Preview: LexisNexis® Mealey's™ Emerging Insurance Disputes Legal News
LexisNexis® Mealey's™ Emerging Insurance Disputes Legal News
Headline Emerging Insurance Disputes Legal News from LexisNexis®
Federal Judge Rules In Insurer's Favor In Coverage Dispute With Zillow Inc.
SEATTLE - A Washington federal judge on April 17 entered judgment in favor of an insurer three days after granting its motion for judgment on the pleadings in its lawsuit disputing coverage for underlying direct infringement, contributory infringement and vicarious liability claims brought against its insured Zillow Inc. (National Union Fire Insurance Co. v. Zillow, Inc., No.16-1461, W.D. Wash., 2017 U.S. Dist. LEXIS 57496).
No Coverage For False Advertising Claims Against Insured, 6th Circuit Affirms
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on April 11 affirmed a lower federal court's ruling that a business liability policy does not provide coverage for false advertising claims brought against an eye health supplement maker insured by a competitor, finding that the insured failed to demonstrate that the underlying complaint alleged a product disparagement claim (Vitamin Health, Inc. v. Hartford Casualty Insurance Co., No.16-1724, 6th Cir.).
8th Circuit Finds Settlement Agreement For Defect Claims Violated Cooperation Clause
ST. LOUIS - A settlement agreement between an association and an insured general contractor over allegations of defective construction violated an insurance policy's cooperation clause and, thus, is unenforceable, the Eighth Circuit U.S. Court of Appeals affirmed April 17 (James River Insurance Co. v. The Interlachen Propertyowners Association and Kuepers Construction Inc., No. 16-2994, 8th Cir.).
Professional Liability Insurer Fails To Show It Was Prejudiced By Delayed Notice
DENVER - A Colorado federal judge held April 13 that a professional liability insurer has failed to sufficiently demonstrate that it was prejudiced by a hospital insured's delayed notice of an underlying medical malpractice dispute (Children's Hospital Colorado v. Lexington Insurance Co., No. 15-01904, D. Colo., 2017 U.S. Dist. LEXIS 56892).
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).
Law Firm, Insurer Argue In 9th Circuit Whether 7 Suits Constitute 1 Claim
SAN FRANCISCO - In briefs filed before the Ninth Circuit U.S. Court of Appeals, a law firm and its former insurer dispute whether seven real estate investment fraud lawsuits brought against the firm should be considered one claim for coverage purposes under professional liability policies (Liberty Insurance Underwriters Inc. v. Davies Lemmis Raphaely Law Corp., et al., No. 16-55711, 9th Cir.).
No Claim For Wrongful Act; No Coverage, Insurer Argues To Federal Court
TULSA, Okla. - An insurer recently argued to an Oklahoma federal court that an underlying breach of contract lawsuit brought against its insured by a former business partner fails to allege a wrongful act to trigger coverage under a professional liability insurance policy (Doug Schwegman, d/b/a Schwegman Insurance and Financial Services v. Continental Casualty Co., No. 16-0730, N.D. Okla.).
Forty Niners' Insurer Appeals Ruling Ordering It To Equally Contribute To Defense
PASADENA, Calif. - The San Francisco Forty Niners Football Co.'s primary commercial general liability insurer on April 12 filed a notice of appeal in the Ninth Circuit U.S. Court of Appeals challenging a lower federal court's finding that it has duty to contribute by equal shares with another insurer to defense costs in an underlying lawsuit against the football team and others (First Mercury Insurance Co. v. Great Divide Insurance Co., No. 17-1511, 9th Cir.).
In Remanded False Claims Act Suit, Discovery Limited To Identified Properties
GULFPORT, Miss. - In a case concerning an insurer's False Claims Act (FCA) violations on Hurricane Katrina claims, a Mississippi federal judge on April 12 granted the parties' motions to reopen the case, which was remanded after a U.S. Supreme Court ruling, limiting initial discovery on those purported violations to properties previously identified in a list provided by the insurer (United States, ex rel. Cori Rigsby, et al. v. State Farm Fire & Casualty Co., No. 1:06-cv-00433, S.D. Miss.).
Panel: Insurer Breached Duty To Defend Claims Of Suspicious 'Flip' Transactions
CHICAGO - The Seventh Circuit U.S. Court of Appeals on April 10 found that an errors and omissions liability insurer has a duty to defend against underlying claims that its title insurance agency insured executed real estate "flip" transactions "contrary to the spirit and purpose" of its agency contract (Title Industry Assurance Co. v. First American Title Ins. Co., et al., No. 15-3310, 7th Cir., 2017 U.S. App. LEXIS 6092).
Judge Finds In Insured's Favor In Coverage Dispute Over Its Employee's Claims
SANTA ANA, Calif. - A California federal judge on April 10 granted an insured's motion for summary judgment in a declaratory judgment lawsuit arising from underlying claims for malicious prosecution and defamation brought by the insured's employee (KPC Healthcare, Inc. v. Hudson Specialty Ins. Co., No. 16-01483, C.D. Calif., 2017 U.S. Dist. LEXIS 55443).
Completed-Work Exclusion Does Not Bar Coverage, 11th Circuit Affirms
ATLANTA - The 11th Circuit U.S. Court of Appeals on April 4 affirmed a lower federal court's finding that an insurance policy's completed-work exclusion does not preclude the insured from coverage for an underlying lawsuit arising from an accident at a railroad crossing, concluding that the lawsuit is another "classic case of the insurer requesting relief from the consequences of the inartfully drafted, yet plain, terms of its insurance policy" (Liberty Surplus Insurance Corp. v. Norfolk Southern Railway Co., No. 16-14767, 11th Cir., 2017 U.S. App. LEXIS 5763).
Judge: Insurer Must Contribute $2.6M To Settlement Arising From Molestation Claims
SAN FRANCISCO - A California federal judge on April 7 held that an insurer must contribute $2.6 million to the $15.8 million that another insurer paid to settle underlying negligent supervision claims against a California school district and three of its administrators arising from allegations that a teacher sexually molested three students (Westport Insurance Corp. v. California Casualty Management Co., No. 16-01246, N.D. Calif., 2017 U.S. Dist. LEXIS 53903).
Judge: Insurer Has No Duty To Defend, Indemnify Suits Over Contaminated Medication
SOUTH BEND, Ind. - An Indiana federal judge on March 31 entered a judgment in favor of an insurer, declaring that it has no duty to defend or indemnify its insureds against underlying lawsuits and medical malpractice complaints stemming from a multistate outbreak of fungal meningitis, lumbar fungal infections and related injuries as a result of patients receiving injections of contaminated epidural steroid medication for pain management (Westfield Insurance Co v. Orthopedic and Sports Medicine Center of Northern Indiana, Inc., et al., No. 14-1548, N.D. Ind., 2017 U.S. Dist. LEXIS 46119).
Court Erred In Finding Parties Were Properly Aligned, Appellants Argue To 6th Circuit
CINCINNATI - Appellants have asked the Sixth Circuit U.S. Court of Appeals to reverse a lower federal court's finding that parties were properly aligned in a dispute over whether additional coverage is owed to satisfy an underlying $3,736,278 judgment against an insured for breaching its duty to exercise ordinary care to maintain its common areas (Evanston Ins Co. v. Housing Authority of Somerset, 16-6691, 6th Cir.).
Additional Insured's Coverage Limited To Vicarious Liability For Insured's Acts
CHARLESTON, S.C. - A South Carolina federal judge on April 14 denied an electric and gas company's motion for partial summary judgment in its lawsuit seeking defense as an additional insured under a commercial general liability insurance policy for two underlying personal injury lawsuits (South Carolina Electric and Gas Co. v. Old Republic Insurance Co., et al., No. 16-2468, D. S.C., 2017 U.S. Dist. LEXIS 57261).
Judge Rules On Indemnity, Coverage Issues In Dispute Arising From FELA Suit
EAST ST. LOUIS, Ill. - An Illinois federal judge on March 29 ruled on dueling summary judgment motions in a lawsuit arising from a railway company's losses incurred in an underlying lawsuit brought by a former employee under the Federal Employers Liability Act (FELA) (BNSF Ry. v. Gilster-Mary Lee Corp., et al., No. 15-250, S.D. Ill., 2017 U.S. Dist. LEXIS 46894).
Broker Failed To State A Negligent Misrepresentation Claim, Illinois Panel Rules
ELGIN, Ill. - An Illinois appeals panel on April 3 held that an insurance broker failed to state a claim for negligent misrepresentation against an insurer, further finding that the broker's professional negligence claim required expert testimony to establish the standard of care applicable between an insurer and a broker (Loomcraft Textile & Supply Co. v. Schwartz Brothers Insurance Agency, Inc., et al., No. 16-0557, Ill. App., 2nd Dist., 2017 Ill. App. Unpub. LEXIS 713).
New Mexico Federal Judge Says Bad Faith, Breach Of Contract Claims Can Stand
ALBUQUERQUE, N.M. - A New Mexico federal judge on March 29 denied a motion for partial judgment on the pleadings filed by insurers in a hail damage and theft coverage dispute after determining that the insured alleged sufficient facts in support of claims for breach of contract and bad faith (Sedillo Electric, et al. v. Colorado Casualty Insurance Co., et al., Nos. 15-1172, 16-43, D. N.M., 2017 U.S. Dist. LEXIS 46442).
Loss Of Boats Was Not Theft, Judge Finds In Ruling For Insurer
FRESNO, Calif. - An insurer did not breach a boat business' all-risk policy in bad faith by denying coverage for a theft claim because the evidence at trial showed that the loss of the business' boat inventory was not the result of theft but rather a family's asset transfer scheme gone awry, a California federal judge held March 31 (Pacific Marine Center, Inc. v. Philadelphia Indemnity Insurance Company, No. 1:13-cv-00992, E.D. Calif., 2017 U.S. Dist. LEXIS 49637).
Federal Law Does Not Apply To State Law Procurement Claims, Insureds Tell 5th Circuit
NEW ORLEANS - Insureds have asked the Fifth Circuit U.S. Court of Appeals to reverse a lower federal court's ruling in favor of an insurer and the United States of America in a lawsuit arising from the insurer's cancellation of a federal flood insurance policy following Hurricane Ike (Robert Spong and Kerry Spong v. Fidelity National Property and Casualty Insurance Co., et al., No. 16-41165, 5th Cir.).
Judge: Intellectual Property Exclusion Relieves Insurer Of Its Duty To Defend
RIVERSIDE, Calif. - A California federal judge on April 3 entered final judgment in favor of a commercial general liability insurer after finding that it has no duty to defend its insured against an underlying trademark and trade dress infringement lawsuit because the insurance policy's intellectual property exclusion bars coverage for all claims (Secard Pools, Inc., et al. v. Kinsale Insurance Co., No. 16-02404, C.D. Calif., 2017 U.S. Dist. LEXIS 47871).
Panel Reverses Ruling Against Insurers In Dispute Prompted By Hedge Fund Collapse
CHICAGO - An Illinois appeals panel on March 31 held that second- and third-level excess insurers' exhaustion provisions were unambiguous and must be enforced as written, reversing and remanding a lower court's ruling against the excess insurers in a coverage dispute arising from the collapse of an $11 million hedge fund (A.R. Thane Ritchie, et al. v. Arch Specialty Ins. Co., et al., No. 1-16-0413, Ill. App., 1st Dist., 6th Div., 2017 Ill. App. Unpub. LEXIS 689).
Maine High Court: Insurer Has No Duty To Defend Suit Challenging Ordinance
PORTLAND, Maine - The Maine Supreme Judicial Court on March 28 affirmed a lower court's ruling that an insurer has no duty to defend the city of South Portland and a code enforcement officer against an underlying federal lawsuit challenging a city ordinance (City of South Portland, et al. v. Maine Municipal Association Property & Casualty Pool, No. 16-05, Maine Sup., 2017 Me. LEXIS 59).
Judge Adopts Magistrate's Recommendation To Defer Insurer's Indemnification Duty
JACKSONVILLE, Fla. - A Florida federal judge on March 28 adopted a magistrate's report that recommended staying the portion of a professional liability insurer's declaratory judgment lawsuit that disputes it duty to indemnify its property management firm insured pending the resolution of underlying theft and conversion claims against the insured and its directors and officers (Philadelphia Indemnity Insurance Company v. Stazac Management, Inc., et al., No. 16-369, M.D. Fla., 2017 U.S. Dist. LEXIS 44983).
Receiver: Summary Judgment Is Not Appropriate For Excess Insurance Dispute
TALLAHASSEE, Fla. - The receiver of an insolvent insurer told a federal court in Florida on March 21 that its breach of contract suit against a directors' and officers' excess liability insurer should go to trial instead of being summarily dismissed (The Florida Department of Financial Services, as Receiver for Northern Capital Insurance Company v. Ironshore Indemnity, Inc., No. 16-cv-00259, N.D. Fla.).
9th Circuit: False Patent Marking Claim Did Not Trigger Advertising Injury Coverage
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on March 31 affirmed that an insurance policy's advertising injury provision did not cover a false patent marking claim that contributed to a $2,951,024 judgment against an insured (Sei Y. Kim v. Truck Insurance Exchange, et al., No. 15-56486, 9th Cir., 2017 U.S. App. LEXIS 5631).
Judge: Suit Fails To Allege Insured Published Material That Disparages Sprint
BALTIMORE - A Maryland federal judge on March 29 held that Sprint's underlying lawsuit against an insured fails to allege the publication of disparaging material and, therefore, the insurer's duty to defend was not triggered under the policy's "personal and advertising injury coverage" (Unwired Solutions, Inc. v. Ohio Security Insurance Co., No. 16-0405, D. Md., 2017 U.S. Dist. LEXIS 46215).
9th Circuit Affirms $6.1M Judgment In Favor Of Insured In Dispute With Excess Insurer
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on March 21 affirmed a lower federal court's $6,080,568 judgment in favor of an insured in a breach of contract and bad faith lawsuit against its excess general liability insurer arising from an underlying patent infringement dispute (Teleflex Medical Incorporated v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 14-56366, 9th Cir., 2017 U.S. App. LEXIS 4996).
9th Circuit Dismisses Appeal In Coverage Dispute Over Trademark Claims
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on March 21 dismissed an insured's appeal in an advertising injury coverage dispute after a lower federal court determined on remand that it lacked subject matter jurisdiction over the case (Vogue International, LLC, d.b.a. Vogue International v. Hartford Casualty Insurance Co., No. 14-56394, 9th Cir., 2017 U.S. App. LEXIS 5011).
Judge: Complaint Fails To Allege Direct Harm To Class 'Because Of Bodily Injury'
BOSTON - A Massachusetts federal judge on March 27 held that underlying class allegations against an insured do not allege bodily injury claims and, as a result, do not seek damages because of bodily injury, granting an insurer's motion for partial summary judgment in a coverage dispute over claims that the insured's athletic tape does not work as advertised (The Cincinnati Insurance Co. v. KT Health Holdings, LLC, et al., No. 16-11722, D. Mass., 2017 U.S. Dist. LEXIS 44432).
Panel: Challenges To Court's Jurisdiction, Coverage Ruling Barred By Res Judicata
CHICAGO - An Illinois appeals panel on March 14 rejected an insured's assignee's appeal in a coverage dispute arising from unsolicited fax transmissions, finding the assignee's claims barred by the doctrine of res judicata (CE Design Ltd. v. HealthCraft Products, Inc., et al., No. 1-14-3000, Ill. App., 1st Dist., 2nd Div., 2017 Ill. App. Unpub. LEXIS 490).
Insured: Duty To Defend Exists Under Trade Dress, Slogan, Advertising Idea Coverage
NEW ORLEANS - An insured asked the Fifth Circuit U.S. Court of Appeals to find that an insurer's duty to defend it against an underlying lawsuit was triggered under an insurance policy's trade dress, slogan and advertising idea coverage (Laney Chiropractic and Sports Therapy, P.A. v. Nationwide Mutual Insurance Co., 16-11183, 5th Cir.).
Louisiana High Court Majority Refuses To Hear Appeal In Medical Malpractice Suit
NEW ORLEANS - A majority of the Louisiana Supreme Court refused to reconsider an appeals court's affirmation of a lower court's finding that a doctor breached the standard of care applicable to an obstetrician and gynecologist in failing to obtain a patient's informed consent before performing surgery, according to a March 24 news release (Renea Fanguy v. Lexington Insurance Co., et al., No. 2017-C-0195, La. Sup.)
Lawsuit Fails To Trigger Professional Liability Coverage, 7th Circuit Affirms
CHICAGO - The Seventh Circuit U.S. Court of Appeals on March 21 affirmed a lower federal court's ruling that an underlying lawsuit against an insured does not assert a claim that plausibly falls under her professional liability insurance policy, rejecting an appeal by a homeowners insurer seeking reimbursement of underlying defense costs from the professional liability insurer (Madison Mutual Insurance Co. v. Diamond State Ins Co., No. 15-3292, 7th Cir., 2017 U.S. App. LEXIS 5006).
Panel: Court Erred In Applying Judicial Estoppel In Professional Liability Suit
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on March 16 reversed and remanded a lower federal court's ruling as to an insurer's breach of contract and equitable claims in a dispute over professional liability insurance coverage (Charla Aldous, et al. v. Darwin National Assurance Company, No. 16-10537, 5th Cir., 2017 U.S. App. LEXIS 4707).
Panel Reverses Ruling Against Insurer In Professional Liability Coverage Dispute
INDIANAPOLIS - An Indiana appeals panel on March 16 reversed a lower court's denial of a professional liability insurer's motion for summary judgment and its entry of a declaratory judgment in favor of the insured's estate in a coverage dispute erupting from an underlying malpractice claim (Admiral Insurance Co. v. Joseph Banasiak, No. 45A05-1604-PL-859, Ind. App., 2017 Ind. App. LEXIS 127).
Judge: Coverage For Negligence In Performing Insurance Services Was Not Triggered
LOS ANGELES - A California federal judge on March 17 dismissed without prejudice a breach of contract and bad faith lawsuit against a professional liability insurer in a coverage dispute arising from the insured's alleged breach of a loan agreement (GemCap Lending, LLC v. Scottsdale Indemnity Co., et al., No. 15-09942, C.D. Calif., 2017 U.S. Dist. LEXIS 38931).
Louisiana Panel: Court Erred In Finding Case Abandoned Due To Unsigned Discovery
GRETNA, La. - A Louisiana appeals panel on March 15 reversed a lower court's dismissal of a lawsuit alleging that an insured breached a partnership agreement involving the opening of a new restaurant/bar and nightclub, concluding that the lower court erred in granting motions by the insured and his professional liability insurer to dismiss the case due to abandonment (Marlen Nunez v. Cesar R. Burgos, et al., No. 16-CA-568, La. App., 5th Cir.).
Panel Affirms Insurer Has No Duty To Defend Suit Alleging On-The-Job Injury
SAN FRANCISCO - A California appeals panel on March 29 affirmed a lower court's ruling that a business owners insurer did not breach its contract when it refused to defend its insureds against a lawsuit alleging injuries and California Labor Code violations by the insured's employee (Elena Delgadillo, et al. v. United States Liability Insurance Co., et al., No A143452, Calif. App., 1st Dist., Div. 4, 2017 Cal. App. Unpub. LEXIS 2273).
Judge: Factors Weigh In Favor Of Federal Court Retaining Jurisdiction
BLUEFIELD, W.Va. - A West Virginia federal judge on March 23 refused to dismiss an insurer's declaratory judgment lawsuit challenging coverage for a lawsuit alleging that the insured's employee filed fraudulent tax returns, finding that the factors weigh in favor of the federal court retaining jurisdiction (Ohio Security Insurance Co. v. K R Enterprises, Inc., et al., No. 15-16264, S.D. W.Va., 2017 U.S. Dist. LEXIS 42011).
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).
Panel: Architect Did Not Have 'Deemed Allowed' Claim That Constitutes Res Judicata
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on March 24 denied an architect's appeal seeking to reverse a ruling in favor of a home builder's insurer in a breach of contract dispute arising from an underlying $63,471,000 copyright infringement dispute, rejecting the architect's argument that an unobjected-to proof of claim in a bankruptcy case should be allowed and should become a final judgment when the bankruptcy case is closed (Kipp Flores Architects, LLC v. Mid-Continent Casualty Co., No. 16-20255, 5th Cir., 2017 U.S. App. LEXIS 5241).
California Jury Rules In Favor Of Alliant On Cross-Claims Brought By Competitor
FRESNO, Calif. - A California jury on March 22 ruled in favor of Alliant Insurance Services and 10 of its insurance producers on a competing insurance brokerage firm's cross-claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of the duty of loyalty, interference with contract and misappropriation of trade secrets (Peter Baldwin, et al. v. Aon Risk Services Companies Inc., et al., No. 14-00572, Calif. Super.).
Insurer's Data Satisfies Florida's Definition Of Trade Secret, Majority Affirms
TALLAHASSEE, Fla. - A majority of a Florida appeals court on March 20 affirmed a lower court's ruling that an insurer's quarterly supplemental reporting (QUASR) data satisfies the definition of trade secret under state law and is, therefore, exempt from public disclosure (Office of Insurance Regulation v. State Farm Florida Ins. Co., No. 1D16-2301, Fla. App., 1st Dist., 2017 Fla. App. LEXIS 3662).
Federal Judge: Computer Fraud Policy Provision Does Not Cover Insured's Loss
ATLANTA - A federal court in Georgia on March 20 entered judgment in favor of an insurer on an insured's breach of contract and bad faith claims four days after a judge found that the insured's losses arising from a 2014 hacking incident of its payment-card reloading system did not trigger coverage under the insurance policy's computer fraud provision (InComm Holdings Inc., et al. v. Great American Insurance Co., No. 15-02671, N.D. Ga., 2017 U.S. Dist. LEXIS 38132).
Federal Judge: Excess Insurer Has No Duty To Defend, Indemnify Manufacturer
EVANSVILLE, Ind. - An Indiana federal judge on March 22 ruled in favor of an excess insurer in a manufacturer insured's breach of contract and bad faith lawsuit seeking coverage for an underlying lawsuit alleging claims for breach of contract, breach of express warranty, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability and negligence (Berry Plastics Corporation v. Illinois National Insurance Co., No. 15-00170, S.D. Ind., 2017 U.S. Dist. LEXIS 41546).
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).
Federal Judge Rules On Dueling Summary Judgment Motions In Hailstorm Dispute
JEFFERSON CITY, Mo. - A Missouri federal judge on March 16 granted in part and denied in part motions for summary judgment by insureds and a homeowners insurer in a class action alleging that the insurer committed breach of contract when it unlawfully applied a policy's $1,000 deductible to an actual cash value (ACV) payment in a hailstorm coverage dispute (Eric Lafollette v. Liberty Mutual Fire Insurance Co., No. 14-04147, W.D. Mo., 2017 U.S. Dist. LEXIS 37755).
Financial Services Exclusion Bars Coverage, Federal Judge Rules Following Remand
SANTA ANA, Calif. - A California federal judge on March 13 held that an insurance policy's financial services exclusion precludes coverage for an underlying lawsuit alleging Lanham Act and unfair competition claims against an insured, further finding that the underlying claims asserting that the insured illegally charged up-front fees to homeowners seeking mortgage advice are uninsurable under California law (First One Lending Corporation, et al. v. The Hartford Casualty Insurance Co., et al., No. 13-01500, C.D. Calif., 2017 U.S. Dist. LEXIS 36548).
Federal Judge Orders Forty Niners' Insurer To Equally Contribute To Defense
SAN JOSE, Calif. - A California federal judge on March 14 found that San Francisco Forty Niners Football Co.'s primary commercial general liability insurer has a duty to contribute by equal shares with another insurer to defense costs in an underlying lawsuit against the football team and others (First Mercury Insurance Co. v. Great Divide Insurance Co., No. 16-02114, N.D. Calif., 2017 U.S. Dist. LEXIS 36501).
Insurers Sue Saudi Arabia Under Justice Against Sponsors Of Terrorism Act
NEW YORK - Insurers on March 23 filed a new complaint against Kingdom of Saudi Arabia and/or the Saudi High Commission for Relief of Bosnia & Herzegovina (SHC) in a federal district court, contending that facts and related evidence presented by victims of the Sept. 11, 2001, terrorist attacks have taken on additional significance as a result of the U.S. Congress' enactment of the Justice Against Sponsors of Terrorism Act (JASTA) this past September (Underwriters Inc., et al. v. Kingdom of Saudi Arabia, et al., No. 17-02129, S.D. N.Y.).
New York Panel: Insurer Failed To Provide Timely Notice Of Its Denial Of Coverage
BROOKLYN, N.Y. - A New York appeals panel on March 15 held that a commercial general liability insurer is estopped from disclaiming coverage under a policy exclusion because it failed to provide an additional insured timely notice of its denial of coverage on the basis of the exclusion, partly reversing a lower court's grant of summary judgment in favor of the insurer in a coverage dispute arising from a building collapse (Harco Construction, LLC, et al. v First Mercury Insurance Co., et al., [Index No. 16011/13] No. 2015-00839, N.Y. Sup., App. Div., 2nd Dept., 2017 N.Y. App. Div. LEXIS 1766).
Protecting Company Assets With Cyber Liability Insurance
By Eileen Garczynski Ames & Gough and Syed Ahmad Hunton & Williams LLP US retailers and other businesses face significant cybersecurity threats that jeopardize their infrastructure, their economic viability, and their reputations. While the means of cyber-attacks vary, the pattern of targets has been relatively consistent. Large databases, as well as point-of-sale systems, continue to be targeted for financial gain or for other motives. Hackers with possible ties to nation-states continue to target infrastructure as well as systems for political insight. The recent news of Russian agents allegedly being involved with the Yahoo breach is yet another example of the threats faced by companies. The Heritage Foundation noted that in the last half of 2016 alone, there were several large scale attacks on several notable US businesses:
Panel Partly Reverses Ruling In Directors, Officers Liability Coverage Dispute
LOS ANGELES - In reversing a lower court in part, a California appeals panel on March 8 held that although a directors and officers liability insurance policy's "Willful Misconduct Exclusion" barred coverage for losses brought about by fraud or criminal acts, the exclusion did not apply to defense expenses (Mitchell J. Stein v. Axis Insurance Company, et al., No. B265069, Calif. App., 2nd Dist., Div. 1, 2017 Cal. App. Unpub. LEXIS 1628).
Judge: No Directors, Officers Liability Coverage Owed For Promissory Note Dispute
HARTFORD, Conn. - A Connecticut federal judge on Feb. 28 dismissed breach of contract, unjust enrichment, conversion and declaratory judgment claims against a directors and officers liability insurer, finding that the insured's failure to provide the insurer with timely notice of an underlying claim negated coverage (J. Graham Zahoruiko v. Federal Insurance Co., et al., No. 15-474, D. Conn., 2017 U.S. Dist. LEXIS 28204).
Judge: Breach Of Contract Suit Against Professional Liability Insurer Is Timely
TAMPA, Fla. - A Florida federal judge on March 13 rejected a professional liability insurer's argument that a breach of contract lawsuit brought by the insured's assignees is barred by a five-year statute of limitations, denying the insurer's motion to dismiss (Mark Chapman, et al. v. ACE American Insurance Co., No: 16-2111, M.D. Fla., 2017 U.S. Dist. LEXIS 35347).
Judge: Insured Owed $100,000 Sublimit Under Policy's 'Known Claims' Endorsement
HUNTINGTON, W. Va. - A West Virginia federal judge on March 8 found that a professional limited liability company insured is entitled to a $100,000 sublimit under the "known claims" endorsement of an accountants professional liability insurance policy for underlying claims over assets that were misappropriated by the insured's employee (CAMICO Mutual Insurance Co. v. Hess, Stewart & Campbell, P.L.L.C., No. 16-2357, S.D. W. Va., 2017 U.S. Dist. LEXIS 32790).
Underlying Claims At Least 'Possibly' Constitute 'Wrongful Acts' Under Policy, Judge Says
HARTFORD, Conn. - A Connecticut federal judge held March 8 that a professional liability insurer has a duty to defend and indemnify its insureds against an underlying lawsuit alleging that an affiliate of the insured tortiously interfered with an employment agreement (David Fernandez, et al., Plaintiffs, v. Zurich American Insurance Co., No. 15-00228, D. Conn., 2017 U.S. Dist. LEXIS 32900).
Judge Partly Grants Motion To Compel In Professional Liability Coverage Dispute
JOHNSTOWN, Pa. - A Pennsylvania federal judge on March 7 granted a law firm insured's motion to compel a professional liability insurer to produce underwriting materials but found that the insured failed to satisfy the heightened relevancy standard applicable to its discovery request for personnel files of three of the insurer's employees (Westport Insurance Corp. v. Hippo Fleming & Pertile Law Offices, et al., No. 15-251, W.D. Pa., 2017 U.S. Dist. LEXIS 31659).
Insurer Has Article III Standing To Sue Insured, Assignees, Panel Says, Reversing
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Feb. 28 reversed and remanded a lower federal court's finding that an insurer has no standing to sue its doctor insured and the insured's patients for declaratory relief and rescission of insurance policies (Allied Professionals Insurance Co. v. Michael Scott Anglesey, M.D., et al., No. 15-55231, 9th Cir., 2017 U.S. App. LEXIS 3658).
7th Circuit Finds $5M Theft Was Not Covered Under 2 Policies
CHICAGO - The Seventh Circuit U.S. Court of Appeals on March 9 affirmed a district court's decision to grant judgment for insurers, finding that theft by a former vice president of a telecommunications firm was not covered under insurance policies and that the insurers did not act in bad faith (Telamon Corp. v. Charter Oak Fire Insurance Co., et al., Nos. 16-1205 and 16-1815, 7th Cir., 2017 U.S. App. LEXIS 4207).
Kentucky Panel: Insured Fails To Show It Suffered Loss Due To Employee Theft
FRANKFORT, Ky. - A Kentucky appeals panel on March 10 affirmed a lower court's ruling that threw out an insured's breach of contract, bad faith, unfair claims practices and misrepresentation claims against its insurer, finding that because the insured failed to make a prima facie showing that it incurred a loss due to employee theft, the use of inventory calculations is not permitted (Khazai Rug Gallery, LLC v. State Auto Property & Casualty Ins. Co., No. 2016-CA-000129-MR, Ky. App., 2017 Ky. App. Unpub. LEXIS 187).
Fraudulent Wire Transfer Emails Did Not Trigger Coverage, 9th Circuit Rules
PASADENA, Calif. - Affirming a trial court's judgment, a Ninth Circuit U.S. Court of Appeals panel on March 9 found no coverage under a crime insurance policy for funds lost by an accounting firm's wire transfers pursuant to fraudulently sent emails, concluding that provisions for forgery, computer fraud and funds transfer fraud did not apply (Taylor & Lieberman v. Federal Insurance Co., No. 15-56102, 9th Cir., 2017 U.S. App. LEXIS 4205).
5th Circuit: Court Erred In Finding Defense Costs Did Not Erode Policy Limit
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on March 1 found that more than $1.4 million in defense costs paid by an insurer in an underlying pension plan dispute have eroded the insured's $1 million fiduciary liability coverage limit, reversing a lower federal court in part (Federal Insurance Co. v. Singing River Health System, No. 15-60774 consolidated with No. 15-60876, 5th Cir., 2017 U.S. App. LEXIS 3742).
Federal Court Erred In Finding Claim Was Untimely, Insured Argues To 8th Circuit
ST. LOUIS - The correct application of the law and the doctrine of waiver do not support a lower federal court's ruling that a food marketing and distribution company insured's notice of an underlying lawsuit brought by its former employee was untimely, the insured argued to the Eighth Circuit U.S. Court of Appeals (Food Market Merchandising Inc. v. Scottsdale Indemnity Co., 16-3427, 8th Cir.).
Judge: Advertising Injury Coverage Was Triggered In Suit Over Wheat Seed Sale
WICHITA, Kan. - A Kansas federal judge on March 9 held that an underlying lawsuit alleging that an insured sold wheat seed in violation of the Plant Variety Protection Act (PVPA) included a claim that potentially fell under an insurance policy's advertising injury coverage (Brett Parker and D&B Parker Farms, L.L.C. v. Farm Bureau Property & Casualty Insurance Co., No. 15-01204, D. Kan., 2017 U.S. Dist. LEXIS 3417).
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).
Judge: Product Liability Claims Constitute Multiple Occurrences Under Excess Policy
COLUMBUS, OHIO - An Ohio federal judge on March 2 found that underlying product liability lawsuits against Big Lots Stores Inc. constitute separate occurrences under a commercial liability umbrella insurance policy, partly granting the insurer's motion for summary judgment (Big Lots Stores, Inc. v. American Guarantee & Liability Insurance Co., No. 14-02635, S.D. Ohio, Eastern Div., 2017 U.S. Dist. LEXIS 29675).
Federal Judge Adopts Joint Request By Cosby, Insurer As To Indemnification Claims
SPRINGFIELD, Mass. - A Massachusetts federal judge on March 8 adopted a joint request by William H. Cosby Jr. and his homeowners and excess insurer to file a stipulation or motion to dismiss the indemnification claims without prejudice in a coverage dispute over underlying defamation lawsuits arising from sexual assault claims (AIG Property Casualty Co. v. Tamara Green, et al., No. 15-30111, D. Mass.).
Panel Rejects Argument That Insurer, Agent Misrepresented Property Was Insurable
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on March 7 affirmed a lower federal court's grant of summary judgment in favor of a federal flood insurer and an insurance agent in an insured's lawsuit over Hurricane Ike flood damage, rejecting the insured's argument that she reasonably relied on the defendants' misrepresentations that her property in the Coastal Barrier Resources System (CBRS) was insurable (Danuta Lobeck v. Tina M. Licatino, et al., No. 16-40967, 5th Cir., 2017 U.S. App. LEXIS 4040).
Judge Adopts Magistrate's Finding That Government Exclusion Negates Defense Duty
SHERMAN, Texas - A Texas federal judge on March 2 adopted a magistrate's report that recommended granting an insurer's request for a declaration that it has no duty to defend or indemnify its insureds against an underlying lawsuit because coverage is barred by the policy's government exclusion (Continental Casualty Co. v. Jeffrey Ramsey, et al., No. 16-00125, E.D. Texas).
Judge: Insureds Have Not Proven 'Extraordinary Circumstances' Warranting Relief
DETROIT - A Michigan federal judge on March 6 denied insureds' motion seeking relief from a case management guideline rule that requires motions for summary judgment to be filed after the close of fact and expert discovery, finding that the insureds have failed to demonstrate special circumstances that would justify the filing of premature summary judgment motions (Livonia Public Schools, et al. v. Selective Insurance Company of the Southeast, No. 16-10324, E.D. Mich., Southern Div., 2017 U.S. Dist. LEXIS 31036).
'Great Weight Of New York Authority' Supports Exclusion's Clarity, Insurer Argues
NEW YORK - A commercial general liability insurer recently argued to the Second Circuit U.S. Court of Appeals that there is no controlling case law supporting a lower court's conclusion that an "Employers Liability Exclusion" is ambiguous as a matter of law (Hastings Development v. Evanston Insurance Co., Nos. 15-3816 and 14-4085, 2nd Cir.).