  • June 20, 2018

    Insured Seeks Coverage For Suit Disputing Constitutionality Of Probationary Services

    WILMINGTON, Del. — An insured on June 15 sued its excess insurer in Delaware Superior Court, seeking coverage for a class action challenging the constitutionality of its subsidiary’s private probationary services (Providence Service Corporation v. Illinois Union Insurance Company, No. 18C-06-114, Del. Super.).

  • June 20, 2018

    Shifting Of Criminal Conduct To Insurer Violates Public Policy, Insurer Argues

    SANTA ANA, Calif. — A commercial general liability insurer on May 30 asked the Fourth District California Court of Appeal to reverse a lower court’s finding that penalties for the crime of secretly recording confidential communications under California Penal Code Section 632 can be shifted onto an insurer, arguing that the lower court’s ruling violates public policy (Nautilus Insurance Company v. Monique Mingione, No. G055914, Calif. App., 4th Dist., Div. 3).

  • June 19, 2018

    9th Circuit Rejects Excess Insurer’s Appeal Seeking $1M From Primary Insurer

    SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on June 18 affirmed a lower court’s ruling that a primary insurer does not owe an additional $1 million under a Parking Operations Errors and Omissions Endorsement for injuries allegedly incurred at a parking garage (Scottsdale Insurance Company v. Hudson Specialty Insurance Company, No. 17-15785, 9th Cir., 2018 U.S. App. LEXIS 16348).

  • June 19, 2018

    Federal Judge: Prior Acts Exclusion Bars Directors, Officers Liability Coverage

    FORT LAUDERDALE, Fla.— A Florida federal judge on June 13 granted a directors and officers liability insurer’s motion to dismiss an additional insured’s assignee’s breach of contract and declaratory judgment lawsuit against it, finding that the policy’s prior acts exclusion bars coverage (Margaret J. Smith v. Travelers Casualty and Surety Company of America, et al., No. 18-80189, S.D. Fla., 2018 U.S. Dist. LEXIS 100711).

  • June 19, 2018

    Parties Announce Settlement Of Coverage Dispute Over Fraudulent Tax Returns

    BLUEFIELD, W.Va. — A business owners liability insurer announced June 13 that it has reached a settlement in a coverage dispute arising from underlying lawsuits alleging that the insured's employee filed fraudulent tax returns (Ohio Security Insurance Co. v. K R Enterprises, Inc., et al., No. 15-16264, S.D. W.Va.).

  • June 19, 2018

    Commingling Exclusion Bars Professional Liability Coverage, Judge Rules

    JACKSONVILLE, Fla. — A Florida federal judge on May 31 found that a commingling exclusion in a professional liability insurance policy precludes coverage for underlying theft and conversion claims brought by homeowners associations against its property management firm insured and its directors and officers (Philadelphia Indemnity Insurance Co. v. Stazac Management Inc., et al., No. 16-369, M.D. Fla., 2018 U.S. Dist. LEXIS 92567).

  • June 19, 2018

    Insurer May Bring Direct Malpractice Suit Against Counsel Hired For Insured

    COLUMBIA, S.C. — Answering one of two questions certified from a federal district court, a majority of the South Carolina Supreme Court on May 30 held that an insurer’s “unique position” allows it to maintain a direct malpractice action against counsel hired to represent its insured when it has a duty to defend but emphasized that certain limitations apply (Sentry Select Insurance Company v. Maybank Law Firm, LLC, et al., No. 2016-001351, S.C. Sup.)

  • June 19, 2018

    Insurers Ask U.S. High Court Question In Dispute Over Faulty Workmanship

    WASHINGTON, D.C. — Insurers petitioned the U.S. Supreme Court on June 6 to answer a question in a dispute in which a federal appellate court predicted how a state high court would rule over whether a subcontractor’s faulty work that caused damage to an insured’s own work can constitute an “occurrence” (Aspen Insurance [UK] Ltd, et al. v. Black & Veatch Corp., No. 17-1662, U.S. Sup., 2018 U.S. S. Ct. Briefs LEXIS 2279).

  • June 19, 2018

    Judge: Claims Against Dentist Are Not Based On Professional Services; No Coverage

    CHICAGO — An Illinois federal judge on June 4 granted a professional liability insurer’s motion for summary judgment, finding that an underlying contract dispute involving the sale of a dental practice is not based on a dental insured’s professional services to warrant coverage (The Medical Protective Co. v. Anne M. Fabricius, DMD, et al., No. 15-6917, N.D. Ill., 2018 U.S. Dist. LEXIS 93160).

  • June 18, 2018

    Alabama High Court Partly Reverses Ruling In Broker Liability Dispute

    MONTGOMERY, Ala. — The Alabama Supreme Court on June 15 partly reversed a lower court’s ruling in favor of a brokerage firm in a negligence and wantonness lawsuit brought by insureds (Jimmy Larry Beddingfield et al. v. Mullins Insurance Company, et al., No. 1170143, Ala. Sup., 2018 Ala. LEXIS 60).

  • June 18, 2018

    Judge Enters Default Judgment Against Insured In Suit Over Minor’s LSD Ingestion

    PHOENIX — An Arizona federal judge on June 14 granted a homeowners insurer’s motion to enter a default judgment against its insured in its declaratory judgment lawsuit disputing coverage for an underlying lawsuit alleging that the insured was negligent for providing a minor with an illicit drug (Stillwater Insurance Company v. Sean Fricker, et al., No. 17-1080, D. Ariz., 2018 U.S. Dist. LEXIS 99711).

  • June 13, 2018

    Judge Stands By Denial Of Insured’s Motion To Dismiss Employer Liability Dispute

    ABERDEEN, Miss. — A Mississippi federal judge on June 11 denied an insured’s employee’s motion to reconsider a ruling refusing to dismiss an insurer’s lawsuit seeking a declaration that an employers liability policy exclusion bars coverage for the employee’s injuries (Wesco Insurance Company v. Archer Landscape Group, LLC, et al., No. 16-165, N.D. Miss., 2018 U.S. Dist. LEXIS 97574).

  • June 12, 2018

    Insurer Asks 5th Circuit To Reverse Coverage Ruling In Dispute Over Occupancy Rights

    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 against an underlying lawsuit alleging that an insured failed to timely negotiate a commercial lease agreement (2200 West Alabama Inc. v. Western World Insurance Co., 17-20640, 5th Cir.).

  • June 12, 2018

    Court Wrongly Created All-Encompassing Additional Insured Coverage, Insurer Says

    ST. LOUIS — An insurer recently asked the Eighth Circuit U.S. Court of Appeals to reverse a lower federal court’s ruling that a conference center is entitled to coverage as an additional insured, arguing that a minor’s injuries from a zip-lining accident did not arise out any portion of the premises the conference center leased to the insured (Great American Alliance Insurance Co. v. Windermere Baptist Conference Center Inc., et al., 17-3635, 8th Cir.).

  • June 11, 2018

    Majority: Application Of Revocation Rule To Policy Does Not Violate Constitution

    WASHINGTON, D.C. — A majority of the U.S. Supreme Court on June 11 found that the retroactive application of Minnesota's revocation-upon-divorce statute to a life insurance policy does not violate the contracts clause of the U.S. Constitution, reversing an Eighth Circuit U.S. Court of Appeals ruling against two individuals named as contingent beneficiaries of their father's life insurance policy (Ashley Sveen, et al. v. Kay Melin, et al., No. 16-1432, U.S. Sup., 2018 U.S. LEXIS 3503).

  • June 8, 2018

    1st Circuit Affirms Insurer Has Duty To Defend Cosby Against Defamation Suits

    BOSTON — The First Circuit U.S. Court of Appeals on June 7 affirmed a lower federal court's finding that William H. Cosby Jr.’s homeowners and excess insurer has a duty to defend him against underlying defamation lawsuits arising from sexual assault claims (AIG Property Casualty Co. v. William H. Cosby Jr., et al., No. 17-1505, 1st Cir., 2018 U.S. App. LEXIS 15389).

  • June 8, 2018

    Majority Reverses Ruling In Professional Liability Dispute Over Opioid Overdoses

    CHARLESTON, W.Va. — A majority of the West Virginia Supreme Court of Appeals on June 5 held that a lower court erred in ruling that an insurer was not entitled to rescind a professional liability insurance policy, finding that there are genuine issues of material fact regarding whether the applicant made fraudulent misrepresentations and omissions regarding his involvement in multiple opioid drug overdose deaths (Admiral Insurance Company v. Philip Fisher, D.O., et al., No. 17-0671, W.Va. Sup., 2018 W.Va. LEXIS 467).

  • June 6, 2018

    Insurer Seeks Panel Rehearing Of Coverage Finding For False Claims Act Suit

    PASADENA, Calif. — An insurer on June 4 filed a petition asking the Ninth Circuit U.S. Court of Appeals to reconsider its May 21 ruling that found a lower federal court erred in holding that an insurer has no duty to defend or indemnify Office Depot Inc. in an underlying qui tam lawsuit (Office Depot Inc. v. AIG Specialty Insurance Company, No. 17-55125, 9th Cir.).