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Preview: LexisNexis® Mealey's™ Emerging Insurance Disputes Legal News

LexisNexis® Mealey's™ Emerging Insurance Disputes Legal News



Headline Emerging Insurance Disputes Legal News from LexisNexis®



 



Panel Reverses Ruling In Insurer's Favor In Errors, Omissions Liability Dispute
HARTFORD, Conn. - A Connecticut appeals court found that an insurer's duty to defend was not barred by a public entity errors and omission liability insurance policy's contract exclusion because an underlying complaint left open the possibility that a negligent misrepresentation claim against the insured did not arise out of a contract, reversing and remanding a lower court in an opinion to be officially released Dec. 6 (Town of Monroe v. Discover Property and Casualty Insurance Co., No. AC 38332, Conn. App.; 2016 Conn. App. LEXIS 443).



Judge: Excess Insurer Not Liable For Equitable Contribution Of Doctor's Defense Costs
PRESCOTT, Ariz. - An Arizona federal judge on Nov. 22 rejected a professional liability insurer's argument that a captive insurer is a primary insurer and must equitably contribute to the defense and indemnity costs incurred by a physician sued for medical negligence (Admiral Insurance Co. v. Community Insurance Group SPC Limited, No. 14-08152, D. Ariz.; 2016 U.S. Dist. LEXIS 161873).



Alabama High Court: Additional $3M Not Triggered For Wrongful Death, Injury Claims
MONTGOMERY, Ala. - The Alabama Supreme Court on Nov. 18 held that a lower court erred in finding that an insurance policy's products/completed-work-hazard aggregate limit applied to expand an insurer's liability from $4 million to $7 million for underlying wrongful death and personal injury claims against a pharmaceutical company insured, reversing in part (Pharmacists Mutual Insurance Company v. Advanced Specialty Pharmacy LLC, et al., No. 1140046, Ala. Sup.; 2016 Ala. LEXIS 131).



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).



4th Circuit Affirms Ruling In Insurer's Favor In Breach Of Contract Suit
RICHMOND, Va. - The Fourth Circuit U.S. Court of Appeals on Nov. 22 affirmed a lower federal court's ruling in favor of an insurer in a lawyer and his consulting firm's lawsuit alleging breach of contract, unjust enrichment, conversion, unauthorized use of name and trademark and copyright infringement (Devil's Advocate LLC, et al. v. Zurich American Insurance Co., No. 15-1048, 4th Cir.; 2016 U.S. App. LEXIS 20952).



Fitbit Sues Insurer For Bad Faith, Challenges Reliance On 'Prior Offense' Exclusion
SAN FRANCISCO - Fitbit Inc. on Nov. 23 sued its insurer for breach of contract and bad faith in federal court in California, seeking a declaration that the insurer has a duty to defend it against an underlying trademark dispute with a competitor (Fitbit Inc. v. Federal Insurance Co., No. 16-06791, N.D. Calif.).



Panel: Settlement Agreement Made In Bad Faith, Cannot Be Enforced Against Insurer
ATLANTA - The 11th Circuit U.S. Court of Appeals on Nov. 17 held that a lower federal court properly applied the appropriate framework to determine whether an underlying settlement agreement could be enforced against an insurer, further affirming the lower court's finding that bad faith in the negotiation of the settlement agreement rested on substantial evidence (Orline Sidman, et al. v. Travelers Casualty and Surety, No. 15-15197, 11th Cir.; 2016 U.S. App. LEXIS 20580).



Federal Judge: False Claims Suit Arose Out Of Insured's Professional Services
SAN FRANCISCO - A California federal judge on Nov. 15 held that an underlying qui tam action brought against an insured under the False Claims Act arose out of the insured's professional services and, therefore, coverage is barred by the policy's professional services exclusion, dismissing breach of contract and bad faith claims against the insurer (HotChalk Inc. v. Scottsdale Insurance Co., No. 16-3883, N.D. Calif.; 2016 U.S. Dist. LEXIS 163046).



Louisiana Panel Affirms Ruling Granting Exception Of Res Judicata In Bad Faith Suit
NEW ORLEANS - A Louisiana appeals panel on Nov. 16 affirmed a lower court's ruling that granted an exception of res judicata and sustained exceptions of no cause and no right of action in favor of insurance agencies in a claimant's bad faith lawsuit (Munson Fletcher d/b/a Fletcher's Auto Sales and Service v. Southern Insurance Agency, No. 2016-0238, La. App., 4th Cir.; 2016 La. App. LEXIS 2126).



California Panel Affirms Ruling In Favor Of Insurer, Broker In Negligence Suit
SAN FRANCISCO - A California appeals panel on Nov. 14 affirmed a lower court's ruling in favor of a life insurer and an insurance agent in a negligence lawsuit brought by the insured's beneficiaries, finding that the beneficiaries are barred from relying on negligence per se to defeat summary judgment (Pacific Coast Drilling Company, Inc., et al. v. Farmers New World Life Insurance Co., et al., Nos. A140423 and A141464, Calif. App., 1st Dist., Div. 2).



Retailer Says Insurers Had Broad Duty To Defend In Computer Spyware Suits
SAN FRANCISCO - In a Nov. 15 reply brief in the Ninth Circuit U.S. Court of appeals, a rent-to-own (RTO) retailer argues that its insurance providers had a broad duty to defend it in underlying lawsuits over its installation of spyware on customers' computers, contending that a trial court erred in construing a recording and distribution policy exclusion in favor of the insurers and against coverage (American Economy Insurance Co., et al. v. Aspen Way Enterprises Inc., et al., No. 16-35059, 9th Cir.).



Architect Asks Panel To Find Proof Of Claim In Bankruptcy Is A Final Judgment
NEW ORLEANS - An architect has asked the Fifth Circuit U.S. Court of Appeals to reverse a ruling in favor of a home builder's insurer in a breach of contract dispute arising from an underlying $63,471,000 copyright infringement dispute, arguing that an unobjected-to proof of claim in a bankruptcy case should be allowed and should become a final judgment when the bankruptcy case is closed (Kipp Flores Architects, LLC v. Mid-Continent Casualty Co., No. 16-20255, 5th Cir.).



Panel Affirms $29,799,781 Judgment Against Insurer In Malpractice Coverage Dispute
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Nov. 14 rejected a professional liability insurer's argument that its policy's prior-knowledge exclusion bars coverage for an underlying malpractice claim against its law firm insured, affirming a $29,799,781.79 judgment against the insurer (OneBeacon Insurance Co. v. T. Wade Welch & Associates, et al., No. 15-20402, 5th Cir.; 2016 U.S. App. LEXIS 20440).



Judge Rules On Motions To Bar Competing Expert Witnesses In Bad Faith Dispute
CHICAGO - An Illinois federal judge on Nov. 2 granted in part dueling motions to bar expert witnesses in a breach of contract and bad faith coverage dispute arising from a $14 million consent judgment entered against an insured (Ray A. Fox, by and through his guardian, Rose Fox v. Admiral Insurance Co., No. 12-8740, N.D. Ill., Eastern Div.; 2016 U.S. Dist. LEXIS 151738).



Federal Judge: Insurer Has To Cover Losses Arising From $492,350 Embezzlement
NEW BERN, N.C. - A North Carolina federal judge held Nov. 14 that an insurer has a duty to pay its automotive retailer insured for the damages it sustained from the unlawful taking of $492,350.53, granting the insured's motion for summary judgment in a crime coverage declaratory judgment dispute (Colony Tire Corp. v. Federal Insurance Co., No. 15-27, E.D. N.C.; 2016 U.S. Dist. LEXIS 156893).



Panel: No Coverage Owed To Securities Broker Dealer For $2.6M Employee Theft
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Nov. 9 affirmed a lower federal court's finding that there is no coverage under a financial institution bond or an errors and omissions insurance policy for claims arising from the alleged $2.6 million theft committed by an insured's employee (Hantz Financial Services Inc., et al v. American Int'l Specialty, et al., No. 15-2237, 6th Cir.).



Washington High Court Answers 3 Certified Questions In Embezzlement Coverage Suit
OLYMPIA, Wash. - The Washington Supreme Court on Nov. 3 responded to three certified questions submitted by a federal district court in an insurer's lawsuit seeking recovery from a bank for losses arising from embezzlement committed by the insured's employee (Travelers Casualty & Surety Co. v. Washington Trust Bank, No. 92483-0, Wash. Sup.).



Judge Refuses To Dismiss Dispute Arising From Alleged Fraud, Embezzlement Scheme
ROCHESTER, N.Y. - Finding that the resolution of fact-intensive questions regarding when an insured discovered a fraud and embezzlement loss and when it should have reported the loss to its insurer is premature at this stage in the litigation, a New York federal judge on Nov. 3 denied the insurer's motion to dismiss a breach of contract lawsuit (Acquest Holdings Inc. v. Travelers Casualty and Surety Company of America, No. 16-00212, W.D. N.Y.; 2016 U.S. Dist. LEXIS 153367).



Georgia Panel Affirms Reformation Of Policy Due To Parties' Mutual Mistake
ATLANTA - A Georgia appeals panel on Nov. 14 affirmed a trial court's decision to reform a commercial insurance policy to identify the proper insured in a wrongful death coverage dispute because of a mutual mistake made by the applicant and the insurer (Occidental Fire and Casualty of North Carolina v. Goodman, et al., Nos. A16A1372 and A16A1373, Ga. App., 3rd Div.; 2016 Ga. App. LEXIS 639).



Judge Rules In Insured's Favor On 2 Open Issues In Suit Arising From Fraud Scheme
NEW YORK - Ruling on two remaining issues in a dispute over coverage for an insured's multimillion-dollar loss of marine gas oil (MGO), a New York federal judge on Nov. 11 held that the insured is entitled to damages measured by a "re-sale" invoice's value of $17,910,833.28 and to prejudgment interest at the New York statutory rate of 9 percent, starting from March 2, 2014 (AGCS Marine Insurance Co. v. World Fuel Services, Inc., et al., No. 14-5902, S.D. N.Y.; 2016 U.S. Dist. LEXIS 158022).



Federal Judge Finds Parties Properly Aligned, Reinstates Order In Favor Of Insurer
LONDON, Ky. - Following remand from the Sixth Circuit U.S. Court of Appeals to evaluate subject matter jurisdiction, a Kentucky federal judge on Nov. 9 held that parties were properly aligned in a dispute over whether additional coverage is owed to satisfy an underlying $3,736,278 judgment against an insured for breaching its duty to exercise ordinary care to maintain its common areas (Evanston Insurance Co. v. Housing Authority Of Somerset, et al., No. 14-027, E.D. Ky.; 2016 U.S. Dist. LEXIS 155273).



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).



Judge: Insurer Liable For Default Judgment Up To $2M Multiple Claims Policy Limit
CINCINNATI - Ruling on dueling summary judgment motions, an Ohio federal judge on Nov. 9 held that an insurer is not entitled to rescind its professional errors and omissions liability policy and breached its contract as a matter of law by both refusing to defend its insured in an underlying lawsuit and refusing to pay the damages award that was legally obtained against its insured in a default judgment (Maxum Indemnity Co. v. National Condo & Apartment Insurance Group, et al., No. 13-191, S.D. Ohio; 2016 U.S. Dist. LEXIS 155576).



Judge: Insurer Has Duty To Defend Cosby Under Massachusetts, California Law
SPRINGFIELD, Mass. - A Massachusetts federal judge on Nov. 8 found that under either Massachusetts or California law, William H. Cosby Jr.'s homeowners and excess insurer has a duty to defend him against underlying defamation lawsuits arising from sexual assault claims (AIG Property Casualty Co. v. Tamara Green, et al., No. 15-30111, D. Mass.; 2016 U.S. Dist. LEXIS 154881).



Illinois Panel Affirms Ruling In Insurer's Favor In Advertising Injury Dispute
CHICAGO - An Illinois appeals panel on Nov. 8 affirmed a lower court's ruling in favor of an insurer in its declaratory judgment lawsuit disputing coverage for an underlying trademark infringement dispute (Selective Insurance Company Of The Southeast v. Member's Property, Inc., No. 1-14-3436, Ill. App., 1st Dist., 2nd Div.; 2016 Ill. App. Unpub. LEXIS 2366).



Insured: Fact Issue Exists As To Whether Settlement Was Based On Advertising Injury
PORTLAND - A pesticide distributor insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's ruling that general liability insurers have no duty to indemnify it for an underlying settlement arising from a former business partner's lawsuit (Crum & Forster Specialty Insurance Co. v. Willowood USA LLC, et al., Nos. 14-35985 and 16-35222, 9th Cir.).



Majority Reverses Ruling Against Insurer In Dispute Over Professional Services
NEW ORLEANS - A majority of the Fifth Circuit U.S. Court of Appeals on Nov. 2 reversed a lower federal court's finding that an underlying claim against an attorney insured is integral to and cannot be divorced from the legal services he performed for his client, rendering judgment in favor of a professional liability insurer (Thomas R. Edwards v. Continental Casualty Co., No. 15-3082, 5th Cir.; 2016 U.S. App. LEXIS 19753).



Federal Judge Orders Insurer To Show Cause Why Complaint Should Not Be Dismissed
ATLANTA - A Georgia federal judge on Nov. 2 ordered a commercial general liability insurer to show cause why its declaratory judgment lawsuit should not be dismissed for lack of subject matter jurisdiction one day after the insurer disputed coverage for an underlying sexual assault claim (AIX Specialty Insurance Co. v. Hammond Residential Group, Inc., et al., No. 16-04085, N.D. Ga.).



Recently Certified Class Moves For Summary Judgment In Hailstorm Coverage Dispute
KANSAS CITY, Mo. - Plaintiffs on Oct. 31 moved for summary judgment in a class action alleging that their homeowners insurer committed breach of contract when it unlawfully applied a policy's $1,000 deductible to an actual cash value (ACV) payment in a hailstorm coverage dispute (Eric Lafollette v. Liberty Mutual Fire Insurance Co., No. 14-04147, W.D. Mo.).



High Court Hears Arguments Over Sanctions For False Claims Act's Seal Requirement
WASHINGTON, D.C. - The U.S. Supreme Court heard arguments Nov. 1 from an insurer, the relators in a qui tam action against that insurer, and the U.S. government over what the appropriate sanctions should be when relators in a False Claims Act (FCA) suit violate that statute's requirement that the complaint and filings remain sealed (State Farm Fire & Casualty Co. v. United States, ex rel. Cori Rigsby, et al., No. 15-513, U.S. Sup.).



Bank, Receiver Never Acquired Right To Enforce Crime Bond, 10th Circuit Affirms
DENVER - The 10th Circuit U.S. Court of Appeals on Nov. 1 affirmed a lower federal court's finding that because coverage never vested before the Federal Deposit Insurance Corp. took over a bankrupt bank, the bank and, consequently, the FDIC never acquired the right to enforce a financial institution crime bond (Federal Deposit Insurance Corporation v. Kansas Bankers Surety Co., No. 15-1390, 10th Cir.; 2016 U.S. App. LEXIS 19622).



Magistrate: Insurer Has No Duty To Defend, Indemnify Suit Alleging Data Breach
BIRMINGHAM, Ala. - A federal magistrate in Alabama on Oct. 25 found that an insurer has no duty to defend or indemnify against claims that confidential data of credit union customers was compromised after a grocery store insured's computer network was hacked (Camp's Grocery, Inc.v. State Farm Fire & Casualty Co., No. 16-0204, N.D. Ala., Middle Div.; 2016 U.S. Dist. LEXIS 147361).



Judge Finds Deficiencies In Amended Complaint In Coverage Dispute Over Data Breach
FORT MYERS, Fla. - A federal judge in Florida on Oct. 24 dismissed without prejudice a primary and excess insurers' amended complaint seeking a declaration that they have no duty to defend or indemnify their cancer care service provider insured against underlying class action lawsuits stemming from a 2015 data breach, giving the insurers seven days to cure the deficiencies in their petition (The Charter Oak Fire Insurance Co., et al. v. 21st Century Oncology Investments, No. 16-00732, M.D. Fla.).



Panel Reverses No Coverage Ruling In Suit Over Alleged Mortgage Services Scheme
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Oct. 20 found that an underlying lawsuit alleging Lanham Act and unfair competition claims against an insured potentially sought damages that were covered under an insurance policy, reversing a lower court's no coverage ruling (First One Lending Corp., et al. v. The Hartford Casualty Insurance Co., No. 14-56492, 9th Cir.; 2016 U.S. App. LEXIS 18935).



'Unrepaid Loan Carve-Out' Does Not Bar Coverage For FDIC's Suit, 9th Circuit Rules
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Oct. 19 affirmed a federal court's finding that a bank's management liability insurance policy's "unrepaid loan carve-out" does not bar coverage for damages sought by the Federal Deposit Insurance Corp. in an underlying lawsuit alleging tortious conduct by the bank's directors and officers (St. Paul Mercury Insurance Co. v. Federal Deposit Insurance Corporation, No. 14-56830, 9th Cir.; 2016 U.S. App. LEXIS 18811).



Federal Judge Approves $265 Million Settlement For Philadelphia Derailment
PHILADELPHIA - The Pennsylvania federal judge overseeing the Philadelphia Amtrak train derailment multidistrict litigation on Oct. 27 approved a $265 million settlement between Amtrak and those injured and the families of those who died in the May 12, 2015, derailment (In re Amtrak Train Derailment in Philadelphia, PA, on May 12, 2015, No. 2654, E.D. Pa.).



Alleged Property Damage Falls Under Policy Exclusion, 9th Circuit Affirms
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Oct. 20 affirmed a lower federal court's finding that insurers have no duty to defend their insured against an underlying inverse condemnation lawsuit brought by homeowners (City of Fullerton, et al. v. Insurance Company of the State of Pennsylvania, et al., No. 14-56434, 9th Cir.; 2016 U.S. App. LEXIS 18928).



Federal Judge Again Rules In Insurers' Favors In Dispute Over Unsolicited Telefaxes
ST. LOUIS - For the second time in a little over a month, a Missouri federal judge on Oct. 27 found that claims in an underlying class action complaint alleging that an insured violated the Telephone Consumer Protection Act (TCPA) fall under a TCPA policy exclusion (Regent Insurance Co., et al. v. Integrated Pain Management, S.C., et al., No. 14-1759, E.D. Mo., Eastern Div.; 2016 U.S. Dist. LEXIS 148855).



Judge Rules In Insurers' Favor In Coverage Suit Over Alleged Counterfeit Products
LOS ANGELES - A California federal judge on Sept. 29 granted insurers' motion for summary judgment in a dispute over coverage for claims seeking more than $1.5 million for the insured's purported sale of counterfeit products (Infinity Micro Computer, Inc., et al. Continental Casualty Company, et al., No. 15-04777, C.D. Calif.; 2016 U.S. Dist. LEXIS 134957).



Policy's No Action Clause Not Applicable In Bad Faith Suit, Judge Rules
OKLAHOMA CITY - Dismissal of insurance breach of contract and bad faith claims against an insurer is not proper because an insurance policy's no action clause is inapplicable, a federal judge in Oklahoma said Oct. 19 (Wilbanks Securities Inc., et al. v. Scottsdale Insurance Co., et al., No. 16-294, W.D. Okla.; 2016 U.S. Dist. LEXIS 144761).



Federal Judges Dismisses Professional Liability Insurer's Declaratory Judgment Suit
NEWARK, N.J. - A New Jersey federal judge on Oct. 5 dismissed without prejudice a professional liability insurer's declaratory judgment action pursuant to the doctrine of Brillhart abstention (Lexington Insurance Co., Inc. v. Conve AVS Vega Mesa LLC, et al., No. 16-5389, D. N.J.; 2016 U.S. Dist. LEXIS 138483).



Insured Fails To Present Evidence To Support Finding Of Liability, Insurer Argues
FRESNO, Calif. - An insurer on Oct. 26 moved for judgment on partial findings in a coverage dispute over an alleged theft that occurred at an insured business by the business owner's brother (Pacific Marine Center Inc., et al. v. Philadelphia Indemnity Insurance Co., No. 13-00992, E.D. Calif.).