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

Mealey's Emerging Insurance Disputes

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.
February 09, 2024
Insurer Petitions 9th Circuit For Panel Rehearing Of Pollution Exclusion Ruling

SAN FRANCISCO — A district court’s ruling that a pollution exclusion bars coverage for an underlying toxic exposure suit stemming from the cleanup of wildfire debris should be affirmed because a panel majority of the Ninth Circuit U.S. Court of Appeals failed to consider two applicable California appellate decisions before concluding that the insurer’s pollution exclusion does not apply to toxic dust, an insurer argues in its petition for panel rehearing.
February 09, 2024
3rd Circuit: Appellant Is Precluded From Relitigating Indemnification Issue

PHILADELPHIA — The Third Circuit U.S. Court of Appeals held that an appellant is precluded from relitigating whether a commercial general liability insurer must indemnify its deli owner insured for liability arising from the appellant’s underlying state court injury lawsuit over a stabbing at the deli, affirming a lower federal court’s grant of the insurer’s motion to dismiss.
February 08, 2024
Insurer Does Not Owe Regulatory Defense Fees To Doctor, Panel Rules In Reversal

RALEIGH, N.C. — A North Carolina appeals court held that a medical professional liability insurer has no duty to reimburse its doctor insured for regulatory defense fees incurred in an underlying investigation by the North Carlina Medical Board, reversing a lower court’s ruling that the policy required the insurer to reimburse $50,000 to the insured.
February 08, 2024
Insured Fails To Establish Coverage ‘Occurrence’ Under Policy, 9th Circuit Affirms

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s dismissal of an advertising company insured’s breach of contract lawsuit against its commercial general liability insurer, finding that the insured failed to demonstrate facts establishing a covered “occurrence” under its policy.
February 07, 2024
Texas Panel: Exclusion Bars Coverage For Baylor College Of Medicine’s COVID-19 Losses

HOUSTON — A Texas appeals court on Feb. 6 affirmed a lower court’s summary judgment ruling in favor of insurers in Baylor College of Medicine’s lawsuit seeking commercial property insurance coverage for its lost business income arising from the coronavirus pandemic, finding that the Pollution and Contamination exclusion unambiguously bars coverage.
February 06, 2024
Bank’s Claim ‘Insurable’ As A Matter Of Ohio Law, 6th Circuit Rules In Reversal

CINCINNATI — The Sixth Circuit U.S. Court of Appeals reversed a lower federal court’s summary judgment ruling in favor of professional liability insurers in a bank insured’s breach of contract and bad faith lawsuit, finding that the bank’s underlying settlement payment to a bankruptcy trustee is “insurable” pursuant to Ohio law and that an ambiguous exclusion should be construed in the insured’s favor.
February 05, 2024
Judge: No Coverage Owed For Unfair Competition Suit Brought Against Insured

SAN DIEGO — A federal judge in California concluded that an insurer has no duty to defend its furniture delivery company insured against an underlying misappropriation of trade secrets and unfair competition lawsuit brought by a competitor, granting the insurer’s motion for summary judgment in the insured’s breach of contract and bad faith lawsuit.
February 02, 2024
Insured Seeks Coverage For Claims It Violated BIPA By Using Biometric Time Clocks

CHICAGO — An insured filed a breach of contract lawsuit in an Illinois federal court, seeking a declaration as to coverage for an underlying putative class lawsuit alleging that it violated the Illinois Biometric Privacy Act (BIPA) by using biometric time clocks to track employee working hours.
February 02, 2024
7th Circuit Refuses To Rehear Coverage Dispute Arising From Bodily Injuries

CHICAGO — The Seventh Circuit U.S. Court of Appeals on Feb. 1 denied a commercial general liability insurer’s petition for panel rehearing challenging its holding that the insurer has a duty to defend against an underlying bodily injury lawsuit arising from a construction site accident, standing by its ruling that an operations exclusion relieves a commercial auto insurer from defending their mutual insured.