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

Mealey's Emerging Insurance Disputes

January 24, 2024
Insurers Have No Duty To Defend Against Copyright Suit, California Panel Affirms

LOS ANGELES — A California appeals panel on Jan. 23 affirmed a lower court’s summary judgment ruling in favor of professional liability and excess insurers, finding that the insurers have no duty to defend or indemnify their investment adviser insured against an underlying copyright lawsuit.
January 24, 2024
Insurers Seek Interlocutory Appeal Of Delaware Judge’s Ruling Granting New Trial

WILMINGTON, Del. — Insurers applied for certification of an interlocutory appeal of a Delaware judge’s ruling that granted the insured’s motion for a new trial in a professional liability coverage dispute arising from a Medicaid fraud investigation, arguing that the judge’s stated bases for her “extraordinary” order are both “unprecedented and at odds with settled law.”
January 23, 2024
CGL Insurer Seeks Panel Rehearing Of Coverage Dispute Arising From Bodily Injuries

CHICAGO — A commercial general liability insurer on Jan. 22 filed a petition for panel rehearing asking the Seventh Circuit U.S. Court of Appeals to reconsider its ruling earlier this month that held that it has a duty to defend against an underlying bodily injury lawsuit arising from a construction site accident, challenging the panel’s ruling that an operations exclusion relieves a commercial auto insurer from defending their mutual insured.
January 23, 2024
Federal Judge Refuses To Dismiss 7-Eleven’s Bodily Injury Coverage Lawsuit

MIAMI — A federal judge in Florida denied insurers’ motion to dismiss a 7-Eleven store’s declaratory judgment lawsuit seeking general liability and liquor liability coverage for a customer’s underlying bodily injury action alleging that a 7-Eleven employee physically struck him numerous times, concluding that the insured has adequately pleaded “a bona fide dispute” to survive dismissal.
January 22, 2024
Insured: High School Shooting Suits Seek Damages Caused By Multiple Occurrences

PONTIAC, Mich. — A public school district insured sued its insurer in a Michigan court, seeking a declaratory judgment that underlying lawsuits arising from a high school shooting seek damages for “bodily injury” that was caused by multiple “occurrences” under the policy and, therefore, the insured is not limited to $5 million in commercial general liability and excess coverage.
January 22, 2024
Infestation Exclusion Bars Coverage For Roof Damage, 4th Circuit Affirms

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Jan. 19 affirmed a Maryland federal court’s ruling that an insured’s claims for breach of contract and bad faith fail because the policy’s infestation exclusion precludes coverage for roof damage caused by an infestation of vultures.
January 22, 2024
Panel: Excess D&O Insurer Owes No Coverage For Costs Of Shareholder Class Action

PHILADELPHIA — The Third Circuit U.S. Court of Appeals on Jan. 19 affirmed a lower federal court’s summary judgment ruling in favor of an excess directors and officers liability insurer, finding that the insurer has no duty to pay a pharmaceutical drug manufacturer insured’s settlement and defense costs arising from an underlying shareholder class action alleging that it artificially inflated its stock when it misrepresented the results of a clinical drug study.
January 22, 2024
Bank, Insurer Stipulate To Dismissal Of Coverage Dispute Arising From Forgery

SANTA ANA, Calif. — A bank insured and its insurer on Jan. 19 filed a stipulation to dismiss with prejudice the insured’s lawsuit seeking coverage for its losses resulting from a forgery eight days after a federal judge in California issued an in-chambers order setting an order to show cause as to dismissal following a settlement announcement by the parties.
January 22, 2024
High Court Refuses To Consider If Damage Caused By Insured’s Work Is Occurrence

WASHINGTON, D.C. — The U.S. Supreme Court denied a petition for a writ of certiorari on Jan. 22, refusing to consider whether the Third Circuit U.S. Court of Appeals rewrote Pennsylvania insurance law in its application of the faulty workmanship doctrine when it found that damages to natural gas wells caused by an insured’s fracking work does not constitute an occurrence under a commercial general liability policy.
January 22, 2024
Insureds Failed To Show Valid Basis For N.C. High Court Review, Insurer Argues

RALEIGH, N.C. — An insurer argued to the North Carolina Supreme Court that an appeals court’s ruling that affirmed a lower court’s dismissal of a clothing retailer insured’s lawsuit seeking coverage for its losses arising from the coronavirus pandemic “presents no precedent-setting error that warrants intervention” by the North Carolina Supreme Court.
January 22, 2024
Panel Says District Court Properly Dismissed Insured’s Suit For Lack Of Jurisdiction

NEW ORLEANS — A district court properly dismissed a fire-suppressing foam distributor’s breach of contract and bad faith suit against its insurer, which denied coverage for a subpoena served on the insured in an underlying multidistrict litigation suit seeking damages for bodily injuries and contaminated drinking water caused by the use of the foam, because the lower court properly found that it lacked specific personal jurisdiction over the insurer, the Fifth Circuit U.S. Court of Appeals said.
January 22, 2024
Contractor, Insurer Settle Construction Defects Suit, File Stipulation Of Dismissal

GREENBELT, Md. — A general contractor and its professional liability insurer filed a corrected stipulation of dismissal with prejudice on Jan. 18 in a Maryland federal court after reaching a settlement in the suit filed by the insured general contractor and alleging that the insurer breached its contract and acted in bad faith by failing to pay the insured for rectification expenses related to a faulty wall system installed as part of a construction project.
January 19, 2024
Court Ignored Ordinary Meaning Of Physical Loss, Insureds Tell N.C. High Court

RALEIGH, N.C. — Restaurant insureds tell the North Carolina Supreme Court that it should reverse an appeals court’s reversal of a lower court’s grant of partial summary judgment in their favor in a coronavirus coverage dispute, arguing that the phrase “physical loss or physical damage” includes loss of the physical use of property under the state’s “long-standing principles of insurance contract interpretation.”
January 19, 2024
Washington Majority Affirms Rulings Against Insurers In Coronavirus Coverage Suit

OLYMPIA, Wash. — A majority of the Washington Supreme Court on Jan. 18 affirmed a lower court’s denial of insurers’ motion to dismiss based on forum non conveniens in a coverage dispute with 60 colleges arising from the COVID-19 pandemic, further affirming the lower court’s issuance of an interstate antisuit injunction enjoining the insurers from taking further action in a parallel Illinois lawsuit.
January 17, 2024
Panel: Southwest’s Costs Are Not Categorically Barred From System Failure Coverage

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Jan. 16 determined that a lower court erred in finding that Southwest Airlines' costs related to a 2016 computer system failure are categorically barred from coverage as a matter of law, reversing and remanding the lower court’s grant of summary judgment in favor of a cyber risk insurer in a coverage dispute arising from Southwest’s alleged more than $77 million in losses resulting from the system failure and subsequent flight disruptions.
January 17, 2024
Assault And Battery Exclusion Bars Coverage For Gas Station Altercation, Judge Rules

NEW ORLEANS — A federal judge in Louisiana held that an insurer has no duty to defend its insured against defamation and negligence claims arising from an underlying altercation at its gas station insured’s property, finding that the policy’s assault and battery exclusion bars coverage.
January 17, 2024
5th Circuit Reverses, Remands For Court To Consider Subrogation Issue

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals reversed a lower federal court’s summary judgment ruling in favor of a defendant insurer and remanded for the lower court to grant the plaintiff insurer’s motion for summary judgment as to the defendant’s duty to defend and indemnify a general contractor against an underlying wrongful death lawsuit and to consider the subrogation issue between the insurers.
January 17, 2024
9th Circuit Sets Oral Argument In Coverage Dispute Arising From Gold Treasure

SEATTLE — The Ninth Circuit U.S. Court of Appeals set oral argument for March 29 of its review of a lower federal court’s summary judgment ruling in favor of an ocean marine general liability insurer in a declaratory judgment lawsuit disputing coverage for an underlying $7.5 million covenant judgment that resolved claims that the appellant was denied possession and use of the tangible and intangible work product that was created during gold salvage expeditions.
January 17, 2024
Federal Judge Sets Order To Show Cause For Dismissal Of Forgery Coverage Suit

SANTA ANA, Calif. — A federal judge in California issued an in-chambers order setting an order to show cause as to dismissal of a bank insured’s lawsuit seeking coverage for its losses resulting from a forgery one day after the parties filed a joint notice of settlement.
January 17, 2024
California Panel Affirms Dismissal Of Untimely Fraud Suit Against Insurance Agent

LOS ANGELES — A California appeals panel affirmed a lower court’s dismissal with prejudice of a real estate brokerage company’s fraud and breach of fiduciary duty lawsuit against an insurance agent, finding that the complaint was untimely.
January 17, 2024
Insured V. Insured Exclusion Bars D&O Coverage, 2nd Circuit Affirms

NEW YORK — The Second Circuit U.S. Court of Appeals affirmed a lower court’s dismissal of a breach of contract lawsuit seeking directors and officers liability coverage for an underlying lawsuit alleging that the plaintiff used his position at a farm and ranch equipment manufacturer to defraud entities related to the manufacturer out of tens of millions of dollars.
January 11, 2024
COMMENTARY: Authority Of An Arbitration Panel To Grant Fees

By Robert M. Hall
January 12, 2024
Insured Asserts Insurer Fraudulently Down-Coded Electrotherapy Medical Devices

MINNEAPOLIS — The manufacturer and seller of an electrotherapy medical device sued its insurer in a Minnesota federal court for breach of contract and deceptive trade practices, alleging that the insurer has a “blanket corporate policy” of fraudulently down-coding and short-paying for the insured’s H-Wave medical devices that has resulted $1.3 million in injuries to the insured.
January 11, 2024
Hospital States Claim Under Health Care Endorsement, 1st Circuit Rules In Reversal

BOSTON — The First Circuit U.S. Court of Appeals ruled Jan. 10 that a hospital insured was subject to decontamination orders and, therefore, states a claim for “Disease Contamination Coverage” under its commercial property insurance policy’s Health Care Endorsement, reversing in part a federal court’s breach of contract lawsuit seeking coverage for its losses arising from the coronavirus pandemic.
January 11, 2024
California Panel Denies NHL Insureds’ Petition For Review In COVID-19 Coverage Suit

SAN JOSE, Calif. — A California appeals panel denied a petition by the National Hockey League (NHL) and 19 league clubs seeking review of a lower court’s ruling in a coverage dispute for their losses resulting from the coronavirus pandemic, finding that the contamination exclusion barred coverage.