Mealey's Emerging Insurance Disputes : Mealey's : Legal News & Analysis

Mealey's Emerging Insurance Disputes

February 22, 2024
Liability Insurer Seeks Extension To Respond In Dispute With Health Insurer

DENVER — A liability insurer moved for an extension to file an answer brief in a health insurer’s appeal to the 10th Circuit U.S. Court of Appeals of a district court’s ruling that the liability insurer does not owe a duty to indemnify the health insurer in an underlying multidistrict litigation antitrust dispute involving an excess errors and omissions (E&O) policy issued by a now-insolvent insurer.
February 21, 2024
U.S. High Court Reverses Ruling In Dispute Over Maritime Choice-Of-Law Provisions

WASHINGTON, D.C. — The U.S. Supreme Court on Feb. 21 held that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law with narrow exceptions that are not applicable to the dispute between a marine insurer and the owner of a yacht that ran aground, reversing an appeals court’s ruling against the insurer.
February 21, 2024
Parties Seek Dismissal Of Federal Coverage Dispute Over Arbitration Proceeding

BOSTON — An insured and a private company management liability insurer asked a Massachusetts federal court on Feb. 15 to dismiss with prejudice their dispute over whether the insurer has a duty to defend its insured in an underlying arbitration proceeding alleging that it violated its fiduciary duty and breached an operating agreement.
February 21, 2024
9th Circuit Denies Insurer’s Petition For Rehearing Of Pollution Exclusion Ruling

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 20 denied an insurer’s petition for panel rehearing, refusing to reconsider the panel majority’s finding that a pollution exclusion does not bar coverage for an underlying toxic exposure suit stemming from the cleanup of wildfire debris.
February 20, 2024
Panel: Insurer Can Rescind Professional Liability Policy Due To Misrepresentation

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Feb. 16 affirmed a lower federal court’s summary judgment ruling in favor of a professional liability insurer in its lawsuit seeking a declaratory judgment that it can rescind an insurance policy issued to a clinic, finding no genuine dispute of material fact that the clinic’s founder made a material misstatement in her applications for coverage.
February 20, 2024
U.S. High Court Stays Order Affirming Confirmation Of Boy Scouts’ Bankruptcy Plan

WASHINGTON, D.C. — U.S. Supreme Court Justice Samuel A. Alito Jr. on Feb. 16 administratively stayed a Delaware federal court’s order affirming a bankruptcy judge’s confirmation of the Boy Scouts of America’s third modified, fifth amended Chapter 11 reorganization plan that contemplates the creation of a settlement trust to “assume liability for all Abuse Claims” pending further order by the Third Circuit U.S. Court of Appeals or the high court on the appeals of two sets of abuse claimants.
February 20, 2024
Judgment Granted For Insurer In Yacht Fire Coverage Row Due To Misrepresentations

MIAMI — A Florida federal judge on Feb. 16 adopted a federal magistrate judge’s report and recommendation that because an insured yacht owner made material misrepresentations in a policy application, including falsely stating that the proposed captain of an 85-foot yacht had no recent driving under the influence (DUI) convictions, summary judgment should be granted to a marine insurer seeking a judgment that it is not obligated to cover the insured’s fire damage losses.
February 20, 2024
Judge Grants FDIC Motion To Dismiss D&O Coverage Suit Arising From Failed Bank

NEW ORLEANS — A federal judge in New Orleans on Feb. 16 granted the Federal Deposit Insurance Corp.’s motion to dismiss with prejudice its lawsuit against a failed bank’s former officials and related declaratory judgment lawsuits against directors and officers liability insurers one day after FDIC filed a stipulated motion to dismiss announcing that the parties reached a settlement.
February 16, 2024
New York High Court: Restaurateur Fails To Allege Direct Physical Loss Or Damage

ALBANY, N.Y. — The New York Court of Appeals on Feb. 15 held that the owner and operator of numerous restaurants failed to allege persistent contamination or total uninhabitability of its restaurants to trigger coverage for “direct physical loss or damage,” affirming the First Department New York Supreme Court Appellate Division’s affirmation of a lower court’s dismissal of the insured’s coverage lawsuit arising from an alleged tens of millions of dollars in revenue loss prompted by the coronavirus pandemic.
February 16, 2024
Class Certification Affirmed In Dispute Over Insurer’s Square Footage Calculation

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s ruling that granted an insured’s motion for class certification in a lawsuit alleging that a homeowners insurer improperly calculated the square footage of California homes, finding that the lower court did not abuse its discretion in redefining the certified class.
February 16, 2024
California Panel Affirms Judgment, $264,440 Attorney Fee Award Against Surety

SAN DIEGO — A California appeals panel affirmed a lower court’s judgment and $264,440 attorney fee award in favor of a plaintiff in her lawsuit seeking to collect under a surety bond for a fraud judgment entered against an automobile dealer, finding that because the plaintiff prevailed on her claim that the dealer violated the California Consumers Legal Remedies Act, she was statutorily entitled to recover her attorney fees from the dealer as an item of costs and the insurer is also liable for these costs because its liability as surety is commensurate with that of its principal.
February 15, 2024
Expert Can Testify On Reason For Law Firm Selection In Negligence Coverage Suit

KANSAS CITY, Mo. — A pair of insurance brokers accused of improperly advising a trucking company that left it with a coverage gap in an underlying deadly accident case fail in their bid to exclude an expert opining on the reasons a company retained a certain law firm, a Missouri federal judge ruled Feb. 14.
February 15, 2024
Insurer’s Percentile Practice Is Not Unfair, Washington Majority Rules In Reversal

OLYMPIA, Wash. — A majority of the Washington Supreme Court on Feb. 15 held that an insurer’s practice of reducing bills for personal injury protection (PIP) coverage to the 80th percentile of charges and its use of a third-party database to determine the reasonableness of medical providers’ chargers is not unfair or unreasonable and does not constitute an unfair practice under the state’s Consumer Protection Act, reversing an appeals court’s ruling and remanding.
February 14, 2024
Federal Judge: Potential For D&O Coverage Exists For SEC Subpoenas, Defense Costs

SAN JOSE, Calif. — A federal judge in California held that on the limited record before the court, there is a potential for directors and officers liability coverage for subpoenas issued by the Securities and Exchange Commission to former directors and officers of a biotech company insured and, therefore, the insured is entitled to advancement of the defense costs consistent with its policies’ “Advancement” clause.
February 14, 2024
Federal Judge Dismisses D&O Coverage Dispute Brought By Former CEO Of Modell’s

NEW YORK — A federal judge granted a directors and officers liability insurer’s motion to dismiss a breach of contract and declaratory judgment lawsuit brought by the former chief executive officer of the now bankrupt Modell's Sporting Goods Inc., finding that the policy does not give the plaintiff the right to block coverage for the company’s former chief financial officer’s $2.8 million settlement of an underlying adversary proceeding filed by the liquidating trustee.
February 13, 2024
Subcontractor Dismisses Certain Claims In Worker Injury Coverage Dispute

NEW YORK — A subcontractor on Feb. 12 voluntarily dismissed with prejudice its claims against a property owner and a construction manager in the subcontractor’s lawsuit filed in a New York federal court seeking coverage for claims brought by two of its workers.
February 13, 2024
No Coverage For City’s Tax Revenue Losses Arising From Pandemic, Panel Affirms

ST. LOUIS — The Eighth Circuit U.S. Court of Appeals on Feb. 12 found that a commercial property insurer owes no coverage for a Missouri city’s tax revenue losses due to governmental closure orders in response to the coronavirus pandemic, affirming a lower court’s ruling in favor of the insurer.
February 13, 2024
U.S. Tax Court: Ruling For IRS Is ‘Consistent’ With Prior Microcaptive Decisions

WASHINGTON, D.C. — In a decision “[c]onsistent with” the court’s handful of rulings on microcaptive arrangements, a U.S. Tax Court judge sustained Internal Revenue Service determinations that two captive insurers did not qualify to escape taxes on purported premiums and that the couple who controlled the captives cannot deduct those amounts and “are liable for the alternative 20% accuracy-related penalties.”
February 13, 2024
9th Circuit Panel Says No Coverage Due For $1M Judgment Entered Against Insured

PASADENA, Calif. — A district court correctly found that no coverage is owed to an insured for a $1 million arbitration judgment because the employment practices liability insurance policy excluded coverage for deliberate fraudulent acts when any final adjudication establishes that a deliberate fraudulent act was committed by the insured, the Ninth Circuit U.S. Court of Appeals said in also finding that the insured’s claims for breach of contract and bad faith fail.
February 12, 2024
Insureds File Suit, Seek Coverage For Costs Incurred To Remediate Riverbank

SAN FRANCISCO — Insureds filed suit against their umbrella liability insurer in California federal court, alleging that the insurer breached its contract and acted in bad faith by relying on the policy’s pollution exclusion to deny coverage for costs incurred in remediating a riverbank.
February 12, 2024
Insured Seeks Rehearing, Certification Of Questions In Opioid Coverage Dispute

SAN FRANCISCO — A prescription drug distributor insured on Feb. 9 asked the Ninth Circuit U.S. Court of Appeals to reconsider its ruling that there is no coverage owed for underlying lawsuits prompted by the opioid epidemic because the underlying claims “describe exclusively deliberate conduct,” arguing that a panel rehearing or rehearing en banc is warranted so the panel can certify two “undecided, critical questions of California law” to the California Supreme Court.
February 12, 2024
11th Circuit Tosses Insurer’s Appeal In Direct Action Suit For Lack of Jurisdiction

ATLANTA — The 11th Circuit U.S. Court of Appeals held that it lacks jurisdiction over an insurer’s appeal of a lower court’s contrary ruling in a direct action lawsuit arising from gunshot injuries, finding that the lower court’s order on dueling summary judgment motions is not final or immediately appealable because it is silent as to an award of any prejudgment interest.
February 12, 2024
English Justice Upholds Tribunals’ ‘Catastrophe’ Application In COVID-19 Cases

LONDON — Ruling in part that arbitration tribunals in two cases concerning the COVID-19 pandemic correctly concluded “that there had been a catastrophe for the purposes of the relevant Reinsurances,” a justice of the High Court of England and Wales on Feb. 9 dismissed an appeal in one case and allowed an appeal in the other case only as to the operation of an “Hours Clause.”
February 09, 2024
11th Circuit Affirms Dismissal Of Coverage Dispute Arising From Liposuction Death

ATLANTA — The 11th Circuit U.S. Court of Appeals on Feb. 8 affirmed a lower court’s dismissal of breach of duty, breach of contract and negligence claims against insurers in a professional liability coverage dispute over a $60 million consent judgment, finding that an estate’s claim arising from a woman’s death following a liposuction procedure is a single claim that is subject to a $50,000 policy limit.
February 09, 2024
8th Circuit: Court Erred In Failing To Apply Policy’s Intrafamily Immunity Exclusion

ST. LOUIS — The Eight Circuit U.S. Court of Appeals held that an insurance policy’s “Intrafamily Immunity” exclusion unambiguously precludes coverage for an underlying bodily injury claim, reversing a lower federal court’s summary judgment ruling.