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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®



 



Professional Services Exclusion Bars Coverage For Pipeline Explosion, Panel Says
SAN FRANCISCO - The First District California Court of Appeal on July 11 affirmed a trial court's judgment in favor of an excess insurer after finding that its policy's professional services exclusion bars coverage for underlying claims arising from a deadly pipeline explosion (Energy Insurance Mutual Limited v. Ace American Insurance Co., No. A140656, Calif. App., 1st Dist., Div. 4).



Panel: Professional Services Exclusion Bars Coverage For Suits Over Ponzi Scheme
ATLANTA - The 11th Circuit U.S. Court of Appeals on July 5 affirmed a lower federal court's finding that a professional services exclusion in both primary and excess executive organization liability insurance policies precludes coverage for underlying lawsuits arising from a Ponzi scheme (Herbert Stettin, et al. v. National Union Fire Insurance Company of Pittsburgh, Pa, et al., No. 15-14716., 11th Cir., 2017 U.S. App. LEXIS 11972).



Excess Insurer Entitled To Recover $5M Settlement Payment, 9th Circuit Affirms
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on July 7 affirmed a lower federal court's finding that a software firm insured's former first-layer excess directors and officers liability insurer is entitled to recover the $5 million it paid to settle an underlying securities action plus prejudgment interest from the insured's latter first-layer excess directors and officers liability insurer (Genesis Insurance Co. v. Magma Design Automation Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 15-16999, 9th Cir., 2017 U.S. App. LEXIS 12194).



Panel: Employers Liability Exclusion Is Ambiguous; Insurer Owes Defense, Indemnity
NEW YORK - The Second Circuit U.S. Court of Appeals on July 10 affirmed a lower federal court's conclusion that a commercial general liability insurance policy's "Employers Liability Exclusion" is ambiguous as a matter of law, further finding that the insurer has a duty to both defend and indemnify its insured (Hastings Development LLC v. Evanston Insurance Co., Nos. 15-3816 and 15-4085, 2nd Cir., 2017 U.S. App. LEXIS 12225).



Federal Judge Dismisses Dispute Over FELA Claim After Parties Reach Settlement
EAST ST. LOUIS, Ill. - An Illinois federal judge has dismissed with prejudice a lawsuit arising from a railway company's losses incurred in an underlying lawsuit brought by a former employee under the Federal Employers Liability Act (FELA) after the parties announced that they reached a settlement (BNSF Ry. v. Gilster-Mary Lee Corp., et al., No. 15-250, S.D. Ill.).



Federal Bankruptcy Judge Strikes Foreign Specialty Reinsurer's $15M Bond
NEW YORK - A foreign specialty reinsurer must post a new $15 million bond as part of its attempt to arbitrate a coverage dispute in Bermuda, a New York federal bankruptcy judge ruled July 17, granting a defunct brokerage company's motion to strike the current bond as defective (In re: MF Global Holdings Ltd., et al., MF Global Holdings Ltd. as plan administrator, and MF Global Assigned Assets LLC v. Allied World Assurance Company Ltd., et al., Chapter 11 No. 11-15059, Adv. Proc. No. 16-01251, S.D. N.Y. Bkcy.).



Judge Retains Jurisdiction Over Coverage Suit Arising From Death At Haunted House
TULSA, Okla. - An Oklahoma federal judge on July 13 denied insureds' motion to dismiss a commercial general liability insurer's declaratory judgment lawsuit challenging coverage for an underlying fatal accident that occurred at a haunted house operated by the insureds, finding that it is appropriate to exercise jurisdiction (Mesa Underwriters Specialty Insurance Co. v. Victor R. Marquez, et al., No. 16-213, N.D. Okla., 2017 U.S. Dist. LEXIS 108638).



Court Failed To Properly Apply New Jersey's Omnibus Statute, CGL Insurer Argues
NEW YORK - A commercial general liability insurer has asked the Second Circuit U.S. Court of Appeals to reverse a lower federal court's ruling in favor of two business auto liability insurers in a dispute over coverage for an underlying fatal injury that occurred at a construction site (Employers Insurance Company of Wausau v. Harleysville Preferred Insurance Co., et al., 16-906, 2nd Cir.).



Panel: Alleged Misconduct Was Not Within Scope Of Police Officer's Employment
DETROIT - The Michigan Court of Appeals on July 11 determined that a municipal liability insurer has no duty to defend a police officer against an underlying federal civil rights lawsuit arising from the disappearance and death of the police officer's cousin, reversing a lower court (Timothy Matouk v Michigan Municipal League Liability & Property Pool, No. 332482, Mich. App., 2017 Mich. App. LEXIS 1106).



Judge: Insurer Is Entitled To Rescind Policy In Suit Over Fall From Infinity Pool
MISSOULA, Mont. - A Montana federal judge on July 10 held that an excess insurer has a right to rescind its insurance policy in a coverage dispute over a claim that the insureds' island property was maintained in a dangerous condition that resulted in a catastrophic fall off the edge of an infinity swimming pool (Mount Vernon Fire Insurance Co. v. Jack L. Gabelhausen, Jr., et al., No. 16-91, D. Mont., 2017 U.S. Dist. LEXIS 106125).



Rescission Lawsuit Is Not 'Exceptional' To Justify Abstention, 9th Circuit Rules
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on July 5 found that a lower court's grant of an insured's request for abstention under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1979), was an abuse of its narrow discretion because the insurer's rescission lawsuit is not "exceptional" to warrant disregarding a federal court's obligation to exercise its jurisdiction (Seneca Insurance Co. Inc. v. Strange Land Inc., et al., No. 15-16011, 9th Cir., 2017 U.S. App. LEXIS 11946).



5th Circuit Affirms Judgment In Favor Of Insurer, Government In Hurricane Ike Suit
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on July 5 affirmed a lower federal court's ruling in favor of an insurer and the United States of America in a lawsuit arising from the insurer's cancellation of a federal flood insurance policy following Hurricane Ike (Robert Spong, et al. v. Fidelity National Property and Casualty Insurance Company, et al., No. 16- 41165, 5th Cir., 2017 U.S. App. LEXIS 12008).



Judge: Ambiguity Exists As To 'Premises Leased' In Suit Over Zip-Lining Accident
JEFFERSON CITY, Mo. - A Missouri federal judge on July 5 granted in part and denied in part an insurer's motion for summary judgment in a coverage dispute arising from a zip-lining accident (Great American Alliance Insurance Co. v. Windermere Baptist Conference Center, Inc., et al., No. 16-04046, W.D. Mo., 2017 U.S. Dist. LEXIS 103148).



Exclusion Does Not Bar Coverage Of Personal Injury Suit, New York Panel Affirms
ROCHESTER, N.Y. - A New York appellate panel majority on June 30 affirmed a lower court's denial of an insurer's motion for summary judgment in a coverage dispute arising from an underlying personal injury action (Erie Insurance Exchange v. J.M. Pereira & Sons, Inc., et al., No. 206 CA 16-00324, N.Y. Sup., App. Div., 4th Dept., 2017 N.Y. App. Div. LEXIS 5409).



Judge: Complaint Fails To Allege Trade Dress Infringement Occurred In Advertising
PORTLAND, Ore. - An Oregon federal magistrate judge on June 29 held that a pizza company's underlying complaint against a convenience store operator insured failed to trigger advertising injury coverage, finding that coverage is further barred by two policy exclusions (Hattenhauer Distributing Co. v. Nationwide Agribusiness Insurance Co., No. 16-1703, D. Ore., 2017 U.S. Dist. LEXIS 101107).



Federal Judge Dismisses Suit Seeking Rescission Of Products Liability Insurance
SAN FRANCISCO - A federal judge on June 13 dismissed a rescission lawsuit after the primary products liability insurer and the manufacturer of the da Vinci Surgical System announced that they have reached a settlement (Illinois Union Insurance Co., et al. v. Intuitive Surgical Inc., No. 13-04863, N.D. Calif.).



Parties Ask Federal Court To Dismiss Their Professional Liability Coverage Dispute
TULSA, Okla. - A professional liability insurer and its insured on July 13 filed a stipulation of dismissal of the insured's breach of contract and bad faith lawsuit prompted by an underlying dispute between the insured and a former business partner (Doug Schwegman, d/b/a Schwegman Insurance and Financial Services v. Continental Casualty Co., No. 16-0730, N.D. Okla.).



Insured Asks 9th Circuit To Find Loss Of Boats Was Due To Theft And Not Scheme
SAN FRANCISCO - A boat business insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's finding that an insurer did not breach an all-risk policy in bad faith by denying coverage for its theft claim (Pacific Marine Center, Inc. v. Philadelphia Indemnity Insurance Co., No. 17-15897, 9th Cir.).



Insuring The Sharing Economy and FINTECH: The Exposures And Related Coverage Issues, Where Things Now Stand And Where They May Be Heading
By Todd D. Kremin and Peter J. Biging (Complete version of commentary with images available. Document #13-170721-199X.) Introduction



Panel Affirms Ruling In Dispute Over Directors, Officers Liability Coverage
CHICAGO - An Illinois appeals panel on June 30 affirmed a lower court's ruling in its entirety in a dispute over directors and officers liability coverage for an underlying lawsuit brought against a condominium association and its alleged board members (Astor Plaza Condominium Association, et al., v. Travelers Casualty and Surety Company of America, et al., Nos. 1-15-2546 & 1-16-0110, Ill. App., 1st Dist., 2nd Div., 2017 Ill. App. Unpub. LEXIS 1364).



Panel: Insured Vs. Insured Exclusion Bars Directors, Officers Liability Coverage
TRENTON, N.J. - A New Jersey appeals panel on June 21 affirmed a lower court's finding that an insurance policy's insured vs. insured exclusion bars directors and officers liability coverage for underlying counterclaims involving the insured's officers (Michael Abboud v. National Union Fire Insurance Company of Pittsburgh, Pa., No. A-3434-14T1, N.J. Super., App. Div., 2017 N.J. Super. LEXIS 80).



FDIC, Insolvent Insurer Seek Joint Dismissal Of Negligence Dispute
LOS ANGELES - Following an appeal that saw a reversal of summary judgment on negligence claims, the Federal Deposit Insurance Corp., as receiver for a failed bank, and an insolvent insurer on May 30 submitted to a California federal court a joint stipulation asking for dismissal of a dispute over directors and officers liability coverage (Federal Deposit Insurance Corp., as receiver for Security Pacific Bank v. BancInsure Inc., No. 12-9882, C.D. Calif.).



Malpractice Claim Reported Too Late To Trigger Coverage, 6th Circuit Affirms
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on June 27 affirmed a lower federal court's rulings in favor of an insurer and its administrator in a coverage dispute arising from an underlying $275,825.29 legal malpractice judgment against an attorney insured (David C. McCarty, et al. v. National Union Fire Insurance Company of Pittsburgh, PA, et al., No. 16-3657, 6th Cir.).



Panel Affirms Ruling In Insured's Favor In Dispute Over $2.2M Malpractice Suit
SPRINGFIELD, Ill. - An Illinois appeals panel on June 27 affirmed a lower court's ruling in favor of a law firm insured in a coverage dispute over an underlying $2,159,738.04 legal malpractice action (Illinois State Bar Association Mutual Insurance Co. v. The Rex Carr Law Firm, LLC, et al., Nos. 4-16-0365 and 4-16-0546, Ill. App., 4th Dist., 2017 Ill. App. Unpub. LEXIS 1304).



Majority Finds Excess Professional Insurance Policy Is Ambiguous, Reverses Ruling
CONCORD, N.H. - A majority of the New Hampshire Supreme Court on June 22 reversed and remanded a lower court's ruling in favor of an excess health care professional liability insurer in a coverage dispute arising from a hepatitis C outbreak, finding that the policy's Coverage A is subject to more than one reasonable interpretation and that the ambiguity should be construed in favor of the insured (Exeter Hospital Inc. v. Steadfast Insurance Co., No. 2015-0624, N.H. Sup., 2017 N.H. LEXIS 129).



Magistrate Judge Grants Voluntary Dismissal Of FDIC Suit Against Insolvent Insurer
FRESNO, Calif. - A California federal magistrate judge on June 8 granted the voluntary dismissal of a coverage lawsuit between the Federal Deposit Insurance Corp., as assignee of certain claims by a failed bank, and an insolvent insurer's receiver (Thomas T. Hawker, et al. v. John D. Doak, insurance commissioner as receiver for Red Rock Insurance Co. f/k/a BancInsure Inc., No. 12-1261 E.D. Calif., 2017 U.S. Dist. LEXIS 88319).



Legal Malpractice Plaintiff Says Case Involved More Than 1 Claim Under Policy
PHILADELPHIA - The victorious plaintiff in a legal malpractice case on Feb. 3 asked the Third Circuit U.S. Court of Appeals to rule that his case contains more than one claim in order to avoid the near-depletion of the defendant's malpractice insurance coverage (Westport Insurance Co. v. Anastasios Papadopoulos, No. 16-3705, 3rd Cir.).



Professional Services Exclusion Does Not Apply, Federal Judge Reiterates
CHICAGO - An Illinois federal judge on June 21 denied insurers' motion to reconsider an earlier ruling that a professional services exclusion does not apply to bar coverage for an underlying lawsuit alleging that a consulting company insured conspired with a competitor's former employee to use the competitor's copyrighted material and other confidential information (Caveo, LLC v. Citizens Insurance Company of America, Inc., et al., No. 15-6200, N.D. Ill., 2017 U.S. Dist. LEXIS 95432).



Professional Services Exclusion Does Not Bar Coverage, Insured Tells 9th Circuit
SAN FRANCISCO - An insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's finding that coverage for an underlying qui tam action brought against it under the False Claims Act (FCA) is barred because the claims arose out of its professional services (HotChalk Inc. v. Scottsdale Insurance Co., No. 16-17287, 9th Cir.).



'Insured Vs. Insured' Exclusion Bars Coverage For Trustee's Breach Of Fiduciary Suit
CINCINNATI - A majority of the Sixth Circuit U.S. Court of Appeals on June 20 held that a management liability insurance policy's "insured-versus-insured" exclusion bars coverage for a liquidation trustee's $18.8 million breach of fiduciary lawsuit against officers of the bankrupt holding company (Indian Harbor Insurance Co. v. Clifford Zucker, et al., Nos. 16-1695, 16-1697 and 16-1698, 2017 U.S. App. LEXIS 10821, 6th Cir).



Judge Dismisses Some Third-Party Claims In Suit Over Employment Practices Exclusion
BIRMINGHAM, Ala. - An Alabama federal judge on June 20 granted an insurance broker's motion to dismiss an insured's third-party fraud and suppression claims but refused to dismiss the breach of contract claim against it in a coverage dispute over a fatal explosion at the insured's Owens, Ala., plant (James River Insurance Co. v. Ultratec Special Effects, Inc., et al., No. 16-00949, N.D. Ala., 2017 U.S. Dist. LEXIS 94319).



11th Circuit Vacates Judgment In Insurer's Favor, Remands For Correct Legal Standard
ATLANTA - The 11th Circuit U.S. Court of Appeals on June 21 found that pursuant to Georgia insurance law, the question of whether an event qualifies as an "accident" must be asked from the insured's viewpoint, vacating and remanding a lower federal court's judgment in favor of a homeowners insurer in a coverage dispute over a shooting that occurred on the insured's property (Allstate Property and Casualty Insurance Co. v. Kim Roberts, et al., No. 16-13063, 11th Cir., 2017 U.S. App. LEXIS 10933).



No Coverage For Insured's Deliberate Acts Of Unprotected Sex, 9th Circuit Affirms
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on June 21 affirmed a lower federal court's ruling that a homeowners insurer has no duty to defend its insured against underlying claims of battery, sexual battery, fraud, intentional infliction of emotional distress, negligence and negligent infliction of emotional distress (Travelers Commercial Insurance Co. v. Jennifer A., No. 15-15841, 9th Cir., 2017 U.S. App. LEXIS 10996).



9th Circuit Partly Reverses Ruling In Insurer's Favor In Suit Over Bodily Injuries
SEATTLE - The Ninth Circuit U.S. Court of Appeals on June 15 held that a lower improperly found that a commercial general liability insurance policy excluded coverage for alleged bodily injuries that were unexpected or unintended consequences of intentional acts, reversing in part (Breanne Walden, et al. v. Maryland Casualty Co., No. 15-35870, 9th Cir., 2017 U.S. App. LEXIS 10641).



9th Circuit Affirms Ruling In Insurer's Favor In Coverage Dispute Over Theft
SAN FRANCISCO - Finding that an insured's argument on appeal is waived because it never presented it to the lower court, the Ninth Circuit U.S. Court of Appeals on June 26 affirmed a lower federal court's summary judgment ruling in favor of a business owners insurer (Pacific Enterprises LLC v. AMCO Insurance Co., et al., No. 15-16042, 9th Cir., 2017 U.S. App. LEXIS 11319).



Wine/Liquor Theft Barred By Dishonest Acts Exclusion, Insurer Argues To 2nd Circuit
NEW YORK - An insurer has asked the Second Circuit U.S. Court of Appeals to reverse a lower federal court's finding that a carrier exception to an insurance policy's dishonest acts exclusion applies to allow coverage for an insured's $1,155,480 claim arising from 4,095 cases of allegedly stolen wine and liquor (Warehouse Wines & Spirits v. Travelers Property Casualty Co., 16-2611, 2nd Cir.).



Insurance Agent Failed To Provide Timely Notice Of Claim, Illinois Panel Affirms
CHICAGO - An Illinois appeals panel on June 30 affirmed a lower court's ruling in favor of professional liability insurer in a coverage dispute arising from an underlying claim that an insurance agent was negligent in the placement of insurance coverage (James River Insurance Co. v. Timcal, Inc., et al., No. 1-16-2116, Ill. App., 1st Dist., 2nd Div.; 2017 Ill. App. LEXIS 446).



Georgia Federal Judge Dismisses 2 Claims Against Broker In Food Contamination Suit
ATLANTA - An insured's breach of contract claim against its insurance broker must be dismissed because the insured, seeking coverage for underlying suits arising out of exposure to hepatitis A from food purchased from the insured, failed to show that a valid contract existed between the parties, a Georgia federal judge said June 16 (Sentinel Insurance Co. Ltd. v. Tropical Smoothie Cafe LLC, et al., No. 16-4162, N.D. Ga.).



Illinois Panel Finds Stay Of Coverage Suit Over Defamation Claim Is Appropriate
ELGIN, Ill. - An Illinois appeals panel on June 14 reversed and remanded a lower court's denial of an insured's motion to stay his insurer's declaratory judgment lawsuit challenging coverage for an underlying defamation claim (State Farm Fire & Casualty Company v. David John and Wheaton College, No. 2-17-0193, Ill. App., 2nd Dist., 2017 Ill. App. LEXIS 378).



Federal Judge Refuses To Transfer Coverage Suit Over Intellectual Property Claims
SEATTLE - A Washington federal judge on June 13 denied a general liability insurer's motion to transfer the venue of an insured's lawsuit seeking coverage for underlying claims that it violated Microsoft Inc.'s intellectual property rights and committed wrongful business practices (TekVisions Inc. v. The Hartford Casualty Insurance Co., No. 16-1946, W.D. Wash., 2017 U.S. Dist. LEXIS 91583).



Debit Card Firm To 11th Circuit: Crime Protection Policy Covered Chit Fraud Loss
ATLANTA - Arguing that an $11 million debit card fraud scheme utilized its computer system, a card management firm argues in a June 13 brief to the 11th Circuit U.S. Court of Appeals that a trial court erred in finding that its crime protection insurer was not obligated to provide coverage for the resulting loss under a computer fraud provision (Hi Technology Corp., et al. v. Great American Insurance Co., No. 17-11712, 11th Cir.).



Company: Insurer Owes Coverage For Fraudulent Email That Led To Financial Loss
SAN FRANCISCO - A company that was the victim of fraud by way of email has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower court's decision and find that an insurer must provide coverage under the terms of a policy regarding losses by computer fraud (Aqua Star [USA] Corp. v. Travelers Casualty and Surety Company of America, No. 16-35614, 9th Cir.).



Judge Denies Specialty Reinsurer's Leave To Appeal Preliminary Injunction Order
NEW YORK - A New York federal judge on June 29 denied leave for a foreign specialty reinsurance company to appeal a preliminary injunction order and contempt order issued in a bankruptcy court in a coverage dispute with its insured (MF Global Holdings Ltd., as plan administrator, and MF Global Assigned Assets LLC v. Allied World Assurance Co. Ltd., et al., Nos. 17-742 & 17-953, S.D. N.Y., 2017 U.S. Dist. LEXIS 101293).



Specialty Reinsurance Company Posts $15M Bond In Order To Pursue Arbitration Bid
NEW YORK - A foreign specialty reinsurance company told a New York federal bankruptcy court on June 26 that it posted a $15 million bond, which was required before the court's consideration of a request to arbitrate a coverage dispute against a defunct brokerage company in Bermuda (In re: MF Global Holdings Ltd., et al. MF Global Holdings Ltd. as plan administrator, and MF Global Assigned Assets LLC v. Allied World Assurance Company Ltd., et al., Chapter 11 No. 11-15059, Adv. Proc. No. 16-01251, S.D. N.Y. Bkcy.).



Judge: Foreign Specialty Reinsurance Must Pay $926,000 In Attorney Fees
NEW YORK - A New York federal bankruptcy judge ruled June 22 that a foreign specialty reinsurance company owes a defunct company $926,000 in attorney fees for its failure to get court permission before filing an action to arbitrate a contract dispute in Bermuda (In re: MF Global Holdings Ltd., et al. MF Global Holdings Ltd. as plan administrator, and MF Global Assigned Assets LLC v. Allied World Assurance Company Ltd., et al., Chapter 11 No. 11-15059, Adv. Proc. No. 16-01251, S.D. N.Y. Bkcy., 2017 Bankr. LEXIS 1585).



Insurers Dispute Coverage For Settlement Of Shooting Death In 8th Circuit
ST. LOUIS - An insurer on Feb. 22 argued in a brief to the Eighth Circuit U.S. Court of Appeals that the indemnity provision in a management agreement between an apartment complex owner and its manager does not control insurance priority in a dispute over coverage of a wrongful death settlement (Federal Ins. Co v. Great American Ins. Co., 16-4045, 8th Cir.).



The Opioid Epidemic: As The Pharmaceutical Industry Is Targeted, Will It Be Covered By Insurance?
By R. Patrick Bedell and Kevin Harris I. THE PRESCRIPTION OPIOID LAWSUITS The United States is currently battling the worst drug crisis in its history. Each day, ninety one Americans die from an opioid overdose,1 and overdose is now the leading cause of death in Americans under age fifty.2 In 2016, drug related deaths likely exceeded 59,000, the largest annual jump ever recorded in the United States.3 Reminiscent of the tobacco lawsuits of the 1990s, state and local governments have filed lawsuits against the pharmaceutical industry, seeking to recover the costs they have incurred addressing the opioid epidemic. In 2017 alone, states, cities and counties have filed over twenty lawsuits against manufacturers and distributors of prescription opioids, as well as the pharmacies that fill prescriptions. As pharmaceutical companies begin to seek insurance for these claims, the insurance industry is confronted with exposure to a new mass tort. In this article, we review the origins of the opioid public health crisis, the lawsuits it has engendered, and the questions it poses for the insurance industry.



9th Circuit: Court Properly Dismissed Complaint Without Leave To Amend
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on June 13 affirmed a lower federal court's dismissal of an insured's lawsuit against its partners management liability reimbursement insurer, finding that the lower court did not abuse its discretion in denying the insured leave to amend its complaint (Cove Partners, LLC v. XL Specialty Insurance Company, No. 16-55315, 9th Cir., 2017 U.S. App. LEXIS 10504).



Judge: Lawsuits Arose Out Of 'Single Scheme'; No Professional Liability Coverage Due
DENVER - A Colorado federal judge on June 12 entered a final judgment in favor of a professional liability insurer after finding that it has no duty to defend or indemnify against an underlying lawsuit alleging that its insured entered into a "kickback contract" to steer additional subcontractor work to city-employee-controlled companies (Ciber, Inc. v. Ace American Insurance Co., No. 16-1189, D. Colo., 2017 U.S. Dist. LEXIS 89895).



Professional Liability Insurer Did Not Ratify Policy, 2nd Circuit Affirms
NEW YORK - The Second Circuit U.S. Court of Appeals on June 5 held that intervenors in a professional liability coverage dispute have failed to show that the insurer performed any act that ratified the insurance policy, affirming a lower court's ruling rescinding the policy because the insured made material misrepresentations on the insurance application (Continental Casualty Co. v. Joseph J. Boughton, Jr., et al., No. 16-2384, 2nd Cir., 2017 U.S. App. LEXIS 9860).



Magistrate Judge Grants Voluntary Dismissal Of FDIC Suit Against Insolvent Insurer
FRESNO, Calif. - A California federal magistrate judge on June 8 granted the voluntary dismissal of a coverage lawsuit between the Federal Deposit Insurance Corp., as assignee of certain claims by a failed bank, and an insolvent insurer's receiver (Thomas T. Hawker, et al. v. John D. Doak, insurance commissioner as receiver for Red Rock Insurance Co. f/k/a BancInsure Inc., No. 12-1261 E.D. Calif., 2017 U.S. Dist. LEXIS 88319).



Insurer Seeks Reversal Of Ruling In Professional Liability Coverage Suit
CINCINNATI - A district court abused its discretion by decertifying a defendant class and by dismissing an insurer's suit seeking a declaration that no coverage is owed under professional liability policies issued to a doctor and his company for hundreds of underlying suits filed against the insureds, the insurer argues in a May 16 reply brief filed in the Sixth Circuit U.S. Court of Appeals (The Medical Protective Co. v. Center for Advanced Spine Technologies Inc., et al., No. 16-4341, 6th Cir.).



Investors: District Court's Ruling On Insurance Policy Limit Was In Error
SAN FRANCISCO - A company that contends that a federal judge in Montana wrongly dismissed its case against an insurance company recently filed an appeal brief in the Ninth Circuit U.S. Court of Appeals, arguing that the judge erred in determining that interrelated claims constituted a legal issue rather than a factual one (Sauerbier Ranches Inc., et al. v. Catlin Specialty Insurance Company, No. 16-35280, 9th Cir.).



Insurer Was Not Entitled To Rescind Policy, California Panel Says In Reversal
SAN FRANCISCO - A California appeals panel on June 12 reversed a lower court's finding that an insurer was entitled to rescind an "Owners, Landlords & Tenants Liability Coverage" insurance policy, finding that the insurer failed to satisfy its burden of showing that the insured made material misrepresentations on the insurance application (Victor Duarte v. Pacific Specialty Insurance Co., No. A143828, Calif. App., 1st Dist., Div. 2).



Federal Bankruptcy Judge Orders Specialty Reinsurance Company To Post $15M Bond
NEW YORK - A New York federal bankruptcy judge held June 12 that a foreign specialty reinsurance company must post a bond in the amount of $15 million before a pending motion to compel arbitration of the dispute in Bermuda would be considered (In re: MF Global Holdings Ltd., et al. MF Global Holdings Ltd. as plan administrator, and MF Global Assigned Assets LLC v. Allied World Assurance Company Ltd., et al., Chapter 11 No. 11-15059, Adv. Proc. No. 16-01251, S.D. N.Y. Bkcy., 2017 Bankr. LEXIS 1585).



Judge: Insurer Has No Duty To Defend Insured Against Unpaid Commissions Claims
BIRMINGHAM, Ala. - An Alabama federal judge on June 2 found that an employment practices liability insurer has no duty to defend its insured against a former employee's claims for unpaid commissions, denying the insured's motion for partial summary judgment (American Chemicals & Equipment, Inc. d/b/a American Osment v. Continental Casualty Co., et al., No. 15-00299, N.D. Ala., 2017 U.S. Dist. LEXIS 84769).



California Panel Reverses Ruling In Lawsuit Alleging Clam Under Elder Abuse Act
SAN FRANCISCO - A California appeals panel held June 2 that a first amended complaint sufficiently alleges "deprivation" of "the property of an elder" pursuant to the Elder Abuse and Dependent Adult Civil Protection Act, 42 U.S. Code Section 3058(i), 42 U.S.C. 3058i, reversing and remanding a lower court (Frederick Mahan, et al. v. Charles W. Chan Insurance Agency, Inc., et al., No. A147236. Calif. App., 1st Dist., 2017 Cal. App. LEXIS 507).



Judge: Fact Issues Preclude Summary Judgment In Fax Blast Coverage Dispute
TAMPA, Fla. - A Florida federal judge on June 5 denied a commercial general liability insurer's motion for summary judgment in its declaratory judgment lawsuit disputing coverage for an underlying $2,139,000 judgment against it insured for sending 4,278 unsolicited facsimile transmissions (Zurich American Insurance Co., as successor by merger to Maryland Casualty Co. v. European Tile And Floors, Inc., et al., No. 16-729, M.D. Fla., 2017 U.S. Dist. LEXIS 85380).



Magistrate Dismisses Yahoo's Suit Seeking Coverage For TCPA Class Action Claims
SAN JOSE, Calif. - A California federal magistrate on June 2 granted a commercial general liability insurer's motion to dismiss Yahoo! Inc.'s breach of contract lawsuit seeking coverage for underlying class action allegations that it violated the Telephone Consumer Protection Act (TCPA) by transmitting unsolicited text messages (Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 17-00447, N.D. Calif., 2017 U.S. Dist. LEXIS 85200).



Judge: Shareholders May Be Entitled To Directors, Officers Liability Coverage
CHICAGO - An Illinois federal judge on June 2 granted in part and denied in part a directors and officers liability insurer's motion for judgment on the pleadings in a coverage dispute over underlying racketeering, breach of fiduciary duty and negligence claims brought against the insured's directors (Vita Food Products, Inc. v. Navigators Insurance Co., No. 16-08210, N.D. Ill., 2017 U.S. Dist. LEXIS 85257).



Louisiana Panel Affirms Venue Was Improper For Suit Against Parish Government
GRETNA, La. - A Louisiana appeals panel on May 31 affirmed a lower court's ruling that the venue was improper for plaintiffs' defamation lawsuit against the St. Bernard Parish government, four of its councilmen and its directors and officers liability insurer (Richard Perniciaro, et al. v. Guy McInnis, et al., No. 16-CA-740, La. App., 5th Cir., 2017 La. App. LEXIS 1015).



FDIC, Insolvent Insurer Seek Joint Dismissal Of Negligence Dispute
LOS ANGELES - Following an appeal that saw a reversal of summary judgment on negligence claims, the Federal Deposit Insurance Corp., as receiver for a failed bank, and an insolvent insurer on May 30 submitted to a California federal court a joint stipulation asking for dismissal of a dispute over directors and officers liability coverage (Federal Deposit Insurance Corp., as receiver for Security Pacific Bank v. BancInsure Inc., No. 12-9882, C.D. Calif.).



Insured's Assignees Appeal Ruling In Directors, Officers Liability Dispute
NEW YORK - An insured's assignees have asked the Second Circuit U.S. Court of Appeals to reverse a lower court's ruling in a coverage dispute arising from alleged breaches of contractual obligations under two promissory notes and a consulting agreement by the insured and its directors and officers (Intelligent Digital Systems v. Beazley Insurance Company, Inc., No. 16-3548, 2nd Cir.).



Company Says SEC's Investigation Warrants Coverage Of Legal Costs
DENVER - A plaintiff company has told the 10th Circuit U.S. Court of Appeals that a federal judge in Colorado erred in entering summary judgment in favor of its insurer, contending that an investigation by the U.S. Securities and Exchange Commission is a claim under its directors and officers liability policy that warrants coverage for $3 million in legal fees (MusclePharm Corporation v. Liberty Insurance Underwriters, Inc., No. 16-1462, 10th Cir.).



9th Circuit Majority Vacates Ruling In Suit Seeking Coverage Under Surety Bond
PASADENA, Calif. - A majority of the Ninth Circuit U.S. Court of Appeals on June 2 vacated and remanded a lower federal court's ruling in favor of an insurer in a suit seeking to recover $305,000 under a surety bond (Nacimiento Water Company, Inc. v. International Fidelity Insurance Co., Nos. 15-56323 and No. 16-55311, 9th Cir., 2017 U.S. App. LEXIS 9810).



Ownership Requirement Applies To Employee Dishonesty Provision, 8th Circuit Affirms
ST. LOUIS - The Eighth Circuit U.S. Court of Appeals on May 31 affirmed a lower federal court's finding that insurers have no duty to indemnify their insured for $100 million in losses because, pursuant to a blanket crime insurance policy, the insured did not own any lost earnings stemming from a Ponzi scheme perpetuated by its investment advisers (3M Company, et al. v. National Union Fire Insurance Company of Pittsburgh, Pa, et al., No. 15-3495, 8th Cir., 2017 U.S. App. LEXIS 9599).



Judge: 'Abusive Act' Exclusion Bars Coverage For Claims Against Board Of Education
NEWARK, N.J. - A New Jersey federal judge on June 1 found that a commercial general liability insurer has no duty to defend its board of education insured against underlying claims arising from abusive acts alleged by students against a former teacher (Montville Township Board of Education v. Zurich American Insurance Co., No. 16-4466, D. N.J., 2017 U.S. Dist. LEXIS 83810).



Homeowners Insurer Asks 1st Circuit To Review Ruling In Favor Of Cosby
BOSTON - William H. Cosby Jr.'s homeowners and excess insurer on May 12 filed an appeal in the First Circuit U.S. Court of Appeals challenging a lower federal court's finding that it 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. 17-1505, 1st Cir.).