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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Pollution Exclusion Bars Coverage For Suits Alleging Violations Of Clean Water Act
CLEVELAND - Because a policy's pollution exclusion clearly bars coverage for claims arising out of violations of the Clean Water Act, an Ohio federal judge March 16 granted an insurer's motion for judgment on the pleadings and terminated the insured's suit against its insurer (JTO Inc. v. The Travelers Indemnity Company of America, No. 16-648, N.D. Ohio, 2017 U.S. Dist. LEXIS 38033).

Carrier Seeks Reformation Of Policy To Include An Intended Pollution Exclusion
ATLANTA - No coverage is owed for contamination claims arising out of the operation of a battery plant because the underlying claim against the insured did not meet the policy's deductible and a pollution exclusion, inadvertently left out of the policy through mutual mistake, precludes coverage, an insurer argues in a March 15 motion for summary judgment filed in Georgia federal court (ACE American Insurance Co. v. Exide Technologies Inc., et al., No. 16-1600, N.D. Ga.).

New York Federal Judge Orders Appraisal To Be Reopened To Determine Mold Damages
NEW YORK - A New York federal judge on Feb. 22 ordered an appraisal panel to reopen an appraisal to determine if insureds sustained any covered losses as a result of mold (Simon Zarour, et al. v. Pacific Indemnity Co., No. 15-2663, S.D. N.Y., 2017 U.S. Dist. LEXIS 37328).

California Federal Judge Says Complete Diversity Does Not Exist, Remands Mold Suit
LOS ANGELES - Because a plaintiff can arguably state a claim against an insurance claims adjuster for intentional infliction of emotional distress, the claims adjuster is not a sham defendant and was not fraudulently joined to defeat federal jurisdiction, a California federal judge said March 17 in remanding the insureds' suit seeking additional coverage for mold damage to California state court (Health Pro Dental Corp., et al. v. Travelers Property Casualty Company of America, et al., No. 17-637, C.D. Calif., 2017 U.S. Dist. LEXIS 38944).

Insureds Failed To Prove Bad Faith Claim, Delaware Supreme Court Concludes
WILMINGTON, Del. - Insureds failed to establish evidence that their insurer did not have a reasonable justification for denying their claim for water damage from a broken toilet to their condominium unit, the Delaware Supreme Court ruled March 13, affirming a directed verdict to the insurer on a bad faith claim (Debra Bennett and William Bennett v. USAA Casualty Insurance Co., No. S10C-02-010, Del. Sup.; 2017 Del. LEXIS 105).

Claims Barred By Statute Of Limitations, Nevada Federal Judge Determines
LAS VEGAS - A Nevada federal judge on March 8 determined that insureds seeking coverage for a water damage claim cannot allege claims for bad faith, unfair claims practices and intentional infliction of emotional distress against their insurer because the claims are barred by the applicable statute of limitations (Maxwell B. Williams, et al. v. The Travelers Home and Marine Insurance Co., et al., No. 16-1856, D. Nev., 2017 U.S. Dist. LEXIS 33954).

Judge Finds Asbestos Claims Against English Insurer Related To Arbitration Clause
NEW ORLEANS - A Louisiana federal judge on March 16 found that an English insurer's removal of a former machinist's asbestos-related claims from a state court was appropriate, finding that the dispute could relate to an underlying arbitration agreement contained in an insurance policy (James Edward O'Connor v. Maritime Management Corp., et al., No. 16-16201, E.D. La., 2017 U.S. Dist. LEXIS 37798).

Garlock Debtors, Insurer Agree To Denial Of Arbitration Request
CHARLOTTE, N.C. - An insurer cannot pursue arbitration against Chapter 11 debtor Garlock Sealing Technologies LLC and affiliates for a coverage dispute with a third-party manufacturer but can file a late proof of claim against the debtors without prejudice to its arbitration rights, according to a consent order filed March 16 in North Carolina federal bankruptcy court (In re: Garlock Sealing Technologies, LLC, et al., No. 10-31607, W.D. N.C. Bkcy.).

Judge Defines 'Collapse,' Finds Insurer Has No Duty To Indemnify Damage
CHICAGO - A homeowners insurance policy was intended to cover only a peril in which a building loses its character as a building, an Illinois federal judge ruled March 14, in defining "collapse" under the policy and finding that the insurer has no duty to indemnify damage caused by a contractor to the insureds' home (The Travelers Home and Marine Insurance Co. v. Patrick Walsh and Colleen Walsh, No. 15-3063, N.D. Ill.; 2017 U.S. Dist. LEXIS 35841).

Federal Judge Bars Expert Testimony On Some Repair Costs For Insureds' Damages
TULSA, Okla. - An Oklahoma federal judge on March 14 excluded testimony from an expert on estimates to repair a master control center (MCC) and electrical costs as a result of insureds' damages caused by a contractor and subcontractor's inadequate design and installation of the concrete columns but allowed other estimates to be admitted (Lexington Insurance Co., et al. v. Newbern Fabricating Inc. and Baucom Concrete Construction Inc. & Newbern Fabricating Inc. v. Doveland Engineering Co., No. 14-0610, N.D. Okla.; 2017 U.S. Dist. LEXIS 36133).

Texas Federal Judge Says Carrier Has A Duty To Indemnify Insured
HOUSTON - A Texas federal judge on Feb. 27 determined that an insurer has a duty to indemnify its insured for an underlying product liability suit but found no support for the insured's extracontractual claims and, accordingly, dismissed those claims against the insurer (U.S. Metals Inc. v. Liberty Mutual Group Inc., et al., No. 12-379, S.D. Texas, 2017 U.S. Dist. LEXIS 32507).

Connecticut Panel Says Insured Not Responsible For Costs During Uninsured Years
HARTFORD, Conn. - In reversing a number of rulings entered by a trial court as part of the second phase of an asbestos and silica coverage dispute, the Connecticut Appellate Court on March 7 said the trial court construed the occupational disease exclusions too narrowly and erred in finding that the insured is responsible for defense costs from 1993 through 2007 when it was uninsured (R.T. Vanderbilt Co. Inc. v. Hartford Accident & Indemnity Co. et al., Nos. AC 36749, AC 37140, AC 37141, AC 37142, AC 37143, AC 37144, AC 37145, AC 37146, AC 37147, AC 37148, AC 37149, AC 37150, AC 37151, Conn. App., 2017 Conn. App. LEXIS 59).

Maryland Federal Judge Says Insured's Claims On Policy Exhaustion Not Timely Filed
BALTIMORE - A Maryland federal judge on March 10 granted motions for partial summary judgment filed by a number of insurers involved in an asbestos coverage dispute after determining that the insured's claims regarding the exhaustion of the insurers' policies were not timely filed (General Insurance Company of America v. The Walter E. Campbell Co. Inc., et al., No. 12-3307, D. Md.; 2017 U.S. Dist. LEXIS 34348).

Rapid-American, Insurers Both Denied Judgment On Policy's Limits
NEW YORK - A New York federal bankruptcy judge on March 2 denied summary judgment to both Chapter 11 debtor Rapid-American Corp. and two of its insurers in a dispute over whether a policy has a $10 million or $30 million limit for asbestos liability claims (Rapid-American Corporation, et al. v. Travelers Casualty and Surety Company, et al., No. 15-01095, S.D. N.Y. Bkcy.).

Judge Orders Insurer, Reinsurer To Meet And Try To Settle Asbestos Dispute
UTICA, N.Y. - A federal judge in New York on Feb. 24 ordered an insurer and reinsurer to schedule a settlement conference after the judge ruled on the parties' motions to dismiss certain claims and which claims remain ready for trial (Utica Mutual Insurance Company v. Fireman's Fund Insurance Company, No. 09-cv-00853, N.D. N.Y.).

Oregon Federal Judge: Pollution Exclusion Bars Coverage For Carbon Monoxide Suits
PORTLAND, Ore. - An insurer has no duty to defend or indemnify its insureds for two underlying lawsuits alleging injuries as a result of carbon monoxide released by a pool heater because carbon monoxide is a pollutant and excluded under the policy's pollution exclusion, an Oregon federal judge said March 9 (Colony Insurance Co. v. Victory Construction LLC, et al., No. 16-457, D. Ore., 2017 U.S. Dist. LEXIS 34368).

No Support Provided For Affirmative Defenses, Indiana Federal Magistrate Says
LAFAYETTE, Ind. - An Indiana federal magistrate judge on March 10 granted a motion to strike a number of an insurer's affirmative defenses in an environmental liability coverage suit after determining that the insurer failed to provide any factual support for the defenses (Landis+Gyr, et al. v. Zurich American Insurance Co., No. 16-82, N.D. Ind., 2017 U.S. Dist. LEXIS 34269).

Insurer Has No Duty To Indemnify Faulty Work Settlement, 7th Circuit Says
CHICAGO - An insurer has no duty to indemnify a settlement of a faulty workmanship claim against a subcontractor, the Seventh Circuit U.S. Court of Appeals affirmed March 8, because claims of an insured's defective work resulting in damage to its own work do not constitute an "occurrence" caused by "property damage" (Allied Property & Casualty Insurance Co., et al. v. Metro North Condominium Association, No. 16-1868, 7th Cir.; 2017 U.S. App. LEXIS 4107).

Judge: Insurer Properly Relied On 'Maintenance' Exclusion To Bar Coverage
PHILADELPHIA - Evidence supported an insurer's reliance on a "maintenance" exclusion to deny coverage for water damage caused by an insured's failure to maintain his furnace, the Third Circuit U.S. Court of Appeals ruled March 6, affirming summary judgment in favor of the insurer on breach of contract and bad faith claims handling (David Dougherty v. Allstate Property and Casualty Insurance Co., No. 16-2680, 3rd Cir.; 2017 U.S. App. LEXIS 3930).

Panel Upholds Breach Of Contract Award, Reverses Bad Faith Awards Against Insurer
BEAUMONT, Texas - A Texas appeals panel on March 9 affirmed a jury's $15,000 award for breach of contract damages but reversed the jury's $20,000 award of actual damages that resulted from an insurer's alleged unfair settlement practices and the jury's award of additional damages of $60,000 that resulted from the finding that the insurer knowingly engaged in unfair settlement practices, rendering judgment that an insured take nothing as to the claims (State Farm Lloyds v. Dennis Webb, No. 09-15-00408-CV, Texas App., 9th Dist.; 2017 Tex. App. LEXIS 1997).

Insurers' Suit Is Not A Parallel Suit; Federal Judge Denies Motion To Dismiss
ST. LOUIS - A Missouri federal judge on March 3 denied an insured's motions to stay and to dismiss an environmental contamination coverage suit filed by insurers after determining that the insurers' suit is different from a suit filed in Missouri state court by the insured (Clearwater Insurance Co., et al. v. The Doe Run Resources Corp., et al., No. 16-195, E.D. Mo., 2017 U.S. Dist. LEXIS 30230).

Washington Federal Judge Dismisses Third-Party Claims Against Insurer
SEATTLE - A Washington federal judge on March 1 granted a motion to dismiss third-party claims against a group of insurers after determining that the insured's settlement with the group of insurers was reasonable and would not cause another insurer involved in the environmental contamination coverage dispute to shoulder an unreasonable burden (King County v. Travelers Indemnity Co., et al., No. C14-1957, W.D. Wash., 2017 U.S. Dist. LEXIS 29153).

Environmental Contamination Coverage Suits Consolidated In Indiana Federal Court
HAMMOND, Ind. - An Indiana federal magistrate judge on Feb. 27 granted an insured's motion to consolidate two coverage suits filed by insurers seeking declaratory relief and reimbursement of defense costs paid on behalf of the insured for an underlying environmental contamination action (Old Republic Insurance Co. v. Gary/Chicago International Airport Authority, No. 15-281, N.D. Ind.., 2017 U.S. Dist. LEXIS 27459).

Insured Seeks Dismissal On Basis Of Insurer's Withdrawal Of Reservation Of Rights
PHOENIX - An insurer's suit seeking a coverage declaration for an underlying state court lawsuit alleging personal injury claims caused by pigeon droppings should be dismissed because the insureds entered into an agreement with the underlying plaintiff and the insurer withdrew its reservation of rights, the insureds argue in a Feb. 28 motion to dismiss filed in Arizona federal court (American Family Mutual Insurance Co. v. Scottsdale Casitas Condominium Association, et al., No. 16-2289, D. Ariz.).

Panel: Evidence Supports $3.5M Jury Verdict In Tainted Onions Coverage Dispute
VENTURA, Calif. - A California appeals panel on March 1 affirmed a jury verdict against an excess insurer in an equitable contribution dispute over $3.5 million that the primary insurer paid to settle a lawsuit arising from a deadly outbreak of hepatitis A caused by contaminated onions that were marketed by the wholesaler insured (National Fire Insurance Company of Hartford v. Great American Insurance Co., No. B264238, Calif. App., 2nd Dist., Div. 6, 2017 Cal. App. Unpub. LEXIS 1453).

9th Circuit: Business Risk Exclusions Bar Coverage For Construction Defects Suit
SAN FRANCISCO - Two business risk exclusions found in a commercial general liability (CGL) insurance policy bar coverage for a construction defects lawsuit, the Ninth Circuit U.S. Court of Appeals held March 2, affirming summary judgment to an insurer on breach of contract and bad faith claims (Archer Western Contractors Ltd. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 15-55648, 9th Cir.; 2017 U.S. App. LEXIS 3796).

Texas Federal Judge Allows Insureds' Breach Of Contract Claim To Move Forward
DALLAS - A Texas federal judge on March 6 determined that an insurer is not entitled to summary judgment on its insureds' breach of contract claim because genuine issues of fact exist regarding whether the insureds suffered a direct financial loss and the extent of any damage caused when the insureds' washing machine overflowed (Corrine Michel Johnson, et al. v. Safeco Insurance Company of Indiana, No. 15-1939, N.D. Texas, 2017 U.S. Dist. LEXIS 30997).

Judge Dismisses Insured's Declaratory Relief Claim In Water Damage Dispute
MIAMI - Dismissing an insured's request for declaratory relief on coverage for water damage to its property, a Florida federal judge held March 1 that the insured "failed to plead facts necessary to establish any dispute or doubt under the insurance policy" and "failed to allege ambiguity" with regard to a loss settlement provision (Espadon Group Inc. v. Lexington Insurance Co., No. 16-24413, S.D. Fla.; 2017 U.S. Dist. LEXIS 29918).

Reformation Of Drilling Contract Was Proper, 5th Circuit Panel Says
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on March 2 determined that a district court did not err in allowing the reformation of a master services contract; however, the panel said the insurer was required to pay only a pro rata share of its insured's attorney fees incurred in the defense and settlement of a personal injury suit (Raylin Richard v. Anadarko Petroleum Corp., et al., No. 16-30216, 5th Cir., 2017 U.S. App. LEXIS 3812).

Oklahoma High Court Says Indoor Air Exclusion Does Not Violate Public Policy
OKLAHOMA CITY - An Oklahoma Supreme Court majority on Feb. 22 determined that a policy's indoor air exclusion does not violate the public policy of the state of Oklahoma because there is no is no law or policy in Oklahoma that prohibits the enforcement of the exclusion (Siloam Springs Hotel LLC v. Century Surety Co., No. 114872, Okla. Sup., 2017 Okla. LEXIS 15).

N.C. Federal Judge Dismisses Insurer's Suit In Favor Of Underlying State Court Suit
ELIZABETH CITY, N.C. - Because an underlying suit filed against insureds and alleging claims related to the exposure to lead paint was filed first in state court and the state of North Carolina has a greater interest in deciding the issues presented in that suit, a North Carolina federal judge on Feb. 17 dismissed the insurer's federal declaratory judgment suit filed against the insureds and underlying plaintiffs (American Reliable Insurance Co. v. Angela Michelle Lewis, et al., No. 16-78, E.D. N.C., 2017 U.S. Dist. LEXIS 22882).

Oregon Federal Judge Adopts Recommendation On Insurer's Duty To Pay Defense Costs
PORTLAND, Ore. - An Oregon federal judge on Feb. 17 refused to modify a magistrate judge's findings and recommendation regarding an insurer's responsibility for certain defense costs in an environmental contamination dispute because the insured did not provide a valid reason to modify the findings and recommendation (Siltronic Corp. v. Employers Insurance Company of Wausau, et al., No. 11-1493, D. Ore., 2017 U.S. Dist. LEXIS 24732).

Judge: Most Of Amtrak's Claims Of Attorney-Client Privilege Should Be Sustained
BROOKLYN, N.Y. - A New York federal judge on Feb. 17 found that most of Amtrak's claims of attorney-client privilege should be sustained with some exceptions, adopting the majority of a special master's report and recommendation in a coverage dispute over environmental contamination (Certain Underwriters at Lloyd's, et al., v. National Railroad Passenger Corp., et al., No. 14-4717, E.D. N.Y., 2017 U.S. Dist. LEXIS 23680).

Nonparty Insurer Says Summary Judgment Documents Should Not Be Sealed
SYRACUSE, N.Y. - A nonparty insurer on Feb. 13 asked a federal court in New York to deny an insurer's motion to seal certain documents and said that if the court seals the documents from the public, it should not seal them from the nonparty insurer (Utica Mutual Insurance Company v. Munich Reinsurance America, Inc., No. 12-cv-00196, and Munich Reinsurance America, Inc. v. Utica Mutual Insurance Company, No. 13-cv-00743, N.D. N.Y.).

Anti-Concurrent Causation Clause Precludes Coverage For Water Damages, Panel Says
TOLEDO, Ohio - A trial court did not err in granting summary judgment in favor of an insurer because it is clear that the policy's anti-concurrent causation clause precluded the insureds' claim for water damages, the Sixth District Ohio Court of Appeals said Feb. 24 (Chad Hartman, et al. v. Erie Insurance Co., No. WD-16-022, Ohio App., 6th Dist., 2017 Ohio App. LEXIS 666).

Insureds Overcome Insurer's Summary Judgment Motion In Bad Faith Suit
NEW HAVEN, Conn. - Insureds have provided enough evidence to support their claims for insurance breach of contract and bad faith against their homeowners insurance provider to overcome the insurer's motion for summary judgment, a federal judge in Connecticut ruled Feb. 21 in denying the insurer's motion and granting a similar motion filed by the insureds' former insurer (Stephen A. Metsack, et al. v. Liberty Mutual Fire Insurance Co., et al., No. 14-1150, D. Conn., 2017 U.S. Dist. LEXIS 24062).