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®
Loss Did Not Trigger Computer Fraud Provision, 5th Circuit Says In Reversal
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Oct. 18 held that a fraud scheme involving an email did not constitute computer fraud under a crime protection insurance policy, vacating a lower court's $1.4 million judgment against the insurer (Apache Corp. v. Great American Insurance Co., No. 15-20499, 5th Cir.; 2016 U.S. App. LEXIS 18748).
Judge: Insurer Did Not Act In Bad Faith In Dispute Over Grain Elevator Explosion
EAST ST. LOUIS, Ill. - An Illinois federal judge on Oct. 18 held that the record fails to contain sufficient concrete evidence showing that an excess insurer acted in bad faith in a coverage dispute arising from an April 27, 2010, grain elevator explosion that injured three workers (West Side Salvage Inc. v. RSUI Indemnity Co., No. 15-0442, S.D. Ill.).
Judge Refuses To Allow Insurer To Intervene In Copyright Infringement Dispute
CLEVELAND - An Ohio federal judge on Oct. 17 denied a commercial property's insurer motion to intervene in a copyright infringement dispute, finding that the insurer lacks a substantial interest in the case and that the insurance action would not share questions of law or fact with the copyright lawsuit (Design Basics LLC v. A.J. Bokar Building Company Inc. d/b/a Willow Wood Homes, No. 16-669, N.D. Ohio; 2016 U.S. Dist. LEXIS 143464).
Ohio Panel: Court Erred In Finding Audit Request Was Not Claim Under Policy
LIMA, Ohio - Reversing a lower court in part, an Ohio appeals court on Oct. 11 held that the court erred in finding that an audit request in an underlying copyright infringement dispute was not a "claim" under an insurance policy (Eighth Floor Promotions v. The Cincinnati Insurance Companies, No. 10-15-19, Ohio App., 3rd Dist.; 2016 Ohio App. LEXIS 4119).
Judge Refuses To Remand Coverage Dispute Over Claims Of Human Rights Violations
CLARKSBURG, W.Va. - A West Virginia federal judge on Oct. 17 denied insureds' motion to remand a declaratory judgment lawsuit seeking coverage for an underlying complaint alleging violations under the West Virginia's Human Rights Act (WVHRA) but granted the insurer's motion to realign the underlying claimant as a plaintiff in the coverage dispute (Grand China Buffett & Grill, Inc., et al. v. State Auto Property and Casualty Co., et al., No 16-159, N.D. W.Va.; 2016 U.S. Dist. LEXIS 143173).
Judge Rejects Attorney Insured's Reliance On 'Reasonable Expectations' Doctrine
PHILADELPHIA - A Pennsylvania federal judge on Oct. 14 ruled in favor of brokers and insurers in an attorney insured's lawsuit alleging that their collective failure to furnish the requested lawyers professional liability insurance policy left him with a gap in coverage, rejecting the insured's argument that the "reasonable expectations" doctrine applied (Philip A. Downey v. First Indemnity Insurance, et al., No. 13-4545, E.D. Pa.; 2016 U.S. Dist. LEXIS 142689).
Pennsylvania Judge: Insurer Has No Duty To Defend, Indemnify Malpractice Suit
PHILADELPHIA - Finding that service of an underlying legal malpractice lawsuit after expiration of a professional liability insurance policy and its automatic extended reporting period does not give rise to a claim, a Pennsylvania judge on Oct. 11 determined that the insurer's duty to defend or indemnify was not triggered (Michael B. Wolf, et al. v. Liberty Insurance Underwriters Inc., et al., No. 000066, Pa. Comm. Pls., Philadelphia Co.; 2016 Phila. Ct. Com. Pl. LEXIS 359).
Extracontractual Monetary Damages Are Recoverable Under ERISA, Panel Says, Reverses
LOS ANGELES - A California appeals panel held Oct. 6 that monetary relief for extracontractual harm is legally recoverable under Section 502(a)(3) of the Employee Retirement Income Security Act, reversing a lower court's ruling that insurers have no duty to defend a managed care company against underlying lawsuits (Health Net, Inc. v. American International Specialty Lines Insurance Co., et al., No. B262716, Calif. App., 2nd Dist., Div. 3; 2016 Cal. App. Unpub. LEXIS 7296).
Insurers To 9th Circuit: Coverage Properly Denied In Suits Over Computer Spyware
SAN FRANCISCO - In briefs filed Oct. 11 in the Ninth Circuit U.S. Court of Appeals, two insurers that issued policies to a rent-to-own (RTO) retailer argue that the policies' recording and distribution exclusions barred coverage for two lawsuits relating to the retailer's installation of spyware on a purchased computer, asking the appeals court to affirm coverage and reimbursement rulings in their favor (American Economy Insurance Co., et al. v. Aspen Way Enterprises Inc., et al., No. 16-35059, 9th Cir.).
Judge Denies Insurer's Motion To Stay, Permission To Appeal Rescission Dispute
SAN FRANCISCO - A California federal judge on Oct. 11 rejected a products liability insurer's argument that interlocutory review of a May 27 order on the issue of rescission is warranted under 28 U.S. Code Section 1292(b) because the order involves a controlling question of law for which there is substantial ground for difference of opinion (Illinois Union Insurance Co., et al. v. Intuitive Surgical Inc., No. 13-04863, N.D. Calif.; 2016 U.S. Dist. LEXIS 140762).
Solicitor General To Argue In High Court Case On False Claims Act Seal Violations
WASHINGTON, D.C. - In its Oct. 11 order list, the U.S. Supreme Court granted a motion by Acting U.S. Solicitor General Ian Heath Gershengorn to participate in upcoming oral arguments over what the appropriate sanctions are when a private qui tam lawsuit plaintiff violates a seal order under the False Claims Act (FCA) (State Farm Fire & Casualty Co. v. United States, ex rel. Cori Rigsby, et al., No. 15-513, U.S. Sup.; 2016 U.S. LEXIS 6149).
Judge Refuses To Dismiss Broker Malpractice Claims Arising From Superstorm Sandy
NEW BRUNSWICK, N.J. - Applying New York law, a New Jersey judge on Oct. 6 denied an insurance broker's motion to dismiss a claim that he breached his professional duty in a lawsuit stemming from the insured's alleged $1,567,044 in damages caused by Superstorm Sandy (Fox Paper, Ltd. v. Hanover Insurance Co., et al., No. MID-L-2818-16, N.J. Super., Law Div., Middlesex Co.; 2016 N.J. Super. Unpub. LEXIS 2234).
Judge Dismisses Foo Fighters' Breach Of Contract Suit Against Insurers, Brokers
LOS ANGELES - A California federal judge on Oct. 7 dismissed with prejudice Foo Fighters LLC's breach of contract lawsuit seeking full policy benefits for 11 shows that were canceled in the wake of the terrorist attacks in Paris and an injury singer and guitarist Dave Grohl suffered during a performance one day after the band and its insurers and brokers filed a stipulation for dismissal (Foo Fighters LLC v. Certain Underwriters at Lloyd's London, et al., No. 16-cv-04208, C.D. Calif.).
Suit Seeking Coverage Under Crime Bond Was Untimely, Illinois Panel Affirms
CHICAGO - An Illinois appeals panel on Sept. 30 affirmed a lower court's ruling that an insured's lawsuit seeking indemnification under a financial institution crime bond is time-barred, rejecting the insured's attempt to apply Section 143.1 of Illinois Insurance Code to toll the bond's 24-month filing requirement (Independent Trust Corp. v. Kansas Bankers Surety Company, No. 1-14-3161, Ill. App., 1st Dist., 5th Div.; 2016 Ill. App. LEXIS 670).
Credit Exclusion Bars Directors, Officers Liability Coverage, 5th Circuit Affirms
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Sept. 27 affirmed a lower federal court's finding that a directors and officers liability insurer has no duty to defend executives against an underlying lawsuit alleging that they misrepresented their company's financial status to secure $48.5 million in bank loans (Markel American Insurance Co. v. Huibert Verbeek, et al., No. 15-51099, 5th Cir.; 2016 U.S. App. LEXIS 17563).
Material Misrepresentations On Application Void Coverage, 6th Circuit Affirms
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Sept. 16 affirmed a lower federal court's ruling that there is no coverage for the Tennessee attorney general's lawsuit against the provider of bio-identical hormone replacement therapy because the insured made material misrepresentations on its insurance application (Dan Hale, et al. v. Travelers Casualty and Surety Company of America, No. 15-6443, 6th Cir.; 2016 U.S. App. LEXIS 17034).
Judge Rules On Summary Judgment Motions In Suit Over Loan Closing Programs
MILWAUKEE - A Wisconsin federal judge on Sept. 30 held that there is a question of fact as to whether an insured could have reasonably foreseen that claims of wrongful acts brought against it by mortgage lenders would result in claims by a title insurer in a dispute arising from the insured's mortgage loan closing services (Fiserv Solutions Inc. v. Endurance American Specialty Insurance Co., et al., No. 11-0603, E.D. Wis.; 2016 U.S. Dist. LEXIS 136938).
Judge: Insured Failed To Provide Insurer Sufficient Notice Of Bad Faith Claim
ALBANY, Ga. - A Georgia federal judge on Sept. 30 found that an insured did not satisfy a statutory prerequisite demand requirement by failing to provide sufficient notice of a bad faith claim or litigation to its insurer before filing its initial complaint, granting the insurer's motion for summary judgment as to the bad faith claim (Foliar Nutrients Inc., et al. v. Nationwide Agribusiness Insurance Co., No. 14-75, M.D. Ga.; 2016 U.S. Dist. LEXIS 135327).
Judge: Insurer Has No Duty To Defend Under Personal, Advertising Injury Coverage
LAS VEGAS - A Nevada federal judge on Sept. 27 held that an underlying cross-complaint against an insured does not give rise to a potential claim for slander, libel or disparagement and, therefore, fails to trigger an insurer's duty to defend under an insurance policy's "personal and advertising injury" provision (Nautilus Insurance Co. v. Access Medical, LLC, et al., No. 15-00321, D. Nev.; 2016 U.S. Dist. LEXIS 132300).
All Class Action Claims Barred By TCPA Exclusion, Federal Judge Rules
ST. LOUIS - A Missouri federal judge held Sept. 23 that all claims in an underlying class action complaint alleging that an insured violated the Telephone Consumer Protection Act (TCPA) fall under a TCPA policy exclusion, granting two insurers' motions for summary judgment (Regent Insurance Co., et al. v. Integrated Pain Management, S.C., et al., No. 14-1759, E.D. Mo., Eastern Div.; 2016 U.S. Dist. LEXIS 130291).
9th Circuit Reverses Order Denying Insurer Reimbursement Of Defense Fees
ANCHORAGE, Alaska - The Ninth Circuit U.S. Court of Appeals on Sept. 23 reversed and remanded a lower federal court's order that denied a professional liability insurer reimbursement of the defense fees it incurred in an underlying lawsuit against its law firm insured (Attorneys Liability Protection Society Inc. v. Ingaldson Fitzgerald, P.C., f/k/a Ingaldson, Maassen & Fitzgerald, Nos. 13-35115, 13-35172, 9th Cir.; 2016 U.S. App. LEXIS 17396).
Insurer Entitled To Rescind Professional Liability Policies, Federal Judge Rules
ROCKFORD, Ill. - An Illinois federal judge on Sept. 19 granted a professional liability insurer's request to rescind three policies because of material misrepresentations that a patent and trademark attorney insured made on his application (Minnesota Lawyers Mutual Insurance Co. v. Jerry A. Schulman, et al., No. 14-50142, N.D. Ill., Eastern Div.; 2016 U.S. Dist. LEXIS 127261).
7th Circuit: Insurer May Conduct Discovery As To Defendant's Status As Insured
CHICAGO - Illinois law permits an insurer seeking declaratory judgment as to its coverage obligations to conduct discovery for evidence outside the underlying complaints as to whether a claimant qualifies as an insured, a Seventh Circuit U.S. Court of Appeals panel ruled Sept. 22, reversing a trial court's judgment in favor of the claimant (Landmark American Insurance Co. v. Peter Hilger, No. 15-2566, 7th Cir.; 2016 U.S. App. LEXIS 17343).
Coverage For Qui Tam Action Limited To $25,000, Federal Judge Rules
LAS VEGAS - A Nevada federal judge on Sept. 19 held that coverage for an underlying qui tam action is available under a professional liability insurance policy's billing errors endorsement up to the $25,000 sublimit of liability, rejecting the insureds' argument that they are owed $2 million under another endorsement (My Left Foot Children's Therapy, et al. v. Certain Underwriter's at Lloyd's London subscribing to policy No. HAH15-0632, No. 15-01746, D. Nev.; 2016 U.S. Dist. LEXIS 128062).
Judge: Material Facts Are In Dispute In Professional Liability Coverage Lawsuit
JACKSON, Miss. - Finding that material facts are in dispute in a professional liability coverage action, a Mississippi federal judge on Sept. 13 denied the insurer's motion for judgment on the pleadings and to dismiss counterclaims and allowed parties to conduct discovery and move for summary judgment (Twin City Fire Insurance Co. v. Joseph B. Moffett, No. 15-111, S.D. Miss., Western Div.; 2016 U.S. Dist. LEXIS 123952).
Insurer Breached Contract In Handling Of Insured's Prior Claims, Judge Rules
COLUMBIA, S.C. - Although an insured has properly pleaded its insurance bad faith and breach of contract claims against its insurer regarding the insurer's actions in an underlying lawsuit and its handling of prior claims, the insured failed to state its breach of contract claim regarding its handling of the prior claims, a federal judge in South Carolina ruled Sept. 14 (Agape Senior Primary Care Inc. v. Evanston Insurance Co., No. 16-1610, D. S.C.; 2016 U.S. Dist. LEXIS 124533).
California Panel Affirms Employment-Related Practices Exclusion Bars Coverage
SAN DIEGO - A California appeals panel on Sept. 23 affirmed a lower court's ruling that a commercial general liability insurance policy's employment-related practices (ERP) bars coverage for all claims alleged against an insured and its employee (Golden Eagle Insurance Corp. v. Alana Munoz, No. G052223, Calif. App., 4th Dist., Div. 3; 2016 Cal. App. Unpub. LEXIS 6998).
Duty To Defend Was Not Triggered, Insurer Argues To 9th Circuit
SAN FRANCISCO - An employment practices liability insurer has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's ruling that it had a duty to defend its insured against an underlying class action lawsuit (PHP Insurance Service Inc., et al. v. Greenwich Insurance Co., No. 16-15083, 9th Cir.).
Judge: Complexity Of Underlying Suits Weighs In Favor Of Staying Coverage Action
DULUTH, Minn. - Finding that the complexity and the preliminary nature of underlying defective product lawsuits weigh in favor of temporarily staying an insurance coverage dispute, a Minnesota federal judge on Sept. 26 granted the insured's motion to stay the insurer's declaratory judgment suit (National Union Fire Insurance Company of Pittsburgh v. Viracon, Inc., No. 16-482, D. Minn.; 2016 U.S. Dist. LEXIS 131732).
Judge Disposes Of PSU's Dispute With Insurer After Parties Announce Settlement
PHILADELPHIA - A Pennsylvania judge on Sept. 26 signed off on a coverage dispute stemming from underlying sexual abuse claims against now-convicted former Penn State coach Gerald Sandusky after Pennsylvania State University (PSU) and its insurer announced that they reached a settlement (The Pennsylvania State University, et al. v. Pennsylvania Manufacturers' Association Insurance Co., Nos. 04126, 03195 and 03197, Pa. Comm. Pls., Philadelphia Co.).
Judge: Excess Insurer Entitled To Recover $3.25M It Contributed To Settlement
AKRON, Ohio - An Ohio federal judge on Sept. 21 held that an excess insurer is entitled to recover from another excess insurer the $3.25 million it contributed to an underlying settlement of a malicious prosecution lawsuit against the City of Barberton, Ohio, and its police officers (Selective Insurance Company of the Southeast v. RLI Insurance Co., No. 12-02126, N.D. Ohio, Eastern Div.; 2016 U.S. Dist. LEXIS 128894).
'Your Work' Exclusion Bars Coverage For Damaged Transformer, Judge Rules
ST. LOUIS - A Missouri federal judge on Sept. 19 found that a commercial general liability insurance policy's "your work" exclusion bars coverage for a transformer that was damaged when the insured was disassembling it for transport (Electric Power Systems International Inc. v. Zurich American Insurance Co., No. 15-1171, E.D. Mo., Eastern Div.; 2016 U.S. Dist. LEXIS 127105).
Majority: Insurer Liable For $3M Judgment In Suit Arising From Teen's Suicide
SEATTLE - A majority of the Ninth Circuit U.S. Court of Appeals on Sept. 16 affirmed a lower federal court's ruling that a commercial general liability insurer had a duty to defend its insured against underlying claims that its misleading marketing, wrongful admission to a behavior modification residential program, poor educational services and negligent training contributed to a teen's suicide (Judith Newman v. United Fire & Casualty Co., No. 14-35103, 9th Cir.; 2016 U.S. App. LEXIS 17013).
Insurers Dispute Coverage For Class Action Claims Arising From Data Breach
FORT MYERS, Fla. - A cancer care service provider's primary and excess insurers filed suit in the U.S. District Court for the Middle District of Florida on Sept. 26, seeking a declaration that they have no duty to defend or indemnify their insured against underlying class action lawsuits stemming from a 2015 data breach (The Charter Oak Fire Insurance Co., et al. v. 21st Century Oncology Investments, No. 16-00732, M.D. Fla.).
Panel: Sports Participants Exclusion Bars Coverage For Lacrosse Player's Death
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Sept. 13 affirmed that there is no coverage for a college lacrosse player's fatal injury because it falls squarely under sports participants and athletic participants policy exclusions (Underwriters Safety and Claims Inc., et al. v. Travelers Property Casualty Company of America, et al., No. 16-5143, 6th Cir.).
Professional Race Car Driver Appeals No Coverage Ruling In 2nd Circuit
NEW YORK - Professional race car driver Anthony Wayne Stewart filed a notice of appeal on Aug. 26 asking the Second Circuit U.S. Court of Appeals to overturn a lower court's ruling that his primary and excess insurer has no duty to defend or indemnify him against an underlying wrongful death lawsuit brought by the estate of a fellow race car driver (Axis Insurance Co. v. Anthony Wayne Stewart, No. 16-2988, 2nd Cir.).
'Entrustment' Exclusion Bars Coverage For Theft, Vandalism Loss, Panel Affirms
MIAMI - A Florida appeals panel held Sept. 7 that a commercial insurance policy's "entrustment" exclusion applies to a third-party's actions as an insured's tenant and precludes coverage for the insured's theft and vandalism loss, rejecting the insured's argument that the exclusion is ambiguous (Grover Commercial Enterprises, Inc., etc. v. Aspen Insurance UK, Ltd., et al., No. 3D14-1987, Fla. App., 3rd Cir.).
Panel: No Commercial Crime Coverage Because Insured Made Material Misrepresentation
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Sept. 1 affirmed a lower federal court's summary judgment ruling in favor of commercial crime insurers in a Chapter 7 trustee's breach of contract and bad faith lawsuit seeking to recover stolen money (Heide Kurtz, solely in her capacity as Chapter 7th Trustee for the Estate of Namco Financial Exchange Corp. v. Liberty Mutual Insurance Co., et al., No. 14-55931, 9th Cir.; 2016 U.S. App. LEXIS 16217).
9th Circuit Says Watercraft Exclusion Bars Coverage For Contaminated Fish
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Sept. 9 affirmed a judgment entered in favor of an insured on a breach of contract claim in a petroleum contamination coverage suit, agreeing with a district court's determination that a watercraft exclusion bars coverage for the insured's fish oil that was contaminated with oil while stored on a ship (Trident Seafoods Corp., v. ACE American Insurance Co., No. 13-36035, 9th Cir.; 2016 U.S. App. LEXIS 16595).
Federal Judge Vacates Hearing On Insurer's Motion To Stay Rescission Dispute
SAN FRANCISCO - A California federal judge on Sept. 8 vacated a Sept. 22 hearing on an insurer's motion to stay and for permission to appeal the issue of whether concealment in an insurance policy rescission lawsuit is measured under California law when the insurance policy is formed or when the policy is delivered to the insured (Illinois Union Insurance Co., et al. v. Intuitive Surgical Inc., No. 13-04863, N.D. Calif.).
Texas High Court Agrees To Hear Dispute Over Insured Vs. Insured Exclusion
AUSTIN, Texas - The Texas Supreme Court granted a directors and officers liability insurer's petition to review an appeals court's finding that an insured vs. insured policy exclusion is inapplicable, according to its orders pronounced Sept. 2 (Great American Insurance Co. v. Robert Primo, No. 15-0317, Texas Sup.).
No Coverage For $2M Judgment Arising From Unsolicited Fax Ads, Majority Affirms
PHILADELPHIA - A majority of a Third Circuit U.S. Court of Appeals panel on Sept. 1 affirmed a federal court's ruling that an insurer has no duty to defend or indemnify a $2 million judgment entered against its insured as part of a class action settlement arising from unsolicited fax advertisements (Auto-Owners Insurance Co. v. Stevens & Ricci Inc., et al., No. 15-2080, 3rd Cir.; 2016 U.S. App. LEXIS 16182).
Federal Judge Stays Discovery In Suit Alleging Lender-Placed Insurance Scheme
MIAMI - A Florida federal judge on Sept. 2 granted defendants' motion to stay discovery pending resolution of their motions to dismiss an amended class action complaint alleging that they participated in a fraudulent scheme that overcharged borrowers for lender-placed insurance (LPI) (Jeffrey Parker, et al. v. AHMSI Insurance Agency Inc. d/b/a Belt Line Insurance Agency, et al., No. 15-23840, S.D. Fla.).
Filed-Rate Doctrine Bars Claims, Mortgage Servicer, Insurer Argue To 11th Circuit
ATLANTA - A mortgage servicer and an insurer on Sept. 9 answered the insureds' appeal in the 11th Circuit U.S. Court of Appeals, contending that the filed-rate doctrine bars all class action claims alleging that they overcharged force-placed insurance (FPI) premiums as part of a kickback scheme (Pankaj Patel, et al. v. Specialized Loan Servicing LLC, et al., No. 16-12100, 11th Cir.).
Panel Partly Vacates Ruling In Amtrak's Superstorm Sandy Suit Against Insurers
NEW YORK - The Second Circuit U.S. Court of Appeals on Aug. 31 found that a lower court erred when it prematurely granted summary judgment in favor of insurers on whether Amtrak was entitled to coverage under the Demolition and Increased Cost of Construction (DICC) clause in its insurance policies, vacating and remanding the Superstorm Sandy dispute in part (National Railroad Passenger Corp. v. Aspen Specialty Insurance Co., et al., No. 15-2358, 2nd Cir.; 2016 U.S. App. LEXIS 16074).
Diocese's Insurer Asks 2nd Circuit To Reverse Discovery, Breach Of Contract Rulings
NEW YORK - An insurer filed a notice of appeal on Aug. 29 in the Second Circuit U.S. Court of Appeals, seeking reversal of a lower federal court's $945,265.11 breach of contract judgment against it and an earlier discovery ruling in a dispute over coverage stemming from underlying sexual misconduct cases brought against its diocese insured (Hartford Roman Catholic Diocesan Corp. v. Interstate Fire & Casualty Co., No. 16-2999, 2nd Cir.).