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

Mealey's Emerging Insurance Disputes

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.
January 11, 2024
Judge: University’s Claims Forge At Least 1 Path To Coverage In Coronavirus Suit

SEATTLE — A Washington judge denied an insurer’s motion to dismiss the University of Washington’s lawsuit seeking coverage for losses allegedly incurred by its medical and athletic properties in the wake of the coronavirus pandemic, finding that the time element losses endorsement may establish coverage based on the insured’s alleged facts.
January 10, 2024
Coverage Owed For Insured’s Loss Of 502,315 Soybean Bushels, New York Justice Rules

NEW YORK — A New York justice granted a physical commodities trader insured’s motion for partial summary judgment on declaratory judgment and breach of contract counterclaims against its insurers in their lawsuit disputing coverage for the insured’s loss of 502,315 bushels of soybeans, finding that the insured established an actual loss under the policies.
January 10, 2024
Ruling A Microcaptive Arrangement Not Insurance, Tax Court Upholds Penalties

WASHINGTON, D.C. — A microcaptive arrangement was “not insurance for federal income tax purposes,” and the three shareholders of a California corporation are liable for accuracy-related penalties totaling 20% of the amount the corporation understated income tax from 2012 to 2014 as a result, a U.S. Tax Court judge ruled.
January 09, 2024
Hearing Canceled Due To Settlement Of Coverage Dispute Over Arbitration Proceeding

BOSTON — A Massachusetts federal court canceled a jury trial and indicated in an electronic notice entered on the docket on Jan. 8 that parties have reportedly settled a dispute over whether a private company management liability insurer has a duty to defend its insured against an underlying arbitration proceeding alleging that it violated its fiduciary duty and breached an operating agreement.
January 09, 2024
Alaska Judge Denies Judgment For Insurer In Dispute Over Water Damage Coverage

ANCHORAGE, Alaska — An Alaska federal judge on Jan. 8 denied an insurer’s motion for summary judgment in its suit seeking a declaratory judgment that a homeowners policy does not provide coverage for the insured’s water damage, finding that fact issues remain regarding whether the insured advised the insurer that the second mortgage on his property “was subject to litigation.”
January 09, 2024
Washington Panel Affirms Stay Of Subcontractor’s Pass-Through Coronavirus Claim

SEATTLE — A Washington appeals court panel on Jan. 8 held that a lower court did not abuse its discretion by staying a subcontractor’s pass-through coronavirus-related claim in its lawsuit against the port of Seattle, a prime contractor and their sureties pending final resolution of the prime contractor’s suit against the port, finding that the plain language of the subcontract explicitly waives the subcontractor’s right to sue under Washington’s Little Miller Act.
January 08, 2024
New Jersey Panel Affirms Dismissal Of Wawa’s Coronavirus Coverage Dispute

TRENTON, N.J. — A New Jersey appeals court panel on Jan. 5 affirmed a lower court’s ruling dismissing with prejudice Wawa Inc.’s first amended complaint seeking coverage for its losses arising from the COVID-19 pandemic, finding that the court’s holdings and reasonings in Mac Prop. Grp., LLC v. Selective Fire & Cas. Ins. Co. apply to Wawa's commercial liability insurance policies and, therefore, no coverage is owed.
January 05, 2024
Merck, Insurers Ask N.J. High Court To Dismiss Cyberattack Coverage Dispute

TRENTON, N.J. — Merck & Co. Inc. and certain insurers filed stipulations in the New Jersey Supreme Court seeking dismissal of the insurers from Merck’s lawsuit seeking coverage for its losses arising from a June 2017 malware/cyberattack.
January 05, 2024
No Professional Liability Coverage Owed For Attorney, 4th Circuit Affirms

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Jan. 4 affirmed a lower federal court’s ruling in favor of insurers in an attorney insured’s lawsuit seeking professional liability coverage for his claim arising from a grand jury subpoena that the U.S. Department of Justice served on his law firm, finding that the insurers never made a clear promise to provide coverage for the insured’s underlying expenses, and his lack-of-good-faith claim at a minimum required him to demonstrate that he was entitled to coverage.
January 05, 2024
Clothing Retailer Asks North Carolina High Court To Review COVID-19 Coverage Suit

RALEIGH, N.C. — A clothing retailer insured petitioned the North Carolina Supreme Court to review an appeals court’s ruling that affirmed a lower court’s dismissal of its lawsuit seeking coverage for its losses arising from the coronavirus pandemic, challenging the lower courts’ reliance on North State Deli v. Cincinnati Ins. Co. in dismissing its case.