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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


9th Circuit Certifies 2 Questions To California High Court In Environmental Suit
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Jan. 13 certified two questions to the California Supreme Court regarding whether California's notice-prejudice rule is a fundamental public policy for the purpose of choice-of-law analysis and whether a consent provision can be interpreted as a notice provision (Pitzer College v. Indian Harbor Insurance Co., No.. 14-56017, 9th Cir.; 2017 U.S. App. LEXIS 668).

Insured Not Entitled To Defense From 3 Insurers, 9th Circuit Panel Affirms
SAN FRANCISCO - A district court did not err in determining that an insured seeking coverage from three insurers for an underlying environmental lawsuit is not entitled to coverage under the policies because the insured failed to tender the underlying suit to the insurers and received a defense for the underlying suit from another insurer, the Ninth Circuit U.S. Court of Appeals said Jan. 13 (M.B.L. Inc. v. Federal Insurance Co., et al., No. 14-56107, 9th Cir.; 2017 U.S. App. LEXIS 695).

Pollution Exclusions Clearly Bar Coverage For Underlying Water Contamination Judgment
ST. LOUIS - A Missouri federal judge did not err in granting three insurers' motions for judgment on the pleadings in a suit filed by a class representative seeking to satisfy an $82 million judgment entered against the insured for damages arising out of water contamination, the Eighth Circuit U.S. Court of Appeals said Jan. 12, noting that radium is clearly barred by the policies' pollution exclusion (Barbara Williams v. Employers Mutual Casualty Co., No. 15-3573, 8th Cir.).

Issues Of Material Fact Preclude Summary Judgment In Avian Flu Suit, Federal Judge Says
MINNEAPOLIS - Because issues of material fact exist regarding how an outbreak of the avian flu virus was transmitted, a Minnesota federal judge on Jan. 12 denied both the insurer and insured's motions for summary judgment (Rembrandt Enterprises Inc. v. Illinois Union Insurance Co., No. 15-2913, D. Minn.; 2017 U.S. Dist. LEXIS 4946).

No Coverage Owed For Damages Caused By Sewage Backup, Iowa Panel Says
DES MOINES, Iowa - A trial court did not err in granting an insurer's motion for summary judgment because the insured, seeking coverage for damages caused by a sewage backup in his home, cannot prove that he acted to his detriment when he relied on his insurance agent's representation that coverage would be afforded for the damages, the Iowa Court of Appeals said Jan. 11 (Carl Budny v. MemberSelect Insurance Co., No. 16-1189, Iowa App.; 2017 Iowa App. LEXIS 46).

No Coverage Owed For Sewage Discharge, Louisiana Appeals Panel Determines
BATON ROUGE, La. - The First Circuit Louisiana Court of Appeal on Jan. 11 affirmed a trial court's ruling that no coverage is afforded under an auto policy for the discharge of raw sewage into a home caused by a pumping system attached to the insured's truck because the policy excludes coverage for bodily injury, property damage and pollution costs caused by the operation of equipment permanently attached to a vehicle (Shenetta West, et al. v. Clean Rite Septic Tank Service LLC, et al., No. 2016 CA 0306, La. App., 1st Cir.; 2017 La. App. LEXIS 59).

Judge: No Indemnification Owed For Water Damage Caused By Insured
CHICAGO - An insurer has no duty to indemnify an insured and no duty to reimburse an additional insured for alleged water damage to an apartment building because there was no covered "occurrence" for the insured's failure to properly cover the building's roof, an Illinois federal judge ruled Jan. 6 (Brit UW Ltd. v. Tripar Inc. and Davis Russell Real Estate and Management LLC, No. 15-5866, N.D. Ill.; 2017 U.S. Dist. LEXIS 2462).

South Carolina High Court Affirms Time-On-The-Risk Allocation Of Insurer's Costs
COLUMBIA, S.C. - The majority of the South Carolina Supreme Court on Jan. 11 affirmed a special referee's finding that coverage under commercial general liability insurance policies was triggered and calculation of an insurer's pro rata portion of the progressive damages based on its time on the risk (Harleysville Group Insurance v. Heritage Communities Inc., et al., No. 2013-001281 & 2013-001291, S.C. Sup.; 2017 S.C. LEXIS 8).

Rescission Of Product Contamination Policy Was Proper, 3rd Circuit Says
PHILADELPHIA - The Third Circuit U.S. Court of Appeals on Jan. 11 affirmed that an insurer was entitled to rescind a product contamination insurance policy because it is clear that the insured made an intentional misrepresentation on the policy application upon which the insurer relied before issuing the policy (H.J. Heinz Co. v. Starr Surplus Lines Insurance Co., No. 16-1447, 3rd Cir.).

No Coverage Owed For Environmental Contamination, Federal Magistrate Judge Says
HAMMOND, Ind. - Insureds seeking coverage for environmental contamination discovered on a property they purchased are not entitled to coverage because the policy bars coverage for known or unknown property damage and for property damage that began before the policy's inception, an Indiana federal magistrate judge said Jan. 5 in granting the insurer's motion for summary judgment (Atlantic Casualty Insurance Co. v. Juan and Maria Garcia, No. 15-66, N.D. Ind.; 2017 U.S. Dist. LEXIS 1861).

Louisiana Federal Judge Denies Insurer's Motion For Reconsideration
NEW ORLEANS - A Louisiana federal judge on Jan. 4 denied an insurer's motion for reconsideration because the insurer failed to prove that the judge committed any errors of law in finding that none of the applicable policy exclusions bars coverage for an insured and an additional insured for two underlying environmental contamination suits filed by neighboring residents of an insured shipyard (Hanover Insurance Co. v. Superior Labor Services Inc., et al., No. 11-2375 c/w 14-1930, 14-1933, 16-2490, E.D. La.; 2017 U.S. Dist. LEXIS 782).

Washington Panel Affirms Judgment In Insured's Favor In Contamination Dispute
TACOMA, Wash. - A Washington judge did not err in finding that an insured is entitled to coverage for groundwater contamination at two of its sites because the evidence clearly supports the trial judge's rulings; however, the judge did err in awarding attorney fees to the insured under the primary policy at issue, the Division II Washington Court of Appeals said Dec. 21 (The Port of Longview v. Arrowood Indemnity Co., et al., No. No. 46654-6-II, Wash. App., Div. 2; 2016 Wash. App. LEXIS 3100).

Federal Magistrate Judge Says Insurer Must Produce Information On Other Claims
HATTIESBURG, Miss. - A Mississippi federal judge on Jan. 6 partially granted a motion to compel filed by insureds seeking coverage for a gasoline leak after determining that the insurer is required to produce information related to the insurer's claims handling of other gasoline leak claims (Grain Dealers Mutual Insurance Co. v. Tammy Cooley, et al., No. 16-39, S.D. Miss.; 2017 U.S. Dist. LEXIS 2157).

Judge: Fees Awarded Under Texas Civil Practice, Remedies Section Are Not Covered
HOUSTON - Fees awarded under Section 82.002(g) of the Texas Civil Practice and Remedies Code are not "damages" covered by a commercial general liability insurance policy, a Texas federal judge ruled Dec. 30, finding that the ruling in Hollybrook Cottonseed Processing, L.L.C. v. Am. Guarantee & Liab. Ins. Co. (772 F.3d 1031 [5th Cir. 2014]) does not affect that conclusion (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas; 2016 U.S. Dist. LEXIS 180539).

Maryland Federal Judge Stays Insurer's Suit Until Similar State Suit Is Resolved
BALTIMORE - A Maryland federal judge on Jan. 3 stayed an insurer's suit seeking a declaration that it is responsible for only a portion of a $4 million judgment entered against its insureds in an underlying suit alleging injuries as a result of exposure to lead paint in the insureds' rental property after determining that federal abstention is warranted because a state court suit filed by the underlying plaintiffs against the insurer turns on the same question of law (Pennsylvania National Mutual Casualty Insurance Co. v. Stewart J. Levitas, et al., No. 16-2060, D. Md.; 2017 U.S. Dist. LEXIS 87).

Judge Dismisses Breach Of Contract Claim Due To Insurer's Lack Of Coverage Decision
SEATTLE - A Washington federal judge dismissed on Jan. 5 an insured's breach of contract claim against its insurer because the insurer has not granted or denied coverage for a claim for water damage to a condominium complex (Mainhouse Homeowners Association v. Allstate Insurance Co., et al., No. 16-1457, W.D. Wash.; 2017 U.S. Dist. LEXIS 1663).

Insurer Says No Coverage For Roofing Subcontractor's $6.6M In Faulty Work Damage
CHICAGO - A commercial general liability insurance policy does not cover a roofing subcontractor over faulty work claims that resulted in more than $6.6 million in damages to townhomes, an insurer says in its Jan. 4 complaint to an Illinois federal court (Nautilus Insurance Co. v. Classic Roofing Inc. and Custom Roofing Contracting Ltd., No. 17-45, N.D. Ill.).

Panel Denies Insured's Petition For Rehearing In Defective Knee Implant Suit
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Dec. 13 refused to rehear an insured's arguments as they pertained to the issues of waiver and promissory estoppel in a coverage suit involving defective knee implants (Stryker Corp., et al. v. National Union Fire Insurance Company of Pittsburgh, Pa., et al., Nos. 15-1657 and 15-1664, 6th Cir.).

Federal Judge: Preliminary Injunction Not Warranted In Environmental Dispute
INDIANAPOLIS - A preliminary injunction prohibiting an insurer from changing an insured's defense counsel and environmental consultant is not warranted because the insured failed to prove that it will be irreparably harmed if the insurer is permitted to choose the insured's defense counsel and environmental consultant, an Indiana federal judge said Dec. 27 (CMW International LLC, et al. v. Amerisure Insurance Co., No. 16-1384, S.D. Ind.; 2016 U.S. Dist. LEXIS 178603).

New York Federal Judge Denies Request For Expedited Briefing In Asbestos Suit
NEW YORK - A New York federal judge on Dec. 21 denied an insured's request for expedited briefing regarding how a recent New York Court of Appeals' decision in an asbestos coverage suit applies to its asbestos coverage dispute because the issue would be better addressed on a fuller record in a motion for summary judgment (Columbus McKinnon Corp., v. The Travelers Indemnity Co., et al., No. 15-5088, S.D. N.Y.; 2016 U.S. Dist. LEXIS 180068).

Asbestos Committee, Insurer Spar Over Coverage Available To Oakfabco
CHICAGO - Under settled Illinois law, the maximum possible recovery from an insurer to Chapter 11 debtor Oakfabco Inc. for asbestos claims is $20 million, so any settlement of coverage disputes between the insurer and the debtor must be based on that amount, the Asbestos Claimants' Committee (ACC) in Oakfabco's case says in a Dec. 8 response to the insurer's request for summary judgment in federal bankruptcy court (In re: Oakfabco, Inc., No. 15-27062, N.D. Ill. Bkcy.).

Insurer: Arguments Made By Reinsurer Regarding Jurisdiction Are Invalid
SAN FRANCISCO - An insurer argued in a federal court in California on Dec. 20 that its reinsurer's "first-to-file" argument is invalid because the reinsurer did not raise that defense in a previous motion to dismiss the insurer's breach of contract suit (The American Insurance Co. v. R&Q Reinsurance Co., No. 16-3044, N.D. Calif.).

Trial Court Did Not Err In Awarding Damages To Insured, Panel Majority Says
LAKE CHARLES, La. - A Third Circuit Louisiana Court of Appeal majority on Dec. 28 affirmed an award entered against an insurer after determining that the trial court did not err in finding that the insured was entitled to repair costs and damages for a broken plumbing pipe under the slab of her home (Alfrieda Onezime Mason v. Shelter Mutual Insurance Co., No. 16-135, La. App., 3rd Cir.; 2016 La. App. LEXIS 2395).

Judge Finds No Additional Coverage For Insured's Damage From Rainstorm
BATON ROUGE, La. - There is no additional coverage, beyond the $10,000 that has already been paid to an insured, for alleged damage following a rainstorm, a Louisiana federal judge held Dec. 20, also finding that an insurance agent was not an agent of the insurer and therefore had no power to bind the insurer to pay for the repairs (Bible World Christian Center v. Colony Insurance Co., No. 15-397, M.D. La.; 2016 U.S. Dist. LEXIS 175766).

Policy Susceptible To More Than 1 Reasonable Interpretation, Judge Says
MIAMI - A Florida federal judge on Dec. 21 denied an insurer's motion to dismiss a suit filed by insureds seeking coverage for water damage after determining that the policy at issue may be ambiguous as the policy language is susceptible to two reasonable interpretations (Ken Cameron, et al. v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla.; 2016 U.S. Dist. LEXIS 176648).

Judge: Fact Issues Exist On Insurer's Failure To Supplement Payment For Repair Costs
PORTLAND, Ore. - An issue of material fact exists as to whether an insurer's alleged failure to supplement an actual cash value (ACV) payment prevented homeowners from contracting for repairs to fix water damage, an Oregon federal judge ruled Dec. 20 (Kenneth and Sarah Matchniff v. Great Northwest Insurance Co., No. 15-00193, D. Ore.; 2016 U.S. Dist. LEXIS 177136).

6th Circuit Affirms Insured Owes $2.4M, Remands For Finding On Insurer's Liability
CINCINNATI - The Sixth Circuit U.S. Court of Appeal on Dec. 16 affirmed that an insured must reimburse its insurer for more than $2.4 million paid by the insurer for the defense and indemnity of underlying asbestos bodily injury suits but remanded the suit for consideration of the insurer's liabilities that began before the start of the insurance policy and continued during the policy period (Continental Casualty Co., et al. v. Indian Head Industries Inc., No. 15-2217, 6th Cir.; 2016 U.S. App. LEXIS 22431).

Ohio Panel Affirms Trial Court, Says Liability Arose From Multiple Occurrences
CINCINNATI - The First District Ohio Court of Appeals on Dec. 14 affirmed a trial court's ruling that an insured's liability for underlying asbestos claims arose from multiple occurrences because each individual's exposure to asbestos constitutes an occurrence (The William Powell Co. v. OneBeacon Insurance Co., et al., No. C-160291, Ohio App., 1st Dist.; 2016 Ohio App. LEXIS 4982).

New Jersey High Court Agrees To Review Allocation Ruling In Asbestos Coverage Dispute
TRENTON, N.J. - The New Jersey Supreme Court on Dec. 12 agreed to hear an appeal concerning whether New Jersey law applies to insurance allocation determinations in an asbestos coverage dispute and whether the insured has to share in those coverage allocations after excess coverage for the asbestos bodily injury claims was no longer available (Continental Insurance Co., et al. v. Honeywell International Inc., et al., No. A-21-16, N.J. Sup.).

Appeal In Insurer Liability Adversary Case Withdrawn From Mediation
WILMINGTON, Del. - An appeal by 27 asbestos disease sufferers of a bankruptcy court's finding that their personal injury claims against insurers of Chapter 11 debtor W.R. Grace & Co. are barred will not be resolved through mediation, a Delaware federal judge ruled Dec. 13, agreeing with a magistrate judge that the issues involved "are not amenable to mediation" (Jeremy B. Carr, et al. v. Continental Casualty Company, et al., No. 16-1010, D. Del.).

Panel: There Can Be No Estoppel Of Flood Policy's Proof-Of-Loss Requirement
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Dec. 6 affirmed a lower federal court's ruling in favor of a federal flood insurer and an insurance broker in a dispute over coverage following a heavy rainfall, rejecting the insureds' argument that the insurer is estopped from alleging that their proof of loss is inadequate (James Miller, et al. v. American Strategic Insurance Corp., et al., No. 16-30251, 5th Cir.; 2016 U.S. App. LEXIS 21731).

Oregon High Court Upholds Insurer's Duty To Defend Defects Case On Four-Corners Rule
SALEM, Ore. - Applying the four-corners rule to an insurer's duty to defend an additional insured general contractor, the Oregon Supreme Court on Dec. 8 affirmed that the insurer owes a defense under a liability insurance policy for defects in a townhome development (West Hills Development Co. v. Chartis Claims, Inc., et al., No. S063823, Ore. Sup.; 2016 Ore. LEXIS 755).

Indiana Federal Judge Says Insurer Failed To Show All Insurers Covered Same Insured
INDIANAPOLIS - An Indiana federal judge on Dec. 14 granted a motion to dismiss filed by insurers involved in an environmental contamination coverage dispute because the insurer, which seeks subrogation from the other insurers, failed to allege in a second amended complaint that all of the insurers covered the same insured (Northern Insurance Company of New York v. Travelers Insurance Co. et al., No. 15-1810, S.D. Ind.; 2016 U.S. Dist. LEXIS 172671).

Florida Panel Reverses Ruling In Insurer's Favor In Sinkhole Coverage Dispute
DAYTONA BEACH, Fla. - A Florida appeals panel on Dec. 9 held that a lower court erred in granting summary judgment in favor of a homeowners insurer on the insureds' bad faith lawsuit arising from a sinkhole coverage dispute, reversing and remanding (Sandra Barton And Gregory Barton v. Capitol Preferred Insurance Co. Inc., No. 5D15-1587, Fla. App., 5th Dist.; 2016 Fla. App. LEXIS 18168).

Federal Magistrate Determines Memos, Emails Are Protected Under Work Product Doctrine
CHICAGO - An Illinois federal magistrate judge on Dec. 13 denied an insurer's motion to compel the production of unredacted documents and emails after determining that the documents and emails are protected under the work product doctrine because they were prepared in anticipation of litigation regarding coverage for the contamination of the insured's blood products (Baxter International Inc., v. AXA Versicherung, No. 11-cv-09131, N.D. Ill.; 2016 U.S. Dist. LEXIS 172234).