Preview: LexisNexis® Mealey's™ Insurance Legal News
LexisNexis® Mealey's™ Insurance Legal News
Headline Insurance Legal News from LexisNexis®
Panel Says Refinery Owner Not Covered Under Policy For Contamination Cleanup Costs
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Oct. 17 determined that a district court did not err in finding that a refinery owner seeking help with environmental cleanup costs was not covered under its parent company's policy because the refinery owner was not listed as an insured and did not show that the policy intended to provide coverage to any third-party beneficiaries (AIG Specialty Insurance Company, f/k/a Chartis Specialty Insurance Company v. Tesoro Corporation, No. 15-50953, 5th Cir.; 2016 U.S. App. LEXIS 18613).
Texas Federal Judge Says Plaintiff Insurers Lack Standing To Assert Claims
AUSTIN, Texas - A Texas federal judge on Oct. 13 dismissed claims alleging violations under the Texas Insurance Code against an excess insurer after determining that the plaintiff insurers do not have standing to assert the claims (Starnet Insurance Co., et al., v. Federal Insurance Co., No. 16-664, W.D. Texas; 2016 U.S. Dist. LEXIS 141782).
Insurer Argues District Court Erred In Dismissing Claims In Oil Spill Damages Suit
BOSTON - An insurer argues in an Oct. 10 reply brief filed in the First Circuit U.S. Court of Appeals that a district court erred in dismissing the insurer's claims against a ship operator because the suit presents issues of first impression regarding the accountability of the government and its private third-party contractors for oil spill damages (Ironshore Specialty Insurance Co., et al. v. United States of America, et al., No. 16-1589, 1st Cir.).
No Coverage Owed For Underlying Lead Injury Suit, Maryland Federal Judge Says
BALTIMORE - No coverage is afforded for an underlying suit alleging bodily injuries as a result of exposure to lead-based paint because the underlying complaint does not allege that the plaintiff was diagnosed with a lead level above the safe level during the term of the policies at issue, a Maryland federal judge said Oct. 14 (CX Reinsurance Co. Ltd. v. Daniel Mathew Heggie Jr. et al., No. 15-1674, D. Md.; 2016 U.S. Dist. LEXIS 142845).
California Federal Judge Says Court Lacks Jurisdiction Over Reinsurer
SAN FRANCISCO - A California federal judge on Oct. 12 granted a reinsurer's motion to dismiss in an asbestos coverage suit on the basis that the California federal court lacks jurisdiction over the reinsurer whose headquarters are based in the Commonwealth of Pennsylvania (The American Insurance Co. v. R&Q Reinsurance Co., No. 16-3044, N.D. Calif.; 2016 U.S. Dist. LEXIS 141467).
Excess Insurer Says Texas Federal Judge Incorrectly Applied Injury-In-Fact Theory
NEW ORLEANS - An excess insurer argues in an Oct. 12 brief filed in the Fifth Circuit U.S. Court of Appeals that a Texas federal judge incorrectly determined that excess policies are triggered by mere exposure to asbestos and said that evidence of actual injury caused by asbestos is necessary to trigger the excess policies (Longhorn Gasket and Supply Co., et al. v. U.S. Fire Insurance Co., No. 15-41625, 5th Cir.).
Iowa Appeals Panel: Insured's Faulty Work Potentially Constitutes An 'Occurrence'
DES MOINES, Iowa - Claims of an insured subcontractor's defective workmanship that caused damages beyond its own work potentially constitute an "accident" that is an "occurrence" covered by a commercial general liability insurance policy, the Iowa Court of Appeals held Oct. 12, finding that the insurer has a duty to defend (Hudson Hardware Plumbing & Heating Inc. v. AMCO Insurance Co., No. 15-1677, Iowa App.; 2016 Iowa App. LEXIS 1097).
No Collapse; No Coverage, New York Justice Rules In Breach Of Contract Dispute
WHITE PLAINS, N.Y. - A New York justice on Sept. 30 granted a commercial property insurer's motion for summary judgment in a breach of contract lawsuit filed by its insured, finding that the insured's loss failed to constitute a collapse necessary to trigger coverage under the policy (HB Holdings & Realty Management LLC d/b/a Balsamo Holdings Corp., et al. v. Tower Insurance Company of NewYork, No. 56804/2015, N.Y. Sup., Westchester Co.).
Insurer Argues In Motion For Summary Judgment That Its Duty To Indemnify Is Limited
HOUSTON - Pursuant to the Texas Supreme Court's answers to certified questions, an insurer argues in an Oct. 3 motion for partial summary judgment that its duty to indemnify its insured for an underlying product liability suit is limited to the cost of replacing gaskets and insulation that were "physically injured" as the result of the need to remove and replace the flanges at an oil refinery (U.S. Metals Inc. v. Liberty Mutual Group Inc., et al., No. 12-379, S.D. Texas).
California Federal Judge Allows U.S. Navy To Intervene In Contamination Dispute
SACRAMENTO, Calif. - A California federal judge on Oct. 6 granted a motion to intervene filed by the U.S. Department of the Navy in an environmental contamination coverage dispute after determining that the addition of the Navy as a party to the suit will not prejudice the insurer and will help the court in developing the facts at issue (Lennar Mare Island LLC v. Steadfast Insurance Co., et al., No. 12-2182, E.D. Calif.; 2016 U.S. Dist. LEXIS 139383).
Insurer Has A Duty To Defend, But No Duty To Indemnify, Federal Judge Says
MINNEAPOLIS - A policy's pollution exclusion does not preclude an insurer's duty to defend an underlying personal injury suit arising out of carbon monoxide poisoning but does preclude the insurer's duty to indemnify, a Minnesota federal judge said Oct. 6 in a second amended opinion, noting that the insured failed to prove that the insurer has a duty to indemnify (Travelers Property Casualty Company of America v. Christopher A. Klick, et al., No. 15-2403, D. Minn.; 2016 U.S. Dist. LEXIS 139752).
Pollution Exclusion Bars Coverage For Underlying Pesticide Suit, Insurer Says
LOS ANGELES - No coverage is owed for an underlying suit filed against an insured and seeking damages for bodily injuries sustained by a minor child as a result of his mother's exposure to pesticides while she was pregnant with the child because coverage is barred by the policies' pollution exclusion, an insurer claims in a complaint filed Oct. 4 in California federal court (Aspen Specialty Insurance Co. v. Ramco Enterprises L.P., No. 16-7422, C.D. Calif.).
Oil/Gas Exclusion Clearly Precludes Coverage, Montana Federal Judge Determines
BILLINGS, Mont. - An insurer has no duty to defend an insured for an underlying suit arising out of the release of hydrocarbon vapors because the policy's oil/gas exclusion clearly precludes coverage for the underlying suit, a Montana federal judge said Oct. 5 (Janson Palmer, et al., v. Northland Casualty Co., et al., No. 15-58, D. Mont.; 2016 U.S. Dist. LEXIS 138556).
Insurer's Negligence Claims Not Barred By Subrogation Clause, Federal Judge Says
ALLENTOWN, Pa. - A subrogation waiver clause included in a heating oil agreement sent to an insured by the heating oil company contravenes public policy because the average consumer does not have the chance to negotiate the provisions in residential heating oil contracts, a Pennsylvania federal judge said Oct. 5 in finding that an insurer is not barred from asserting negligence claims, as the subrogee of its insured, against the heating oil company (State Farm Fire & Casualty Co., et al. v. Petroleum Heat & Power Co. Inc., et al., No. 13-6732, E.D. Pa.; 2016 U.S. Dist. LEXIS 138479).
Judge Says Asbestos Trust Should Not Be Forced To Fund Litigation Against Itself
CONCORD, N.H. - A New Hampshire judge on Sept. 23 ruled that the liquidator of an insolvent insurer cannot deduct what is owed to an asbestos settlement trust from money the liquidator pays for the legal expenses of California's insurance guarantor in a suit against the asbestos trust (In the Matter of the Liquidation of The Home Insurance Company, No. 03-E-0106, N.H. Sup., Merrimack Co.).
Claims Against Insurer In Water Damage Suit Cannot Stand, Federal Judge Says
BOISE, Idaho - An insurer did not breach its contract or act in bad faith in its handling of an insured's claim for water damages, an Idaho federal judge said Sept. 30 after determining that the insured failed to provide any support that the insurer breached its contract (Kim Peck v. The Cincinnati Insurance Co., No. 14-500, D. Idaho; 2016 U.S. Dist. LEXIS 136465).
Florida Majority Quashes Ruling, Says Court Misapplied, Misinterpreted Statutes
TALLAHASSEE, Fla. - A majority of the Florida Supreme Court held Sept. 29 that an appellate court misapplied a statutory presumption of correctness and incorrectly found that another statute requires a showing of bad faith for an insured to recover attorney fees, quashing and remanding the appellate court's ruling in a sinkhole coverage dispute (Kathy Johnson v. Omega Insurance Co., No. SC14-2124, Fla. Sup.; 2016 Fla. LEXIS 2148).
Insured Failed To Prove Existence Of Policies, New York Federal Judge Says
ALBANY, N.Y. - A New York federal judge on Sept. 29 granted summary judgment motions filed by three insurers in an asbestos coverage dispute after determining that the insured failed to prove the terms of lost policies and failed to provide sufficient evidence regarding the dates of first exposure for the underlying claims (Pacific Employers Insurance Co. v. Troy Belting & Supply Co., et al., No. 11-912, N.D. N.Y.; 2016 U.S. Dist. LEXIS 134224).
Federal Judge Agrees With Insured's Interpretation Of Policy's Noncumulation Clause
BRIDGEPORT, Conn. - A Connecticut federal judge on Sept. 26 granted an insured's motion for summary judgment in an asbestos liability coverage suit after determining that an excess insurer cannot use its policy's prior insurance and noncumulation of liability clause to reduce any amount of any payments made to the insured for the underlying liabilities (New England Reinsurance Corp. v. Ferguson Enterprises Inc., et al., No. 12-948, D. Conn.; 2016 U.S. Dist. LEXIS 132863).
Insured Must Produce Documents Related To Premium Allocation, Federal Judge Says
INDIANAPOLIS - Insureds seeking coverage for environmental contamination claims must produce information related to their premium allocation in addition to a list of all of the insureds' global coverage policies, an Indiana federal judge said Sept. 27 (Eli Lilly and Co., et al. v. Arch Insurance Co., et al., No. 13-1770, S.D. Ind.; 2016 U.S. Dist. LEXIS 131855).
Missouri Panel: Pollution Exclusion Does Not Bar Coverage For Underlying Suits
ST. LOUIS - The Eastern District of the Missouri Court of Appeals on Sept. 27 affirmed that a pollution exclusion cannot be used as a bar to coverage for underlying toxic tort claims because the exclusion, as used in the policy at issue, is ambiguous (The Doe Run Resources Corp. v. American Guarantee & Liability Insurance, et al., No. ED103026, Mo. App., Eastern Div., Div. 3; 2016 Mo. App. LEXIS 964).
Panel Says Staffing Company's Insurer Owes No Duty In Carbon Monoxide Injury Case
NEW ORLEANS - A Louisiana appeals panel on Sept. 28 partially reversed and partially affirmed a ruling in a carbon monoxide poisoning case and determined that the insurer for a staffing company did not owe a duty to defend to the general contractor who had organized the project where two workers sustained their injuries (William F. Spencer v. Chevron Corporation, et al., No. 2016-CA-0174, La. App., 4th Cir.; 2016 La. App. LEXIS 1786).
Questions Of Fact Exist On Cause Of Mold Growth, Washington Federal Judge Finds
SEATTLE - Because it is not clear if a dishwasher leak was the efficient proximate cause of more than $5,000 in mold damage, a Washington federal judge on Sept. 26 denied a motion for summary judgment filed by insureds seeking coverage for mold damage within their home (R.W. and R.J.T., v. Liberty Mutual Fire Insurance Co., No. 16-465, W.D. Wash.; 2016 U.S. Dist. LEXIS 131586).
Texas High Court Denies Petition For Review In Mold Coverage Dispute
AUSTIN, Texas - The Texas Supreme Court on Sept. 30 refused to review a mold coverage suit in which a trial court granted an insurer's no-evidence motion for summary judgment because the insureds failed to file a timely and substantive response to the motion (Veronica L. Davis, et al. v. State Farm Lloyds Texas, No. 16-0531, Texas Sup.).
Texas Federal Judge Says Question Of Fact Remains On Insured's Refusal To Settle
HOUSTON - Even though an insurer has shown that it was prejudiced as a matter of law by an insured's conduct in declining a settlement in an underlying lawsuit over a faulty flex connector, a question of fact exists as to whether the insured's refusal to settle was reasonable, a Texas federal judge said Sept. 29 in vacating a prior ruling on the issue (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas; 2016 U.S. Dist. LEXIS 133972).
11th Circuit: Insured's Alleged Defective Roof Work Does Not Constitute 'Property Damage'
ATLANTA - A commercial general liability insurer had no duty to defend or indemnify a contractor in an underlying lawsuit seeking to recover the costs of repairing and replacing roofing work installed incorrectly by an insured subcontractor because the costs did not constitute "property damage" under the policy, the 11th Circuit U.S. Court of Appeals affirmed Sept. 28 (Core Construction Services Southeast Inc., et al. v. Crum & Forster Specialty Insurance Co., No. 16-10030, 11th Cir.; 2016 U.S. App. LEXIS 17575).
Judge: Complexity Of Underlying Suits Weighs In Favor Of Staying Coverage Action
DULUTH, Minn. - Finding that the complexity and the preliminary nature of underlying defective product lawsuits weigh in favor of temporarily staying an insurance coverage dispute, a Minnesota federal judge on Sept. 26 granted the insured's motion to stay the insurer's declaratory judgment suit (National Union Fire Insurance Company of Pittsburgh v. Viracon, Inc., No. 16-482, D. Minn.; 2016 U.S. Dist. LEXIS 131732).
Tailoring A New 'Suit': Examining An Insurer's Duty To Defend 'Suits' In Light Of Changing Policy Language
By Christopher P. Ferragamo and Alexis P. Joachim I. Introduction A standard commercial general liability (CGL) insurance policy provides a policyholder with indemnity coverage for damages caused by bodily injury, property damage, and personal and advertising injuries subject to certain obligations and limitations. The CGL policy also provides the policyholder with equally important defense coverage, which typically requires the insurance company to defend the insured against certain legal proceedings and pay defense costs outside the limits of the insurance policy. The breadth and scope of the insurer's defense obligation is a highly contested area of disagreement between policyholders and insurers and one that generates a sizable amount of the insurance coverage litigation filed each year. One such area of disagreement, which is the focus of this article, is whether an insurer is obligated to provide a defense to an insured (e.g. retain and pay defense counsel costs and expenses) when traditional litigation has not actually been commenced against an insured.
Alabama Federal Judge: Sewage Is Not Excluded Under Policy's Pollution Exclusion
MONTGOMERY, Ala. - Because sewage is not considered a pollutant under Alabama law, a pollution exclusion cannot be asserted as a bar to coverage for two underlying lawsuits alleging injuries from sewage exposure, an Alabama federal judge said Sept. 22 (Evanston Insurance Co. v. J&J Cable Construction LLC, et al., No. 15-506, M.D. Ala.; 2016 U.S. Dist. LEXIS 129371).
Insurer Has No Duty To Indemnify Under Pollution Exclusion, Federal Judge Says
MINNEAPOLIS - A policy's pollution exclusion does not preclude an insurer's duty to defend an underlying personal injury suit arising out of carbon monoxide poisoning but does preclude the insurer's duty to indemnify, a Minnesota federal judge said Sept. 23 in partially granting the insurer's motion for summary judgment (Travelers Property Casualty Company of America v. Christopher A. Klick, et al., No. 15-2403, D. Minn.; 2016 U.S. Dist. LEXIS 130762).
Carrier Owes No Coverage For Underlying Tort Actions, New York Justice Says
NEW YORK - A New York justice on Sept. 19 determined that an insurer has no duty to defend a number of entities named as defendants in underlying suits alleging personal injuries caused by exposure to toxic materials during cleanup activities in the wake of the Sept. 11, 2001, terrorist attacks on the World Trade Center because the entities were not additional insureds under the policies at issue (Taunus Corp., n/k/a DB USA Corp., et. al. v. Zurich American Insurance Co., No. 652275/2011, N.Y. Sup., New York Co.; 2016 N.Y. Misc. LEXIS 3347).
New York Federal Judge Denies Motion For Interlocutory Appeal In Asbestos Dispute
NEW YORK - A New York federal judge on Sept. 22 denied an insurer's motion for interlocutory appeal on the issue of allocation in an asbestos coverage case after determining that an appeal would serve only to delay and not advance the case (Liberty Mutual Insurance Co. v. The Fairbanks Co., Nos. 13-3755, 15-1141, S.D. N.Y.).
Rapid-American Says Insurance Policy Exhaustion Finding Should Be Vacated
NEW YORK - A New York federal bankruptcy judge improperly found that Chapter 11 debtor Rapid-American Corp. has not paid a sufficient amount for asbestos claims to reach the level of excess coverage provided under three insurance policies, the company says in a Sept. 9 motion to vacate the judge's ruling (Rapid-American Corporation, et al. v. Travelers Casualty and Surety Company, et al., No. 15-01095, S.D. N.Y. Bkcy.).
Pittsburgh Corning Parent's Coverage Dispute With Insurers Dismissed
PITTSBURGH - Bankruptcy court is not the proper forum for an adversary insurance coverage action filed in the Chapter 11 case of Pittsburgh Corning Corp. (PCC) by PCC parent PPG Industries Inc. because an amended complaint contains no allegations that arise under bankruptcy law, a federal bankruptcy judge in Pennsylvania ruled Aug. 25 in dismissing the 16-year-old proceeding (In re: Pittsburgh Corning Corporation, No. 00-22876 [PPG Industries, Inc., et al. v. Argonaut Insurance Company, et al., No. 00-2201], W.D. Pa. Bkcy.).
Insurer Must Pay Insured For Costs Incurred By Change In Deposition, Judge Says
INDIANAPOLIS - An insurer must reimburse its insureds for attorney fees and expenses incurred as a result of a rescheduled deposition, an Indiana federal judge said Sept. 19 after determining that the insureds were not prejudiced by the change in deposition dates (Eli Lilly and Co., et al. v. Arch Insurance Co., et al., No. 13-1770, S.D. Ind.).
No Coverage Owed For Water, Mold Damages, D.C. Federal Judge Says
WASHINGTON, D.C. - No coverage is afforded for water and mold damages that occurred within a vacation home because the insureds did not have a water shut-off valve to turn off the home's main water supply while the home was unoccupied, a District of Columbia federal judge said Sept. 26, noting that the policy required the home's main water supply to be shut off while the home was unoccupied (Vasilli Katopothis, et al. v. Windsor-Mount Joy Mutual Insurance Co., et al., No. 14-380, D. D.C.; 2016 U.S. Dist. LEXIS 130907).
Oregon High Court Affirms Judgment Against Insurer In Water Damage Dispute
PORTLAND, Ore. - Coverage was triggered under a commercial general liability insurance policy for a negligence award against a siding contractor for water damage to a housing complex, the Oregon Supreme Court ruled Sept. 22, upholding a garnish judgment against the insurer in the amount of $433,958.16 (FountainCourt Homeowners' Association v. American Family Mutual Insurance Co., No. 61, Ore. Sup.; 2016 Ore. LEXIS 613).
Kansas Federal Judge Says Issues Of Fact Exist Regarding Collapse
TOPEKA, Kan. - A Kansas federal judge on Sept. 22 denied an insurer's motion for partial summary judgment after determining that issues of fact exist regarding whether a collapse caused the damages at issue to its insureds' kitchen (Dr. Thomas C. Welton, et al. v. AMCO Insurance Co., No. 14-4066, D. Kan.; 2016 U.S. Dist. LEXIS 130466).