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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Indiana Federal Judge Denies Insured's Motion For Preliminary Injunction
INDIANAPOLIS - An Indiana federal judge on April 11 denied an insured's motion for a preliminary injunction after determining that the insured has already shown that it can avoid suffering any irreparable harm by paying for its own site remediation contractor rather than switching to the insurers' choice of contractor while its lawsuit against its insurers is pending (Ranburn Corp. v. Argonaut Insurance Co., et al., No. 16-088, N.D. Ind., 2017 U.S. Dist. LEXIS 54833).

Federal Magistrate Judge Says Some Emails Are Protected By Work Product Doctrine
FORT WAYNE, Ind. - None of the approximately 185 emails between an insured and two of its environmental contractors are protected by the attorney-client privilege; however, a portion of the emails on are protected by the work product doctrine, an Indiana federal magistrate judge determined April 14 after conducting an in camera review of the emails sought by an insurer in an environmental contamination coverage dispute (Valley Forge Insurance Co. v. Hartford Iron & Metal Inc., et al., No. 14-006, N.D. Ind.; 2017 U.S. Dist. LEXIS 57370).

Ohio Federal Judge: Insurer Failed To Show Good Cause Exists For Protective Order
CINCINNATI - An Ohio federal judge on April 11 denied an insurer's motion for a protective order regarding a number of documents and communications sought by an insured seeking coverage for underlying asbestos claims after determining that the insurer failed to meet its burden of establishing that there is good cause for a protective order (The William Powell Co. v. National Indemnity Co., et al., No. 14-807, S.D. Ohio, 2017 U.S. Dist. LEXIS 55148).

Insurer Says Its Payment Of Asbestos Claims Was Reasonable
SYRACUSE, N.Y. - An insurer told a federal court in New York on April 7 that its payments to its insured were reasonable and that a reinsurer's challenge to those payments is contrary to the follow-the-fortunes doctrine (Utica Mutual Insurance Company v. Century Indemnity Company, No. 13-cv-00995, N.D. N.Y.).

3rd Circuit: Insurers Have No Duty To Defend, Indemnify Faulty Workmanship Claims
PHILADELPHIA - Commercial general liability insurers have no duty to defend or indemnify an insured in a shoddy workmanship lawsuit filed by the former owner of an apartment complex, the Third Circuit U.S. Court of Appeals ruled April 11, affirming summary judgment for the insurers (Mega Construction Corp. v. XL America Group, et al. v. Travelers Casualty Insurance Company of America v. Ohio Casualty, No. 16-2639, 3rd Cir., 2017 U.S. App. LEXIS 6210).

Fact Issues Exist On When Damage Manifested Under Insurance Policies, Judge Says
TRENTON, N.J. - Factual issues remain on whether damage caused by a window subcontractor manifested before or after an insurer's policy periods, a New Jersey federal judge ruled April 12, denying summary judgment to two insurers in a contribution lawsuit over defense costs incurred by the one insurer in a construction defects case (American Fire and Casualty Co. v. Crum & Forster Specialty Insurance Co., No. 14-04696, D. N.J., 2017 U.S. Dist. LEXIS 56450).

Judge Rules On Insurers' Late Notice, Suits Limitations Defense In Coverage Dispute
TACOMA, Wash. - In a coverage dispute between a condominium association and several "all-risk" insurers, a Washington federal judge on April 12 granted in part and denied in part summary judgment on two insurers' late notice defense but granted summary judgment entirely on their suit limitations defense (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 56292).

Judge: Fact Issues Remain On If Covered Peril Caused Insured's Continuous Damage
TACOMA, Wash. - Questions of fact exist on whether a covered peril caused continuous damage to a condominium association's common areas and buildings under several "all-risk" insurance policies, a Washington federal judge ruled April 10, denying summary judgment to the association and insurers (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 54761).

Federal Judge Denies Reconsideration Of Ruling In Contamination Dispute
TRENTON, N.J. - A New Jersey federal judge on April 5 denied motions for reconsideration filed by two insurers and their insured after determining that the court did not commit a clear error of law in interpreting the applicability of the policies' per-occurrence limits and absolute pollution exclusion in an environmental contamination dispute (Castoro & Co. Inc. v. Hartford Accident and Indemnity Co. Inc., et al., No. 14-1305, D. N.J., 2017 U.S. Dist. LEXIS 52140).

4th Circuit: Insured's Faulty Design Of Student Housing Foundation Is Covered
RICHMOND, Va. - A professional liability insurance policy provided coverage for a general contractor's liability for defective design of a building's foundation, which resulted in the contractor becoming responsible to pay $1.77 million as part of the costs to repair, the Fourth Circuit U.S. Court of Appeals held April 4, affirming summary judgment on an insured's breach of contract counterclaim (Westchester Surplus Lines Insurance Co. v. Clancy & Theys Construction Co., Nos. 15-2299 & 15-2373, 4th Cir., 2017 U.S. App. LEXIS 5796).

Excess Insurer Owes No Coverage For Costs Incurred By Well Blowout, Judge Says
AUSTIN, Texas - A Texas federal judge on April 6 granted an excess liability insurer's motion for summary judgment after determining that the excess insurer has no duty to contribute to an insured's costs incurred as the result of an oil well blowout (Starnet Insurance Co., et al., v. Federal Insurance Co., No. 16-664, W.D. Texas, 2017 U.S. Dist. LEXIS 53172).

Coverage Not Barred For Power Plant Explosion Damages, Federal Judge Says
BRIDGEPORT, Conn. - A Connecticut federal judge on April 6 granted a motion for summary judgment in favor of plaintiffs seeking to recover a $13.5 million judgment entered against an insured for damages and personal injuries incurred as a result of a power plant explosion after determining that a "wrap-up" exclusion in the insurer's policy is ambiguous and cannot be construed as a bar to coverage (James Thompson et al., v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 14-259, D. Conn., 2017 U.S. Dist. LEXIS 52673).

Judge Remands Injury Claims After Insurer Seeking Arbitration Is Dismissed
ALEXANDRIA, La. - After granting a request to dismiss a Bermuda insurer who removed an action filed by an injured electrician from a state court based on an arbitration agreement with an energy company named as a defendant, a Louisiana federal judge on April 3 granted the claimant's motion to remand the case to a state court for lack of jurisdiction (Garrett L. Faulk, et al. v. Alcoa Inc., et al., No. 2:16-CV-01461, W.D. La., 2017 U.S. Dist. LEXIS 51675).

Insurer Relies On Follow-The- Fortunes Rule To Show Reinsurer Must Cover Claims
NEW YORK - An insurer told the Second Circuit U.S. Court of Appeals on April 3 that the language of certain reinsurance agreements are the same as if the agreements had specific follow-the-fortunes provisions (Utica Mutual Insurance Company v. Clearwater Insurance Company, No. 16-cv-2824 and Utica Mutual Insurance Company v. Clearwater Insurance Company, No. 16-2535, 2nd Cir.).

Liquidator Of Insolvent Insurer Asks Court To Approve $10M Settlement
CONCORD, N.H. - The liquidator of an insolvent insurer asked a New Hampshire court on March 30 to approve a $10 million settlement between the liquidator and a manufacturing company that has had asbestos-related claims brought against it (In the Matter of the Liquidation of The Home Insurance Company, No. 03-E-0106, N.H. Sup., Merrimack Co.).

Insurer Files Complaint, Says No Coverage Owed For Underlying Asbestos Claims
CLEVELAND - No coverage is owed to an insured for thousands of underlying asbestos bodily injury claims because the coverage limits of the primary policies have not been fully exhausted, an excess insurer argues in a lawsuit filed April 5 in Ohio federal court against the insured (Berkshire Hathaway Specialty Insurance Co., f/k/a Stonewall Insurance Co. v. Goodyear Tire & Rubber Co., No. 17-714, N.D. Ohio).

15 Lawsuits Over Defects In Insureds' Windows Constitute Separate 'Occurrences'
DES MOINES, Iowa - Fifteen lawsuits against insureds for alleged negligently designed or installed windows constitute separate "occurrences" under comprehensive general liability policies, an Iowa federal judge ruled March 31, granting partial summary judgment to the insureds (Pella Corp., et al. v. Liberty Mutual Insurance Co., No. 11-00273, S.D. Iowa).

New York Law Applies In Environmental Dispute, Delaware High Court Says, Reversing
WILMINGTON, Del. - The Delaware Supreme Court on March 23 determined that the law of New York should be applied in a dispute over the allocation of environmental contamination claims because New York has the most significant relationship with the parties and applying the law of the state in which an environmental cleanup site is located, as proposed by the lower court, would result in an inconsistent application of a policy's contract language (Chemtura Corp. v. Certain Underwriters at CCLC Lloyd's, et al., No. 371, 2016, Del. Sup., 2017 Del. LEXIS 127).

California Federal Judge: Policies Cannot Be Stacked; Insured Cannot Recover $27M
RIVERSIDE, Calif. - A noncumulation clause included in three umbrella policies operates as an anti-stacking provision, preventing the insured from stacking the three policies' $9 million limits to cover costs for a landfill cleanup, a California federal judge said March 8 (The Insurance Company of the State of Pennsylvania v. County of San Bernardino, No. 16-0128, C.D. Calif., 2017 U.S. Dist. LEXIS 45031).

Federal Judge Says Insurer Is Entitled To Reimbursement Of Costs Paid Under Deductible
SAN FRANCISCO - An insurer involved in an environmental contamination coverage dispute is entitled to reimbursement of the deductible it paid on behalf of its insured because the policy at issue specifically states that the deductible includes claim expenses such as defense costs, a California federal judge said March 29 in granting the insurer's motion for partial summary judgment (American Guarantee and Liability Insurance Co., et al. v. Technichem Inc., et al., No. 15-03611, N.D. Calif., 2017 U.S. Dist. LEXIS 47103).

Policy Clearly Excludes Coverage For Black Lung Disease Claim, Judge Finds
KANSAS CITY, Kan. - No coverage is provided for an underlying black lung disease claim filed by a former coal miner because the insured failed to purchase an endorsement that would have provided coverage for black lung disease claims, a Kansas federal judge said March 30 (Liberty Mutual Fire Insurance Co. v. The Clemens Coal Co., et al., No. 14-2332, D. Kan., 2017 U.S. Dist. LEXIS 49889).

Man's Land-Based Asbestos Work Dooms Insurer's Action Seeking To Recoup Benefits
NEW ORLEANS - The court lacks jurisdiction over an employer and its insurer's action seeking to recover benefits paid under the Longshore and Harbor Workers' Compensation Act (LHWCA) to the widow of a primarily land-based worker, a federal judge in Louisiana held March 13 (Signal Mutual Indemnity Association Ltd., et al. v. Asbestos Corp. Ltd., et al., No. 15-00633, M.D. La.).

Kaiser Gypsum Seeks Deadline Extension While Insurers Seek Dismissal Of Case
CHARLOTTE, N.C. - Chapter 11 debtor Kaiser Gypsum Co. on March 7 asked a North Carolina federal bankruptcy court for more time to file a plan of reorganization, two weeks after several insurance companies told the court the case should be dismissed because it was filed in bad faith (In re Kaiser Gypsum Company, Inc., et al., No. 16-31602, W.D. N.C. Bkcy.).

Maryland Federal Judge Says Temporary Restraining Order Is Not Warranted
BALTIMORE - A Maryland federal judge on March 22 denied an underlying plaintiff's motion for a temporary restraining order seeking to ban an insurer and its insured from reaching a settlement for an underlying judgment awarded for personal injuries in a lead paint exposure suit (CX Reinsurance Co. Ltd., v. Benjamin L. Kirson, et al., No. 15-3132, D. Md., 2017 U.S. Dist. LEXIS 41230).

Dismissal Appropriate Based On Insurer's Withdrawal Of Reservation Of Rights
PHOENIX - Dismissal of an insurer's suit seeking a coverage declaration for an underlying state court lawsuit alleging personal injury claims caused by pigeon droppings is appropriate because the insureds entered into an agreement with the underlying plaintiff and the insurer withdrew its reservation of rights, an Arizona federal judge said March 22 in granting the insureds' motion to dismiss (American Family Mutual Insurance Co. v. Scottsdale Casitas Condominium Association, et al., No. 16-2289, D. Ariz., 2017 U.S. Dist. LEXIS 42343).

Judge Awards $187,604.17 For Costs Associated With Insured's Work On Fuel Tank
HOUSTON - Granting a motion for final entry of judgment, a Texas federal judge ruled March 29 that a commercial general liability insurer owes a contractor $187,604.17 for costs associated with an insured subcontractor's work on a fuel tank (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas, 2017 U.S. Dist. LEXIS 46285).

Judge: Water Exclusion Bars Coverage To Insureds For Damage From Collapsed Pipe
MIAMI - An insurance policy's water exclusion precludes payment to insureds for water damage and other repairs stemming from their collapsed and backed-up pipe, a Florida federal judge ruled March 28, granting summary judgment to the insurer (Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla., 2017 U.S. Dist. LEXIS 45474).

Issues Of Fact Exist On Cause Of Collapse And Insured's Knowledge, Federal Judge Says
PEORIA, Ill. - Because questions of fact exist regarding the cause of the collapse of a building's second floor and the insured's knowledge of the condition of the building, an Illinois federal judge on March 21 denied an insurer's motion for summary judgment (WAMFAM5 Inc. v. Nova Casualty Insurance Co., No. 15-1195, C.D. Ill., 2017 U.S. Dist. LEXIS 40159).

Court Did Not Abuse Its Discretion In Staying Coverage Issues, Illinois Panel Says
CHICAGO - An Illinois appeals panel on March 24 found that a lower court did not abuse its discretion by staying litigation as to an insurance policy's "care, custody, or control" and "professional services" exclusions in a coverage dispute arising from 65 underlying lawsuits alleging that the failure of the insured's cryogenic tanks caused semen and testicular tissue specimens to become unusable (Sentry Insurance v. Continental Casualty Co., et al., No. 1-16-1785, Ill. App., 1st Dist., 5th Div., 2017 Ill. App. LEXIS 163).

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).