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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Panel: Pollution Exclusion Bars Environmental Damage Claim With Insolvent Insurer
NEW YORK - A pollution exclusion precludes coverage for an environmental damage claim with an insolvent insurer, the First Department New York Supreme Court Appellate Division affirmed June 22 (In re Midland Insurance Co.; ASARCO LLC, v. The Superintendent of Financial Services of the State of New York, in her capacity as liquidator of Midland Insurance Co., No. 41294/86, N.Y. Sup., App. Div., 1st Dept., 2017 N.Y. App. Div. LEXIS 5065).

California Federal Judge Denies Motion To Dismiss Counterclaims In Sewage Suit
LOS ANGELES - A California federal judge on June 23 denied a motion to dismiss bad faith counterclaims against an insurer in a coverage dispute arising out of a sewage spill after determining that the counterclaims sufficiently allege facts in support of the claims (Travelers Property Casualty Company of America v. Mountain Movers Engineering Contactors Inc., No. 16-2127, S.D. Calif., 2017 U.S. Dist. LEXIS 97731).

Insured Entitled To Documents Related To Underwriting, Federal Magistrate Judge Says
BALTIMORE - A Maryland federal magistrate judge on June 23 determined that an insured is entitled to documents pertaining to an insurer's underwriting review because the documents may help the insured in defending the insurer's misrepresentation claim alleged against the insured in a lead coverage dispute (CX Reinsurance Co. Ltd., f/k/a CNA Reinsurance Co. Ltd. v. B&R Management Inc., et al., No. 15-3364, D. Md., 2017 U.S. Dist. LEXIS 97133).

Reinsurer, Insurer Settle $6.2M Breach Of Contract Dispute Over Asbestos Claims
NEW HAVEN, Conn. - A reinsurer and insurer have resolved their $6.2 million reinsurance dispute involving a settlement of underlying asbestos claims, according to a June 20 status report filed in a Connecticut federal court (Travelers Casualty and Surety Co., f/k/a The Aetna Casualty and Surety Co. v. Century Indemnity Co. as successor to Insurance Company of North America, No. 16-cv-170, D. Conn.).

With Summary Judgment Denied, Coverage Row Bound For Trial
CHICAGO - A dispute over how much coverage from an insurer exists for asbestos claims against Chapter 11 debtor Oakfabco Inc. must be decided at trial because the insurer's policy and binder are too ambiguous to decide the issue on summary judgment, an Illinois federal bankruptcy judge held June 12 (In re: Oakfabco, Inc., No. 15-27062, N.D. Ill. Bkcy.).

THAN Trust Implores Court To End Insurers' Pursuit Of Audit Rights
WILMINGTON, Del. - An amended lawsuit filed by insurers seeking to audit the T H Agriculture & Nutrition LLC (THAN) asbestos trust for evidence of fraud should be dismissed because the insurers already conducted a court-ordered audit and have produced no evidence of wrongdoing for the trust to pursue, the trust, THAN and its parent argue in separate briefs supporting their motions to dismiss filed June 9 in Delaware state court (AIU Insurance Company, et al. v. Philips Electronics North America Corporation, et al., No. 9852, Del. Chanc.).

Georgia Federal Judge Dismisses 2 Claims Against Broker In Food Contamination Suit
ATLANTA - An insured's breach of contract claim against its insurance broker must be dismissed because the insured, seeking coverage for underlying suits arising out of exposure to hepatitis A from food purchased from the insured, failed to show that a valid contract existed between the parties, a Georgia federal judge said June 16 (Sentinel Insurance Co. Ltd. v. Tropical Smoothie Cafe LLC, et al., No. 16-4162, N.D. Ga.).

Majority Finds Excess Professional Insurance Policy Is Ambiguous, Reverses Ruling
CONCORD, N.H. - A majority of the New Hampshire Supreme Court on June 22 reversed and remanded a lower court's ruling in favor of an excess health care professional liability insurer in a coverage dispute arising from a hepatitis C outbreak, finding that the policy's Coverage A is subject to more than one reasonable interpretation and that the ambiguity should be construed in favor of the insured (Exeter Hospital Inc. v. Steadfast Insurance Co., No. 2015-0624, N.H. Sup., 2017 N.H. LEXIS 129).

Texas High Court Grants Insurer New Trial In Defect Coverage Dispute
AUSTIN, Texas - A judgment in an underlying construction defect lawsuit is not binding on an insurer because its insured builder did not have a sufficient financial stake in the outcome due to a pretrial agreement, the Texas Supreme Court ruled June 16, granting a new trial over whether the insurer must cover the construction defect claims (Great American Insurance Co., et al. v. Glen Hamel, et al., No. 14-1007, Texas Sup., 2017 Tex. LEXIS 553).

Texas Federal Judge Says Insurer Has Duty To Defend Underlying Negligence Suit
DALLAS - An insurer has a duty to defend its insured in an underlying suit alleging that the insured failed to properly remediate water damage to property in storage because the underlying suit claims that the insured's actions were negligent, a Texas federal judge said June 14 (Bedivere Insurance Co., f/k/a General Accident Insurance of America v. Pacific Van & Storage of Texas Inc., d/b/a Joyce Moving and Storage Co. Inc., et al., No. 16-1111, N.D. Texas, 2017 U.S. Dist. LEXIS 91265).

Insurer Seeks Equitable Contribution For Insured's Defense In 3 Defects Suits
MORRISTOWN, N.J. - An insurer claims in a June 2 complaint filed in New Jersey state court that it is entitled to equitable contribution from another insurer because the other insurer improperly denied coverage to its insured for three construction defects lawsuits filed against the insured (Zurich American Insurance Co., as successor by merger to Assurance Company of America, et al. v. Crum & Forster Specialty Insurance Co., et al., No. L-1233-17, N.J. Super., Morris Co.).

Sewage Is A Pollutant; Coverage Is Barred, Insurer Argues In 11th Circuit Brief
ATLANTA - An Alabama federal judge erred in finding that coverage is provided for two underlying lawsuits alleging injuries from sewage exposure because a total pollution exclusion is not limited to traditional industrial or environmental pollution and bars coverage, an insurer argues in its June 8 reply brief filed in the 11th Circuit U.S. Court of Appeals (Evanston Insurance Co. v. J&J Cable Construction LLC, et al., No. 17-11188, 11th Cir.).

California Panel Affirms No Coverage For Dentist's Claim For Lost Practice Income
SACRAMENTO, Calif. - A California appeals panel on June 13 affirmed a lower court's ruling in favor of an insurer in a dispute over coverage for an individual dentist's claim for lost dental practice income due to a sewage backup (William A. Gilbert v. The Dentists Insurance Company, Inc., No. C075959, Calif. App., 3rd Dist., 2017 Cal. App. Unpub. LEXIS 4041).

Reinsurer Seeks Trial Date Move After Failed Settlement Discussions
UTICA, N.Y. - Following failed settlement talks, a reinsurer in a June 12 letter requests that a New York federal court move the trial date in a reinsurance dispute from September to October to accommodate the schedule of its two key witnesses (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-cv-00853, N.D. N.Y.).

Court Schedules Discovery Into Rapid-American, Insurer Policy Limits Dispute
NEW YORK - A New York federal bankruptcy judge on June 6 issued a scheduling order for fact discovery and identification of expert witnesses in a dispute between Chapter 11 debtor Rapid-American Corp. and one of its insurers over whether a policy has a $7 million or $14 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.).

Insurer Seeks Rescission Of Contamination Policy For Alleged Misrepresentation
NEW YORK - An insurer alleges in a June 14 complaint that rescission of a contamination products insurance policy is warranted because the insured, seeking coverage for a recall of frozen peas, failed to disclose that Listeria was discovered in its production facility prior to the issuance of the policy (Berkley Assurance Co. v. National Frozen Foods Corp., No. 17-4486, S.D. N.Y.).

Delaware Judge Determines Insurance Policies Were Properly Transferred
WILMINGTON, Del. - A Delaware judge on June 8 denied a motion for summary judgment filed by an excess insurer in an asbestos coverage dispute after determining that the insurer's policies were not excluded from an asset transfer between the insured and its statutory trust after the insured went bankrupt (Motors Liquidation Co. DIP Lenders Trust v. Allianz Insurance Co., No. N11C-12-022 PRW, Del. Super., New Castle Co., 2017 Del. Super. LEXIS 279).

Court: Action Alleging Asbestos Defendant Withheld Insurance Coverage Time-Barred
BALTIMORE - Asbestos plaintiffs were on notice that a settling defendant could have more access to insurance coverage than previously disclosed after Porter Hayden, in which a court concluded that the aggregate limits in product liability policies did not apply to installation or operation claims, a Maryland appeals court held June 1 (Estate of Harold L. Adams, et al. v. Continental Insurance Co. No. 1065 September Term 2014, Md. Sp. App., 2017 Md. App. LEXIS 567).

Pennsylvania Federal Judge: Duty To Defend Is Owed For Contaminated Water Suit
PITTSBURGH - Insurers have a duty to defend a school district and its superintendent against an underlying suit alleging that the district was negligent in failing to monitor a water system that became contaminated with lead and copper because the underlying complaint sounds in negligence and it is unclear if the underlying injuries were caused by the ingestion of lead, a Pennsylvania federal judge said June 9 (The Netherlands Insurance Co., et al. v. Butler Area School District, et al., No. 17-341, W.D. Pa., 2017 U.S. Dist. LEXIS 89073).

Connecticut Judge Says Insured Breached Policies' 'No Voluntary Payments' Clause
HARTFORD, Conn. - Because an insurer was prejudiced by an insured's breach of the policies' "no voluntary payments" provision when it failed to notify the insurer of an environmental contamination cleanup plan, a Connecticut Superior Court judge on May 19 granted the insurer's motion for partial summary judgment as it pertained to the "no voluntary payments" provision (MacDermid Inc. v. The Travelers Indemnity Co., et al., No. 12-6067744, Conn. Super., 2017 Conn. Super. LEXIS 937).

Syndicates Ask Court To Compel Reinsurer To Follow Umpire Selection Process
BOSTON - In a dispute over environmental claims, a collection of insurance syndicates on May 31 asked a Massachusetts federal court to compel a reinsurer to arbitrate their disagreement and to enforce the parties' agreed-to procedure for the selection of an umpire (Certain Underwriters at Lloyd's, London v. Transport Insurance Co., No. 17-10618, D. Mass.).

Hazardous Materials Exclusion May Not Bar Coverage, Appeals Court Says
ROCHESTER, N.Y. - A New York appellate panel on June 9 affirmed a trial court's denial of an insurer's motion for summary judgment after determining that a policy's hazardous materials exclusion may not preclude coverage for an underlying suit alleging damages caused by "malodorous conditions" created by the insured's recycling facility (Hillcrest Coatings Inc., et al., v. Colony Insurance Co., No. 597 CA 16-01898, N.Y. Sup., App. Div., 4th Dept., 2017 N.Y. App. Div. LEXIS 4519).

Judge Finds Policy Covered Water Vapor Damage, Rejects Insurer's Arguments
BILLINGS, Mont. - A Montana federal judge on June 6 granted summary judgment in favor of a property owner, finding that issues of fact exist as to whether a contractor caused a furnace vent pipe to disconnect, resulting in water damage, but found that the damage was covered under a homeowners insurance policy (Landy C. Leep v. Trinity Universal Insurance Co., No. 16-57, D. Mont., 2017 U.S. Dist. LEXIS 86759).

6th Circuit Majority Says Agreement Barred Future Claims For Cleanup Costs
CINCINNATI - The majority of the Sixth Circuit U.S. Court of Appeals on June 1 affirmed a district court's ruling that a 1994 settlement agreement bars coverage for any future claims arising out of coverage for environmental cleanup costs incurred by the insured at a Superfund site in Texas (Arrowood Indemnity Company v. Lubrizol Corporation, No. 16-3463, 6th Cir.; 2017 U.S. App. LEXIS 9854).

New Jersey High Court Remands Environmental Coverage Dispute
TRENTON, N.J. - The New Jersey Supreme Court on May 19 remanded an environmental contamination coverage case to allow the New Jersey Superior Court Appellate Division to reconsider its ruling regarding a successor company's rights under its predecessor's insurance policies in light of the high court's February 2017 ruling in a similar environmental contamination suit that also addressed the assignment of policy rights (Haskell Properties LLC v. The American Insurance Co., et al., No. 078210, N.J. Sup.).

Kaiser Gypsum's Insurance Coverage Dispute Sent Back To Oregon Court
CHARLOTTE, N.C. - An insurance coverage dispute over two polluted sites in Oregon and Washington between Chapter 11 debtor Kaiser Gypsum Co. and its insurers will not be decided by a North Carolina bankruptcy court after the court remanded the case May 16 (In re Kaiser Gypsum Company, Inc., et al., No. 16-31602, W.D. N.C. Bkcy.).

Pollution Exclusion Bars Coverage For Sewage Contamination, Panel Affirms
NEW YORK - The Second Circuit U.S. Court of Appeals on May 31 affirmed a district court's ruling that a policy's pollution exclusion relieves an insurer of its duty to defend an insured plumbing company for an underlying suit arising out of the discharge of hazardous chemicals into nearby homes while the insured was refurbishing a sewer system (Cincinnati Insurance Co. v. Roy's Plumbing Inc., et al., No. 16-2511, 2nd Cir.).

District Court Correctly Found Sewage Is Not A Pollutant, Appellee Tells 11th Circuit
ATLANTA - An Alabama federal judge correctly determined that a policy's total pollution exclusion cannot be asserted as a bar to coverage for two underlying lawsuits alleging injuries from sewage exposure because the interpretation is consistent with Alabama law, an appellee argues in a May 25 brief filed in the 11th Circuit U.S. Court of Appeals (Evanston Insurance Co. v. J&J Cable Construction LLC, et al., No. 17-11188, 11th Cir.).

Insured Says Ohio Supreme Court Should Refuse To Review Asbestos Occurrence Ruling
CINCINNATI - The Ohio Supreme Court should refuse to review an appellate court's ruling that an insured's liability for underlying asbestos claims arose from multiple occurrences because the appellate court correctly determined that each individual's exposure to asbestos constitutes an occurrence, an insured maintains in an April 24 response to an insurer's petition for review (The William Powell Co. v. OneBeacon Insurance Co., et al., No. 2017-0411, Ohio Sup.).

Asbestos Claimants Nix Plan To Have District Court Hear Oakfabco Insurance Dispute
CHICAGO - A federal judge will not decide a dispute over the amount of money available to Chapter 11 debtor Oakfabco Inc. to pay asbestos claims under two lost insurance policies after the judge on May 17 granted the Asbestos Claimants' Committee's request to withdraw its motion to move the dispute from bankruptcy court (Asbestos Claimants Committee v. Oakfabco Inc., et al., No. 17-03336, N.D. Ill.).

No Coverage Owed For Mold Growth In Insured's Home, Federal Judge Says
COLUMBIA, S.C. - A South Carolina federal judge on June 1 granted an insurer's motion for summary judgment after determining that the insurer presented sufficient evidence proving that no coverage is afforded for mold growth within an insured's home (Pansy Clayton v. Nationwide Mutual Insurance Co., No. 16-2467, D. S.C., 2017 U.S. Dist. LEXIS 83658).

Coverage Barred For Construction Defects Claims, Insurer Says In Complaint
TAMPA, Fla. - No coverage is owed for an underlying suit seeking damages as a result of water intrusion and other construction defects because coverage is barred for the underlying claims by exclusions for mold, pollution and impaired property, an insurer claims in a May 24 complaint filed against its insured in Florida federal court (Mid-Continent Casualty Co. v. Mobley Homes Florida LLC, No. 17-1232, M.D. Fla.).

Insured Says Coverage Owed For Damages Caused By Water Intrusion
SEATTLE - An insured condominium complex is owed coverage for hidden damages caused by water intrusion discovered at a number of its condominium buildings, the insured claims in a May 26 complaint filed in Washington federal court (Milestone Condominium Association v. State Farm Fire and Casualty Co., et al., No. 17-832, W.D. Wash.).

Insured Seeks Finding That Coverage Is Owed For Water Damages
SEATTLE - An insurer owes coverage for hidden damages caused by water intrusion to insured condominiums because the damages occurred during the applicable policy periods and no policy exclusions bar coverage, an insured claims in a May 26 complaint filed in Washington federal court (Edmonds Seacrest Homeowners Association v. State Farm Fire & Casualty Co., No. 17-833, W.D. Wash.).

Insured: Insurer Is Liable Under 'Collapse' Provisions For Hidden Decay Damages
SEATTLE - An insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's ruling that an insurer is not liable for damage to apartments from hidden decay under its policies' "collapse" provisions (American Economy Insurance Co. v. CHL, LLC, No. 16-35606, 9th Cir.).