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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Federal Judge Denies Motion To Strike In Contamination Coverage Dispute
TOLEDO, Ohio - An Ohio federal judge on Jan. 9 denied a motion to strike a deposition in an environmental contamination coverage dispute after determining that the insurers and the insureds agreed to extend the discovery deadline for the deposition to a time outside of the discovery deadline set by the court (Hartford Accident and Indemnity Co. et al., v. FFP Holdings LLC et al., No. 15-377, N.D. Ohio, 2018 U.S. Dist. LEXIS 3810).

Kentucky Federal Judge Allows Insured To Amend Claim In Contamination Coverage Suit
LEXINGTON, Ky. - An insured seeking to amend its counterclaim in an environmental contamination coverage suit has proven that good cause exists for filing the amendment after the court's deadline set forth in the court's scheduling order and that the insurers will not be prejudiced if the amended counterclaim is filed, a Kentucky federal judge said Jan. 3 in granting the insured's motion to amend (Century Indemnity Co., et al. v. Begley Co., et al., No. 17-138, E.D. Ky., 2018 U.S. Dist. LEXIS 471).

3rd Circuit Panel Affirms Summary Judgment Ruling In Bad Faith Lawsuit
PHILADELPHIA - A federal district court did not err in granting summary judgment in favor of an insurer in an insurance breach of contract and bad faith lawsuit because the insurer paid full coverage limits for mold remediation under the terms of a homeowners insurance policy and, thus, could not have acted in bad faith, a Third Circuit U.S. Court of Appeals panel ruled Jan. 10 in affirming (Mary Ann Andrews, et al. v. Merchants Mutual Insurance Co., No. 17-1413, 3rd Cir., 2018 U.S. App. LEXIS 637).

Panel Majority Says Pollution Exclusion Is Not Violation Of Maryland Public Policy
ANNAPOLIS, Md. - The majority of the Court of Appeals of Maryland on Dec. 18 determined that the interpretation of a pollution exclusion clause under Georgia law as excluding coverage for bodily injuries caused by the ingestion of lead-based paint does not violate Maryland public policy (Quanta Brownlee, et al. v. Liberty Mutual Fire Insurance Co., et al., No. 1, Md. App., 2017 Md. LEXIS 819).

Insurer Owes Coverage For Underlying Property Damages Caused By Roofing Debris
TULSA, Okla. - An insurer has a duty to defend its insured against underlying allegations arising out of damages caused by debris and dust that may have contained asbestos because the underlying suit clearly alleges a claim for property damages, which are not precluded by the policy's asbestos exclusion, an Oklahoma federal judge said Jan. 5 (Above It All Roofing & Construction Inc. v. Security National Insurance Co., No. 16-770, N.D. Okla., 2018 U.S. Dist. LEXIS 1968).

Insurer Asserts Breach Of Contract Against Reinsurer In Federal Court
HARTFORD, Conn. - A reinsurer breached its contract by refusing to pay $1.25 million under a series of reinsurance agreements with an insurer for the insurer's settlement of underlying asbestos claims, the insurer says in a Dec. 22 complaint filed in Connecticut federal court (Travelers Casualty and Surety Co. v. Allstate Insurance Co., No. 17-02144, D. Conn.).

Judge: City Is Not Entitled To Independent Counsel In Sewer Backup Coverage Suit
SANTA ANA, Calif. - A California federal judge on Dec. 18 denied the city of Laguna Beach's motion for partial summary judgment but granted its motion for partial stay in a coverage dispute over damages arising from an April 26, 2016, sewer backup (Tokio Marine Specialty Insurance Company v. Laguna Beach, No. 17-00277, C.D. Calif., 2017 U.S. Dist. LEXIS 212828).

Insured's Stucco Damage Barred From Coverage, Insurer Says In Federal Court
JACKSONVILLE, Fla. - A commercial general liability insurance policy excludes coverage for an insured's underlying construction defects lawsuits arising out of stucco damage, the insurer says in a Jan. 10 complaint filed in a Florida federal court (Auto-Owners Insurance Co. v. Kis Construction LLC, et al., No. 18-00086, M.D. Fla.).

Panel Says Insured Proved Existence Of Missing Policies In Contamination Dispute
CHICAGO - The First District Illinois Appellate Court on Dec. 29 affirmed a trial court's ruling that an insured seeking coverage for underlying environmental contamination lawsuits proved the existence of missing insurance policies under which it seeks coverage (The Travelers Indemnity Co., et al. v. Rogers Cartage Co., No. 1-16-0780, Ill. App., 1st Dist., 2017 Ill. App. LEXIS 829).

Court Properly Dismissed Insurer's Suit In Favor Of Insured's New Jersey Suit
CHICAGO - The First District Illinois Appellate Court on Dec. 27 affirmed a trial court's dismissal of an insurer's suit seeking a declaration regarding its coverage obligations for environmental contamination after determining that the trial court weighed all relevant factors before concluding that the coverage dispute should be litigated in New Jersey where the insured's suit is pending (The Travelers Indemnity Co., et al. v. Tate & Lyle Ingredients Americas LLC, et al., No. 1-17-1195, Ill. App., 1st Dist., 3rd Div., 2017 Ill. App. Unpub. LEXIS 2774).

Appeal In Contamination Dispute Is Moot As Ruling Was Later Issued In Insurer's Favor
INDIANAPOLIS - The Indiana Court of Appeals on Dec. 29 dismissed an insurer's appeal in an environmental contamination coverage dispute after determining that the insurer cannot appeal the trial court's denial of its motion for summary judgment because the trial court ultimately issued a decision in the insurer's favor when it later dismissed all the claims against the insurer (United States Fidelity & Guaranty Insurance Co., et al. v. Crawfordsville Square LLC, et al., No. 54A05-1704-PL-874, Ind. App., 2017 Ind. App. Unpub. LEXIS 1729).

Insurer Properly Denied Coverage Based On 'Claims In Process' Exclusion
CHICAGO - An insurer properly denied coverage for environmental contamination cleanup costs based on the policies' "claims in process" exclusion because the damages for which the insureds sought coverage occurred before the inception date of the applicable policies, the Seventh Circuit U.S. Court of Appeals said Dec. 22 (Atlantic Casualty Insurance Co. v. Juan Garcia, et al., No. 17-1224, 7th Cir., 2017 U.S. App. LEXIS 26307).

Illinois Judge Says Insured Failed To Prove All Primary Policies Were Exhausted
CHICAGO - Following a bench trial in an asbestos coverage dispute, an Illinois federal judge on Dec. 28 determined that a ruling regarding the exhaustion of the insured's umbrella and excess policies would be premature because the insured failed to meet its burden of proving that the primary policies were exhausted (John Crane Inc. v. Admiral Insurance Co., et al., No. 04-CH-08266, Ill. Cir., Cook Co.).

Oakfabco Backs Asbestos Claimants' Pursuit Of Fraud Claims Against Insurer
CHICAGO - Chapter 11 debtor Oakfabco Inc. gave the go-ahead Dec. 20 to asbestos claimants to pursue a nine-count fraudulent inducement complaint against Oakfabco insurers and a claims management company alleging that they knew that additional coverage was available for asbestos claims when the insurers attempted to settle with Oakfabco before it filed for bankruptcy (In re: Oakfabco, Inc., No. 15-27062, N.D. Ill. Bkcy.).

Reinsurer Seeks New Trial After New York Federal Jury Awards $64M To Insurer
UTICA, N.Y. - Following a jury's verdict of $64 million, a reinsurer in a Dec. 29 motion asked a New York federal court for a new trial, arguing that it is not liable under seven reinsurance agreements for sums an insurer paid to an insured in an asbestos claims settlement (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).

6th Circuit Denies Rehearing For Ruling On Documents Between Insurer, Reinsurer
CINCINNATI - In an asbestos coverage dispute, the Sixth Circuit U.S. Court of Appeals on Jan. 3 denied a panel rehearing and rehearing en banc on a decision to not conduct an in camera review of an insurer's documents disclosed to third parties other than a reinsurer and a claims adjuster (In re OneBeacon Insurance Co. v. The William Powell Co., No. 17-3852, 6th Cir.).

Federal Judge Says Abstention In Mold Coverage Dispute Is Warranted, Dismisses Suit
ATLANTA - A Georgia federal judge on Jan. 3 dismissed an insurer's suit after determining that the insureds' suit, filed in Georgia state court and seeking coverage for mold damages, is substantially similar and that abstention in favor of the state court suit is warranted (Safeco Insurance Company of Indiana v. David Pearson, et al., No. 17-3335, N.D. Ga., 2018 U.S. Dist. LEXIS 706).

Judge Finds Fact Issues Exist On Whether Foundation Damage Was Covered By Policy
NEW HAVEN, Conn.- A Connecticut federal judge on Dec. 29 refused to grant summary judgment on a breach of contract claim asserted by insureds, finding that genuine issues of fact exist on when damage to a property's foundation occurred, but the judge found no evidence to support their claims for violation of Connecticut law or to show that the insurer acted in bad faith (Raymond G. Gabriel v. Liberty Mutual Fire Insurance Co., No. No. 3:14-cv-01435, D. Conn., 2017 U.S. Dist. LEXIS 213202).

Insurer's Failure To Exclude Parties Was A Mistake, 3rd Circuit Says In Affirming
PHILADELPHIA - The Third Circuit U.S. Court of Appeals on Dec. 14 affirmed a New Jersey federal judge's ruling in favor of an insurer in an environmental contamination dispute after determining that the insurer's failure to exclude coverage to certain parties involved in the contamination dispute clearly was a mistake or scrivener's error (Indian Harbor Insurance Co. v. NL Environmental Management Services Inc., et al., Nos. 16-3262, 16-3293, 3rd Cir., 2017 U.S. App. LEXIS 25277).

5th Circuit Panel Says Appellant Waived Right To Argue That Texas Law Applies
NEW ORLEANS - An insured's assignee whose lungs were damaged by the inhalation of an excess amount of chlorine in the insured hotel's hot tub waived the right to argue that Oklahoma law, rather than Texas law, should be applied because the assignee failed to argue that the application of Texas law was a manifest injustice, the Fifth Circuit U.S. Court of Appeals said Dec. 13 in affirming the district court's ruling in favor of the insurer (Wesley Howard v. Maxum Indemnity Co., No. 16-11746, 5th Cir.).

Excess Insurer's Liability For Oilfield Explosion Capped At $11M, Federal Judge Says
AUSTIN, Texas - An excess insurer is not obligated to contribute its full $25 million policy limits to the settlement of an underlying wrongful death and personal injury suit arising out of an oilfield explosion because the excess insurer's liability is capped at $11 million according to the requirements of Texas Oilfield Anti-Indemnity Act (TOAIA), a Texas federal judge said Dec. 14 (Liberty Mutual Fire Insurance Co. v. Surplus Insurance Co., et al., No. 16-870, W.D. Texas, 2017 U.S. Dist. LEXIS 206187).

Wisconsin Panel Says Policy Clearly Bars Coverage For Mold Damages
WAUKESHA, Wis. - The Second District Wisconsin Court of Appeals on Dec. 13 affirmed that a trial court correctly entered judgment for an insurer in a suit seeking damages as a result of injuries caused by mold contamination in a rented apartment because the policy at issue clearly bars coverage for mold damages and mold-related injuries (Susan M. Smith v. Mumm Real Estate LLC, No. 2016AP1944, Wis. App., Dist. 2, 2017 Wisc. App. LEXIS 1039).

Default Judgment Entered Against Insureds In Mold Damages Coverage Suit
ALEXANDRIA, Va. - A Virginia federal judge on Dec. 15 entered a default judgment against insureds who failed to answer an insurer's complaint after agreeing with a magistrate judge's determination that no coverage is owed for underlying suits alleging that the insureds' decking product developed mold, rot and decay because the policies' exclusions for fungi and bacteria and for damages to "your product" bar coverage (Indiana Lumbermens Mutual Insurance Co. v. Timber Treatment Technologies LLC, et al., No. 16-692, E.D. Va., 2017 U.S. Dist. LEXIS 206868).

New York Federal Jury Awards $64M To Insurer, Finds Reinsurer Is Liable
UTICA, N.Y. - A jury in a New York federal court on Dec. 15 awarded an insurer more than $64 million after finding that a reinsurer is liable under seven reinsurance agreements for sums the insurer paid to an insured in an asbestos claims settlement (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).

New York High Court Finds No Set Rule On Reinsurer's Liability Cap On Defense Costs
NEW YORK - In a coverage dispute over asbestos litigation costs, the New York Court of Appeals on Dec. 14 ruled that one of its previous rulings did not establish a general rule that a reinsurance contract's total liability cap encompasses both indemnity and defense costs incurred by an insurer (Global Reinsurance Corporation of America v. Century Indemnity Co., No. CTQ-2016, 0005, N.Y. App., 2017 N.Y. LEXIS 3723).

Defect Notice May Trigger Insurer's Defense Coverage, Florida High Court Rules
TALLAHASSEE, Fla. - A Florida Statutes Chapter 558 proceeding for resolving construction defect disputes prior to litigation constitutes a "suit" under commercial general liability insurance policies that may trigger a duty to defend provided that an insurer consents to an insured's participation, a majority of the Florida Supreme Court held Dec. 14 (Altman Contractors Inc. v. Crum & Forster Specialty Insurance Co., No. SC16-1420, Fla. Sup., 2017 Fla. LEXIS 2492).

Underlying Asbestos Claims Arose Out Of Single Occurrence, Illinois Panel Says
CHICAGO - The First District Illinois Appellate Court on Dec. 5 affirmed a trial court's ruling that underlying asbestos bodily injury claims constitute only one occurrence under an insurer's policies because the underlying claims arose from the single cause of the insured's manufacturing of ash-handling conveyor systems for coal plants (United Conveyor Corp. v. Allstate Insurance Co., et al., No. 1-16-2314, Ill. App., 1st Dist., 2nd Div., 2017 Ill. App. LEXIS 744).

Insurer Argues Delaware Judge Properly Found Excess Policies Were Not Triggered
WILMINGTON, Del. - Review of a Delaware judge's ruling that a number of excess insurance policies are not triggered by underlying asbestos claims filed against an insured is not warranted because the primary policies at issue were not exhausted, an insurer asserts in a Dec. 8 joinder brief filed in the Delaware Supreme Court (Motors Liquidation Co. DIP Lenders Trust v. Allstate Insurance Co., et al., No. 381, 2017, Del. Sup.).

Georgia Federal Judge Says Insurer Had Reasonable Basis To Dispute Mold Claim
AUGUSTA, Ga. - A Georgia federal judge on Dec. 6 denied an insurer's motion for summary judgment on a breach of contract claim but granted the insurer's motion on a bad faith claim after determining that the insurer had a reasonable basis to deny the insured's claim for coverage of mold and water damages incurred to her home as a result of a hailstorm (Carrie Finch v. Owners Insurance Co., No. 16-169, S.D. Ga., 2017 U.S. Dist. LEXIS 200934).

Federal Judge Denies Motion To Dismiss In Chemical Exposure Coverage Dispute
CHICAGO - An Illinois federal judge on Dec. 7 denied an insurer's motion to dismiss after rejecting the insurer's argument that the potential indemnitor for underlying liabilities arising out of exposure to polychlorinated biphenyls should be named as the defendant pursuant to a 1999 settlement between the insurer and the potential indemnitor because the coverage dispute is based on the insured's contracts with the insurer (Magnetek Inc. v. The Travelers Indemnity Co., et al., No. 17-3173, N.D. Ill.).

Coverage Barred For Claims Arising Out Contaminated Pet Food, Insurer Asserts
CHICAGO - No coverage is owed to an insured manufacturer of pet food for underlying claims alleging damages caused by pet food manufactured by the insured and contaminated with pentobarbital because the insured made material misrepresentations in its application for insurance and because the policies at issue clearly preclude coverage for the underlying claims, an insurer asserts in a Dec. 5 complaint filed in Illinois federal court (Colony Insurance Co. v. Evanger's Dog and Cat Food Co. Inc., et al., No. 17-8756, N.D. Ill.).

Parties Settle Bird Flu Damages Coverage Suit Prior To Start Of Trial
MINNEAPOLIS - A Minnesota federal judge on Dec. 4 dismissed a coverage dispute arising out of the infection of egg-laying birds with pathogenic avian influenza after the parties notified the court that they settled the coverage dispute (Rembrandt Enterprises Inc. v. Illinois Union Insurance Co., No. 15-2913, D. Minn.).

With Expert Opinions Allowed, Insurer Denied Judgment On Home Damage Claims
NASHVILLE, Tenn. - A Tennessee federal judge on Dec. 4 denied summary judgment to an insurer in a lawsuit over coverage for a damaged home after finding that testimony by the homeowners' expert is admissible and raises a material factual dispute about whether a sinkhole caused the damage (Debra Daniels, et al. v. Erie Insurance Group, No. 3:16-cv-01977, M.D. Tenn., 2017 U.S. Dist. LEXIS 198906).