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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Federal Judge Denies Motion To Dismiss As It Pertains To Clause In Settlement Agreement
NEW YORK - A New York federal judge on Feb. 6 denied an insured's motion to dismiss as it pertained to the enforcement of a judgment reduction clause in a settlement agreement regarding a number of environmentally contaminated sites because it pertains to the claims at issue in the contribution suit, which has been pending in the New York federal court since 1984 (Olin Corp. v. Lamorak Insurance Co., et al., No. 84-1968, S.D. N.Y., 2018 U.S. Dist. LEXIS 20424).

Quarry Dust Exposure Coverage Suit Dismissed In Deference To Parallel State Suit
BIRMINGHAM, Ala. - An insurer's suit seeking a declaration that no coverage is owed for underlying claims arising out of exposure to lime quarry dust must be dismissed in deference to the additional insured's suit filed in Alabama state court against the insurer and others because Alabama has a substantial interest in litigating claims in state court, an Alabama federal judge said Feb. 9 (The Charter Oak Fire Insurance Co. v. G&R Mineral Services Inc., et al., No. 17-752, N.D. Ala., 2018 U.S. Dist. LEXIS 21533).

Justice Allows Tortious Interference Claim Against Insurer's Claims Handler
NEW YORK - In a dispute over an alleged profit arrangement between insurers and reinsurers, an estate's executor established sufficient allegations to move forward with his tortious interference claim against a claims handler for its denial of payment of an underlying $7.1 million asbestos judgment, a New York justice ruled Jan. 24 (Ruby Konstantin v. Certain Underwriters at Lloyd's London, et al., No. 652897/2013, N.Y. Sup., New York Co.).

Claims Against Insurer Fail; Plaintiffs Failed To Show They Are Third-Party Beneficiaries
OKLAHOMA CITY - The daughter and daughter-in-law of a named insured cannot assert claims for breach of contract and bad faith against an insurer in connection with a coverage claim for water and mold damages within an insured home because the daughter and daughter-in-law failed to prove that they are third-party beneficiaries under the policy at issue, an Oklahoma federal judge said Feb. 6 in granting an insurer's motion to dismiss (Karen Annette Foster-Blackwood, et al. v. Liberty Insurance Corp., No. 17-1146, W.D. Okla., 2018 U.S. Dist. LEXIS 19275).

Water Leakage, Seepage Excluded Under Homeowners Insurance Policy, Judge Says
MISSOULA, Mont. - The efficient proximate cause of homeowners' loss was repeated seepage or leakage of water over an extended period of time, which is an excluded peril under a homeowners insurance policy, a Montana federal judge ruled Feb. 5 (Tafford and LaRayne Oltz v. Safeco Insurance Company of America, No. 16-124, D. Mont., 2018 U.S. Dist. LEXIS 18743).

Insureds' Complaint Seeking Coverage For Foundation Damages Dismissed
BRIDGEPORT, Conn. - A Connecticut federal judge on Feb. 8 granted an insurer's motion to dismiss its insureds' amended complaint seeking damages as a result of defective concrete used in their home's foundation after determining that the insureds failed to carry their burden of proving that coverage is afforded under the policy and that the insurer acted in bad faith when it denied their claim (Joseph Mazzarella, et al. v. Amica Mutual Insurance Co., No. 17-598, D. Conn., 2018 U.S. Dist. LEXIS 20737).

Insurer Required To Cover Damages From 'Collapse,' Magistrate Judge Finds
MIAMI - Finding that "collapse" is not defined in an "all-risk" insurance policy, a Florida federal magistrate judge on Feb. 5 held that an insurer is obligated to cover sagging and falling down ceilings at a condominium complex (Key Biscayne Ambassador Condominium Association Inc. v. Aspen Specialty Insurance Co., No. 16-24564, S.D. Fla., 2018 U.S. Dist. LEXIS 19440).

New York High Court To Decide If Coverage Due For Time No Insurance Was Available
ALBANY, N.Y. - After hearing oral arguments on Feb. 6, the New York Court of Appeals is set to decide whether an excess insurer owes coverage to its insured for the time periods when the insured was unable to purchase environmental liability insurance coverage even if the excess insurer's policies specifically stated that coverage is afforded only for damages occurring during the policy period (KeySpan Gas East Corp. v. Munich Reinsurance America Inc., et al., No. APL-2016-00236, N.Y. App.).

No Coverage Due For Clean Air Act Violations, New York Panel Says
ROCHESTER, N.Y. - The Fourth Department New York Supreme Court Appellate Division on Feb. 2 determined that a trial court properly found that no coverage is owed under professional liability and environmental professional liability policies for a criminal action filed against an insured and arising out of alleged violation of the Clean Air Act because the criminal action does not constitute a suit for which coverage is provided (Certified Environmental Services Inc. v. Endurance America Insurance Co., et al., No. 1510 CA 17-01125, N.Y. Sup., App. Div., 4th Dept., 2018 N.Y. App. Div. LEXIS 704).

Insureds' Claims For Contract Breach, Bad Faith Can Stand, Federal Judge Determines
TULSA, Okla. - An Oklahoma federal judge on Feb. 2 denied an insurer's motion for summary judgment on breach of contract and bad faith claims in a dispute over coverage for earthquake and mold damages after determining that the insureds offered sufficient evidence to support their claims (Larry W. Thomas, et al. v. Farmers Insurance Co., No. 16-17, N.D. Okla., 2018 U.S. Dist. LEXIS 17418).

Coverage Owed Under Policy For Hidden Decay, New York Justice Determines
WESTCHESTER, N.Y. - A New York state justice on Jan. 25 determined that insureds seeking coverage for damages to their home caused by water that seeped behind the home's stucco facade are owed coverage under the policy at issue because the damages were caused by hidden decay, a covered cause of loss under the policy (John E. Parauda, et al. v. Encompass Insurance Co., No. 61128/15, N.Y. Sup., Westchester Co., N.Y. Misc. LEXIS 269).

Federal Magistrate Judge Orders Defendant To Amend Answers In Lead Coverage Suit
BALTIMORE - A Maryland federal magistrate judge on Jan. 31 ordered a defendant in a lead paint coverage suit to amend two answers in response to an insurer's requests for admission after determining that the defendant can learn additional information regarding the insured property's conditions from her grandmother and legal guardian who lived with the defendant at the insured property (CX Reinsurance Co. Ltd., et al. v. Homewood Realty Inc., et al., No. 15-3136, D. Md.; 2018 U.S. Dist. LEXIS 15339).

2nd Circuit Orders Briefing In Reinsurance Dispute Over Occurrence Liability Cap
NEW YORK - In a coverage dispute over asbestos litigation costs, the Second Circuit U.S. Court of Appeals on Jan. 26 ordered an insurer and reinsurer to submit briefing concerning how a New York high court ruling applies to a reinsurance contract's per-occurrence liability cap (Global Reinsurance Corporation of America v. Century Indemnity Co., No. 15-2164, 2nd Cir.).

Reinsurer Says Insurer Fails To Show Asbestos Payments Are Covered, Seeks New Trial
UTICA, N.Y. - A reinsurer argues in its Jan. 19 reply brief for a new trial following a jury's $64 million verdict that an insurer does not show that seven reinsurance agreements cover payments made to an insured in an asbestos claims settlement (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).

8th Circuit Affirms No Property Damage Triggered Coverage For Defective Bags
ST. LOUIS - The Eighth Circuit U.S. Court of Appeals on Jan. 29 affirmed a lower federal court's ruling in favor of a commercial general liability insurer in a coverage dispute arising from the contamination of landscaping materials with plastic from defective storage bags that were manufactured by the insured (Decker Plastics v. West Bend Mutual Insurance Co., No.17-1319, 8th Cir., 2018 U.S. App. LEXIS 2085).

Insurer Did Not Breach Its Contract In Handling Mold Damages Claim
GRAND RAPIDS, Mich. - The Michigan Court of Appeals on Jan. 25 affirmed a trial court's ruling in favor of an insurer in a mold coverage dispute, agreeing with the trial court that the insured failed to prove that the insurer breached its contract and acted negligently in handling the claim (Sherry Horrocks, et al. v. Citizens Insurance Company of America, et al., Nos. 335972, 336480, Mich. App., 2018 Mich. App. LEXIS 198).

Bad Faith Claim Based On Alleged Failure To Notify Insured Survives Dismissal
JACKSON, Miss. - A Mississippi federal judge on Jan. 22 dismissed a number of an insured's claims alleged against its insurer in a mold coverage dispute on the basis that the policy's organic pathogen exclusion precludes coverage but refused to dismiss the insured's claim for breach of the duty of good faith and fair dealing after determining that the insured stated a plausible bad faith claim regarding the insurer's alleged failure to notify the insured of the claim denial (Heritage Properties Inc. v. Ironshore Specialty Insurance Co., et. al., No. 17-637, S.D. Miss., 2018 U.S. Dist. LEXIS 9598).

Magistrate Judge Says Further Information On Claimant's Tenancy Is Necessary
BALTIMORE - A Maryland federal magistrate judge on Jan. 24 determined that a third-party claimant in a lead-paint coverage suit must amend certain answers to a request for admission filed by the insurer and provide further information regarding his tenancy with his mother at the property where he was exposed to lead paint (CX Reinsurance Company Limited v. Devon S. Johnson, No. 15-3132, D. Md., 2018 U.S. Dist. LEXIS 11209).

Man's Claims Against Johns-Manville Broker Barred, Court Rules Again
NEW YORK - An asbestosis sufferer "received due process in every possible respect" as a future claimant in the long-running Chapter 11 case of Johns-Manville Corp., so he cannot pursue in personam claims against the company's insurance broker, a New York federal bankruptcy judge held Jan. 24 on remand (In re Johns-Manville Corporation, et al., No. 82-11656, S.D. N.Y. Bkcy., 2018 Bankr. LEXIS 166).

No Coverage Owed Under Policy's Collapse Provision, Connecticut Federal Judge Says
HARTFORD, Conn. - A Connecticut federal judge on Jan. 24 dismissed an insured's suit seeking coverage for the deterioration of a home's basement walls caused by a chemical reaction because the policy's collapse provision does not provide coverage for the loss as there has been no abrupt collapse of the walls (Gail M. Chernosky v. Amica Mutual Insurance Co., No. 17-1047, D. Conn., 2018 U.S. Dist. LEXIS 11285).

No Coverage Afforded For Cracking In Foundation Walls Of Insureds' Home
HARTFORD, Conn. - A Connecticut federal judge on Jan. 18 determined that no coverage is afforded to insureds whose basement walls are cracking as the result of defective concrete because the foundation walls have not abruptly collapsed as required for coverage to exist under the policy's collapse provision (Howard and Donna Makufka v. CSAA Fire & Casualty Insurance Co., No. 16-567, D. Conn., 2018 U.S. Dist. LEXIS 7976).

No Coverage Owed For Cleanup Costs Incurred As The Result Of Oil Tank Leak
PHILADELPHIA - A Pennsylvania federal judge on Jan. 19 granted an insurer's motion for summary judgment after determining that the policy's pollution exclusion clearly bars coverage for cleanup costs incurred by the insureds as a result of a heating oil tank leak (Irl S. Barg et al. v. Encompass Home & Auto Insurance Co., No. 16-6049, E.D. Pa., 2018 U.S. Dist. LEXIS 8951).

Missouri Appeals Panel Says No Coverage Afforded For Release Of Methane Gas
ST. LOUIS - The Eastern District Missouri Court of Appeals on Dec. 19 affirmed that no coverage exists for the release of methane gas caused by an insured's remediation of a landfill site because the release did not occur during the effective policy coverage period (Hazelwood Logistics Center LLC v. Illinois Union Insurance Co., No. ED105571, Mo. App., Eastern Div., Div. 1, 2017 Mo. App. LEXIS 1328).

Federal Jurisdiction Exists Over Carbon Monoxide Poisoning Coverage Suit
PHILADELPHIA - A Pennsylvania federal judge on Jan. 12 determined that exercising federal jurisdiction over an insurer's suit seeking a coverage declaration for an underlying carbon monoxide poisoning suit filed against an insured is appropriate because the insurer's suit and the underlying suit are not parallel proceedings (Foremost Insurance Co. v. Nosam LLC, et al., No. 17-2843, E.D. Pa., 2018 U.S. Dist. LEXIS 6645).

Magistrate Judge Partially Grants Motion To Compel In Lead Paint Coverage Suit
BALTIMORE - A Maryland federal magistrate judge on Jan. 19 determined that an insurer is required to produce documents related to its knowledge of any lead paint conditions at its insured's buildings prior to the date on which the insured's insurance application and endorsement became effective (CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v. Devon S. Johnson, No. 15-3132, D. Md., 2018 U.S. Dist. LEXIS 8594).

Federal Magistrate Judge Says Former Tenant Should Be Dismissed From Lead Suit
BALTIMORE - A Maryland federal magistrate judge on Jan. 3 recommended that an insurer's motion to compel responses from a former tenant of an insured building that contained lead paint be denied because the former tenant is no longer a proper party to the insurer's suit as the tenant's underlying claims alleging injuries as a result of exposure to lead paint in the insured's building were dismissed (CX Reinsurance Co. Ltd., et al. v. Singer Realty, et al., No. 15-3056, D. Md., 2018 U.S. Dist. LEXIS 671).

Insurer Opposes New Trial As Jury Had Evidence For $64M Award Against Reinsurer
UTICA, N.Y. - In response to a reinsurer's motion for a new trial, an insurer argues in a Jan. 12 brief to a New York federal court that a jury had ample evidence in a "dozen witnesses and hundreds of exhibits" before reaching a $64 million verdict against a reinsurer over asbestos claims (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).

Insurers Win Relief From Kaiser Gypsum's Stay To Seek Coverage Case Costs
CHARLOTTE, N.C. - Chapter 11 debtor Kaiser Gypsum Co.'s insurers received relief from the automatic bankruptcy stay so they can pursue the repayment of their costs from the debtor's primary insurer in a California state court asbestos coverage lawsuit, according to a Dec. 27 North Carolina federal bankruptcy court order (In re Kaiser Gypsum Company, Inc., et al., No. 16-31602, W.D. N.C. Bkcy.).

Insurer Says Reinsurer Breached Contract With Regard To Asbestos Claims
BRIDGEPORT, Conn. - A reinsurer breached its contract by refusing to pay its share of losses arising out of the settlement of asbestos claims, an insurer says in a Jan. 16 complaint filed in the Connecticut federal court (Travelers Casualty and Surety Co. v. Lamorak Insurance Co., No. 18-00087, D. Conn.).

Reinsurers Breached Their Contract By Failing To Pay Share Of Loss, Insurer Says
BRIDGEPORT, Conn. - With regard to settlements of underlying asbestos claims, two reinsurers breached their contract by failing to pay their share of losses, an insurer says in its Jan. 16 complaint filed in Connecticut federal court (Travelers Casualty and Surety Co. v. Nationwide Mutual Insurance Co., et al., No. 18-00088, D. Conn.).