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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®



 



Judge: Any Evidence Of Insurer's Nonpayment Of Claims Is 'Irrelevant, Prejudicial'
MISSOULA, Mont. - On remand from the Ninth Circuit U.S. Court of Appeals, a Montana federal judge on Dec. 4 granted in part and denied in part a commercial general liability insurer's motions in limine in a coverage dispute over claims that a beauty school insured expelled students after they filed complaints of unprofessional conduct, sexual harassment, occupational health and safety, violations of internal policies and procedures, licensing rules and regulations and curriculum (Breanne Walden, et al. v. Maryland Casualty Co., No. 13-222, D. Mont., 2017 U.S. Dist. LEXIS 198973).



Judge: CGL Insurer Has No Duty To Defend Construction Company Against Counterclaims
ASHLAND, Ky. - A Kentucky federal judge on Nov. 28 held that a commercial general liability insurer has no duty to defend its construction company insured against counterclaims arising from a dispute over the final price of the construction of a home (Owners Insurance Co. v. Frontier Housing, Inc., et al., No. 16-40, E.D. Ky., 2017 U.S. Dist. LEXIS 195011).



Pennsylvania Judge Vacates No Coverage Ruling In Dispute Over Racetrack Death
PHILADELPHIA - A Pennsylvania judge on Nov. 30 found that a lower court erred in finding that a commercial umbrella liability insurer has no duty to indemnify its insured against $2.6 million in punitive damages that it paid to settle an underlying wrongful death and survival action, vacating and remanding for an entry of summary judgment in favor of the insured on the breach of contract claim and for reinstatement and further proceedings on the bad faith claim (Bensalem Racing Association, Inc., et al. v. Ace Property and Casualty Insurance Co., No. 530 EDA 2017, Pa. Super.).



Tennessee Panel Reverses Ruling In Employee Dishonesty Coverage Dispute
NASHVILLE, Tenn. - A Tennessee appeals panel on Nov. 22 held that a lower court erred in finding that a commercial general liability insurance policy's employee dishonesty provision was ambiguous, reversing and remanding to enter a judgment that the policy limits for an underlying employee embezzlement claim is $15,000 and not $30,000 (Tennessee Clutch and Supply, Inc. v. Auto-Owners (Mutual) Insurance Co., No. M2016-02195-COA-R3-CV, Tenn. App., 2017 Tenn. App. LEXIS 761).



Dishonesty Exclusion Bars Coverage, 5th Circuit Affirms
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Nov. 20 affirmed a lower court's ruling that an insurance policy's dishonesty exclusion bars coverage for a restaurant owner insured's loss, rejecting the insured's argument that the exclusion's exception for "acts of destruction" by "employees" applies to establish coverage (Maldonado Investments, L.L.C. v. State Farm Fire & Casualty Co., No. 16-31206, 5th Cir., 2017 U.S. App. LEXIS 23585).



Judge Refuses To Dismiss Coverage Suit Arising From Failed Business Relationship
MOBILE, Ala. - An Alabama federal judge on Nov. 29 held that an underlying claimant's lawsuit seeking to recover a lost investment in its relationship with an insured is sufficient, at the present stage, to plausibly state a claim that the damages fall outside the policy coverage for the "physical injury to tangible property" (Acadia Insurance Co. v. SouthernPointe Group, Inc., et al., No. 17-01368, N.D. Ala., 2017 U.S. Dist. LEXIS 195581).



Insurer Fails To Show Policy Excuses It From Defending Insured, Judge Reiterates
PHILADELPHIA - A Pennsylvania federal judge on Nov. 29 denied a homeowners insurer's motion to reconsider an April 5 ruling that denied its motion for judgment on the pleadings in a coverage dispute arising from underlying assault and battery and negligence claims (Unitrin Direct Insurance Company v. Michael Esposito, No. 16-5239, E.D. Pa., 2017 U.S. Dist. LEXIS 195739).



Insurer Asks 2nd Circuit To Find Wire Transfer Theft Is Not Covered Under Policy
NEW YORK - An insurer asked the Second Circuit U.S. Court of Appeals on Dec. 5 to reverse a lower court's finding that coverage for a firm's multimillion-dollar loss due to a fraudulent wire transfer scheme existed under the computer fraud provision of the company's executive protection insurance policy (Medidata Solutions Inc. v. Federal Insurance Co., No. 17-2492, 2nd Cir.).



Judge Stays Class Action Challenging Insurance Practices After Settlement Announced
JEFFERSON CITY, Mo. - A Missouri federal judge in a Nov. 29 text order granted a joint motion to stay a class action alleging that a 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 after the parties announced that they reached a settlement (Jean Heckmann v. Liberty Mutual Fire Insurance Co., No. 14-04147, W.D. Mo.).



Insured's Suit Against Adjuster In Hurricane Ike Coverage Dispute Is Untimely
GALVESTON, Texas - A Texas federal judge on Dec. 5 found that an insured's breach of contract and negligence lawsuit against an adjuster is time-barred by a two-year statute of limitations, granting the adjuster's motion for summary judgment in Hurricane Ike coverage dispute (Gracie Reese v. Aftermath Public Adjusters, Inc., et al., No. 16-273, S.D. Texas, 2017 U.S. Dist. LEXIS 199527).



Panel: No Indemnity Obligation Owed To Target In Relation To Personal Injury Suit
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Nov. 29 held that an indemnification arrangement involving Target Corp. and hamper suppliers is not an "insured contract" pursuant to an insurance policy issued to one of the suppliers, affirming a lower court's grant of summary judgment in favor of the insurer in a coverage dispute over an alleged eye injury caused by a pop-up laundry hamper that was purchased at Target in 2010 (Northern Insurance Company of New York v. Target Corporation, et al., No. 16-2222, 6th Cir., 2017 U.S. App. LEXIS 24156).



Pennsylvania Court: Complaint Alleges Injuries Caused By Unintentional Conduct
PHILADELPHIA - A Pennsylvania Superior Court on Nov. 22 found an underlying personal injury complaint alleges injuries that were caused by unintentional conduct, reversing and remanding a lower court's ruling in favor of an insurer (Erie Insurance Exchange v. Tracy L. Moore, et al., No. 869 WDA 2016, Pa. Super., 2017 Pa. Super. LEXIS 957).



Judge: No Coverage For Claims Alleging HIV Infection From Adult Film Work
OAKLAND, Calif. - A California federal judge on Nov. 27 found that the State Insurance Compensation Fund has no duty to defend against underlying claims that adult film stars became infected with the human immunodeficiency virus (HIV) while they were performing in films that were being produced by the insured, finding that the non-intentional tort claims are preempted by the exclusive remedy provision of workers' compensation and the intentional tort claims are barred under a policy exclusion (Seneca Insurance Company Inc. v. Cybernet Entertainment LLC, et al., No. 16-06554, N.D. Calif., 2017 U.S. Dist. LEXIS 194441).



5th Circuit Affirms Ruling In Coverage Dispute Arising From Ponzi Scheme
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Nov. 20 rejected an insured's appeal seeking to reverse a lower court's ruling that it did not "own" its lost earnings stemming from a Ponzi scheme within the meaning of a commercial crime insurance policy (Cooper Industries Ltd., et al. v. National Union Fire Insurance Co. of Pittsburgh, Pa., No. 16-20539, 5th Cir., 2017 U.S. App. LEXIS 23349).



Judge: CGL Insurer Has No Duty To Defend Against Class Action Over Data Breach
TAMPA, Fla. - A Florida federal judge on Nov. 17 held that a commercial general liability insurer has no duty to defend against a putative class action alleging that an insured failed to adequately protect the plaintiffs' personal private information (PPI) and timely disclose a data breach to end users (Innovak International Inc. v. The Hanover Insurance Co., No. 16-2453, M.D. Fla., 2017 U.S. Dist. LEXIS 191271).



No Coverage Owed For Underlying Suits Alleging Statutory Violations
CHARLOTTE, N.C. - An insurer has no duty to defend its insured in two underlying class actions alleging violations of the federal Driver's Privacy Protection Act (DPPA) because the business liability policy's statutory violation exclusion clearly bars coverage, a North Carolina federal judge said Nov. 17 in granting the insurer's motion for judgment on the pleadings (Hartford Casualty Insurance Co. v. Ted A. Greve & Associates, P.A., et al., No. 17-183, W.D. N.C., 2017 U.S. Dist. LEXIS 190603).



1st Circuit: Insured Not Entitled To Separate Counsel To Defend Against Suit
BOSTON - The First Circuit U.S. Court of Appeals on Nov. 15 found that the presence of an embezzlement counterclaim in a dispute between an employer insured and its former employee fails to generate a conflict of interest that entitles the insured to separate counsel to defend against an underlying wrongful termination lawsuit at its employment practices liability insurer's expense (Mount Vernon Fire Insurance Co. v. VisionAid Inc., 15-1351, 1st Cir., 2017 U.S. App. LEXIS 22906).



Specific Matter Exclusion Bars Coverage For Alleged Scheme, Federal Judge Rules
LOS ANGELES - A California federal judge on Nov. 16 held that an insurer has no duty to defend or indemnify against underlying lawsuits alleging that an insured's directors and officers participated in a scheme to transfer encumbered properties to their relatives while avoiding banks' interests in the properties (Ocean Towers Housing Corporation v. Evanston Insurance Co., No. 15-6461, C.D. Calif., 2017 U.S. Dist. LEXIS 190738).



North Dakota Supreme Court: Fact Issues Exist As To Whether Exclusions Bar Coverage
BISMARCK, N.D. - The North Dakota Supreme Court on Nov. 16 held that there are material fact issues as to whether a commercial general liability insurance policy's "assault and battery" and "liquor liability" exclusions bar coverage of a negligence claim against an insured bar, reversing a lower court in part (Carol Forsman v. Blues, Brews and Bar-B-Ques, Inc., et al., No. 20170088, N.D. Sup., 2017 N.D. LEXIS 273).



Panel: Assault And Battery Exclusion Bars Coverage For Claims Arising From Shooting
DENVER - The 10th Circuit U.S. Court of Appeals on Nov. 20 affirmed a lower court's finding that an insurance policy's assault and battery exclusion barred coverage for an underlying shooting at a concert by a security officer hired by the insured (Event Security, LLC, et al. v. Essex Insurance Co., No. 17-6073, 10th Cir., 2017 U.S. App. LEXIS 23292).



Court Affirms No Coverage For Student's Sexual Assault Lawsuit Against Teacher
HARRISBURG, Pa. - The Pennsylvania Superior Court on Nov. 14 affirmed a lower court's ruling that an insurer has no duty to defend or indemnify a music teacher against a student's lawsuit alleging sexual assault (Old Republic Insurance Company v. Matthew Stevens, et al., No. 1903 MDA 2016, Pa. Super., 2017 Pa. Super. Unpub. LEXIS 4188).



Insurer's Duty To Defend Church, Elders Is Ongoing, Federal Judge Rules
WICHITA, Kan. - A Kansas federal judge on Nov. 13 held that an insurer has not paid its limit as a result of a judgment or settlement of an underlying litigation arising from sexual abuse claims against the pastor of a church and, therefore, the insurer is still obligated to provide a defense to the church and its elders against two underlying lawsuits (Brotherhood Mutual Insurance Company v. M.M., a minor by and through his natural mother, et al., No. 16-1362, D. Kan., 2017 U.S. Dist. LEXIS 187525).



Insurer, Plastics Company Dispute Scope Of Coverage For Packing Products Case
CHICAGO - A plastics company and insurer recently submitted their arguments to the Seventh Circuit U.S. Court of Appeals, disputing whether a trial court erred when it found that the insurer was not liable to provide coverage in relation to an underlying lawsuit stemming from faulty laminate made by the company (Berry Plastics Corp., n/k/a Berry Global Inc. v. Illinois National Insurance Co., No. 17-1815, 7th Cir.).



Federal Judge: No Employment Practices Coverage Owed For Age Discrimination Claims
DENVER - A Colorado federal judge on Nov. 14 granted an insurer's motion for summary judgment in a coverage dispute over underlying age discrimination and retaliation claims against its insured, finding that the insured failed to give timely notice of the claim (Scottsdale Indemnity Co. v. Convercent Inc., et al., No 17-01236, D. Colo., 2017 U.S. Dist. LEXIS 187939).



Judge Dismisses Breach Of Contract Claim In Coverage Dispute Over Mortgage Fraud
SEATTLE - A Washington federal judge on Nov. 13 dismissed a breach of contract claim brought by the Federal Deposit Insurance Corp. against fourth-level excess insurers in a coverage dispute arising from fraudulent mortgage loans, finding that third-level excess insurance has not been exhausted (Federal Deposit Insurance Corp. v. Arch Insurance Company, et al., No.14-0545, W.D. Wash., 2017 U.S. Dist. LEXIS 187224).



Objections To Insurer's Discovery Requests Overruled In Dispute Over Employee Theft
PHILADELPHIA - A Pennsylvania federal magistrate on Nov. 14 granted an insurer's motion to overrule objections to its request for the production of documents in a coverage dispute arising from the alleged theft of an insured's employee stock ownership plan assets by a former employee (Barbie Spear, in her capacity as trustee of the Alliance Holdings, Inc. Employee Stock Ownership Plan and Alliance Holdings, Inc. Employee Stock Ownership Plan, Plaintiffs v. Westfield Insurance Company, No. 15-00582, E.D. Pa., 2017 U.S. Dist. LEXIS 188193).



S.D. High Court: Professional Services Exclusion Bars Coverage For Surveying Error
PIERRE, S.D. - A designated professional services endorsement excludes all potential insurance coverage for any property damage caused by a land-surveying error, the South Dakota Supreme Court ruled Nov. 8, finding that a trial judge erred in granting summary judgment to a project architect (Western National Mutual Insurance Co. v. TSP Inc., No. 27798, S.D. Sup.).



California Panel: No Coverage Owed For Suits Alleging Liability For Opioid Epidemic
SANTA ANA, Calif. - A California appeals panel on Nov. 6 affirmed a lower court's finding that commercial general liability insurers have no duty to defend pharmaceutical manufacturers and distributors against two underling lawsuits alleging that they engaged in a fraudulent scheme to promote the use of opioids for long-term pain to increase corporate profits, finding that the underlying actions can be read only as being based on the insureds' deliberate and intentional conduct that produced injuries that were neither unexpected nor unforeseen (The Traveler's Property Casualty Company of America, et al. v. Actavis Inc., et al., No. G053749, Calif. App., 4th Dist., Div. 3, 2017 Cal. App. LEXIS 976).



Judge: Sexual Misconduct Suit Against Psychiatrist Potentially Triggers Coverage
CHICAGO - An Illinois federal judge on Nov. 8 found that an underlying lawsuit alleging sexual misconduct against a psychiatrist insured suggests an error in the insured's professional treatment and, therefore, potentially triggers coverage under a professional liability insurance policy (Professional Solution Insurance Co. v. Dale Giolas, M.D, et al., No. 16-9868, N.D. Ill., Eastern Div., 2017 U.S. Dist. LEXIS 184995).



No Professional Liability Coverage Owed For Claims Arising From Foreclosure Suit
GREENBELT, Md. - A Maryland federal judge on Nov. 6 found that a lawyers professional liability insurer has no duty to defend or indemnify its insured against underlying claims arising from the insured's handling of the closing of the short sale of an estate's property (James River Insurance Co. v. Brick House Title, LLC, No. 16-3464, D. Md., 2017 U.S. Dist. LEXIS 183225).



Insurer's Conduct Belies Fact That It Was Prejudiced By Doctor's Lack Of Cooperation
GREENBELT, Md. - A Maryland federal judge held Oct. 16 that a professional liability insurer is liable for the money damages incurred by its insureds in a medical malpractice dispute, rejecting the insurer's argument that a doctor insured's failure to cooperate was a sufficient basis to deny coverage and finding instead that the insurer was prejudiced by its own choice not to defend the malpractice lawsuit from the beginning (Claudia M. Mora, et al. v. Lancet Indemnity Risk Retention Group, Inc., No. 16-960, D. Md., 2017 U.S. Dist. LEXIS 171122).



Parties Submit Arguments To 7th Circuit On Duty To Defend In Class Action
SAN FRANCISCO - An insurer and a real estate broker recently submitted their arguments in the Seventh Circuit U.S. Court of Appeals, disputing whether an exclusion in the policy precludes coverage in relation to an underlying lawsuit in which class members allege that the broker and individual agents received secret profits while acting as their real estate agents (Hanover Insurance Co. v. Paul M. Zagaris Inc. et al., 17-15477, 9th Cir.).



Judge: 3 Policy Exclusions Bar Coverage For Damage Caused By Marijuana Operations
DETROIT - Finding that tenants' use of an insured's commercial property units to grow marijuana was illegal or at the very least dishonest, a Michigan federal judge on Nov. 8 held that coverage for the insured's losses arising from this activity is barred by an insurance policy's illegal/dishonest acts provision, as well as two other policy exclusions (K.V.G. Properties Inc. v. Westfield Insurance Co., No. 16-11561, E.D. Mich., 2017 U.S. Dist. LEXIS 185005).



Suit Over Loan Closing Programs Administratively Closed After Settlement Announced
MILWAUKEE - A Wisconsin federal judge on Nov. 1 administratively closed a coverage dispute arising from the insured's mortgage loan closing services after the remaining parties announced that they have reached a settlement (Fiserv Solutions Inc. v. Endurance American Specialty Insurance Co., et al., No. 11-0603, E.D. Wis.).



Court Erred In Applying 2-Year Statute Of Limitations To Claim Against Broker
LAKELAND, Fla. - A Florida appeals panel on Nov. 3 found that a lower court improperly granted summary judgment in favor of an insurance broker on a intentional misrepresentation claim, concluding that the court should have applied a six-year statute of limitations instead of a two-year statute of limitations in determining whether the claim was valid (Haji Tehrani v. 1st Source Insurance Inc., et al., No. 2D16-1020, Fla. App., 2nd Dist., 2017 Fla. App. LEXIS 15883).



Florida Panel Affirms Stay Of Equine Mortality Coverage Suit Pending Arbitration
MIAMI - A Florida appeals panel on Nov. 1 affirmed a lower court's ruling granting an insurer's motion to stay an insured's lawsuit seeking equine mortality coverage for a loss arising from the death of a horse and compelling arbitration (Lucky Star Horses, Inc., et al. v. Diamond State Insurance Co., No. 3D17-725, Fla. App., 3rd Dist., 2017 Fla. App. LEXIS 15718).



Federal Judge: No Evidence Insured's Race Prompted Insurer's Coverage Decisions
LITTLE ROCK, Ark. - An Arkansas federal judge on Oct. 27 dismissed with prejudice an insured's 42 U.S. Code Section 1981 claim against his insurer, finding that there was no evidence that the insured's race prompted the insurer's coverage decisions regarding damage caused by two storms (Kasib Tauheed Bilal v. IDS Property & Casualty Insurance Co., No. 16-675, E.D. Ark., 2017 U.S. Dist. LEXIS 178317).



Wine Collector Asks Panel To Reverse No Coverage Ruling For Alleged $18M Wine Fraud
SANTA ANA, Calif. - A high-end wine collector has asked a California appeals court to reverse a lower court's judgment in favor of an insurer in his lawsuit seeking coverage for an alleged multimillion-dollar loss to his wine collection due to fraud (David Doyle v. Fireman's Fund Insurance Company, No. G054197, Calif. App., 4th Dist., Div. 3).