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Preview: LexisNexis® Mealey's™ California Insurance Legal News

LexisNexis® Mealey's™ California Insurance Legal News



Headline California Insurance Legal News from LexisNexis®



 



9th Circuit Certifies Question Of 'Exceptional Importance' To California Insurers
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Aug. 22 certified a question to the California Supreme Court to determine whether an injured third party's claims against an employer for negligent hiring, retention and supervision of an employee who intentionally injured the third party constitutes an "occurrence" under the employer's commercial general liability insurance policy (Liberty Surplus Insurance Corporation, et al. v. Ledesma and Meyer Construction Co., Inc., et al., No. 14-56120, 9th Cir.; 2016 U.S. App. LEXIS 15352).



Judge: Insurer Has Alleged 2nd Insurer Has Duty To Defend Suit Against Football Team
SAN JOSE, Calif. - A California federal judge on Aug. 29 held that a commercial general liability insurer has alleged that some of the claims in an underlying lawsuit against the San Francisco Forty Niners Football Co. and others are potentially covered by a second insurance policy (First Mercury Insurance Co. v. Great Divide Insurance Co., No. 16-02114, N.D. Calif.; 2016 U.S. Dist. LEXIS 115872).



Brokers Seek To Dismiss Foo Fighters' Breach Of Contract Suit Over Canceled Shows
LOS ANGELES - Insurance brokers on Aug. 8 moved a California federal court to dismiss Foo Fighters LLC's breach of contract lawsuit seeking full policy benefits for 11 shows that were canceled in the wake of the terrorist attacks in Paris and an injury singer and guitarist Dave Grohl suffered during a performance (Foo Fighters LLC v. Certain Underwriters at Lloyd's London, et al., No. 16-cv-04208, C.D. Calif.).



Panel Majority Says District Court Failed To Consider Effect Of Medications
SAN FRANCISCO - A district court erred in entering judgment in favor of a disability plan and a disability insurer because it failed to consider how medications taken by the disability claimant would affect his ability to function in a workplace under the "any occupation" test, the majority of a Ninth Circuit U.S. Court of Appeals panel said Aug. 26 (Daniel G. Demer v. IBM Corporation LTD Plan, et al., No. 13-17196, 9th Cir.; 2016 U.S. App. LEXIS 15788).



Statute Voiding Discretionary Clauses Does Not Apply To Health Plan, Judge Says
SAN FRANCISCO - A California statute voiding discretionary clauses in disability and life insurance policies does not apply to a claim for medical expenses under a health insurance policy because New York law applies to the dispute and because health insurance is not a form of disability insurance, a California federal judge said Aug. 30 (David Bain et al., v. United Healthcare Inc., No. 15-3305, N.D. Calif.; 2016 U.S. Dist. LEXIS 116805).



9th Circuit Says Watercraft Exclusion Bars Coverage For Contaminated Fish
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Sept. 9 affirmed a judgment entered in favor of an insured on a breach of contract claim in a petroleum contamination coverage suit, agreeing with a district court's determination that a watercraft exclusion bars coverage for the insured's fish oil that was contaminated with oil while stored on a ship (Trident Seafoods Corp., v. ACE American Insurance Co., No. 13-36035, 9th Cir.; 2016 U.S. App. LEXIS 16595).



Panel: No Commercial Crime Coverage Because Insured Made Material Misrepresentation
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Sept. 1 affirmed a lower federal court's summary judgment ruling in favor of commercial crime insurers in a Chapter 7 trustee's breach of contract and bad faith lawsuit seeking to recover stolen money (Heide Kurtz, solely in her capacity as Chapter 7th Trustee for the Estate of Namco Financial Exchange Corp. v. Liberty Mutual Insurance Co., et al., No. 14-55931, 9th Cir.; 2016 U.S. App. LEXIS 16217).



Judge OKs $110.8M Distribution Of Insurer In Conservatorship's Settlement Funds
LOS ANGELES - A California judge on July 26 approved the state's insurance commissioner's application for an order allowing him to distribute $110.8 million of a $200 million settlement (Insurance Commissioner of the State of California v. Executive Life Insurance Company, No. BS 006912, Calif. Super., Los Angeles Co.).



Judge Orders Conservatorship Of Insurer In Hazardous Financial Condition
SAN FRANCISCO - A California judge on July 28 ordered an insurer into conservatorship and named the state's insurance commissioner as conservator (Dave Jones, Insurance Commissioner of the State of California v. CastlePoint National Insurance Company, and DOES 1-50, No. CPF-16-515183, Calif. Super., San Francisco).



Magistrate Judge: California Law Allows Insurer To Rescind Policy
FRESNO, Calif. - An insurance company's motion for default judgment in a suit where it seeks to rescind a commercial insurance property policy issued to a man who claims that a warehouse he owned was robbed should be granted, a federal magistrate judge in California recommended Aug. 22, noting that state law requires insureds to provide truthful information on a policy application (United States Specialty Insurance Company v. Hussein Saleh, d/b/a 3 Hermanos Warehouses, No. 16-cv-00632-DAD-MJS, E.D. Calif.; 2016 U.S. Dist. LEXIS 111769).



Judge: Insurer Owes Defense For Covered Water Claims, Noncovered Mold Claims
SAN FRANCISCO - A commercial general liability insurer owed a defense in an underlying action for both covered water damage claims and noncovered mold damage claims, a California federal judge ruled Aug. 19, finding that neither a mold exclusion or a "continuous or progressive injury or damage" exclusion applies to bar coverage (Saarman Construction Ltd. v. Ironshore Specialty Insurance Co., No. 15-03548, N.D. Calif.; 2016 U.S. Dist. LEXIS 110921).



Federal Judge Vacates Hearing On Insurer's Motion To Stay Rescission Dispute
SAN FRANCISCO - A California federal judge on Sept. 8 vacated a Sept. 22 hearing on an insurer's motion to stay and for permission to appeal the issue of whether concealment in an insurance policy rescission lawsuit is measured under California law when the insurance policy is formed or when the policy is delivered to the insured (Illinois Union Insurance Co., et al. v. Intuitive Surgical Inc., No. 13-04863, N.D. Calif.).



Federal Judge Refuses To Allow Insureds To Add Brokers, Claims To Coverage Dispute
SAN DIEGO - A California federal judge on Sept. 1 denied insureds' motion to amend their complaint to add insurance brokers as defendants in a directors and officers liability coverage dispute (Scott G. Kelly, et al. v. Starr Indemnity & Liability Co., No. 15-2900, S.D. Calif.; 2016 U.S. Dist. LEXIS 118415).



California Federal Judge: Insurance Adjuster Must Be Dismissed From Coverage Suit
LOS ANGELES - A California federal judge on Sept. 9 denied a motion to remand and granted an insurance adjuster's motion to dismiss in a water damage coverage suit after determining that the adjuster was fraudulently joined to the suit (Farzin Michael Feizbakhsh, et. al. v. Travelers Commercial Insurance Co., et al., No. 16-02165, C.D. Calif.; 2016 U.S. Dist. LEXIS 123471).



Panel: Excess Insurer Has Alleged Viable Equitable Subrogation, Bad Faith Claims
LOS ANGELES - A California appeals panel on Aug. 5 held that the lack of an excess judgment against Warner Brothers Entertainment Inc. in an underlying employment injury dispute that settled does not preclude the equitable subrogation and breach of the duty of good faith and fair dealing lawsuit that the entertainment company's excess insurer brought against its primary insurer (Ace American Insurance Co. v. Fireman's Fund Insurance Co., No. B264861, Calif. App., 2nd Dist., Div. 4; 2016 Cal. App. LEXIS 647).



Federal Judge Dismisses Directors, Officers Liability Insurance Dispute
LOS ANGELES - A California federal judge on June 24 dismissed with prejudice a nonprofit mutual-benefit corporation insured's breach of contract and bad faith lawsuit against its directors and officers liability insurer the same day the parties filed a joint motion to dismiss (Market Lofts Community Association v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 15-03093, C.D. Calif.).



Faulty Work Exclusion Bars Coverage For Insured's Stone Flooring Error, Panel Finds
LOS ANGELES - Damage to an insured's mixed-use complex caused by subcontractors' faulty stone flooring work is precluded under a defective workmanship exclusion, a California appeals panel held July 28, affirming summary judgment to seven insurers on breach of contract, bad faith and fraud claims (Olympic and Georgia Partners LLC v. Arch Specialty Insurance Co., et al., No. B264647, Calif. App., 2nd Dist., Div. 2; 2016 Cal. App. Unpub. LEXIS 5559).



Judge Finds Requirement Met For Insurance Coverage Dispute Over Defects Suit
LOS ANGELES - Because homeowners seek more than $7.5 million in an underlying construction defects lawsuit, a California federal judge ruled Aug. 1 that the amount-in-controversy requirement has been met for an insurance coverage dispute involving three insurers (Maryland Casualty Co. and Northern Insurance Company of New York v. Ironshore Specialty Insurance Co., No. 16-00186, E.D. Calif.; 2016 U.S. Dist. LEXIS 100462).



Sufficient Evidence Provided At Trial To Support Bad Faith Claim, Panel Rules
LOS ANGLES - A referee did not err in issuing judgment against an insurer in an insurance breach of contract and bad faith lawsuit because sufficient evidence was provided at trial to support the claim, a California appellate panel ruled July 25 in an unpublished opinion (Laura Beth Barickman, et al. v. Mercury Casualty Co., No. B260833, Calif. App., 2nd Dist., Div. 7; 2016 Cal. App. Unpub. LEXIS 5494).



Panel Remands Issue Of Whether Provisions Cover Alleged Unauthorized Transfers
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on July 29 affirmed a lower federal court's finding that there is no coverage owed under an insurance policy's "computer fraud" provision for any transfers to a payroll company that were authorized by the insured, but remanded for the lower court to determine whether the policy's "computer fraud" or "funds transfer fraud" provisions cover the purported unauthorized transfers totaling $11,991.89 in a coverage dispute arising from unpaid federal payroll taxes (Pestmaster Services, Inc. v. Travelers Casualty and Surety Company of America, No. 14-56294, 9th Cir; 2016 U.S. App. LEXIS 13829).



Brokers Seek To Dismiss Foo Fighters' Breach Of Contract Suit Over Canceled Shows
LOS ANGELES - Insurance brokers on Aug. 8 moved a California federal court to dismiss Foo Fighters LLC's breach of contract lawsuit seeking full policy benefits for 11 shows that were canceled in the wake of the terrorist attacks in Paris and an injury singer and guitarist Dave Grohl suffered during a performance (Foo Fighters LLC v. Certain Underwriters at Lloyd's London, et al., No. 16-cv-04208, C.D. Calif.).



Reinsurer Says California Federal Court Does Not Hold Jurisdiction Over It
SAN FRANCISCO - A reinsurer told a federal court in California on July 28 that its reinsured has not shown that the court holds specific jurisdiction over it in an asbestos-related reinsurance payment dispute (The American Insurance Company v. R&Q Reinsurance Company, No. 16-cv-03044, N.D. Calif.).



Judge: Insurer Fails To Show All Claims Barred By Contractual Liability Exclusion
SAN JOSE, Calif. - A California federal judge on July 22 held that an insurer has failed to satisfy its burden of establishing that all claims alleged in underlying class actions are excluded from coverage under a "products/completed operations liability and professional liability" insurance policy's contractual liability exclusion, denying the insurer's motion for summary judgment in a coverage dispute over lawsuits arising from the insured's service of providing consumers with genetic data from saliva testing (Ironshore Specialty Insurance Co. v. 23andMe, Inc., No. 14-03286, N.D. Calif.; 2016 U.S. Dist. LEXIS 96079).



Federal Judge Partly Grants Cosby's Motion To Stay Insurer's Coverage Dispute
LOS ANGELES - A California federal judge on July 18 granted William H. Cosby Jr.'s motion to stay a homeowners and excess insurer's coverage dispute pending resolution of an underlying lawsuit brought by model, actress and TV producer Janice Dickinson but denied the motion to the extent Cosby seeks a stay pending the resolution of a criminal action in Pennsylvania (AIG Property Casualty Co. v. William H. Cosby Jr., et al., No. 15-04842, C.D. Calif.).



Penalty Was Correctly Assessed But Must Be Recalculated, Panel Says
SAN FRANCISCO - A district court did not err in assessing a statutory penalty against a disability plan administrator for failing to provide a requested plan document within 30 days, but the district court must recalculate the penalty to assess the penalty based solely on the failure to timely produce the plan document, the Ninth Circuit U.S. Court of Appeals said July 25 (Curtis F. Lee v. ING Groep, N.V., et al., No. 14-15848, 9th Cir.; 2016 U.S. App. LEXIS 13489).



Panel Affirms Ruling In Equitable Contribution Dispute Over Product Liability Suit
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on Aug. 9 affirmed a lower federal court's ruling that an insurer's equitable contribution claim against a second insurer fails because the insurers did not share the same level of risk (Mitsui Sumitomo Insurance USA, Inc., et al. v. Tokio Marine & Nichido Fire Insurance Company, Ltd., No. 14-56337, 9th Cir.; 2016 U.S. App. LEXIS 14622).



Insurer Has Duty To Defend Employment Practices Dispute, 9th Circuit Says, Reverses
PASADENA, Calif. - In reversing a lower federal court's no coverage ruling, the Ninth Circuit U.S. Court of Appeals found July 27 that a commercial general liability insurer has a duty to defend its insured against an underlying lawsuit because the insured may not have acted with the requisite intent to trigger the policy's "intentional acts" exclusion (Steven J. Berns v. Sentry Select Insurance Co., No. 14-55996, 9th Cir.; 2016 U.S. App. LEXIS 13684).



Pelvic Mesh Maker Orders Liquidation Value Estimate In Bid To Save Settlement
LOS ANGELES - Pelvic mesh maker Caldera Medical Inc. on July 28 told a California federal court judge that it has hired an expert to analyze its potential liquidated value after the court on July 25 disapproved a $20 million class settlement (Federal Insurance Company v. Caldera Medical, Inc., et al., No. 15-393, C.D. Calif.).



No Coverage For Alleged $100,000 Loss Due To Computer Fraud, 9th Circuit Affirms
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on June 28 affirmed that an insurance policy's "authorized representative" exclusion bars coverage for an insured's claim seeking reimbursement of $100,000 in losses arising from computer fraud (Southern California Counseling Center v. Great American Insurance Co., No. 14-56169, 9th Cir.; 2016 U.S. App. LEXIS 11825).



Policies Triggered By Bodily Injuries Caused By Asbestos Exposure, California Panel Says
LOS ANGELES - A trial court did not err in finding that excess policies provide occurrence-based coverage for asbestos-related losses, the Second District California Court of Appeal said June 22 in affirming that the policies were not triggered by the exposure to the asbestos, but the bodily injuries caused by the exposure (Goulds Pumps Inc. v. Travelers Casualty and Surety Co., No. B255439, Calif. App., 2nd Dist., Div. 5).



Insurer Tells 9th Circuit It Did Not Waive Its Right To Rescind Policies
SAN FRANCISCO - An insurer has asked the Ninth Circuit U.S. Court of Appeals to overturn a lower federal court's ruling finding that it committed breach of contract and awarding its recycling company insured $745,540.29, arguing that it did not waive its right to rescind two consecutive insurance policies in a dispute over fire damage to the insured's facility (Star Insurance Co. v. Sunwest Metals Inc., Nos. 15-56562 and 15-56568, 9th Cir.).



Panel: Fact Issues Exist For Breach Of Contract Claim But Not Elder Abuse Claim
LOS ANGELES - A California appeals panel on June 27 found that triable issues of fact require reversal of a lower court's dismissal of a breach of contract claim against an insurer, further holding that the insureds' bad faith and elder abuse claims cannot survive under the genuine dispute doctrine (Clayton D. Paslay, et al. v. State Farm General Insurance Co., No. B265348, Calif. App., 2nd Dist., Div. 4; 2016 Cal. App. LEXIS 511).



Judge: Bad Faith, Breach Of Contract Claims Can't Be Severed Or Bifurcated
LOS ANGELES - A federal judge in California on June 10 denied an insurer's motion to sever or bifurcate claims in an insurance breach of contract and bad faith lawsuit, ruling that an insured purchased four related policies from a "standard package," causing the claims in the action to be "inextricably tied together" (Film Allman LLC v. New York Marine and General Insurance Co. Inc., No. 14-7069, C.D. Calif.; 2016 U.S. Dist. LEXIS 76697).



Stay Would Not Be Fair To Parties In Bad Faith Lawsuit, Judge Rules
FRESNO, Calif. - A federal judge in California on June 14 denied motions to stay and to dismiss filed by insureds in an insurance breach of contract and bad faith lawsuit, ruling that staying the proceedings pending appeal of an underlying lawsuit would not be fair to the parties involved in the instant action (Paul Evert's RV Country Inc., et al. v. Universal Underwriters Insurance Co., No. 15-0124, E.D. Calif.; 2016 U.S. Dist. LEXIS 77360).



Judge: Theft Over Multiple Days Only A Single Occurrence Under Insurance Policy
FRESNO, Calif. - Insureds are not entitled to multiple occurrence coverage under the terms of a business insurance policy because even though their business merchandise was stolen over the course of multiple days, it is still considered to be only one "occurrence," a federal judge in California ruled June 9 (Patrick E. Patterson, et al. v. American Economy Insurance Co., No. 14-1281, E.D. Calif.; 2016 U.S. Dist. LEXIS 75538).



Judge Rejects Claim That Insured Failed To Timely Submit Paperwork To Port Plan
SAN FRANCISCO - Dismissal of a life insurance policy beneficiary's breach of contract and bad faith lawsuit against an insurer is not proper because the beneficiary has shown that his deceased wife timely completed all necessary paperwork and submitted to her employer as administrator of the policy to port her group life insurance policy into an individual policy, a federal judge in California ruled July 20 (Kent Graham v. Standard Insurance Co., No. 16-3407, N.D. Calif.; 2016 U.S. Dist. LEXIS 94871).



Magistrate Judge: Insurer Hasn't Shown That Judicial Estoppel Should Be Invoked
FRESNO, Calif. - Summary judgment is not warranted in an insurance breach of contract and bad faith lawsuit because an insurer has failed to show that the doctrine of judicial estoppel should be invoked and has failed to show that no genuine issue of material fact exists related to claims made by insureds in suing the insurer, a federal magistrate judge in California ruled July 5 (Halonda Naff, et al. v. State Farm General Insurance Co., No. 15-0515, E.D. Calif.; 2016 U.S. Dist. LEXIS 86854).



Federal Magistrate Recommends Default Judgment Be Entered Against Insured
SACRAMENTO, Calif. - A federal magistrate judge in a California on June 16 recommended that a commercial general liability insurer's motion for a default judgment be granted and that a judgment be issued declaring that the insurer has no duty to defend or indemnify its insured against an underlying breach of contract and negligence lawsuit alleging the insured's pilot car services were performed "in an unworkmanlike manner" (Atain Specialty Insurance Co. v. Richard Szetela d/b/a D&D Pilot Car Services, et al., No. 14-2991, E.D. Calif.; 2016 U.S. Dist. LEXIS 78855).



Trade Dress Claim Triggered Insurer's Duty To Defend Garment Merchant, Judge Says
LOS ANGELES - A California federal judge on June 20 held that a commercial general liability insurer has a duty to defend its garment merchant insured against an underlying lawsuit because the insured was potentially liable for alleged damages arising from trade dress infringement in one of its advertisements (Great Lakes Reinsurance UK PLC v. In and Out Fashion Inc., No. 15-05889, C.D. Calif.; 2016 U.S. Dist. LEXIS 80656).



Insurance Guarantor Says It Does Not Owe Medicare $119,122 Reimbursement
LOS ANGELES - A state insurance guaranty association argues in a June 29 motion in federal court in California that the United States has not met its burden in showing that the association owes certain Medicare reimbursements (California Insurance Guarantee Association v. Sylvia Mathews Burwell, et al., No. 15-cv-1113, C.D. Calif.).



Commissioner Wants To Distribute $110M To Insolvent Insurer's Policyholders
LOS ANGELES - California's insurance commissioner asked one of the state's courts on June 29 for approval of a $110 million interim distribution of certain settlement proceeds to an insolvent insurer's policyholders (Insurance Commissioner of the State of California v. Executive Life Insurance Company, No. BS 006912, Calif. Super., Los Angeles Co.).



Termination Of Benefits Was Reasonable, California Federal Judge Determines
FRESNO, Calif. - A California federal judge on July 5 determined that a disability claims administrator did not abuse its discretion in terminating a claimant's benefits because the administrator identified two reasonable jobs within the proper zone that could be performed by the claimant (William Barnett v. Southern California Edison Company Long Term Disability Plan, No. 12-130, E.D. Calif.; 2016 U.S. Dist. LEXIS 86828).



Claimant Treated For Same Condition 3 Months Before Joining Plan, Judge Says
LOS ANGELES - A disability insurer's denial of long-term disability benefits based on a plan's pre-existing conditions provision was reasonable because the evidence shows that the claimant was treated for the same condition in the three months before becoming a participant in the plan, a California federal judge said June 28 (Oluwaremilekun Fagbemi Abubakar v. Aetna Life Insurance Company, et al., No. 15-1517, C.D. Calif.; 2016 U.S. Dist. LEXIS 83982).



Offset Was Not Abuse Of Discretion, California Federal Judge Determines
SAN JOSE, Calif. - A disability plan administrator did not abuse its discretion in offsetting a claimant's long-term disability benefits to account for Social Security disability income (SSDI) benefits that she receives for her dependents, a California federal judge said June 14 in granting the plan's motion for summary judgment (Susan Rene Jones v. Life Insurance Company of North America et al., No. 08-3971, N.D. Calif.; 2016 U.S. Dist. LEXIS 77409).



Plan Administrator Failed To Consider All Evidence, California Federal Judge Says
SAN JOSE, Calif. - A plan administrator abused its discretion by failing to consider a disability claimant's functional capacity evaluation and an award of Social Security disability benefits before terminating the claimant's long-term disability benefits, a California federal judge said June 30 in remanding the benefits claim to the plan administrator (Olga Gorbacheva v. Abbott Laboratories Extended Disability Plan, et al., No. 14-2524, N.D. Calif.; 2016 U.S. Dist. LEXIS 85702).



Insurer Did Not Waive Appraisal Condition, California Panel Affirms
SAN JOSE, Calif. - A California appeals panel on June 27 affirmed that an insurer did not waive an insurance policy's appraisal condition and that the appraisal condition can be applied to preclude underlying claims arising from windstorm damage to a mobile home (Gordon Blackwell v. Foremost Insurance Co., No. H042263, Calif. App., 6th Dist.; 2016 Cal. App. Unpub. LEXIS 4749).



California Federal Judge Partially Grants Insurers' Motion To Reconsider
SAN FRANCISCO - A California federal judge on July 15 partially granted a motion for reconsideration on the issue of whether a deductible applies to defense costs in an environmental contamination dispute and said the insurers are free to file a motion to amend their complaint after the underlying suit is adjudicated to allege a claim pertaining to the care, custody or control exclusion in the business auto policies at issue (American Guarantee and Liability Insurance Co., et al. v. Technichem Inc., et al., No. 15-03611, N.D. Calif.).



Court Misconstrued Phrase 'Financial Advantage,' Insurer Argues To 9th Circuit
SAN FRANCISCO - An insurer argues in a recent brief to the Ninth Circuit U.S. Court of Appeals that an insurance policy exclusion unambiguously precludes coverage for an antitrust claim alleging that the insured's acquisition of a medical group gave it an unlawful advantage in bargaining over health care services prices (Allied World National Assurance, et al v. St. Luke's Health System, LTD, et al., No. 15-35767, 9th Cir.).