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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Insured Failed To Timely Notify Insurer Of Polluted Sites, Panel Majority Says
CHICAGO - The majority of the First District Illinois Appellate Court on Nov. 21 determined that a trial court did not err when it granted an insurer's motion for summary judgment because the evidence shows that the insured failed to give the insurer timely notice of pollution at two sites for which it seeks coverage (The Travelers Indemnity Co. v. Amsted Industries Inc., et al., No. 15-2495, Ill. App., 1st Dist., Div. 1; 2016 Ill. App. Unpub. LEXIS 2513).

Insured Timely Notified Insurer Of Only 1 Pending Suit, Federal Judge Says
NEW YORK - A New York federal judge on Nov. 21 amended a prior ruling entered in favor of an insured to clarify that the insured timely notified the insurer of only one underlying suit pending against it and not two suits pending against it (Olin Corp. v. Insurance Company of North America, et al., No. 84-1968, S.D. N.Y.; 2016 U.S. Dist. LEXIS 161542).

Louisiana Federal Judge Says Exclusions For Pollution, Silica Do Not Bar Coverage
NEW ORLEANS - A Louisiana federal judge on Nov. 23 denied an insurer's motions for summary judgment on the duty to defend and indemnify an insured and an additional insured against two underlying suits filed by neighboring residents of an insured shipyard after determining that the insurer failed to prove that the policy's exclusions for health hazard, silica or pollution bar coverage for the underlying suits (Hanover Insurance Co. v. Superior Labor Services Inc., et al., No. 11-2375 c/w 14-1930, 14-1933, 16-2490, E.D. La.; 2016 U.S. Dist. LEXIS 162480).

Policyholder Is Entitled To Documents Sought In Contamination Dispute
BROOKLYN, N.Y. - A New York federal magistrate judge on Nov. 23 granted an insured's motion to compel the production of documents in an environmental contamination coverage dispute after determining that the insured has shown a need for the requested documents and that the request was not overly burdensome (Certain Underwriters at Lloyd's, et al., v. National Railroad Passenger Corp., et al., No. 16-2778, E.D. N.Y.; 2016 U.S. Dist. LEXIS 162783).

Illinois Federal Judge Says Discovery Needed Before Duty To Defend Can Be Decided
CHICAGO - An Illinois federal judge on Nov. 23 granted an insurer's motion seeking discovery in an asbestos coverage dispute after finding that the effect of an underlying settlement agreement on the insurer's duty to defend must first be determined before a decision can be made on the insurer's duty to defend the insured against a number of other underlying asbestos suits (The Hillshire Brands Co. v. Travelers Casualty and Surety Co., No. 15-06859, N.D. Ill.; 2016 U.S. Dist. LEXIS 162386).

Insurer Loses Bid For Judgment On Liquidating Trust's Payment Claims
OAKLAND, Calif. - An asbestos personal injury liquidating trust properly submitted proposals to an insurer regarding the payment of allowed claims that triggered the insurer's policies and did not violate two debtors' plan of reorganization by allocating to the insurer 100 percent of the liquidated value of each approved unpaid claim, a California federal bankruptcy judge held Nov. 21 (In re CFB Liquidating Corporation, f/k/a Chicago Fire Brick Co., et al., No. 01-45483, [Barry A. Chatz, as Trustee for the CFB/WFB Liquidating Trust v. Continental Casualty Company, No. 15-4136] N.D. Calif. Bkcy.; 2016 Bankr. LEXIS 4034).

Reinsurer Says It May Need To Depose 20 Current And Former Insurance Employees
SYRACUSE, N.Y. - A reinsurer asked a federal court in New York on Nov. 28 to intervene in a number of discovery disputes with an insurer, notably asking that the court allow it to depose up to 20 current and former employees and agents of the insurer (Utica Mutual Insurance Company v. R&Q Reinsurance Company, No. 15-cv-00270, N.D. N.Y.).

Insureds' Liability Must Be Resolved Before Coverage Issues, New Jersey Panel Says
TRENTON, N.J. - Insurers' coverage obligations in a mold damages suit can be adjudicated only after the insureds' liability for the damages caused by the mold contamination is resolved, the Appellate Division of the New Jersey Superior Court determined Nov. 21 (Larry Chenault v. Victory Highlands Condominium Association Inc., et al., Nos. A-3626-14T4, A-3627-14T4, A-3628-14T4, N.J. Super., App. Div.; 2016 N.J. Super. Unpub. LEXIS 2500).

Insured's Faulty Work Is Not An 'Occurrence' Under New York Law, Judge Says
TOPEKA, Kan. - Applying New York law to an insurance contract, a Kansas federal judge on Nov. 17 ruled that claims for alleged property damage as a result of an insured's faulty construction are not covered as "occurrences" (Black & Veatch Corp. v. Aspen Insurance [UK] Ltd., et al., No. 12-2350, D. Kan.; 2016 U.S. Dist. LEXIS 159679).

Exception To Policy Provision Does Not Apply In Oil Spill Coverage Dispute, Panel Says
BEAUMONT, Texas - An exception to a policy's joint venture provision does not apply to provide coverage to an insured seeking coverage for damages incurred as a result of the Deepwater Horizon Oil Spill in the Gulf of Mexico because a monetary judgment was not entered against the insured as required by the provision's second exception, the Ninth District Texas Court of Appeals said Nov. 17 in reversing a trial court's ruling (Houston Casualty Co., et al., v. Anadarko Petroleum Corp., et al., No. 09-14-00459, Texas App., 9th Dist.; 2016 Tex. App. LEXIS 12354).

Federal Judge Dismisses Excess Insurer's Suit, Says Abstention Is Warranted
GULFPORT, Miss. - A Mississippi federal judge on Nov. 18 dismissed an excess insurer's suit against an additional insured's excess insurer after determining that the coverage question at issue in the federal suit is the same as the coverage question at issue in a pending state court case filed by the insured's primary insurer (Associated International Insurance Co. v. First Specialty Insurance Corp., No. 16-239, S.D. Miss.; 2016 U.S. Dist. LEXIS 160254).

Missouri Federal Judge: No Contribution Owed By Insurer For Asbestos Settlement
ST. LOUIS - Because an insurer's pro rata share for each year at issue in an asbestos coverage suit is less than its annual deductible, the insurer is not responsible for contributing to the settlement costs incurred by another insurer on behalf of the insured, a Missouri federal judge said Nov. 15 in granting the insurer's motion for summary judgment (Zurich American Insurance Co. v. Insurance Company of North America, et al., No. 14-1112, E.D. Mo.; 2016 U.S. Dist. LEXIS 157688).

Louisiana Federal Judge Says Federal Jurisdiction Exists In Asbestos Coverage Suit
NEW ORLEANS - A Louisiana federal judge on Nov. 17 denied a plaintiff's motion to remand an asbestos coverage dispute to Louisiana state court after determining that the plaintiff failed to prove that he was not exposed to asbestos while working in one of the insured's facilities on the Outer Continental Shelf (OCS) (Jesse Frank Sheppard v. Liberty Mutual Insurance Co., et al., No. 16-2401, E.D. La.; 2016 U.S. Dist. LEXIS 159338; 2016 U.S. Dist. LEXIS 159336).

Plaintiffs Appeal Ruling That Claims Against W.R. Grace Insurers Are Barred
WILMINGTON, Del. - Twenty-seven asbestos disease sufferers on Nov. 14 asked a Delaware federal court to decide if a bankruptcy judge erred in finding that their state law personal injury claims against insurers of Chapter 11 debtor W.R. Grace & Co. are barred by an injunction in W.R. Grace's plan of reorganization (Continental Casualty Company, et al. v. Jeremy B. Carr, et al., No. 16-1010, D. Del.).

Insured Failed To Prove Avian Flu Outbreak Is Covered Under Policy, Insurer Argues
MINNEAPOLIS - An insurer argues in a Nov. 15 reply in support of its motion for partial summary that an insured has failed to meet its burden of proving that coverage is owed for an outbreak of the avian flu virus under the policy's exception to a naturally occurring material exclusion (Rembrandt Enterprises Inc. v. Illinois Union Insurance Co., No. 15-2913, D. Minn.).

Florida Federal Judge Says No Evidence That EIFS Was Defectively Installed
ORLANDO, Fla. - Because there is no evidence that an insured's exterior insulation finishing system (EIFS) was defectively installed, a Florida federal judge on Nov. 18 denied an insurer's motion for summary judgment in a suit filed by an insured seeking coverage for water and mold damages to the insured's home (George Crews, et al. v. Federal Insurance Co., No. 15-866, M.D. Fla.; 2016 U.S. Dist. LEXIS 160200).

Pennsylvania Federal Judge: Underlying Suit Does Not Allege An Occurrence
PHILADELPHIA - No coverage is owed to insureds for an underlying negligence suit because the underlying suit arose out of faulty workmanship and not an occurrence, a Pennsylvania federal judge said Nov. 16 in granting an insurer's motion for summary judgment (Robert A. Bealer, et al. v. Nationwide Mutual Insurance Co., et al., No. 16-3181, E.D. Pa.; 2016 U.S. Dist. LEXIS 158438).

Damages From Insured's Faulty Work Are Not Covered, Arkansas Federal Judge Says
LITTLE ROCK, Ark. - Damages for defective workmanship that resulted in damages only to an insured general contractor's work product itself do not constitute property damage caused by an "occurrence" under a commercial general liability insurance policy, an Arkansas federal judge ruled Nov. 18, granting summary judgment to the insurer on its duty to defend and indemnify two underlying construction defects cases (Auto-Owners Insurance Co. v. Hambuchen Construction Inc., et al., No. 16-0005, E.D. Ark.; 2016 U.S. Dist. LEXIS 160364).

Insured Did Not Comply With Policy's Consent-To-Settle Provision, Appeals Panel Says
CINCINNATI - An excess liability insurer has no duty to reimburse an insured for underlying settlements related to defective knee implants because the policy's consent-to-settle provision clearly required the insured to seek the excess insurer's consent and the insured failed to do so, the Sixth Circuit U.S. Court of Appeals said Nov. 18 in reversing a Michigan federal judge's ruling (Stryker Corp., et al. v. National Union Fire Insurance Company of Pittsburgh, Pa. et al., Nos. 15-1657 and 15-1664, 6th Cir.; 2016 U.S. App. LEXIS 20653).

Insurer Owes Duty To Defend Environmental Contamination Suit, Federal Judge Says
LOS ANGELES - An insurer has a duty to defend its insureds against underlying environmental contamination claims because the policy's chemical discharge exclusion does not apply to the underlying suit; however, the insureds are not entitled to independent counsel, a California federal judge said Nov. 7 (Hollyway Cleaners & Laundry Co., et al. v. Central National Insurance Company of Omaha Inc., No. 13-7497, C.D. Calif.; 2016 U.S. Dist. LEXIS 155003).

Judge Denies Petition To Vacate Arbitration Award, Grants Confirmation
NEW YORK - A federal judge in New York on Nov. 10 denied an insurer's petition to vacate a reinsurance arbitration award and granted a reinsurer's cross-petition to confirm the award, holding that the court could review only whether the arbitrators had done their job and not whether their interpretation of a reinsurance agreement was correct (Yosemite Insurance Company v. Nationwide Insurance Company, No. 16-cv-05290, S.D. N.Y.; 2016 U.S. Dist. LEXIS 157061).

Insurer's Claims In Asbestos Coverage Suit Are Not Ripe, Arizona Federal Judge Says
PHOENIX - An Arizona federal judge on Nov. 10 dismissed an insurer's claims seeking a coverage declaration for two underlying asbestos suits filed against its insured after determining that the insurer's claims are not ripe for adjudication because the policies' self-insured retentions have likely not been met by a settlement in one of the underlying suits and the other underlying suit is still pending in Arizona state court (Berkshire Hathaway Specialty Insurance Co. v. City of Phoenix, et al., No. 16-1083, D. Ariz.; 2016 U.S. Dist. LEXIS 156234).

Insurer: Reinsurer Knew Performance Under Agreement Was Connected To California
SAN FRANCISCO - Following the dismissal of a suit for lack of jurisdiction, an insurer filed an amended complaint against its reinsurer in a federal court in California on Nov. 2, making a point of noting the state's connection with the underlying reinsurance agreements (The American Insurance Co. v. R&Q Reinsurance Co., No. 16-3044, N.D. Calif.).

Insurer Owes Defense Costs For Covered Faulty Work, Iowa Federal Judge Holds
DES MOINES, Iowa - Under Iowa law, claims against an insured for defective workmanship that resulted in water damage to property other than the insured's work constitute an "occurrence" under comprehensive general liability policies, an Iowa federal judge ruled Nov. 1, finding that the insurer is responsible for most of the defense costs in underlying product liability lawsuits (Pella Corp., et al. v. Liberty Mutual Insurance Co., No. 11-00273, S.D. Iowa).

Avian Flu Outbreak Is A Pollution Condition Under Policy, Insured Argues
MINNEAPOLIS - An insured argues in a Nov. 8 brief in support of its motion for partial summary judgment and in opposition to an insurer's motion for partial summary judgment that coverage is owed for an outbreak of the avian flu virus because the dispersal and migration of the virus constitutes a pollution condition under the applicable policy (Rembrandt Enterprises Inc. v. Illinois Union Insurance Co., No. 15-2913, D. Minn.).

Insurers File Suit, Claim No Coverage Owed For Underlying Pollution Claims
LOS ANGELES - No coverage is owed for underlying pollution claims filed against an insured because the policies at issue contain pollution and lead exclusions, two insurers allege in a Nov. 8 complaint filed in California federal court (XL Insurance America Inc., et al., v. Craig R. Jalbert, et al., No. 16-8318, C.D. Calif.).

Carrier Seeks Recission Of Policies Issued To Insured Based On Misrepresentation
ATLANTA - An insurer claims in a Nov. 7 complaint filed in Georgia federal court that it is entitled to rescind its insured's policies and owes no further coverage for underlying suits arising out of exposure to hepatitis A from food purchased from the insured because the insured did not disclose in its insurance application that it was a national franchisor (Sentinel Insurance Co. Ltd., v. Tropical Smoothie Cafe LLC, et al., No. 16-4162, N.D. Ga.).

California Federal Judge Denies Motion To Dismiss In Sewage Spill Coverage Suit
LOS ANGELES - A California federal judge on Oct. 31 refused to dismiss an insurer's claims against its insured and two underlying plaintiffs in a dispute over coverage for a sewage spill after determining that federal jurisdiction is proper as the amount in controversy exceeds the federal jurisdictional requirement (Travelers Property Casualty Company of America v. Mountain Movers Engineering Contactors Inc., No. 16-2127, S.D. Calif.).

Insurer Argues Settlement Agreement Barred Claims For Cleanup Costs
CINCINNATI - An insurer argues in a Nov. 1 response brief to the Sixth Circuit U.S. Court of Appeals that a district court correctly found that a 1994 settlement agreement bars coverage for any future claims arising out of coverage for environmental cleanup costs incurred by the insured at a Superfund site in Texas (Arrowood Indemnity Company v. Lubrizol Corporation, No. 16-3463, 6th Cir.).

Real Estate Property Managed Endorsement Rendered Policies Excess, Judge Rules
SACRAMENTO, Calif. - A California federal judge on Nov. 2 held that a Real Estate Property Managed endorsement rendered an insurer's policies excess with respect to an underlying personal injury claim, finding that the insurer has no duty to defend or indemnity its property manager insured (Atain Specialty Insurance Co. v. Sierra Pacific Management Co., et al., No. 14-00609, E.D. Calif.; 2016 U.S. Dist. LEXIS 152874).

No Coverage For Foundation Damage Caused By Plumbing Leaks, Federal Judge Says
DALLAS - No coverage is afforded to insureds for foundation damage caused by plumbing leaks in their home because the policy specifically excludes coverage for foundation or earth movement and the policy's limited water damage endorsement does not extend coverage for foundation movement, a Texas federal judge said Nov. 2 (John F. Thomas, et al. v. State Farm Lloyds, et al., No. 15-1937, N.D. Texas; 2016 U.S. Dist. LEXIS 152318).

Church Sues In Pennsylvania Federal Court, Alleges Insurer Acted In Bad Faith
PHILADELPHIA - A Pennsylvania church on Nov. 3 filed a suit against its insurer in Pennsylvania federal court, alleging that the insurer breached its contract and acted in bad faith when it refused to pay for water damages at the church (Shawnee Tabernacle Church, et al., v. GuideOne Insurance, No. 16-5728, E.D. Pa.).

Claims Arising Out Of Cracked Basement Walls Will Proceed To Trial, Federal Judge Says
BRIDGEPORT, Conn. - A Connecticut federal judge on Nov. 3 denied an insurer's motion for reconsideration after determining that the insurer failed to identify any controlling decisions that were overlooked when the court determined that insureds' claims arising out of cracks discovered in their home's basement walls must proceed to trial (Stephen Belz and Karla Belz v. Peerless Insurance Co., No. 13-01315, D. Conn.; 2016 U.S. Dist. LEXIS 152493).

Judge: Insureds' Negligence Claim From Collapse Is Not Precluded By Contract
TULSA, Okla. - Insureds' negligence claim arising out of damages from a wall collapse are not barred because even if there is a contractual relationship between the insureds and a contractor, the insureds did not assume risk of loss for the collapse of a wall due to the wall's allegedly negligent construction, an Oklahoma federal judge ruled Nov. 2 (Lexington Insurance Co., et al. v. Newbern Fabricating Inc. and Baucom Concrete Construction Inc. v. Doveland Engineering Co. and Baucom Concrete Construction Inc. v. Commercial Metals Co., No. 14-0610, N.D. Okla.; 2016 U.S. Dist. LEXIS 151857).

Insured Claims Carrier Wrongfully Denied Coverage For Roof's Collapse
CHICAGO - An insured seeking coverage for the collapse of its roof following a snowstorm alleges in a Nov. 3 complaint filed in Illinois federal court that its insurer breached its contract and acted in bad faith by denying coverage based on the policy's imminent collapse exclusion (Ravinia Vogue Cleaners v. Travelers Casualty Insurance Company of America, No. 16-10311, N.D. Ill.).