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Preview: LexisNexis® Mealey's™ Insurance Legal News

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5th Circuit Denies Request To Certify Question To Texas High Court In Asbestos Suit
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Oct. 5 denied an insurer's request to certify questions to the Texas Supreme Court regarding whether the "sudden and accidental" exception to the policies' pollution exclusion applies to afford coverage for the underlying asbestos claims and whether vertical exhaustion of the policies applies (Longhorn Gasket and Supply Co., et al. v. U.S. Fire Insurance Co., No. 15-41625, 5th Cir.).



Rhode Island Federal Judge: Effluent Is Not Excluded By Pollution Exclusion
PROVIDENCE, R.I. - A Rhode Island federal judge on Sept. 26 rejected an insurer's argument that coverage for an underlying lawsuit alleging property damage as a result of the insured's impermissible drainage of water and effluent from an apartment complex is barred by a policy's pollution exclusion because the definition of pollution in the policy does not include effluent as an excluded pollutant (GeoVera Specialty Insurance Co. v. Kurt Poulton, No. 16-432, D. R.I., 2017 U.S. Dist. LEXIS 165539).



Missouri Appeals Panel Says 'All Sums' Method Of Allocation Applies
ST. LOUIS - The Eastern District Missouri Court of Appeals on Oct. 3 determined that a trial court properly applied an "all sums" method of allocation and properly determined that vertical exhaustion applies to a number of primary and excess policies under which an insured seeks coverage for underlying asbestos claims (Nooter Corp. v. Allianz Underwriters Insurance Co. et. al., No. ED103835, Mo. App., Div. 2, 2017 Mo. App. LEXIS 977).



Bifurcation Of Bad Faith Claim For Trial Permitted In Asbestos Coverage Dispute
NEWPORT NEWS, Va. - Bifurcation of a bad faith claim in an asbestos coverage dispute is appropriate for trial but not for discovery as the issue of coverage intertwines and overlaps with the issue of bad faith, a Virginia federal magistrate judge said Oct. 2 (Hopeman Brothers Inc. v. Continental Casualty Co., et al., No. 16-187, E.D. Va., 2017 U.S. Dist. LEXIS 164434).



Judge: 'Deleterious Substances' Exclusion Bars Coverage For Insured's Grout Dust Work
PHILADELPHIA - A commercial general liability insurer did not breach its insurance contract nor did it act in bad faith in denying a claim, a Pennsylvania federal judge ruled Sept. 29 because "deleterious substances" exclusion precluded coverage for grout dust from construction work that led to property damage (Collin R. Ginther v. Preferred Contractors Insurance Company Risk Retention Group LLC, No. 16-686, E.D. Pa., 2017 U.S. Dist. LEXIS 161720).



7th Circuit To Hear Parties' Oral Arguments In Contamination Coverage Suit
CHICAGO - The Seventh Circuit U.S. Court of Appeals is scheduled to hear oral arguments on Oct. 23 in a suit involving an insurer's duty to defend and indemnify its insureds who seek coverage for environmental contamination cleanup costs at their commercial property (Atlantic Casualty Insurance Co. v. Juan and Maria Garcia, No. 17-1224, 7th Cir.).



Indiana Federal Judge Says Question Of Fact Exists On Quality Of Chemical
INDIANAPOLIS - An Indiana federal judge on Oct. 4 denied a third-party defendant's motion for summary judgment in a suit seeking reimbursement for damages caused when a contaminated chemical was used by an insured to manufacture baby wipes after determining that an issue of fact exists as to the quality of the chemical when it was shipped by the third-party defendant (Nice-Pak Products Inc. et al. v. Univar USA Inc. et al., No. 15-409, S.D. Ind., 2017 U.S. Dist. LEXIS 164440).



California Appeals Panel: Insurer Owes For Water Damage To Modular Units
RIVERSIDE, Calif. - An insurer must pay for damage to modular units that were delivered without completed roofs and sustained water damage over several months, and that amount is not to be offset by a prior settlement between the general contractor for the project and the insured that was responsible for building and delivering the units, a California appellate panel ruled Sept. 8 (Global Modular, Inc. v. Kadena Pacific, Inc., North American Capacity Insurance Co. v. Kadena Pacific, Inc., No. E063551, Calif. App., 4th Dist., Div. 2, 2017 Cal. App. LEXIS 778).



Remand Of Water Damage Suit Is Appropriate, Texas Federal Judge Determines
HOUSTON - Remand of an insured's suit seeking coverage and damages related to the denial of a claim for water and storm damage is appropriate because the insured's claims against the adjusters are viable under the Texas Insurance Code, a Texas federal judge said Oct. 6 in rejecting the insurer's argument that the adjusters were fraudulently joined as defendants to defeat diversity jurisdiction (Lillie Jean Hooper v. Allstate Texas Lloyd's, et al., No. 17-2038, S.D. Texas, 2017 U.S. Dist. LEXIS 165953).



2016 Insurance-Related Class Actions Filed In Or Removed To Federal Court
By Charlotte E. Thomas (Complete version of commentary with images available. Document #03-171011-199X.) This report analyzes 210 insurance-related class actions1 filed in or removed to federal court in 2016. In many respects, the results are predictable. The greatest percentage of the insurance-related class actions involve coverage or claims handling decisions, although there were a few interesting pockets of recurring class claims, such as inflated drug prices and cost of insurance ("COI") increases for life insurance policies. The predominant forum choices were on the American coasts, California and Florida being the preferred locations. One notable result was the frequency of voluntarily dismissals by the plaintiff and individual settlements reached with the named plaintiff only. It can only be surmised that either these cases never were intended to be consummated as class actions or that impediments arose after filing that prevented a cost-effective resolution on a class-wide basis.



New York Federal Jury Finds Amtrak Is Owed $14.3M For Contamination Cleanup Claims
BROOKLYN, N.Y. - A New York federal jury on Sept. 27 entered a $14.3 million verdict in favor of Amtrak and against its insurers after finding that the insurers owe coverage for environmental contamination cleanup costs incurred by Amtrak (Certain Underwriters at Lloyd's, et al. v. National Railroad Passenger Corp., et al., No. 14-4717, E.D. N.Y.).



California Panel Affirms $14M In Prejudgment Interest In Stringfellow Dispute
RIVERSIDE, Calif. - A California state court did not err in awarding the state of California almost $14 million in prejudgment interest in an environmental contamination suit arising out of cleanup costs at the Stringfellow Acid Pits Superfund site, the Fourth District California Court of Appeal said Sept. 29 after finding no error in the lower court's application of vertical exhaustion and no error in its designated start date for the accrual of prejudgment interest (California v. Underwriter's at Lloyds, et al., No. E064518, Calif. App., 4th Dist., Div. 2, 2017 Cal. App. LEXIS 846).



Expert Testimony Excluded; Insurer Granted Summary Judgment On Pollution Exclusion
CHICAGO - An Illinois federal judge on Sept. 25 granted an insurer's motion on the applicability of the pollution exclusion after determining that testimony offered by the insured's expert on the contamination at two of the insured's sites must be excluded because the expert's testimony does not support the insured's argument that the contamination was sudden and accidental as required for coverage to exist under the policies at issue (Varlen Corp. v. Liberty Mutual Insurance Co., et al., No. 13-5463, N.D. Ill., 2017 U.S. Dist. LEXIS 162110).



No Coverage Owed For Underlying Lead Paint Suit, Federal Judge Says
ALBANY, N.Y. - No coverage is owed to an insured for two underlying lawsuits alleging injuries caused by exposure to lead paint in the insured's rental property because the insured failed to provide the insurer with timely notice of the occurrence, which was a 1994 report by the county health department detailing the presence of lead paint in the property, a New York federal judge said Sept. 26 (J. Peter McPartlon v. Continental Casualty Co., and Continental Casualty Co. v. J. Peter McPartlon, Nos. 15-299, 15-1520, N.D. N.Y., 2017 U.S. Dist. LEXIS 157858).



Illinois Federal Judge Decides Admissible Evidence In Bad Faith Coverage Dispute
CHICAGO - An Illinois federal judge on Sept. 27 determined that an insured's claims for punitive damages and attorney fees should be withheld from a jury but that evidence related to how long the insurer took to process the insured's claim is relevant for the jury to hear as it pertains to the insured's claim for bad faith arising out of a dispute for lost business property and income caused by the contamination of the insured's property and business with lead dust (Jordan Mozer & Associates Ltd. v . General Casualty Company of Wisconsin, No. 14-10264, N.D. Ill., 2017 U.S. Dist. LEXIS 159518).



Magistrate Judge Declines Revisiting Ruling On Documents Between Insurer, Reinsurer
CINCINNATI - In an asbestos coverage dispute, an Ohio federal magistrate judge on Sept. 26 refused to reconsider a prior decision where she declined to conduct an in camera review of an insurer's documents disclosed to third parties other than a reinsurer and a claims adjuster because they are not entitled to protection under the attorney-client privilege (The William Powell Co. v. National Indemnity Co., et al., No. 14-807, S.D. Ohio, 2017 U.S. Dist. LEXIS 157733).



Reinsurer Asserts Statute Of Limitations Defense To Breach Of Contract Counterclaims
PHILADELPHIA - In response to an insurer's breach of contract counterclaims, a reinsurer on Sept. 27 filed an amended answer in a Pennsylvania federal court, asserting a statute of limitations defense and that it did not agree to reinsure an excess umbrella policy (R&Q Reinsurance Co. v. St. Paul Fire & Marine Insurance Co., No. 16-1473, E.D. Pa.).



No Coverage For Damages To Foundation Walls, Connecticut Federal Judge Determines
HARTFORD, Conn. - An insurer did not breach its contract when it denied coverage for damages to a home's foundation walls because the loss was not sudden and accidental as required for coverage to exist under the policy's collapse provision, a Connecticut federal judge said Sept. 27 in granting the insurer's motion for summary judgment (Glenn R. Carlson, et al. v. Allstate Insurance Co., No. 15-1045, D. Conn., 2017 U.S. Dist. LEXIS 159155).



Pollution From Insured's Everyday Operations Can Be Accidental, Federal Judge Says
BROOKLYN, N.Y. - A New York federal judge on Sept. 21 determined that environmental contamination resulting from an insured's everyday operations can be accidental, as that term is used in the policies' pollution exclusions, because the spills at issue occurred inadvertently during the insured's normal, everyday operations (Certain Underwriters at Lloyd's, et al. v. National Railroad Passenger Corp., et al., No. 14-4717, E.D. N.Y., 2017 U.S. Dist. LEXIS 154584).



Carrier Did Not Prove Omission Of Pollution Exclusion Was Mutual Mistake, Judge Says
ATLANTA - A Georgia federal judge on Sept. 19 rejected an insurer's argument that the omission of a pollution exclusion from its policy was a mutual mistake and found that the insurer owes coverage for contamination claims arising out of the operation of a battery plant because the insured met the policy's deductible (ACE American Insurance Co. v. Exide Technologies Inc., et al., No. 16-1600, N.D. Ga.).



Ohio Federal Judge Denies Motion To Dismiss, Says Release Was Pollution Incident
COLUMBUS, Ohio - An Ohio federal judge on Sept. 19 denied an insurer's motion to dismiss after determining that the insured sufficiently alleged facts to support its claim that the release of hazardous waste was a pollution incident under the terms of the policy at issue (Olymbec USA LLC v. Aspen Specialty Insurance Co., et al., No. 16-948, S.D. Ohio, 2017 U.S. Dist. LEXIS 152083).



Insured Argues California's Notice-Prejudice Rule Must Be Applied In Environmental Suit
SAN FRANCISCO - An insured argues in an Aug. 11 reply brief that the California Supreme Court should find that California's common-law notice-prejudice rule is a fundamental public policy and applies both to a policy's notice provision and consent provision in an environmental contamination coverage suit (Pitzer College v. Indian Harbor Insurance Co., No. S23950, Calif. Sup.).



Maryland Federal Judge Denies Motion To Compel Documents Related To Lead-Paint Suit
BALTIMORE - A Maryland federal judge on Sept. 20 denied an insured's motion to compel documents related to its insurer's settlement of a lead-paint liability suit after determining that the documents sought are relevant only if the insurer introduces the settlement to prove damages or liability (CX Reinsurance Company Ltd. v. B&R Management Inc., et al., No. 15-3364, D. Md., 2017 U.S. Dist. LEXIS 155011).



Kaiser Gypsum's Stay Lifted To Allow Appeals In Coverage Dispute
CHARLOTTE, N.C. - The primary asbestos insurer for Chapter 11 debtor Kaiser Gypsum Co. can pursue appeals of rulings in all three phases of coverage litigation in California state court, a North Carolina federal bankruptcy judge ruled in a Sept. 20 minute order lifting the automatic stay in the bankruptcy case to allow the appeals to proceed (In re Kaiser Gypsum Company, Inc., et al., No. 16-31602, W.D. N.C. Bkcy.).



Arbitration Not Available For Coverage Dispute Based On Policy, Garlock Says
CHARLOTTE, N.C. - Former Chapter 11 debtor Garlock Sealing Technologies LLC does not have to arbitrate an insurance coverage dispute with an insurer based on the plain language of the 1983 policy at issue, Garlock and affiliates argue in a Sept. 22 response to the insurer's motion to force arbitration in North Carolina federal court (Safety National Casualty Corp. v. Garlock Sealing Technologies LLC, et al., No. 3:17-cv-00458, W.D. N.C.).



Federal Judge Schedules Jury Trial In Reinsurance Suit Over Asbestos Claims
SYRACUSE, N.Y. - In a reinsurance dispute over coverage for underlying asbestos injury claims, an insurer writes in a letter filed in a New York federal court on Sept. 19 that it rejects a reinsurer's suggestion that it dismiss the case without prejudice because the case presents a justiciable controversy (Utica Mutual Insurance Co. v. R&Q Reinsurance Co., No. 15-270, N.D. N.Y.).



No Coverage Owed For Damages Caused By Collapsed Liquid Propane Tanks
WILLIAMSPORT, Pa. - No coverage is afforded for damages to an insured's property caused by the collapse of liquid propane tanks into a sinkhole because the sinkhole was caused by excess rainfall, which is clearly precluded under the policy's flood exclusion, a Pennsylvania federal judge said Sept. 18 in granting an insurer's motion for summary judgment on claims of breach of contract and bad faith (Heller's Gas Inc. v. International Insurance Company of Hannover Ltd., et al., No. 15-1350, M.D. Pa., 2017 U.S. Dist. LEXIS 151072).



1st Circuit Allows Negligence Claims Against U.S. In Oil Spill Coverage Dispute
BOSTON - The First Circuit U.S. Court of Appeal on Sept. 15 reversed a district court's dismissal of admiralty and maritime negligence claims filed against the United States in an oil spill dispute after determining that the negligence claims are viable under the Suits in Admiralty Act (Ironshore Specialty Insurance Co., et al. v. United States of America, et al., No. 16-1589, 1st Cir., 2017 U.S. App. LEXIS 17928).



Pollution Exclusion Bars Coverage For Manure Contamination, Judge Says
YAKIMA, Wash. - No coverage is owed to insureds seeking coverage for an underlying environmental contamination suit arising out of liquid manure that seeped from the insureds' holding pond and contaminated the local water because the policies' pollution exclusions clearly bar coverage for the contamination, a Washington federal judge said Sept. 11 (The Dolsen Cos., et al. v. Bedivere Insurance Co, et al., No. 16-3141, E.D. Wash.).



Repopulation Of Bird Flock Lost In Avian Flu Outbreak Is Covered Under Policy
MINNEAPOLIS - A Minnesota federal judge on Sept. 12 determined that an insured is entitled to reimbursement for the costs of repopulating its bird flock after an outbreak of the avian flu virus required the flock to be destroyed because the destruction of the birds qualifies as a remediation expense as it is damaged property (Rembrandt Enterprises Inc. v. Illinois Union Insurance Co., No. 15-2913, D. Minn., 2017 U.S. Dist. LEXIS 147030).



Massachusetts Justice Says Issues Of Fact Exist In Contamination Coverage Suit
BOSTON - A Massachusetts Superior Court justice on Sept. 7 denied an insurer's motion for summary judgment in an environmental contamination coverage suit after determining that issues of fact exist about the insured's knowledge of the contamination and whether some of the contamination occurred prior to the inception of the policy at issue (Casella Waste Systems Inc., et al. v. Steadfast Insurance Co., No. 2016-2521, Mass. Super., Suffolk Co.).



Insurer Says To New York High Court: Reinsurer Must Pay Its Share Of Defense Costs
NEW YORK - Reinsurance certificates should be treated as concurrent with underlying insurance policies, an insurer argues in an Aug. 4 reply brief in the New York Court of Appeals, so that a reinsurer must pay its share of defense costs for asbestos litigation (Global Reinsurance Corporation of America v. Century Indemnity Co., No. CTQ-2016, 0005, N.Y. App.).



Reinsurer Opposes Motion To Bar Employee's Testimony In Asbestos Coverage Dispute
UTICA, N.Y. - In a dispute over an underlying $325 million settlement of asbestos claims, a reinsurer responds in a Sept. 13 opposition brief to an insurer's motion to exclude testimony from the reinsurer's former employee, arguing to a New York federal court that the former employee has extensive knowledge regarding reinsurance practices, policies and procedures (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-cv-00853, N.D. N.Y.).



Insurer Is Responsible For 25 Percent Of Lead-Paint Judgment, Federal Judge Says
BALTIMORE - A Maryland federal judge on Sept. 14 said an insurer is responsible for paying for 25 percent of a judgment entered against its insured in an underlying lead-paint injury case after determining that the allocation must be calculated based on the time period during which the tenant lived in the insured's property (Pennsylvania National Mutual Casualty Insurance Co., v. Jacob Dackman & Sons LLC, et al., No. 16-2640, D. Md., 2017 U.S. Dist. LEXIS 148907).



Issue Of Fact Exists As To Whether Water, Mold Damage Occurred Within Policy Periods
TRENTON, N.J. - The Appellate Division of the New Jersey Superior Court on Sept. 11 vacated a portion of a trial court's ruling after determining that the evidence creates a question of fact as to whether water and mold damage caused by the faulty installation of doors and windows occurred during the applicable policy periods (Selective Insurance Company of America v. TRH Builders Inc., et al., No. A-1015-15T3, N.J. Super., App. Div., 2017 N.J. Super. Unpub. LEXIS 2265).