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Preview: LexisNexis® Mealey's™ Insurance Legal News

LexisNexis® Mealey's™ Insurance Legal News

Headline Insurance Legal News from LexisNexis®


Washington Federal Judge Denies Motion For Summary Judgment On Bad Faith Claims
SEATTLE - A Washington federal judge on Feb. 13 denied an insurer's motion for summary judgment on an insured's claims for bad faith in an environmental coverage dispute because the judge previously found that the insurer breached its duty to defend and any estoppel argument is now irrelevant to the disposal of the insured's bad faith claims (King County v. Travelers Indemnity Co., et al., No. C14-1957, W.D. Wash.).

Insureds Failed To File Suit Within 1-Year Limitation Period, Federal Judge Says
LOS ANGELES - Because insureds seeking coverage for damages to their home caused by a sewage backup did not file their lawsuit against their insurers until well after the policy's one-year limitation period expired, a California federal judge on Feb. 13 granted the insurers' motion for summary judgment and dismissed the insureds' complaint in its entirety (Jacqueline Keller,. et al. v. Federal Insurance Co., et al., No. 16-3946, C.D. Calif., 2017 U.S. Dist. LEXIS 20820).

10th Circuit Panel Says No Breach Of Contract For Denying Claim For Damages
DENVER - Because an insured failed to establish that it suffered water damage to "covered property" at a renovation project under a builders risk policy, the 10th Circuit U.S. Court of Appeals on Feb. 16 affirmed a Colorado federal judge's finding that the insurer properly denied coverage and did not breach its contract (Gerald H. Phipps, Inc. d/b/a GH Phipps Construction Co. v. Travelers Property Casualty Company of America, No. 16-1039, 10th Cir.).

Judge Rules In Insurer's Favor In Suit Arising From Superstorm Sandy Flood Damage
CAMDEN, N.J. - A New Jersey federal judge on Feb. 14 granted a federal flood insurer's motion for summary judgment in a lawsuit brought by insureds seeking a declaration that they are entitled to coverage and compensatory damages stemming from the insurer's purported mishandling of their Superstorm Sandy flood claim (Herbert Ruth and Danna Ruth v. Selective Insurance Company of America, No. 15-2616, D. N.J., 2017 U.S. Dist. LEXIS 20534).

Judge: Fact Issues Exist On If Roofing Limitation Bars Coverage For Insured
CHARLESTON, S.C. - A genuine issue of material fact exists as to the suitability of a roof covering on a homeowner's roof in order to trigger a roofing limitation endorsement in a commercial general liability insurance policy that would preclude coverage for damages, a South Carolina federal judge held Feb. 6 (Williford Roofing Inc. v. Endurance American Specialty Insurance Co., et al., No. 16-01830, D. S.C., 2017 U.S. Dist. LEXIS 16033).

9th Circuit: Insurance Policy Bars Damage Caused By 'Subsidence'
SAN FRANCISCO - Claims against a mutually insured subcontractor for damage caused by "subsidence" are excluded under an insurance policy, the Ninth Circuit U.S. Court of Appeals ruled Feb. 14, finding that an insurer had no duty to defend and thus was not responsible to share in costs incurred by a defending insurer (St. Paul Mercury Insurance Co. v. Navigators Specialty Insurance Co., No. 14-56723, 9th Cir., 2017 U.S. App. LEXIS 2586).

Insurer Files Complaint, Seeks Rescission Of Product Contamination Policy
NEW YORK - An insurer claims in a Feb. 10 complaint filed in New York federal court that rescission of its product contamination insurance policy is warranted because the insured failed to disclose its knowledge of a possible contamination of its frozen vegetables (Starr Surplus Lines Insurance Co. v. CRF Frozen Foods LLC, et al., No. 17-1030, S.D. N.Y.).

2nd Circuit Panel Says Policy Is Ambiguous On Insurer's Liability Limits
NEW YORK - The Second Circuit U.S. Court of Appeals on Feb. 10 vacated a district court's award of partial judgment on the pleadings entered in favor of an insured seeking coverage for an oil spill after determining that the policy language regarding the insurer's liability to the insured is ambiguous (American Commercial Lines LLC v. Water Quality Insurance Syndicate, Nos. 16-91, 16-119, 2nd Cir., 2017 U.S. App. LEXIS 2460).

Washington Federal Judge: Insurers Breached Duty To Defend In Environmental Suit
SEATTLE - A Washington federal judge on Feb. 10 granted an insured's motion for summary judgment after determining that three insurers breached their contracts of insurance by refusing to defend the insured against state and federal agency claims arising out of environmental contamination because the claims are potentially covered under the policies at issue (King County v. Travelers Indemnity Co., et al., No. C14-1957, W.D. Wash., 2017 U.S. Dist. LEXIS 19397).

Insured Ordered To File Motion To Remand If It Objects To Removal
SHREVEPORT, La. - A Louisiana federal magistrate judge on Feb. 10 ordered an insured seeking coverage for damages caused by a sewage backup that occurred during the insured's work in a neighborhood to file a motion to remand its suit if it contests the insurer's notice of removal to Louisiana federal court (Eagle Water LLC v. Arch Insurance Co., et al., No. 17-250, W.D. La., 2017 U.S. Dist. LEXIS 19317).

Policy Limits Coverage For Insureds' Water Damage, New York Panel Majority Says
ROCHESTER, N.Y. - Because an insurance policy limits coverage to $25,000 for water damage and an insured property was damaged by water that entered the basement through a broken conduit, a trial court erred in denying the insurer's motion for summary judgment, a Fourth Department New York Supreme Court Appellate Division majority said Feb. 10 (Ronald J. Papa, et al., v. Associated Indemnity Corp., et al., No. 16-01136, N.Y. Sup., App. Div., 4th Dept., 2017 N.Y. App. Div. LEXIS 1132).

California Appeals Panel Says No Additional Coverage Owed For Water Damages
SAN FRANCISCO - An insurer owes no additional coverage for water damages to an insured's condominium, the First District California Court of Appeal, Division Four, said Feb. 10 after determining that substantial evidence supports a jury's verdict in favor of the insurer (Greg Kawai v. State Farm Fire and Casualty Co., et al., No. A136569, Calif. App., 1st Dist., Div. 4, 2017 Cal. App. Unpub. LEXIS 1006).

Judge: 'Vacancy Provision' Does Not Exclude Insured's Water Damage Claim
SCRANTON, Pa. - Because more than 31 percent of an insured condominium development's common areas were in use at the time a loss for water damage occurred, a Pennsylvania federal judge ruled Feb. 10 that an insurance policy's "Vacancy Provision" does not apply to exclude coverage for the insured's claim (Village Heights Condominium Association v. The Cincinnati Insurance Co., No. 16-554, M.D. Pa., 2017 U.S. Dist. LEXIS 19425).

Panel Finds Insured's Flood Loss Barred, Affirms Judgment Notwithstanding Verdict
DES MOINES, Iowa - Finding that a church's cause of loss was a flood and, consequently, that the loss was excluded under its insurance policy, an Iowa appeals panel on Feb. 8 affirmed a trial judge's granting of an insurer's motion for judgment notwithstanding a $717,000 verdict in favor of the church (Salem United Methodist Church of Cedar Rapids, Iowa v. Church Mutual Insurance Co., No. 16-0170, Iowa App., 2017 Iowa App. LEXIS 122).

Insured Seeks Coverage For Water Damage Caused By Burst Water Pipe
BISMARCK, N.D. - An insurer acted in bad faith by denying a claim for water damage to an insured apartment building because water damage is listed as a "specified cause of loss" in the policy, an insured claims in a Feb. 7 complaint filed in North Dakota federal court (Spring Glen Apartments LLP v. Arch Specialty Insurance Co., No. 17-28, D. N.D.).

Reinsurer Says It Was Not Obligated To Follow The Fortunes Of Its Reinsured
NEW YORK - A reinsurer told the Second Circuit U.S. Court of Appeals on Feb. 1 that a lower court judge erred in finding that the reinsurer was obligated to pay its reinsured under the follow-the-fortunes or follow-the-settlement doctrine (Utica Mutual Insurance Company v. Clearwater Insurance Company, No. 16-cv-2824 and Utica Mutual Insurance Company v. Clearwater Insurance Company, No. 16-2535, 2nd Cir.).

New Jersey High Court: Assignment Valid; Coverage Owed For Environmental Claims
TRENTON, N.J. - The New Jersey Supreme Court on Feb. 1 affirmed that an assignment of rights under numerous insurance policies issued between 1964 and 1986 is enforceable and valid because the assignment was made after the loss occurred and the insurers' obligation to insure the risk under the policies was not altered by the assignment to a successor company (Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co., et al., No. 2015, 076523, N.J. Sup., 2017 N.J. LEXIS 121).

Pollution Exclusion Bars Coverage For Explosion, 8th Circuit Panel Says
ST. LOUIS - The Eighth Circuit U.S. Court of Appeals on Jan. 31 affirmed a district court's ruling that a policy's pollution exclusion clearly bars coverage for an underlying suit alleging bodily injury caused by an explosion at a natural gas facility (Hiland Partners GP Holdings LLC, et al., v. National Union Fire Insurance Company of Pittsburgh, PA, No. 15-3936, 8th Cir., 2017 U.S. App. LEXIS 1696).

Insurer Has A Duty To Indemnify, Appellants Argue In Brief Filed In 8th Circuit
ST. LOUIS - The Eighth Circuit U.S. Court of Appeals should reverse a Minnesota federal judge's ruling that a policy's pollution exclusion precludes an insurer's duty to indemnify an underlying personal injury suit arising out of carbon monoxide poisoning because the federal judge's interpretation of the pollution exclusion is contrary to Minnesota law, the appellants argue in a Jan. 25 reply brief (Travelers Property Casualty Company of America v. Christopher A. Klick, et al., No. 16-4000, 8th Cir.).

Federal Magistrate Judge Says Sanctions Against Insurer Are Not Warranted
HATTIESBURG, Miss. - A Mississippi federal magistrate judge on Feb. 2 denied a motion for sanctions filed by insureds seeking coverage for a gasoline leak because despite the insureds' contentions, the insureds were able to complete a deposition and obtained sufficient responsive answers from the insurer during the deposition (Grain Dealers Mutual Insurance Co. v. Tammy Cooley, et al., No. 16-39, S.D. Miss., 2017 U.S. Dist. LEXIS 14615).

Federal Judge Says Insurer Owes No Duty To Employee For Asbestos Exposure
NEW ORLEANS - An insurer owes no duty to an employee of an insured for damages arising out of the employee's exposure to asbestos while employed by the insured, a Louisiana federal judge said Jan. 30 in granting the insurer's motion for summary judgment (Jesse Frank Sheppard v. Liberty Mutual Insurance Co., et al., No. 16-2401, E.D. La., 2017 U.S. Dist. LEXIS 12011).

Insurer Did Not Breach Contract As It Paid For Water, Mold Damages
ATLANTA - The Fourth Division of the Georgia Court of Appeals on Feb. 2 affirmed a trial court's ruling in favor of an insurer after determining that the insurer did not breach its contract of insurance by paying the insureds for water and mold damages rather than continuing to participate in the home's restoration work (John and Cathy Clary v. Allstate Fire and Casualty Insurance Co., No. A16A2186, Ga. App., 4th Div., 2017 Ga. App. LEXIS 29).

Progressive Injury Exclusion Bars Coverage For Water Damage Suits, Judge Says
SAN FRANCISCO - A policy's continuous or progressive injury exclusion bars coverage for two underlying suits filed against an insured because the insured's repair work to address the water intrusion problems was completed more than four years before the inception of the policy, a California federal judge said Jan. 31 (Saarman Construction Ltd. v. Ironshore Specialty Insurance Co., No. 15-3548, N.D. Calif., 2017 U.S. Dist. LEXIS 13633).

Judge Finds Subcontractor Exception Negates 'Your Work' Exclusion In Insurance Policy
ORLANDO, Fla. - On reconsideration, a Florida federal judge ruled Feb. 6 that a commercial general liability insurer had a duty to defend a lawsuit over damage to a condominium complex because the subcontractor exception negates application of the "your work" exclusion (Evanston Insurance Co. v. DiMucci Development Corporation of Ponce Inlet Inc. and Towers Grande Condominium Association, No. 15-486, M.D. Fla., 2017 U.S. Dist. LEXIS 16154).

New York Justice: Insurer's Claims Against Sprinkler Company Must Be Dismissed
ITHACA, N.Y. - A New York justice on Feb. 1 determined that an insurer's claims against a company with which the insured contracted to install a sprinkler system must be dismissed because the applicable contract between the insured and the defendant included a subrogation waiver that bars the insurer from seeking reimbursement from the defendant (Philadelphia Indemnity Insurance Co., as subrogee of Country Club of Ithaca, NY Inc. v. Buffalo Hotel Supply Co. Inc., et al., No. EF2015-0101, N.Y. Sup., Tompkins Co., 2017 N.Y. Misc. LEXIS 346).

Insurer: Claim Barred By Failure To Comply With Warehouse Receipt Provision
CHICAGO - An insurer has asked the Seventh Circuit U.S. Court of Appeals to reject an insured assignee's argument that a lower court erred in finding that the failure to obtain a storage agreement or warehouse receipt bars coverage for the contamination of products stored at the insured's warehouse (PQ Corp. v. Lexington Insurance Co., No. 16-3280, 7th Cir.).

2nd Circuit Says Insured's Notice Of Environmental Claims Was Not Timely
NEW YORK - The Second Circuit U.S. Court of Appeals on Jan. 27 affirmed that two insurers in an environmental contamination coverage dispute did not waive their right to assert a late-notice defense because the insured's notice of the underlying environmental claims was not timely (Travelers Indemnity Co., et al. v. Northrop Grumman Corp., et al., No. 15-3117, 2nd Cir., 2017 U.S. App. LEXIS 1471).

Pennsylvania Federal Judge: Policies Exclude Coverage For Bodily Injury To Employee
PHILADELPHIA - Insurers have no duty to defend or indemnify an insured in an underlying bodily injury suit arising out of exposure to asbestos because the policies at issue clearly exclude coverage for bodily injury to an employee while employed by the insured, a Pennsylvania federal judge said Jan. 26 (National Fire Insurance Company of Hartford, et al. v. Burns & Scalo Roofing Co., No. 15-6028, E.D. Pa.; 2017 U.S. Dist. LEXIS 11061).

Bankruptcy Judge Removes Payment Finding In Summary Judgment Ruling
NEW YORK - A New York federal bankruptcy judge on Jan. 13 agreed with Chapter 11 debtor Rapid-American Corp. that a finding that the debtor has not paid a sufficient amount for asbestos claims to reach the level of excess coverage provided under three insurance policies should not have been part of a prior summary judgment ruling (Rapid-American Corporation, et al. v. Travelers Casualty and Surety Company, et al., No. 15-01095, S.D. N.Y. Bkcy.).

3rd Circuit Accepts Direct Appeal In Row Between Insurers, Asbestos Claimants
PHILADELPHIA - The Third Circuit U.S. Court of Appeals said Jan. 20 that it will hear a direct appeal by 27 asbestos disease sufferers of a bankruptcy court's finding that their personal injury claims against insurers of reorganized Chapter 11 debtor W.R. Grace & Co. are barred (Continental Casualty Company, et al. v. Jeremy B. Carr, et al., No. 17-8002, 3rd Cir.).

Connecticut Federal Magistrate Judge: Review Of Memo Is Needed Before Production
NEW HAVEN, Conn. - A Connecticut federal magistrate judge on Jan. 27 determined that an in camera review of a memo produced by an insurer involved in an asbestos coverage dispute must be conducted to determine if the memo contains any privileged information (ITT Corp. and Goulds Pump Inc. v. Travelers Casualty & Surety Co., No. 12-38, D. Conn.).

Louisiana Federal Judge Denies 2nd Motion To Remand, Says Federal Jurisdiction Exists
NEW ORLEANS - A Louisiana federal judge on Jan. 24 denied a plaintiff's second motion to remand an asbestos coverage dispute to Louisiana state court after reiterating that federal jurisdiction is appropriate because 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.; 2017 U.S. Dist. LEXIS 9526).

Underlying Plaintiffs Permitted To Intervene In Lead Coverage Suit
BALTIMORE - A Maryland federal judge on Jan. 25 allowed underlying plaintiffs asserting claims arising out of lead paint to intervene in an insurer's suit filed against its insureds after determining that permissive intervention is appropriate because there is a question of fact common to the insurer's claim and the intervenors' claim (CX Reinsurance Co. Ltd., et al. v. Homewood Realty Inc., et al., No. 15-3136, D. Md.; 2017 U.S. Dist. LEXIS 10096).

Maryland Federal Judge Finds Issue Of Fact Exists On Additional Living Expenses
BALTIMORE - Because an issue of fact exists regarding whether insureds seeking additional coverage for water and mold damages to their home were fully compensated for additional living expenses, a Maryland federal judge on Jan. 23 denied an insurer's motion for summary judgment as it pertained to the issue of additional living expenses (Richard Kurland, et al. v. ACE American Insurance Co., et al., No. 15-2668, D. Md.; 2017 U.S. Dist. LEXIS 10065).

11th Circuit: 'Damage To Your Work' Exclusion Bars Duty To Defend Insured
ATLANTA - The "damage to your work" exclusion relieves a commercial general liability insurer from any duty to defend an insured in a construction defects lawsuit, the 11th Circuit U.S. Court of Appeals affirmed Jan. 23, because the allegations relate only to the structure of the property itself, which the insurer and insured agreed is excluded (Auto-Owners Insurance Co. v. Elite Homes Inc., No. 16-10996-AA, 11th Cir.; 2017 U.S. App. LEXIS 1132).

Insurer Has Duty To Defend Insureds Against Water Damage Suits
CHICAGO - An insurer has a duty to defend its insureds against two underlying lawsuits seeking damages as a result of water damage stemming from a water leak in the insureds' pool because the underlying suits allege an occurrence, an Illinois federal judge said Jan. 24 (Admiral Indemnity Co., et al. v. 899 Plymouth Court Condominium Association, et al., No. 16-5085, N.D. Ill.; 2017 U.S. Dist. LEXIS 9803).

Faulty Work Claims Do Not Constitute 'Occurrence' Under Insurance Policy, Judge Says
PHILADELPHIA - Faulty workmanship claims do not constitute "accidents" or "occurrences" under a commercial general liability insurance policy, a Pennsylvania federal judge ruled Jan. 23, finding that an insurer has no duty to defend its insured (Quality Stone Veneer Inc. v. Selective Insurance Company of America, No. 15-6509, E.D. Pa.; 2017 U.S. Dist. LEXIS 9393).

California High Court: Statutory Authority Supports Replacement Cost Regulation
SAN FRANCISCO - The Supreme Court of California on Jan. 23 held that statutory authority supports the California Insurance commissioner's 2011 regulation covering replacement cost estimates for homeowners insurance, reversing and remanding an appeals court's judgment that invalidated the regulation (Association of California Insurance Companies et al., v. Dave Jones, as commissioner, etc., No. S226529, Calif. Sup.; 2017 Cal. LEXIS 217).