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Mealey's Insurance

June 29, 2023
Rhode Island’s Arbitration Act Does Not Apply To Appraisal Proceeding, Judge Says

PROVIDENCE, R.I. — A Rhode Island federal judge denied a homeowners insurer’s motion to compel an arbitration award, allowing an insured’s claims for breach of contract and bad faith to proceed, because Rhode Island’s Arbitration Act does not govern the appraisal proceeding in which the parties participated to determine the amount of an insured’s losses caused by water damage.
June 26, 2023
Pollution Liability Policy Is Excess Over Commercial General Liability Policy

DETROIT — A trial court did not err in finding that a contractor’s pollution liability insurance policy was excess to a commercial general liability insurance policy and that the commercial general liability insurer owes a duty to defend its insured against an underlying carbon monoxide poisoning suit stemming from the insured’s negligent repair of a furnace; however, the trial court erred in awarding the excess insurer attorney fees, costs and sanctions without first conducting a reasonableness hearing, the Michigan Court of Appeals said.
June 26, 2023
Panel Upholds Finding That Water Damage Suit Is Barred By Suit Limitations Provision

DENVER — The 10th Circuit U.S. Court of Appeals upheld a district court’s grant of summary judgment in favor of an insurer in a water damage suit after determining that the insured’s suit is barred by the policy’s four-year limitations provision and that insurer’s denial of coverage based on the policy’s exclusions for long-term water leakage and faulty workmanship does not constitute bad faith.
June 26, 2023
Contaminated Water Coverage Dispute To Remain In Connecticut, Judge Says

NEW HAVEN, Conn. — A Connecticut federal judge denied an insured’s motion to dismiss or to transfer a suit filed by its insurer and seeking a declaration regarding its coverage obligation to an insured distributor of a fire-suppressing foam for a subpoena served on the insured in an underlying multidistrict litigation seeking damages for bodily injuries and contaminated drinking water caused by the use of the foam, allowing the insurer’s suit to remain in Connecticut federal court.
June 23, 2023
Bad Faith Claim Against Builders Risk Insurer Cannot Proceed, Federal Judge Says

BEAUMONT, Texas — A Texas federal judge adopted a magistrate judge’s recommendation to grant a builders risk insurer’s motion for summary judgment on breach of contract and bad faith claims after rejecting the insured’s argument that the bad faith claim should proceed because the insurer was vicariously liable for its agent’s negligent procurement of the policy and estopped from denying coverage for interior water damage sustained at the insured’s warehouse while the roof was being replaced.
June 22, 2023
Suit Limitations Provision Bars Breach Of Contract, Bad Faith Claims, Panel Says

NEW YORK — The Second Circuit U.S. Court of Appeals on June 21 affirmed a district court’s ruling in favor of a homeowners insurer in a water damage coverage suit after determining that the policy’s suit limitations provision bars the insured’s breach of contract and bad faith claims.
June 21, 2023
Insurers’ Request To Limit $87.5M Punitive Damages Award Under Indiana Law Denied

SOUTH BEND, Ind. — An Indiana federal judge denied a request by insurers’ to limit an $87.5 million punitive damages award entered for an insured by a jury in a breach of contract and bad faith dispute stemming from the insured’s request for coverage costs related to the cleanup of polychlorinated biphenyls (PCBs) because the award is within the state’s statutory cap as the statutory cap applies to each individual punitive damages award, which is $12.5 million against each of the seven insurers named as defendants in the suit.
June 20, 2023
Insured Files Appeal In 3rd Circuit In Asbestos Bodily Injury Coverage Suit

PHILADELPHIA — An insured filed a notice of appeal in the Third Circuit U.S. Court of Appeal, seeking review of a district court’s ruling that the insured is not entitled to coverage for an underlying asbestos bodily injury suit under primary and excess policies because the insured breached the policies’ notice provisions by failing to notify its insurers of the underlying lawsuit until after a jury verdict was entered.
June 19, 2023
Insureds’ Motion To Stay Water, Mold Damage Suit Denied As Prejudicial

HARRISBURG, Pa. — A Pennsylvania federal magistrate judge on June 16 denied a motion to stay filed by insureds in a water and mold damage suit after determining that the motion is prejudicial to the administration of justice.
June 19, 2023
Magistrate Judge Recommends Denial Of Motion To Dismiss In Fentanyl Overdose Suit

WEST PALM BEACH, Fla. — A Florida federal magistrate judge recommended denying a motion to dismiss pertaining to an insurer’s claims seeking declarations that its policy’s exclusions for liquor liability, expected or intended injury and failure to maintain bar coverage for an underlying negligence suit arising out of a fentanyl overdose at an insured inn because the insurer alleges sufficient facts in support of its contention that the exclusions could apply as a bar to coverage.
June 19, 2023
Professors Call For Review Of Insurer Standing Ruling In Asbestos Bankruptcy Case

WASHINGTON, D.C. — A request for the U.S. Supreme Court to decide whether the primary insurer for asbestos debtors Kaiser Gypsum Co. Inc. and Hanson Permanente Cement Inc. has standing to challenge the debtors’ reorganization plan should be granted “to resolve an entrenched circuit split and restore uniformity to bankruptcy proceedings,” eight law professors say in an amicus curiae brief in support of the insurer.
June 15, 2023
Insurer’s Suit Properly Dismissed For Lack Of Jurisdiction, Panel Says

CINCINNATI — An district court properly dismissed an insurer’s suit seeking a declaration that no coverage is owed for underlying bodily injury suits alleging that the insured’s manufacture of fire protective gear caused a diagnosis of various cancers, the Sixth Circuit U.S. Court of Appeals said in agreeing with the lower court’s conclusion that the application of the policies’ occupational disease exclusion and total pollution exclusion presents novel issues of Ohio law that weigh against the federal court exercising jurisdiction.
June 14, 2023
COMMENTARY: Does Follow The Form And Follow The Settlements Trump Contrary Governing Law In Facultative Certificates?

By Robert M. Hall
June 14, 2023
N.J. Panel Affirms Ruling In Insurers’ Favor In Coronavirus Coverage Suit

TRENTON, N.J. — A New Jersey appeals court on June 13 affirmed a lower court’s grant of summary judgment in favor of primary and excess insurers in insureds’ lawsuit seeking coverage for its business losses arising from governmental orders closing the operation of their boardwalk amusement and entertainment businesses in response to the coronavirus, finding that the insureds did not satisfy the coverage prerequisite that they incurred “direct physical loss or damage” to their property and coverage is separately barred under the policies' pollution/contamination exclusion.
June 13, 2023
Insureds Failed To Show Motion To Strike Is Warranted In Mold Suit

HARRISBURG, Pa. — A Pennsylvania federal magistrate judge denied a motion to strike’s a homeowners insurer’s motion to deem the insureds’ motion for interlocutory appeal withdrawn in a water and mold damage suit after determining that the insureds failed to show that they would be prejudiced if the motion to strike were denied.
June 12, 2023
Umbrella Insurer Says Only 1 $5M Limit Applies To 3-Year Policy

DETROIT — An umbrella insurer contends in a response to its insured’s cross-motion for summary judgment filed in Michigan federal court that its three-year policy includes only one $5 million limit for underlying environmental contamination suits filed against the insured and not separate $5 million limits for each year of the policy.
June 12, 2023
Pollution Liability Insurer Cannot Withhold Documents Prepared In Insured’s Defense

NEWARK, N.J. — A pollution liability insurer cannot assert attorney-client privilege or work product doctrine as a basis to withhold documents prepared while still involved in the defense of an underlying suit filed against its insured, a New Jersey federal magistrate judge said in partially granting the insured’s motion to compel.
June 12, 2023
Pollution Exclusion Does Not Bar Coverage For Underlying Water Contamination Suit

ELGIN, Ill. — The Second District Illinois Appellate Court reversed and remanded a trial court’s ruling that an insurer has no duty to defend its insured city in an underlying suit alleging that the city provided unsafe drinking water to its residents because the policies’ pollution exclusion applies only to traditional environmental contamination claims and the underlying suit against the insured does not allege a claim involving traditional environmental contamination.
June 09, 2023
11th Circuit Rejects Subrogee Insurer’s Reliance On Concurrent Cause Doctrine

ATLANTA — The 11th Circuit U.S. Court of Appeals affirmed a federal district court’s grant of summary judgment in favor of an insurer in a subrogee insurer’s lawsuit seeking indemnification for their mutual insured’s nearly $3.5 million in losses and remediation expenses arising from a joint venture that oversaw a construction project at a water reclamation facility, rejecting the subrogee insurer’s reliance on the concurrent cause doctrine.
June 08, 2023
Panel Denies English Reinsurer’s Rehearing Bid In All-Sums Allocation Case

NEW YORK — A Second Circuit U.S. Court of Appeals panel denied a petition for panel rehearing in which an English facultative reinsurer argued that the opinion “misreads the context” of one English case and “overlooked an English appellate decision reaching exactly the opposite conclusion” in a case concerning all-sums allocation of an environmental claims settlement.
June 05, 2023
Insurer Responds To Condo Owner’s Washington High Court Appeal In Collapse Dispute

OLYMPIA, Wash. — A commercial property insurer asked the Washington Supreme Court to affirm an appeals court’s finding that a condominium owners association insured failed to provide evidence of an “abrupt or sudden falling down of any part of a building such that it could not be occupied for its intended purpose” to trigger policy coverage, arguing that the insured does not explain how previous state and federal court decisions create a conflict with the appeals court’s ruling.
June 05, 2023
Primary Insurers Say Insured Interfered With Settlement Of Asbestos Claims

FORT WORTH, Texas — Primary insurers of an insured named in underlying asbestos bodily injury lawsuits allege in an amended complaint filed in Texas federal court that their insured breached its contracts of insurance by interfering with the primary insurers’ duty to indemnify the insured for settlements of some of the underlying suits in an attempt to force the primary insurers to continue defending the insured for the underlying claims.
June 01, 2023
3rd Circuit Says Faulty Workmanship Is Not Occurrence, No Coverage Owed To Insured

PHILADELPHIA — The Third Circuit U.S. Court of Appeal on May 31 reversed a district court’s ruling that an insurer must indemnify its insured for damages to natural gas wells caused by the insured’s fracking work because neither faulty workmanship nor failure to perform a contract in a workmanlike manner can be construed as an occurrence under the policy at issue.
May 31, 2023
Appraisal Award For Mold Damages Confirmed By New York Federal Judge

NEW YORK — A New York federal judge on May 30 confirmed an appraisal award of approximately $5,000 entered in favor of insureds whose home sustained mold damage following Superstorm Sandy, rejecting the insureds’ argument that the appraisal failed to comply with the court’s prior order regarding the terms of the appraisal.
May 31, 2023
Court Properly Found No Coverage Owed For Raw Sewage Injury Suit, Insurer Says

BOSTON — A district court properly found that an insurer is entitled to reimbursement for defense costs paid on behalf of its insureds and has no duty to contribute to the settlement of a bodily injury suit stemming from an employee’s contact with raw sewage because the policy’s fungi and bacteria exclusion clearly precludes coverage, the insurer says in an appellee brief filed in the First Circuit U.S. Court of Appeals.