November 21, 2019
In Part I of this series, we explored the differences between institutional and non-institutional bad faith. For claims of institutional bad faith, plaintiffs often attempt to demonstrate a pattern and practice by offering evidence of claims of other policyholders. Unlike claims of institutional bad...
November 20, 2019
In Part I of this series, we discussed institutional bad faith and best practices for insurers to minimize the risk of these costly and intrusive lawsuits. In Part II, we will focus on cutting discovery off at the pleadings—by narrowing the plaintiff’s claim, you limit the scope of relevance in...
November 14, 2019
Broadly speaking, there are two types of bad faith claims that may be alleged against an insurance company—traditional or non-institutional bad faith, and institutional bad faith. For the former, a policyholder would seek to hold an insurer liable for its acts or omissions that directly and...
October 29, 2019
A recent decision from one of New York’s trial courts of general jurisdiction could have a chilling effect on written communications between an insurer and its retained counsel during a claim investigation. In Otsuka America, Inc. v. Crum & Forster Specialty Insurance Co., 2019 WL 4131024,...
October 22, 2019
Texas policyholders can no longer cut deals with storm repair contractors to pocket their deductibles for storm repairs. The Texas Legislature has amended the Texas Insurance Code and Texas Business & Commerce Code, targeting construction companies that offer “free roofs” and “waived...
October 14, 2019
Those familiar with first party insurance policies have undoubtedly encountered a recurring issue with the interpretation of appraisal provisions – what does it mean to disagree on the amount of loss? In Valvano Realty Co. v. American Fire and Casualty Co., the United States District Court for the...
August 09, 2019
In late July, the South Carolina Supreme Court handed down a helpful ruling for insurers when it held that, if an insured fails to give notice to his automobile insurer of a pending claim, the insurer may deny coverage above statutory limits upon a showing that it was substantially prejudiced by its...
July 22, 2019
Joe Ziemianski, Irene Yesowitch, and Sam Stalker discuss the Circuit Court's decision in Universal Cable Prods., LLC v. Atlantic Specialty Ins. Co. and what it means for insurers in and out of California.
July 17, 2019
Donnie M. Apodaca, II, Stephen Pate, and Alicia G. Curran discuss two recent the Supreme Court of Texas’s decisions and considerations for insurers before they invoke appraisal and pay the appraisal awards.
July 12, 2019
A bad faith claim against an insurer often focuses as much on the process of a claims investigation as it does on the substance of a claims decision itself. If the coverage decision was wrong (but not unreasonable), and the investigation was thorough, there may be liability for breach of contract,...
July 10, 2019
A property insurer, having paid for covered damage, can recover the loss by seeking reimbursement from its insured where the insured has recovered funds from a responsible third-party, or the insurer may pursue a claim directly against the third-party. If the insurer makes a direct claim against...
July 08, 2019
Christopher S. Clemenson and John Daly discuss the instructions from the Colorado Supreme Court and how it may create a number of new disputes between insurers and their insureds during, and after, the appraisal process.
July 01, 2019
Insurance companies may no longer be allowed to rely on clear policy language that expressly excludes general contractor overhead and profit (“GCOP”) from actual cash value payments. The Pennsylvania Supreme Court recently agreed to hear argument on the issue in Kurach v. Truck Insurance Exchange,...
June 13, 2019
Law enforcement in Miami-Dade County, Florida recently arrested nine individuals described by Florida Chief Financial Officer Jimmy Patronis as the “ringleaders of an elaborate fraud scheme” led by Barbara Maria Diaz de Villegas, owner of the public adjusting company The Rubicon Group. The...
February 12, 2019
Alycen Moss discusses top transportation issues to track and how these issues impact the transportation industry.
February 05, 2019
Kristie M. Abel discusses how Abbey/Land demonstrates that an insurer can successfully contest such a judgment, however, the insurer needs to meet a high burden in order to prevail.
November 09, 2018
Gary Gassman, a member of firm's Global Insurance Department, and Jonathan Walton, an associate in the firm's Global Insurance Department, co-authored. "Policy Limits Demands and Time Limit Demands Duty to Settle."
October 24, 2018
Lisa Stern and Michael Miller discuss the first decision to directly address the question whether an interstate compact that is not congressionally approved may delegate authority to an interstate body to promulgate regulations that trump conflicting law in the compact states.
October 24, 2018
Lisa Stern and Mike Miller discuss a number of attempts to hold casualty carriers and annuity issuers liable for allegedly failing to disclose deductions from the amounts used to purchase structured settlement annuities for plaintiffs’ benefit. Each case has met with varying results but serves as a reminder of the pitfalls and exposure to the insurance industry at the point of settlement.
August 20, 2018
The first step in any coverage analysis is determining which jurisdiction’s laws govern the coverage issues. This can be outcome determinative as demonstrated by the Supreme Court of Delaware’s recent decision in Travelers Indemnity Company v. CNH Industrial America, LLC, Case No. 420, 2017 (Del. Jul. 16, 2018), in which the choice of law analysis made a $13.7 million difference.
August 13, 2018
Century Surety Company insured Pastazios Pizza, Inc. under a commercial general liability policy. Pastazios, along with its owner and manager, Ajredin Deari, was sued by eighteen year old Jane Doe in Texas state court.
June 05, 2018
Teri Mae Rutledge discusses the California Supreme Court's decision in Liberty Surplus Insurance Corp. v. Ledesma & Meyer Construction Co., Inc.
April 20, 2018
Greg Hudson discusses the Texas Supreme Court's decision in Menchaca v. USAA Texas Lloyds Company. The court articulates five rules when extracontractual causes of action are available even when there has been no breach of the insurance policy and clarifies the procedural steps a court should follow in determining which rule applies.
April 10, 2018
Laura B. Dowgin discusses the big win for insurers in the New York Court of Appeals as this decision instructs New York courts to look at the terms of the insurance contract at issue, and where no coverage was given, and no premium received, the risk of liability is placed on the policyholder.
October 26, 2017
Melissa Brill and Laura Dowgin discuss the decision in Air Master & Cooling, Inc. v. Selective Ins. Co. of Am., and its impact on progressive property damage claims in New Jersey.
July 24, 2017
Melissa Brill and Alexander Selarnick discuss the Second Circuit adoption of the New York Court of Appeals’ previous holding that the “all sums” provision in the insuring agreement permits an insured to access the limits of all policies in any triggered year, when the insurance policies contain “prior insurance” or “non-cumulation” clauses.
July 07, 2017
Stephen Pate, of Cozen O'Connor's Global Insurance department, wrote an article titled, "A Perfect Storm: FDR, Pappy O'Daniel, Huey Long's Ghost, and the Failed Fifth Circuit Nomination of James V Allred" for the Journal of the Texas Supreme Court Historical Society.
July 01, 2017
Dina Richman, of Cozen O'Connor's Global Insurance Department, is a contributing author "Her Story: Lessons in Success from Lawyers Who Live It."
July 01, 2017
Dina Richman, of Cozen O'Connor's Global Insurance Department, wrote an article for the DRI titled, "Insuring Fine Art: The Visual Artists Rights Act and Its Implications for Insurance Claims."
May 02, 2017
Michael D. Handler and Thomas M. Jones discuss three recent rulings that are consistent with the trend of courts around the country concluding carbon monoxide is a pollutant under a liability insurance policy.
May 01, 2017
Elan Kandel and Alexander Selarnick, of Cozen O'Connor's Global Insurance department, co-authored an article for Risk Management titled "Insuring Against Social Engineering Attacks."
April 01, 2017
Stephen Pate, of Cozen O'Connor's Global Insurance department, wrote an article titled "When LBJ Got His Way: The Making of a Texas Federal Judge, 1959" for the Journal of the Texas Supreme Court Historical Society.
December 20, 2016
Kenneth Levine, co-chair of the Insurance Corporate & Regulatory Group, discusses the misuse of assignment of benefit provisions in connection with homeowners policies and its potential to create a rise in fraudulent claims and rate increases.
December 01, 2016
Deborah Minkoff and Abby Sher Author chapter 1A: Self-Insured Retentions Versus Large or Matching Deductibles in the 2016 New Appleman on Insurance Law Library Edition.
November 17, 2016
Limitations of Time and Notice Requirements for Commencement of Actions - Jurisdictions Comparative Chart - Limitations of Time and Notice Requirements for Commencement of Actions
September 30, 2016
Richard Mason of the Global Insurance Department authors this Insight Regulatory/Law column on the Restatement of the Law of Liability Insurance.
June 01, 2016
Jonathan Toren co-authored two chapters with Frank Cordell of the 2016-2017 edition, which offers a comprehensive understanding of the key types of cases and considerations inherent in insurance litigation in Washington.
May 09, 2016
Melissa F. Brill and Laura B. Dowgin discuss the May 3, 2016, decision by the New York Court of Appeals that answered two certified questions posed by the Delaware Supreme Court regarding the appropriate allocation method for long-tail claims among successive excess carriers.
April 20, 2016
Jonathan Walton of the Global Insurance Department co-authored this piece in the American Bar Association's Tort Trial & Insurance Practice Law Journal, discussing alternative dispute resolution.
March 01, 2016
Joseph Kelleher co-authored an article in FC&S Legal about the issues at the intersection of insurance law, hydraulic fracturing, and induced seismicity.
July 01, 2015
Joseph Ziemianski, Andrea Cortland, and other industry professionals, co-wrote this article in The Federation of Defense and Corporate Counsel Quarterly which discusses litigation related to concussions in sports.
June 23, 2015
In its discussion, the Washington Supreme Court found that the term collapse, as used in the insurance policy before it, was ambiguous. The court then adopted a definition of collapse, but the use of uncertain terms in its definition may lead to further ambiguity.
June 01, 2015
Alycen Moss and Lynnette Espy-Williams discuss the statutory requirements regarding rescission, the contestable period, rescission methods, waiver considerations, the most common defenses to rescission, and a closing note on a likely claims from the insured – bad faith.
June 01, 2015
Jennifer Kennedy-Coggins and V. Morgan Carroll discuss the Fair and Accurate Credit Transactions Act and will examine the potential coverage available for FACTA violations under Georgia Law.
May 14, 2015
The Georgia Supreme Court unanimously held that when an insured fails to seek its insurer’s consent to settle a claim, the insured cannot pursue litigation against its insurer to recover settlement amounts paid by the insured without its insurer’s consent or for bad faith refusal to settle.
April 30, 2015
Throughout the past decade, the federal False Claims Act has imposed billions of dollars in penalties upon corporations.
April 23, 2015
On April 20, 2015, the Georgia Supreme Court unanimously held that when an insured fails to seek its insurer’s consent to settle a claim, the insured cannot pursue litigation against its insurer to recover settlement amounts paid by the insured without its insurer’s consent or for bad faith refusal to settle.
March 19, 2015
In an article recently published in Claims Magazine titled Thor's Hammer: Hidden hazards in nonmetallic cable installations, Peter Lynch a member in the firm's Subrogation & Recovery group discusses the hidden hazards in nonmetallic cable installations that pose potential fire hazards.
February 27, 2015
In In re Deepwater Horizon, Cause No. 13-0670, Slip Op., Feb. 13, 2015, the Texas Supreme Court held that an allocation of liability found in an “insured contract” would determine the coverage provided to an additional insured in a general liability policy. Specifically, the court held that the additional insured had coverage under the general liability policy of the named insured only to the extent the named insured was required to obtain coverage for the additional insured.
February 19, 2015
In Colorado, under the notice-prejudice rule, an insured who gives late notice of a claim to his or her liability insurer does not lose coverage benefits unless the insurer proves that the late notice prejudiced its interests. Friedland v. Travelers Indem. Co., 105 P.3d 639, 643 (Colo. 2005). On February 17, 2015, in response to certified question of law from the 10th Circuit Court of Appeals, the Colorado Supreme Court held that the notice-prejudice rule does not apply to date-certain notice requirements in claims-made policies. Craft v. Philadelphia Indem. Ins. Co., Case No. 14SA43. Rather, date-certain notice requirements will be enforced as written.
February 15, 2015
Benjamin Branda, an associate in the firm's Global Insurance Practice, authored, "Up in the Airwaves: Technological Determinism, the Public Performance Right, and Aereo’s Uncertain Future" in Wake Forest Journal of Business and Intellectual Property Law.
February 11, 2015
Adam Stein of the Global Insurance Department discusses private equity funds in the article titled Deep Cover in Best's Review. Limited partner investors in private equity funds and other “passive” institutional investors are being sued in growing numbers, a trend that can be expected to continue as courts in many jurisdictions continue to entertain such suits.
February 10, 2015
Social media, whether it be posted comments, photographs, video footage or other media, has clearly emerged over the last few years as a new and sometimes generous source of information to assist with recovery efforts. From insureds to possible targets to third-party witnesses, it is clear people are now more accustomed to posting what occurs in their daily lives to their social media accounts, which also necessarily means there is a good chance loss related information has and will continue to find its way into the world of social media. But often times, What is and what is not discoverable when it comes to “social media”? is a question that gives insurance claims professionals and their subrogation counsel a moment of pause when litigating a subrogation claim and considering whether to explore social media as source of useful information. Three recent cases in Florida, provide further guidance on how far a litigant can go in seeking discovery of social media.
February 02, 2015
On January 9, 2015, the U.S. Court of Appeals for the 8th Circuit handed down Philadelphia Consolidated Holdings Corp. v. LSI-Lowery Systems, Inc., which decided whether a technology company’s claim was covered under its professional liability policy. In LSI-Lowery, the court decided three issues of current importance for “claims made” policies. First, emails showing an expectation the insured would be sued meant that a “claim” had been made even though damages were not expressly demanded. Second, when it was made, the claim involved a “wrongful act,” even though it related to breach of a contract (an excluded circumstance). Third, a regulation mandating a finding of prejudice in order to prevail on “late notice” did not apply because there was no coverage under the policy in the first instance.
February 01, 2015
Richard Mason of the Global Insurance Department discusses the recently enacted laws and how they can lead to fresh claims. Victims of sexual abuse are taking advantage of state reviver statutes to file claims that were previously time-barred, leading to unexpected exposures for religious and educational institutions, among others.
December 23, 2014
On December 15, 2014, the Supreme Court of Pennsylvania held that bad faith claims brought pursuant to 42 Pa. C.S. § 8371 may be assigned by an insured to an injured third party under Pennsylvania law. See Allstate Prop. & Cas. Ins. Co. v. Wolfe, No. 39 MAP 2014 (Pa. Dec. 15, 2014).
December 22, 2014
The Pennsylvania Supreme Court in Pennsylvania Nat’l Mut. Cas. Ins. Co. v. St. John, et al., 2014 WL 7088712 (December 15, 2014), has affirmed that a first manifestation trigger applies to property damage claims under a CGL policy, triggering the single policy in effect when damage first manifests. St. John also confirmed that the multiple or continuous trigger adopted in J.H. France Refractories v. Allstate Ins. Co., 534 Pa. 29 (1993), which triggers all policies on a risk from exposure through manifestation, is unique to claims involving asbestos or other similarly latent diseases.
December 18, 2014
The U.S. Senate wrapped up the 113th Congress and left Washington without holding a vote to renew the Terrorism Risk Insurance Act (TRIA). In the closing weeks of the session, Senator Chuck Schumer (D-N.Y.) had negotiated an agreement with Chairman of the U.S. House of Representatives Committee on Financial Services Jeb Hensarling (R-Texas) that would have reauthorized TRIA for six years and raised the trigger for government reimbursement from $100 million to $200 million and increased companies’ co-payments to 20 percent from 15 percent.
November 18, 2014
In Santacruz v. Allstate Texas Lloyds, Inc., 2014 WL 5870429 (Nov. 13, 2014), the 5th Circuit allowed a policyholder to pursue a claim for common law and statutory bad faith even though the policyholder repaired the alleged damage before the insurer was able to observe that damage.
November 10, 2014
In Shamoun & Norman, LLP v. Ironshore Indemnity, Inc., Cause No. 3:14-1340, In the U.S. District Court, Northern District of Texas, the federal district court construed a professional liability policy issued by Ironshore to require a defense of the law firm policyholder in a fee dispute, despite an absence of allegations that the insured law firm negligently provided any legal service.
November 06, 2014
On October 10, 2014, the 3rd Circuit Court of Appeals decided Camico Mutual Ins. Co. v. Heffler, Radetich & Saitta, LLP, where it enforced a policy clause providing for repayment to the insurer of defense costs, and confirmed that a 2010 Pennsylvania Supreme Court decision had not invalidated such clauses. The court also determined the insured’s employee was performing “professional services” as defined in the policy notwithstanding the employee’s fraudulent conduct.
October 20, 2014
The Washington Supreme Court addressed two issues of first impression regarding legal malpractice claims in Schmidt v. Coogan, No. 88460-9, (October 9, 2014) and held: (1) that “uncollectibility” is an affirmative defense to a claim of legal malpractice, and (2) emotional distress damages are not available in a legal malpractice claim based upon a lawyer’s failure to timely file a lawsuit.
September 30, 2014
In interpreting the scope of the pollution exclusion, one question seems to appear in case after case — what exactly does the pollution exclusion exclude? In State Farm Fire & Casualty Company v. Dantzler, 289 Neb. 1 (2014), the Supreme Court of Nebraska added to the body of law on that question while summarizing the various interpretations from other jurisdictions.
September 15, 2014
Michael D. Handler of the Global Insurance Department in the Seattle office, writes an article for Litigation Management Magazine on rescission of insurance policies. “The path through rescission of an insurance policy is fraught with perils, even for insurers that attempt to proceed in the utmost good faith,” writes Handler.
September 08, 2014
In Greene v. Farmers Insurance Exchange, the Texas Supreme Court clarified the scope and application of § 862.054 of the Texas Insurance Code, the “anti-technicality” statute, holding that the clause would only operate in situations where the policyholder affirmatively violated an obligation created under the policy. The court further held that public policy did not change this result, despite the concurring opinion of two justices that argued that the court’s opinion created confusion as to whether and when public policy would dictate a different result. Specifically, the concurrence argued that the majority opinion failed to distinguish the instant case from prior cases involving a “nonmaterial breach” by a policyholder.
August 18, 2014
On July 31, 2014, the New York Supreme Court, Appellate Division, First Department chipped away at the privilege protections available to insurers. In National Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. TransCanada Energy USA, Inc., 119 A.D.3d 492 (1st Dept. July 31, 2014), the First Department affirmed a 2013 New York County Supreme Court ruling that documents prepared in the ordinary course of an insurer’s investigation as to whether to pay a claim are not privileged — even if these documents are prepared by an attorney.
August 18, 2014
In an opinion filed August 5, 2014, the Florida First District Court of Appeal held that under Florida’s unclaimed property law, life insurance proceeds are not “due and payable,” and the dormancy period does not begin to run, until the life insurance company receives proof of the insured’s death and surrender of the policy. The court further held that life insurance companies do not have an affirmative duty under Florida law to search death records to determine whether an insured has died.
August 07, 2014
In a recent decision in the case of Pyramid Technologies, Inc. v. Hartford Casualty Ins. Co., 752 F.3d 807 (9th Cir., May 19, 2014), the 9th Circuit, relying on California law, upheld a grant of summary judgment dismissing the insured’s business interruption claim as speculative. In addition, by a split decision, it reversed in part and remanded in part the trial court’s exclusion of the testimony from the insured’s expert witnesses under Daubert standards. Finally, and most importantly, the Court of Appeals reversed a grant of summary judgment concerning the insurer’s “genuine dispute” defense, holding that bad faith was an issue for the jury under the facts of the case.
August 05, 2014
A recent 3rd Circuit decision, ArcelorMittal Plate, LLC v. Joulé Technical Services, Inc., 558 Fed.Appx. 205 (3d Cir. 2014) reiterates that under New Jersey law, an insurer does not act in bad faith when denying a claim that is “fairly debatable.” Although the court disagreed with the insurer’s application of the policy’s employer’s liability exclusion to preclude coverage, it also held that there was no basis to impose bad faith liability on the insurer.
August 04, 2014
On July 21, 2014, the Pennsylvania Supreme Court recently held, as a matter of first impression, that the Continuance of Coverage Provision of the Pennsylvania insurance insolvency statute, 40 P.S. § 221.21, precludes coverage for all “risks in effect” under an insurance policy, even when the policy was cancelled prior to liquidation.
July 30, 2014
In an article published in Law360, Angelo Savino and Julie Albright of the Global Insurance Department discuss unfinished business claims. In a departure from Jewel v. Boxer, the decisions in the cases of Thelen LLP and Heller Ehrman LLP reflect a shift in the manner by which courts treat trustees’ claims for post-dissolution fees, say Angelo Savino and Julie Moeller Albright of Cozen O'Connor.
July 17, 2014
The New York Court of Appeals recently confirmed that the heightened timeliness of disclaimer requirement in New York Insurance Law § 3420(d)(2) does not apply to claims arising from property damage, in KeySpan Gas East Corp. v. Munich Reinsurance America, Inc., et al., 2014 N.Y. Slip Op. 4113 (N.Y. June 10, 2014). Unanimously reversing the appellate division, the KeySpan court found that this standard for waiver of coverage defenses extends only when an insured seeks coverage under a New York liability policy for bodily injuries or death sustained in New York. Because this dispute arose from property damage claims, the insurers, which previously reserved their rights, had no duty under the statute to disclaim “as soon as reasonably possible.”
June 17, 2014
Gregory Hudson, of the Global Insurance department writes an article titled" Guilty D&O May Lose Defense Costos, Indemnification Too," in Law360.
In Protection Strategies Inc. v. Starr Indemnity & Liability Co., the U.S. District Court for the Eastern District of Virginia allowed an insurer to recoup over $670,000 in costs paid for its insured first to respond to government subpoenas and then for the insured and its key employees to defend themselves against claims for governmental fraud and conspiracy.
June 16, 2014
Andrew Tobin and Paul Dowsey of the Global Insurance Department, write about effective claims controls in facultative reinsurance in an article titled "Taking Charge" in Best's Review. Facultative business can give rise to conflicts between reinsurers and cedents in the handling of claims, particularly if the cedent is concerned with reputational risk and has no meaningful exposure.
June 12, 2014
On June 2, 2014, the Washington State Court of Appeals issued a published opinion regarding what constitutes a “suit” in the context of environmental liability claims under the Model Toxics Control Act (MTCA). The court held there must be “an explicit or implicit threat” from a government agency of “immediate and severe consequences by reason of the contamination” in order to trigger the duty to defend, and that no such threat was present. Gull Industries, Inc. v. State Farm Fire & Cas. Co., et al., No. 69569-0-I. The opinion is significant in light of existing Washington law that states that an insurer may be required to indemnify an owner or operator of contaminated property even if no agency has taken or overtly threatened formal legal action.
June 02, 2014
Plaintiff John Z. Huang represented Yongping Zhou in a deportation suit. Mid-suit, Zhou terminated the representation and retained another attorney. Throughout the course of the litigation, Zhou hired several more attorneys and ultimately succeeded in vacating his domestic violence conviction after spending two years in an Immigration and Naturalization Service detention center. Zhou then sued Huang for legal malpractice.
June 02, 2014
International Law Digest containing the limitation periods in general, funding actions in Spain, privilege, bringing court proceedings, the role of experts, interim remedies, disclosure and costs.
June 01, 2014
Insurers facing policy limits demands must act cautiously under even the best of circumstances to avoid threats of bad faith. The situation becomes far more complicated when the insurer receives a policy limits demand and it insures multiple insureds and/or additional insureds. Complete chaos can ensue when an insurer has multiple insureds and/or additional insureds, and the claimant’s counsel is only willing to release one insured and/or additional insured for the insurer’s available policy limits.
May 19, 2014
Samantha Evans discusses The Potential Liabilities and Insurance Coverage Implications of Solar Panels in Claims Journal. Samantha writes, “Solar panels are quickly becoming a fixture in our everyday lives. Whether driving down a country road or the busiest highway, you will see solar panels dotting the roofs of commercial buildings and residential homes alike. Comprised of photovoltaic cells, solar panels harness and convert the sun’s energy into usable electricity otherwise generated by the use of oil, coal and “dirtier” fossil fuels. Solar panels offer an attractive, alternative “green” source of energy for eco-conscious individuals and businesses.” To read the whole article, click here.
May 08, 2014
Litigation over challenges to corporate mergers has swelled in recent years, exposing directors, officers and their D&O insurers to large amounts of defense costs and potentially great liability. The Delaware Chancery Court recently issued an opinion analyzing and explaining the various standards by which courts review challenges to director decision-making in the merger context, which provides a thorough summary for all interested parties.
May 06, 2014
Last week, the Washington Court of Appeals held that “in an insurance bad faith case, the amount of a reasonable covenant judgment sets a floor, not a ceiling, on the damages the jury may award.” Miller v. Safeco Ins. Co., No. 68594-5-1. The claim arose out of an automobile accident in 2000, when Patrick Kenny, the at-fault driver, rear-ended a cement truck, severely injuring his three passengers.
May 05, 2014
In Protection Strategies, Inc. v. Starr Indemnity & Liability Co., the U.S. District Court for the Eastern District of Virginia allowed an insurer to recoup more than $670,000 in costs paid for the insured first to respond to government subpoenas and then for the insured and its key employees to defend themselves against claims for governmental fraud and conspiracy.
May 01, 2014
William Knowles and Kathleen Grohman, of the Global Insurance Department in Seattle, co-authored an article on 3D printing in Claims Management Magazine. The article focuses on 3D printing and “why this emerging technology isn’t smelling so sweet to insurers.”
April 29, 2014
In Betzdolt v. Auto Club Group Insurance Company, a Michigan resident was allowed to proceed with a bad faith claim against her insurer in Florida, even though the insurer did not sell policies in Florida, did not deliver policies in Florida, and was not authorized to write insurance policies in Florida. Betzdolt arises in the context of a third-party liability case (car accident) in which the Michigan resident was being defended by the Michigan insurer in Florida.
April 09, 2014
Claims Made and Reported Requirements, Retro Dates, Prior Knowledge and Prior/Pending Exclusions
April 01, 2014
Angelo G. Savino, a shareholder in the Global Insurance Department, authored an article titled Event Horizon featured in the April 2014 issue of [Best’s Review]. In the article Angelo discusses the Haliburton v. Erica P. John Fund Supreme Court case and other factors that could have major impact on the D&O space in 2014.
March 28, 2014
Melissa Brill of the Global Insurance department discusses K2 and the Court of Appeals decision to reject the notion of coverage in this article published by Property Casualty360.
March 13, 2014
On February 21, 2014, a New York state trial court judge ruled that Zurich American Insurance Company has no duty to defend the Sony Corporation in lawsuits relating to a 2011 cyberattack on its PlayStation network. This decision is among the first in the country to address coverage issues for large scale data security breaches. Judge Jeffrey Oing rendered an immediate decision after hearing oral argument, recognizing the issue’s importance and the likelihood of an appeal.
March 12, 2014
Recent criminal trials turned national media events, such as the Trayvon Martin and Casey Anthony trials, have highlighted modern jurors’ expectations for forensic evidence. Commentators have termed jurors’ expectations for forensic evidence the “CSI Effect.”
March 10, 2014
Melissa Brill of the Global Insurance Department discusses TCPAS Class Actions in Law360. "A recent shift in Second Circuit law may lead to a rise in class actions under the Telephone Consumer Protection Act. After a 2012 U.S. Supreme Court case shed light on the proper interpretation of a section of the TCPA, the Second Circuit paved the way for TCPA class actions in New York federal courts."
March 03, 2014
Jonathan Toren of the Global Insurance Department is co-author of Chapter 14, “Deductibles and Self-Insured Retentions,” in The Reference Handbook on the Commercial General Liability Policy, Second Edition. In the commercial insurance industry, the commercial general liability (CGL) policy is the most common form of liability insurance purchased by both public and private sectors throughout the United States and, as a result, is arguably the most litigated insurance product in the marketplace. This book is a survey of the current developments and issues that can arise from a liability policy.
February 28, 2014
The New York Court of Appeals rarely hears reargument of its decisions, let alone reverses itself. On February 18, 2014, the Court of Appeals did just that.
February 27, 2014
In Validus Reinsurance, Ltd. v. United States, No. 13-0109 (ABJ), 2014 WL 462886 (D.D.C. 2014), the U.S. District Court for the District of Columbia found that a foreign reinsurer was not subject to excise tax under Internal Revenue Code Section 4371 when purchasing retrocessional coverage for the assumed reinsurance of U.S. risks. While foreign reinsurance contracts are subject to excise tax, the court held that Section 4371’s plain language did not encompass retrocessional reinsurance transactions.
February 24, 2014
In a cutting-edge decision, the federal 6th Circuit Court of Appeals has ruled that an exclusion barring coverage for an insured’s liability for “disgorgement” of “remuneration” or “advantage” is limited to “acquiring” funds as opposed to “retaining” funds. William Beaumont Hospital v. Federal Ins. Co., No. 13-1468, 2014 WL 185388 (6th Cir. Jan. 16, 2014). The Beaumont decision is the first of its kind and, if followed by other courts, narrowly circumscribes the scope of disgorgement exclusions that are typically included in errors and omissions and directors and officers liability policies.
February 19, 2014
Topics include: Causes of Freeze Losses, Subrogation Considerations on Freeze Losses, Subrogation Claims & Interruption of Gas Service & Impact of Tariffs and Statutes of Repose on Subrogation Claims
February 11, 2014
On January 28, 2014, the Supreme Court of Connecticut, in Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn. 29, addressed three issues that define the extent of coverage available under a medical professional liability policy. The court concluded that each claimant triggered a separate limit; an aggregate limit for professional lines claims applied; and a retention for each medical incident applied.
February 10, 2014
In Schroeder v. Weighall, the Washington Supreme Court invalidated another portion of Washington’s medical malpractice reform legislation. Specifically, the court invalidated RCW 4.16.190(2), which had eliminated the tolling of the statute of limitations for medical malpractice claims brought by those who alleged malpractice in their care as minors. The court held that the statute violated Article I, Section 12 of the Washington State Constitution, and reversed the trial court’s summary judgment order dismissing Jaryd Schroeder’s medical malpractice action.
February 05, 2014
With the arrival of the new year, many are applying the mantra “out with the old, in with the new.” Although this may be motivational for personal resolutions, it does not generally apply in the context of law as last year’s law is often the basis for this year’s lawsuit. The best strategy to prevent bad faith litigation is to be aware of the current trends and decisions (see links). The following bad faith decisions showcase some of the best and the worst holdings for insurers in 2013. We will continue to monitor and report on any major developments in 2014.
January 27, 2014
In Ewing Construction Co. Inc. v. Amerisure Ins. Co., No. 12-0661, 2014 WL 185035 (Tex. Jan. 17, 2014), the Texas Supreme Court held that a general contractor who agrees to perform construction work in a “good and workmanlike manner” does not “assume liability” for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion in a commercial general liability policy. This holding substantially clarifies the Texas Supreme Court’s prior holding in Gilbert Texas Construction LP v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010).
January 23, 2014
A recent shift in 2nd Circuit law may lead to a rise in class action litigation under the Telephone Consumer Protection Act (TCPA). See Bank v. Independence Energy Grp. LLC, 736 F.3d 660 (2d Cir. 2013). After a 2012 Supreme Court case shed light on the proper interpretation of a section of the TCPA, the U.S. Court of Appeals for the 2nd Circuit took up the question on December 3, 2013 and paved the way for TCPA class action suits in New York federal courts.
January 23, 2014
Farmers tend to their crops by considering factors such as temperature, humidity, chemical levels and the impact of rodents and insects, but the methods of monitoring and responding to these core concepts have evolved. Farmers, like the rest of us, want to work efficiently and cost effectively. Thus, they are using agriculture-monitoring devices to handle these tasks and determine when to water, when to cover their crops and when to till their soils.
January 07, 2014
In an article titled “K2: Will NY Court of Appeals Reaffirm Coverage by Estoppel?” Melissa Brill (Global Insurance, New York Downtown) discusses what will happen if the New York Court of Appeals upholds its recent “coverage by estoppel” decision on reargument. The article examines the meaning of the court’s decision, the Jan. 7 reargument, and the positions that the parties, and amici curiae, have taken in their briefing for that reargument. To read the article, click here.
December 19, 2013
On December 3, 2013, the intermediate Pennsylvania Court of Appeals decided Indalex, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, concluded that an “occurrence” under a commercial umbrella liability policy may arise in the context of defectively manufactured components used in a home, which resulted in alleged property damage and bodily injury. This holding is the first appellate level decision in Pennsylvania in recent years to find an insured occurrence in the context of claims by homeowners.
December 16, 2013
As a matter of first impression under Pennsylvania law, the court in Shannon v. New York Central Mutual Insurance Company, No: 13-cv-1432 (M.D. Pa. Nov. 20, 2013) denied a motion to strike an insurer’s defense of “bad faith set-up,” asserted in response to a bad faith claim based on the insurer’s alleged failure to settle a claim.
December 10, 2013
A Legal and Forensic Accounting Case Study of Business Interruption Loss is a webcast presented by Richard Mackowsky, Senior Counsel of Cozen O’Connor’s Global Insurance Department and John Damico, CPA and Partner with Matson, Driscoll & Damico Forensic Accountants on December 10, 2013. The presentation discussed complex and cutting edge business interruption issues generated by catastrophes and the lessons learned including how to handle claims for wide area damage.
November 25, 2013
On November 12, 2013, in Quellos Group LLC v. Federal Insurance Company, the Washington Court of Appeals affirmed summary judgment in favor of two excess professional liability insurers because the excess policies “require[d] exhaustion of the underlying liability limits by actual payment by the insurer before excess coverage is triggered ...” even though the insured “filled the gap” by paying the difference between the value of the settlement with the primary carrier and the primary policy's limits. This holding represents the latest in a growing line of cases finding that an insured cannot settle with an underlying insurer for less than policy limits, absorb the difference between the settlement value and the limits, and then trigger excess coverage.
November 14, 2013
In Stewart Title Guar. Co. v. Sterling Savings Bank, et al., Wash. No. 87087-0 (October 3, 2013), the Washington Supreme Court held that a nonclient insurer may not pursue a malpractice claim against appointed defense counsel for failure to assert defenses favorable to the insurer, unless the insurer could show it was an intended beneficiary of the legal services provided by appointed defense counsel. The court reasoned that neither an alignment of interest between an insurer and policyholder nor appointed counsel’s duty to inform the carrier regarding case activity, equated to a duty of care owed by appointed defense counsel to the appointing insurer. The court declined to reach the parties’ equitable subrogation arguments that formed the basis of the actual legal malpractice claim.
November 12, 2013
Recently, in IBEW Local 90 Pension Fund v. Deutsche Bank AG, No. 11-cv-4209, 2013 U.S. Dist. LEXIS 155136 (S.D.N.Y. Oct. 29, 2013), District Judge Kathleen Forrest declined to certify a class of securities plaintiffs and granted the defendant, Deutsche Bank’s (DB), Daubert motion to exclude all testimony of the plaintiffs’ market efficiency and damages expert. This relatively rare ruling is significant for securities defendants and their D&O insurers. As the court observed, because the vast majority of securities cases settle once a class is certified, class certification has come to mark a “crucial inflection point in securities litigation.” The case highlights a significant hurdle that securities plaintiffs may face at the class certification stage. Moreover, the decision illustrates how foreign issuers in a post-Morrison environment may be further insulated from U.S. liability even as to that portion of their securities traded on a domestic exchange.
October 31, 2013
On October 16, 2013, the U.S. District Court for the District of New Jersey, in Aleynikov v. The Goldman Sachs Group, Inc., found that a former vice president and computer programmer was an “officer” of Goldman Sachs & Co., Inc. (GSCo), and therefore eligible for advancement of legal fees and expenses for his ongoing defense in a New York state criminal case, even though the criminal action concerned the theft of confidential GSCo property. The decision provides an interesting lesson in the differences between indemnification and advancement and who may be considered an officer for purposes of awarding indemnity and advancement.
October 24, 2013
In Brechbill v. State Farm Fire & Cas. Co., No. 1111117, ___ So. 3d ___, 2013 WL 5394444, 2013 Ala. LEXIS 126 (Ala. Sept. 27, 2013), the Alabama Supreme Court held that there is only one, as opposed to two, causes of action for bad faith. More important, the Alabama Supreme Court held that a bad faith claim, no matter how plead, will not survive when an insurer can show a debatable reason for the denial.
October 23, 2013
We have all seen the Herculean deeds of a superhero on television or in the movies. They knock over buildings, use buses as weapons and generally cause super-sized amounts of property damage. Have you ever wondered who pays for the property damages left in the wake of a superhero? With no superhero exclusion, a property policy might just cover these situations. So, if the insurer pays for the damage caused by the actions of a superhero, is there a path for subrogation recovery? Let’s dive into that world, and find out.
October 09, 2013
In Klutschkowski v. Peacehealth, et al., No. 160615518 (Ore., Sept. 26, 2013), the Oregon State Supreme Court unanimously held that an Oregon statute capping non-economic damages at $500,000 was unconstitutional as applied to a case asserting common law claims for injuries sustained by an infant during labor and delivery.
October 08, 2013
The Property Adjuster’s Toolbox is a three-part webinar series presented by members of the firm’s Global Insurance Department. The presentations discuss the nuts and bolts of investigating and adjusting a claim under a first-party property insurance policy.
October 03, 2013
Molly Eckman discusses the Senate Bill 814 which puts into law the creating of sweeping reforms on environmental claims-handling regulations and available remedies for insured facing liability for cleanup of contaminated property in the state of Oregon.
September 12, 2013
In a highly awaited decision, the California Supreme Court in Zhang v. Sup. Ct. of San Bernardino County considered whether insurance practices that violate the California Unfair Insurance Practices Act can give rise to a first-party cause of action under the California Unfair Competition Law.
September 05, 2013
The South Dakota Supreme Court in Bertelsen v. Allstate Insurance Co. (1) held that an insurer cannot avoid bad faith liability by claiming it did not know about controlling claims handling statutes, and (2) reaffirmed that an insurer cannot rely upon claimants to provide a copy of the applicable laws (i.e., a copy of the claims handling statutes), especially in the absence of a request.
September 05, 2013
Due to changes effective January 1, 2013, the Florida Motor Vehicle No-Fault Law now codified the insured’s obligation to submit to an examination under oath. At first it may seem odd that the Florida legislature had to go to such great lengths to incorporate, and explicitly condition, the receipt of no-fault benefits on the insured’s submission to an examination under oath. However, a brief look at the recent trends leading to this change demonstrates why the Florida legislature rewrote insurance contract law in the no-fault context.
August 27, 2013
Proposed changes to the Federal Rules of Civil Procedure may impact the management, scope and sanctions related to e-discovery in federal courts. The changes are aimed at encouraging early and active case management, ensuring e-discovery remains proportional to the action, and advancing cooperation among parties. If approved, these amendments to the civil rules will become effective on December 1, 2015.
August 26, 2013
Melissa Brill of the Global Insurance Department writes this article titled NY Insurers Breaching Duty to Defend May Lose Defenses to Indemnification in Property Casualty360 that focuses on the K2 decision,
August 26, 2013
The U.S. District Court in the Southern District of New York recently granted, in part, a reinsurer’s motion for summary judgment on a late notice defense, but ruled the issue of whether a reinsurer was prejudiced by the cedent’s late notice will have to be determined at trial. In Ins. Co. of the State of Pa. v. Argonaut Ins. Co., the Insurance Company of the State of Pennsylvania, filed suit against its quota-share reinsurer, Argonaut, seeking reimbursement under a facultative reinsurance certificate. ICSOP sought to recover losses paid to its insured for asbestos bodily injury claims pursuant to a reinsured excess umbrella policy.
August 05, 2013
In 2011, the National Fire Protection Association (NFPA) explicitly rejected negative corpus as a reliable methodology in fire investigation. Section 18.6.5 presents a significant obstacle to subrogation actions when a fire’s ignition source cannot be conclusively determined due to the damage caused by the fire, particularly when it is believed that the fire was caused by a discarded cigarette. However, a recent decision in a case being handled by Cozen O’Connor from the U.S. District Court for the Southern District of Ohio may serve as valuable precedent in such circumstances.
July 25, 2013
On July 16, 2013, the Pennsylvania Court of Common Pleas (Philadelphia County) granted summary judgment to ACE American Insurance Company, upholding its denial of an insurance claim arising from False Claims Act litigation against AmerisourceBergen Co. Richard Mason of Cozen O’Connor was lead counsel for ACE American Insurance Company.
July 19, 2013
On July 10, 2013, a majority of a three-judge panel of the Superior Court of Pennsylvania cut a new path for insureds and insurers with respect to defense under reservations of rights. See The Babcock & Wilcox Company, et al. v. American Nuclear Insurers, et al., 2013 PA Super. 174, 2013 PA Super. LEXIS 1630. According to the majority, when an insurer tenders a defense subject to a reservation, an insured may reject the insurer’s defense and bind the insurer to a settlement that the insurer did not consent, so long as the settlement is fair and reasonable.
July 16, 2013
Recently, wildfires have besieged the Western United States again. Severe heat and drought conditions increase not only the potential for fires but the available fuel if a fire ignites. The Tres Lagunas fire burned more than 10,000 acres of land and was started by downed utility lines. Although the Tres Lagunas fire was contained before any property damage occurred, it is interesting to use it as a case study to consider when investigating fires started by utility lines.
July 10, 2013
In Montrose Chemical Corp. v. Admiral Ins. Co., 10 Cal.4th 645, 42 Cal.Rptr.2d 324 (1995), the California Supreme Court held that a “continuous trigger” applies to liability coverage for property damage claims arising out of pollution where the property damage is allegedly continuous or progressive.
July 08, 2013
In the recent decision of Schifino v. Geico General Ins. Co. et al., 2013 WL 2404115 (W.D.Pa. 2013), and for the second time in less than a year, the district court for the Western District of Pennsylvania precluded a plaintiff from offering expert testimony supporting an insurer’s alleged bad faith. The district court reasoned that expert testimony addressing the reasonableness of an insurer’s claims handling in denying a claim was unnecessary as a matter of evidence and interfered with the fact finding role of the jury.
June 28, 2013
Law 360 reports that policyholders have chalked up major wins at the New York Court of Appeals and the Illinois Supreme Court this year, clinching rulings that widen coverage for defense costs, statutory damages and disgorgement losses, while excess insurers are cheering the Second Circuit for shielding their policies from being triggered early.
June 26, 2013
On June 11, 2013, the New York Court of Appeals, in J.P. Morgan Securities, Inc., et al. v. Vigilant Insurance Company, et al., reinstated a declaratory judgment action against D&O Liability insurers, reasoning that an SEC order requiring Bear Stearns & Co., Inc. (Bear Stearns) to pay $160 million in disgorgement did not conclusively establish that the payment was uninsurable.
June 19, 2013
In a recent case before the U.S. District Court for the Central District of Illinois, the court held that jail employees were not entitled to coverage for sexual molestation of an inmate under the law enforcement coverage part of the jail’s liability insurance policy. In so holding, the court declined to apply an expansive interpretation to the policy’s “arising out of” language.
June 17, 2013
On June 10, 2013, the governor of Oregon signed into law Senate Bill 814, creating sweeping reforms on environmental claims-handling regulations and available remedies for insureds facing liability for cleanup of contaminated property located in the state. The legislation is effective immediately.
June 14, 2013
The New York Court of Appeals, New York’s highest state court, recently held – in what appears to be a new position in New York – that an insurer that breached its duty to defend could not later rely on otherwise applicable exclusions to deny coverage for indemnification.
June 14, 2013
The U.S. Court of Appeals for the 2nd Circuit recently eliminated the foundation for policyholders’ arguments in favor of “functional exhaustion.” In Ali v. Federal Insurance Co., No. 11-5000-cv (2d Cir. June 4, 2013), the 2nd Circuit held that functional exhaustion as permitted in the 1928 decision in Zeig v. Massachusetts Bonding & Ins. Co., 23 F.2d 665 (2d Cir. 1928) does not apply to excess liability policies.
June 12, 2013
On certification from the U.S. District Court for the Northern District of Alabama, the Supreme Court of Connecticut recently issued an opinion holding that an insurer’s bad faith conduct in the investigation of a third-party liability insurance claim does not provide a basis for recovery under Connecticut law. Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 2013 Conn. LEXIS 187 (Conn. June 11, 2013).
June 10, 2013
Richard Mason, of the Global Insurance Department, discusses attorney-client privilege in Best's Review.
May 22, 2013
On May 7, 2013, a divided panel of the NY Court of Appeals issued an important opinion, in Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2013 N.Y. Slip. Op. 03264 (May 7, 2013). The court affirmed, by a plurality, the Appellate Division’s ruling that at least one occurrence per year of abuse transpired under the policy wording at issue.
May 15, 2013
The decision, which ordered the defendants to produce documents and the clerk to unseal papers filed in motion practice, represents a new and troubling broadening of the scope of discovery in bad faith cases.
May 07, 2013
The 2nd Circuit's decision affirmed the Southern District of New York’s dismissal of Saint Vincent’s claims and addressed the pleading standards for allegations of breach of fiduciary duty with respect to management of an ERISA plan.
May 06, 2013
On March 13, 2013, the Oregon legislature introduced Senate Bill 814 to create sweeping reforms on environmental claims handling regulations and available remedies for insureds facing liability for cleanup of contaminated property located in the state.
May 01, 2013
In DRI’s For The Defense, Jonathan Toren of the Global Insurance Department is co-author of this article, “Retained Limits, Deductibles, and Self-Insurance. “ The last few years have been challenging for insurers and policyholders alike. As the economy has faltered and competitive pressures have increased, many companies have tried to restructure their insurance programs to reduce premium outlays. Insurers, meantime, have looked for ways to manage their limits more conservatively.
May 01, 2013
Angelo Savino, chair of the professional liability practice in Global Insurance, published an article in Best's Review addressing the issue of claims having decreased but D&O insurers face a potentially volatile underwriting landscape. To read the complete article click here.
April 24, 2013
Earlier this month the 7th Circuit affirmed a district court order that held an insurer properly denied coverage to the insured law firm based on its failure to comply with the reporting requirements under its claims-made professional liability policy.
April 11, 2013
In Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court held that a class-action plaintiff may not avoid the effect of the federal Class Action Fairness Act (CAFA) by “stipulating” he will not seek damages in excess of $5,000,000. CAFA provides that the federal “district courts shall have original jurisdiction” over a civil “class action” if, among other things, the “matter in controversy exceeds the sum or value of $5,000,000.” 28 U.S.C. §§ 1332(d)(2), (5). The statute further states that to “determine whether the matter in controversy exceeds the sum or value of $5,000,000,” the “claims of the individual class members shall be aggregated.” § 1332(d)(6).
April 05, 2013
Policyholders in New York and New Jersey presently have no private right of action against insurance companies for alleged violations of each state’s respective statutory claim handling guidelines – New York’s Unfair Claim Settlement Practices Act, N.Y. Ins. Law § 2601, and New Jersey’s Unfair Claim Settlement Practices Act, N.J. Admin. Code tit. 11, §§ 2-17.6 and 2-17.7. Although the New York and New Jersey statutes each prohibit insurers from engaging in unfair claim settlement practices, neither allows insureds the right to enforce the laws or seek damages for a violation by filing a lawsuit against the insurer. Rather, the Insurance Department for each state are vested with the exclusive power of enforcement, and then only when an insurer engages in a pattern of violations demonstrating that the mishandling of claims is a general business practice. That may soon change, however.
March 20, 2013
In Syracuse University v. National Union Fire Insurance of Pittsburgh, PA, No. 2012EF 63 (Sup. Ct., Onondaga County, January 29, 2013), the New York Supreme Court, County of Onondaga, held that an insured’s costs incurred in responding to subpoenas issued by state and federal agencies, were covered (as defense costs) as “Claims” made under a not-for-profit individual and organization insurance policy issued by National Union. The case arose out of allegations that a Syracuse assistant basketball coach, Bernie Fine, had sexually abused two former participants in Syracuse University’s basketball program over a period of years while serving in his capacity as the University’s assistant basketball coach.1 The court held that issuance of the subpoenas constituted a “Claim” as defined in the policy.
March 20, 2013
In a recent unanimous decision, the U.S. Supreme Court held that the Securities Exchange Commission (SEC) has five years from the date when an alleged fraud begins – not from the date when the SEC uncovers the fraud – to bring an action seeking penalties. It is likely this decision will have a large-scale impact, including an impact on D&O insurers, by spurring the SEC to complete its investigations and bring enforcement actions sooner rather than later.
March 19, 2013
In D.R. Horton, Inc.—Denver v. Mountain States Mutual Casualty Co., No. 12-cv-01080 (February 25, 2013), another U.S. District Court judge for the District of Colorado determined a liability insured seeking defense costs from its insurer may qualify as a “first-party claimant” for purposes of Colorado’s Unfair Claim Settlement Practices Act, potentially entitling the insured to recover unpaid defense costs, attorneys’ fees in prosecuting the recovery action and two times the unpaid defense costs as a penalty.
March 18, 2013
The Washington Supreme Court joined a minority of jurisdictions that hold that insurers may not unilaterally reserve the right to seek reimbursement for defense costs paid in defending non-covered claims through a reservation of rights letter. In National Surety Corp. v. Immunex Corp., the Washington Supreme Court, in a five to four decision, held that insurers defending under a reservation of rights may not seek reimbursement for defense costs from the insured, even if there is a determination that the insured is not entitled to coverage under the policy No. 86535-3 (March 7, 2013). In so holding, the court recognized that, upon a showing of actual and substantial prejudice resulting from an insured’s delayed tender, an insurer could minimize or avoid liability for defense costs.
March 15, 2013
When an insured sues an insurer for bad faith, how much of the claims file maintained by the insurer is discoverable? In a 5-4 decision, the Washington Supreme Court recently weakened insurers’ ability to protect confidential communications with their attorneys in first-party claims where the insured has alleged bad faith. Cedell v. Farmers Insurance Company of Washington, No. 85366-5 (February 22, 2013). The court held that, in the context of a first-party claim for bad faith claim handling and processing, courts must apply a presumption that there is no applicable attorney-client privilege. The court further held that an insurer would be entitled to overcome the presumption by showing that its counsel was providing legal advice as to the insurer’s potential liability and was not acting in the insurer’s “quasi-fiduciary” function. Upon this showing, the insurer is entitled to an in camera review where the trial court will determine if the privilege applies, subject to the insured’s assertions that the privilege does not apply due to an exception, including the civil fraud exception.
March 11, 2013
It may be surprising to learn that currently there is no federal
law requiring the installation of fire sprinklers in residential
structures. Despite most states and municipalities requiring
fire sprinkler systems in commercial structures, few states
or municipalities have tried to implement this requirement in
residential structures. In 2011, U.S. fire departments responded
to 370,000 home structure fires causing $6.9 billion in direct
damage. According to the 2009 American Housing Survey, 4.6
percent of occupied homes (including multi-unit) had sprinklers,
up from 3.9 percent in 2007.
March 08, 2013
In Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (Slip Op. Feb. 27, 2013), the U.S. Supreme Court, in a 6-3 majority opinion (Ginsburg, J.), affirmed the U.S. Court of Appeals for the 9th Circuit’s ruling that a securities class action plaintiff need not prove materiality of alleged misrepresentations or misleading omissions as a prerequisite to class certification under Fed. R. Civ. P. 23. Justices Kennedy, Scalia, and Thomas dissented. Justice Alito concurred with the majority but added a separate and important note (discussed below). The Court’s decision lowers the bar for investors seeking to obtain class certification, which has significant implications for D&O insurers, companies, their Directors and Officers (Ds and Os), and securities fraud plaintiffs alike. The Court’s ruling in Amgen also settles a split among the 2nd, 3rd, 7th, and 9th Circuits. Although the ruling is clearly favorable to securities fraud class action plaintiffs, the four concurring and dissenting justices appear willing to entertain arguments over the continued validity of the fraud-on-the-market presumption, which could drastically alter the landscape for securities class actions.
March 07, 2013
Following considerable public comment, the Texas Supreme Court revised and issued final approval of new rules providing for expedited trials and dismissal of baseless claims. Despite pleas from various factions, however, the new rules maintain their mandatory nature. The revisions do, however, contain material changes to the Alternative Dispute Resolution provision of new Rule 169 of the Texas Rules of Civil Procedure.
March 05, 2013
On February 15, 2013 a Pennsylvania federal district court held that the shipment of defective drywall from China to the United States constituted one “occurrence” for purposes of insurance coverage, and the occurrence took place when the damage caused by the drywall manifested itself in the residences or buildings of the underlying plaintiffs. With this ruling, Pennsylvania joins Virginia as one of the few states to opine regarding the number of occurrences in the Chinese drywall context.
March 01, 2013
In a victory for liability insurers against the asbestos plaintiffs’ bar, the California Supreme Court ruled in Greb v. Diamond International Corp., that California’s statutory provision that a dissolved corporation continues to exist perpetually for purposes of being named as a defendant in a suit does not apply to dissolved foreign corporations. Instead, the law of the state of incorporation governs how long a foreign corporation can be sued after it is dissolved, even for suits by injured California residents. Diamond International Corporation was a dissolved Delaware corporation, and the Supreme Court held that the three-year Delaware survival statute barred an asbestos bodily injury suit in California filed more than three years after the corporation was dissolved under Delaware law. The practical effect is that the dissolved corporation’s insurers do not have any liability for suits filed more than three years after the Delaware dissolution, because the plaintiff cannot obtain a judgment against the insured necessary to bring a direct action against the liability insurer.
February 15, 2013
In 2011, the Texas Legislature passed House Bill 274, directing the Texas Supreme Court to promulgate new rules reducing the expense and delay of litigation. House Bill 274 calls for early
February 13, 2013
In its recent decision in Powell v. Cherokee Insurance Company, Case No.: 5:09-CV-00205, the U.S. District Court for the Western District of Kentucky reaffirmed that in a third-party bad faith lawsuit alleging failure to timely settle a personal injury claim, the third-party claimant must produce evidence of conduct by the insurer that is outrageous, because of the defendant’s evil motive or his reckless indifference to [her] rights in order to establish a bad faith claim under the Kentucky Unfair Claims Settlement Practices Act (UCSPA).
February 11, 2013
The examination under oath has long served as a valuable tool to prevent fraud and exaggeration in property insurance claims, while also keeping the cost of insurance as low as possible. The Washington Supreme Court, however, did insurance consumers no favor when it recently held, in an 8-1 decision, that an insured may substantially comply with an insurer's request for examination under oath (EUO), even where the insured never submitted to the requested EUO. Staples v. Allstate Ins. Co., No. 86413-6, Washington Supreme Court (Jan. 24, 2013). The court also held that an insurer must establish actual prejudice before denying a claim based on the insured's noncompliance with the EUO request. The court's decision is a departure from previous precedent.
February 07, 2013
In a case of first impression, the Illinois Appellate Court considered whether a professional liability insurer can deny a defense to its insured, an attorney who admits he erred in providing legal services. Ill. State Bar Assoc. Mut. Ins. Co. v. Greenfield & Assocs., P.C., No. 1-11-0337, 2012 Ill. App. LEXIS 921 (Ill. Ct. App. Nov. 9, 2012). The court held the insurer had a duty to defend its insured against a legal malpractice claim. The court rejected the insurer’s reliance on the prohibition against admitting liability in its Voluntary Payments condition.
January 28, 2013
Yearly, many oil pipelines fail, spill crude oil, and cause significant health and environmental damage all across the continental United States, leading to hefty financial implications for the oil companies, landowners, government, and insurers.
January 24, 2013
On January 15, 2013, the Supreme Court, in a majority decision with two justices dissenting, ruled that a so-called “floating home” which did not have self-propulsion and essentially consisted of a house-like plywood structure with French doors floating on an empty bilge space, did not come within the definition of a vessel under 1 U.S.C. § 3 and therefore was not subject to maritime law. Lozman v. City of Riviera Beach, docket 11-626, 568 US ___ (1/15/2013).
January 22, 2013
In Washington State Department of Transportation v. James River Insurance Company, Wash. No. 876444 (January 17, 2013), the Washington Supreme Court declared binding arbitration agreements in insurance contracts void and unenforceable. The court explained that binding arbitration frustrates legislative intent to protect Washington policyholders' rights to sue insurers in Washington courts for coverage disputes over subjects located, resident or to be performed in Washington.
January 18, 2013
When can the Federal Government be pursued for a flood damage subrogation claim? Are one-off floods considered a taking of property requiring compensation under the 5th Amendment, or are repetitive flooding events required? Are state laws better avenues to evaluate flood claims?
January 16, 2013
In Abrams, Fensterman, Fensterman, Eisman, Greenberg, Formato & Eininger, LLP v. Underwriters of Lloyds, London, no. CV11-665, 2013 U.S. Dist. LEXIS 1204 (E.D. N.Y. January 2, 2013), the District Court for the Eastern District of New York upheld a legal liability insurer’s denial of coverage to a law firm. The court agreed with the insurer that although two complaints filed against the law firm and its partners alleged professional malpractice, the policy’s business pursuit exclusion and business enterprise exclusion applied.
January 14, 2013
In what may be the continuation of a trend toward the erosion of the attorney-client privilege and work product doctrine in bad faith litigation, another court has held that an insurer's communications with defense counsel retained for the insured in an underlying liability suit are discoverable and not subject to the attorney-client privilege or work product doctrine in a subsequent third-party bad faith lawsuit, under Georgia law.
January 08, 2013
Last year, we notified you that the National Labor Relations Board will now consider a general employer rule requiring confidentiality during an internal investigation into an employee complaint to be an unfair labor practice. The Board has now taken things even further.
January 01, 2013
LexisNexis retained Ken Levine to draft its chapter on living benefits under life insurance policies, for the publisher’s preeminent Appleman on Insurance library treatise. This chapter reviews the manner in which these benefits arise, including a discussion of cash surrender and nonforfeiture values; the historical evolution of regulation to preserve and administer these benefits; policy loans; accelerated death benefits; the secondary (viatical) market, tax treatment of these benefits; and, authority and support for other aspects of these benefits.
December 28, 2012
What is the value of a prized pet? Will the law on pet value change in Texas in 2013? How do other states value pets? Those questions and others are addressed in our December Subrogation Alert discussing whether the sentimental value of a pet can be recovered.
December 19, 2012
In Capitol Specialty Insurance v. JBC Entertainment Holdings, Inc. et al., No. 68129-0-1, 2012 Wash. App. LEXIS 2835 (Ct. App. Dec. 10, 2012), the Washington Court of Appeals held a firearms exclusion in a commercial general liability (CGL) policy unambiguously excludes coverage for all claims arising from a nightclub shooting regardless of who used the firearm, including those claims characterized as pre-shooting negligence. The court distinguished the holding from those claims where there are allegations of post-shooting acts that lead to further injury or harm to the claimant.
November 15, 2012
Earlier this year, the U.S. District Court for the Southern District of Texas ruled an insured can pursue its bad faith claim even where the insurer made timely payment of the appraisal award and the court dismissed the breach of contract claim on summary judgment. Intermodal Equip. Logistics, LLC and Sea Train Logistics, LLC v. Hartford Accident & Indem. Co., No. 3:10-cv-00458 (S.D. Tex. Galveston Div. May, 24, 2012).
November 13, 2012
Collectibility in Legal Malpractice Suits - A Required Element in Proving Damages: Schmidt v. Coogan - Commercial Litigation Alert - In Schmidt v. Coogan, No. 41279-9-II, 2012 WL 5331567 (October 30, 2012), the Washington Court of Appeals held that (1) collectibility is a required component in determining legal malpractice damages and (2) the failure to prove collectibility is fatal to a plaintiff trying to establish damages in a legal malpractice action.
November 13, 2012
With the re-election of Barack Obama and the prospect of continued political gridlock at the congressional level, the administration will likely turn to regulatory and administrative avenues in an effort to pursue workplace policy goals. The landscape is very different than it was just four short years ago.
November 08, 2012
Virginia Supreme Court Ends Chinese Drywall Debate - Global Insurance Alert - We are pleased to report that the Virginia Supreme Court has tacked down – or, more appropriately, "drywall-ed in" – the issue of whether a pollution exclusion in a property insurance policy precludes coverage for Chinese drywall claims under Virginia law.
November 07, 2012
Fifth Circuit Reverses Itself on Hurricane Katrina Cases, Raises Bar for Pursuing Flood Claims Against Army Corps of Engineers - Subrogation and Recovery Alert! - Flood damage subrogation claims are likely to be harder to pursue against the Army Corps and potentially other governmental entities according to a recent U. S. Fifth Circuit Court of Appeals case discussing Hurricane Katrina losses.
November 06, 2012
On October 15, 2012, the U.S. District Court of Appeals for the 5th Circuit – applying Texas law – addressed another Cumis counsel matter. See Coats, Rose, Yale, Ryman & Lee, P.C. v. Navigators Specialty Ins. Co., No. 12-10055, 2012 WL 4858194 (5th Cir. Oct. 15, 2012).
October 24, 2012
ATF Critical of Electrical Arc Bead Recognition Study - Subrogation and Recovery Alert! - A new Technical Bulletin (Tech. Bull. 001-9/28/2012) issued by the Bureau of Alcohol, Tobacco & Firearms critiques an earlier National Institute of Justice funded report on inspecting electrical conductors involved in fires. This ATF Technical Bulletin is important reading for anyone handling fire losses involving electrical equipment or electrical lines.
October 19, 2012
Ohio Supreme Court Rules That Claims of Defective Workmanship Against A Builder Do Not Constitute An Occurrence Under A CGL Policy - Global Insurance Alert - On October 12, 2012, the Ohio Supreme Cort resolved a long-simmering conflict among Ohio's intermediate appellate courts by answering the following certified question: Are claims of defective construction/workmanship brought by a property owner claims for "property damage" caused by an "occurrence" under a commercial general liability policy?
October 09, 2012
Ninth Circuit Upholds Dismissal of Global Warming Action on Displacement Grounds - Global Insurance Alert - The U.S. Court of Appeals for the 9th Circuit affirmed the dismissal of a complaint filed by the Native Village of Kivalina and the city of Kivalina (collectively Kivalina) against 22
of the world’s largest energy producers alleging damages caused by global warming. Kivalina v. ExxonMobil Corp.,No. 09-17490 (9th Cir. filed Sept. 21, 2012). Kivalina alleged that the barrier island on which the village is located is becoming uninhabitable.
October 09, 2012
Maryland's Rule of Contributory Negligence - Subrogation and Recovery Alert! - For the past 165 years in Maryland, if a jury found a plaintiff even as little as 1 percent responsible for an alleged injury, any recovery against the defendant(s) was barred. This is known as the contributory negligence doctrine.
October 04, 2012
Utah Court of Appeals Relies on Wikipedia to Determine Common Meaning of Term Used in Insurance Policy Exclusion - Global Insurance Alert - In Fire Insurance Exchange v. Oltmanns, 2012 UT App 230 (2012),the court determined the term “jet ski” as used in an exclusion in a homeowner’s policy was ambiguous, based in part on a Wikipedia definition of the term.
September 25, 2012
Exculpatory Provisions Can No Longer Preclude Liability for Reckless Acts in Pennsylvania: The Supreme Court of Pennsylvania's Recent Decision Shows that the Tide is Turning - Subrogation and Recovery Alert! - Have you handled a good liability case only to find an exculpatory clause in the contract or lease allowing the targeted party to avoid liability for its negligent acts or omissions? Now, in Pennsylvania, liable parties no longer can
claim blanket protection under an exculpatory provision if they were potentially reckless in bringing about a loss.
September 25, 2012
Texas Supreme Court Revisits Ruttiger Extracontractural Liability in Workers' Compensation Claims All But Vanquished - Global Insurance Alert! - On June 22, 2012, the Texas Supreme Court, in Texas Mutual Insurance Company v. Ruttiger, withdrew its original August 26, 2011 opinion, substituting it with an opinion that even further limits a claimant’s extra-contractual rights in a workers’ compensation matter.
September 20, 2012
Florida Appellate Court Holds that Appraisal Award Constitutes a 'Favorable Resolution' and Permits Insured to Pursue Bad Faith Claim - Global Insurance Alert - The Florida District Court of Appeal, Fourth District, recently held that an appraisal award in favor of an insured constitutes the "favorable resolution" of an action for insurance benefits necessary to proceed with a statutory first-party bad faith action under Florida law. Trafalgar v. Zurich Ins. Co., 2012 WL 3822215 (Fla. App. 4 Dist. Sept. 5, 2012).
September 14, 2012
Sixth Circuit Confirms that Cybercrime is Crime... and Finds Coverage - Global Insurance Alert - On August 28, 2012, the 6th Circuit Court of Appeals handed down a groundbreaking decision that sent shock waves through the world of cyber-risk insurance.
September 13, 2012
Fire on the Mountain: Rapidly Growing Fire on Capser Mountain Near Casper, Wyoming - Subrogation and Recovery Alert! - A rapidly spreading wildfire, the Sheep Herder Hill fire, that broke out on the afternoon of Sunday, September 9, 2012, has now burned at least six structures, more than seven-square-miles, and forced some 500 people to evacuate from Casper Mountain, according to the Associated Press on Monday.
September 13, 2012
Petersen v. Columbia Casualty Company: A Case Study in the Differences Between the Duty to Advance and the Duty to Defend - Global Insurance Alert - On August 21, 2012, in Petersen v. Columbia Casualty Company, et al., No. SACV-12-00183, U.S. District Judge James V. Selna held that a professional liability insurance policy, which provided that the insurer had a duty to advance defense expenses, should not be interpreted under the standards that govern policies containing the broader “duty to defend.”
September 04, 2012
Jonathan Toren of the Global Insurance Department authored this article in Law30 discussing Acticon V. China North East Petroleum. The United States Court of Appeals for the Second Circuit recently held that even if a stock recovers its value after dropping following a corrective disclosure, a showing of loss causation is not necessarily negated at the pleading stage in a claim for securities fraud, in Acticon AG, et al. v. China North East Petroleum Holdings Ltd., et al., No. 11-4544-cv (2nd Cir., August 1, 2012).
August 29, 2012
Recent Amendments to the Pennsylvania Insurance Holding Company Act: New Enterprise Risk Report - Insurance Corporate and Regulatory Alert - Pennsylvania’s Insurance Holding Company Act (IHCA) was recently amended by Act 136, signed into law on July 5, 2012. Act 136 made a number of changes to the IHCA.
August 29, 2012
The Broad Scope of Contractual Liability Exclusions in D&O Policies - Global Insurance Alert - On August 17, 2012, the U.S. District Court for the Middle District of Pennsylvania, in Federal Insurance Co. v. KDW Restructuring & Liquidation Services LLC et al., Case No. 3:07-cv-01357, held that Federal Insurance Company does not have a duty to defend or to indemnify its insured, Uni-Marts, LLC, under a D&O policy for claims arising out of Uni-Marts’ alleged misrepresentations and omissions to gas station purchasers.
August 27, 2012
GE Dishwashers - Recall and Investigation by CPSC - Subrogation and Recovery Alert! - The Consumer Product Safety Commission (CPSC) issued a recall of GE dishwashers. The CPSC recall affects about 1,300,000 dishwashers for the Brands GE, GE Adora, GE Eterna, GE Profile and Hotpoint.
August 27, 2012
Recent Amendments to the Pennsylvania Insurance Holding Company Act: Changes Affecting Corporate Governance and Intercompany Transactions and Agreements - Insurance Corporate and Regulatory Alert - Pennsylvania’s Insurance Holding Company Act (IHCA) was recently amended by Act 136, which was signed into law on July 5, 2012. Act 136 makes a number of changes to the IHCA, including imposing new corporate governance requirements and processes and expanding the Pennsylvania Insurance Department’s authority to examine affiliates of an insurer.
August 15, 2012
Cle Elum Burning: The Taylor Bridge Fire - Subrogation and Recovery Alert! - On Monday August 13 a fire broke out in the rural area around Cle Elum, Washington.
August 14, 2012
Eleventh Circuit Holds An Arbitration Panel is A Tribunal Under 28 U.S.C. § 1782 For Purposes of Obtaining Discovery For Use in Foreign Arbitration - Global Insurance Alert! - As a matter of first impression, the United States Court of Appeals for the 11th Circuit, held that an arbitral panel in Ecuador was a tribunal under 28 U.S.C. § 1782 for purposes of obtaining discovery for use in foreign proceedings. See, Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS
Forwarding (USA), Inc., No. 11-12879, 2012 WL 2369166 (11th Cir. June 25, 2012).
August 10, 2012
California Supreme Court Adopts "All-Sums-With Stacking" Rule Disapproves FMC Corp. v. Plaisted In The Process - Global Insurance Alert - In a long-awaited decision, the California Supreme Court unanimously held that in cases of continuous or progressive property damage, each insurer, including excess insurers, on the risk at any point when damage occurred is liable for indemnity up to its policy limit if its policy contains “all sums” language.
August 09, 2012
Recent Amendments to the Pennsylvania Insurance Holding Company Act Changes Affecting Controlling Persons - Insurance Corporate and Regulatory Alert - Pennsylvania’s Insurance Holding Company Act (IHCA) was recently amended by Act 136, which was signed into law on July 5, 2012. Act 136 makes a number of changes to the IHCA, including requiring new filings, mandating prior notice and/or approval for certain transactions, and expanding the Insurance Department’s regulatory authority.
August 07, 2012
The Decision in Phaneuf Funeral home v. Little Giant Pump Co.: Statute of Repose in New Hampshire Now Only Protects Manufacturers & Sellers of Products Who Were Involved In the Transformation of the Products into Improvements - Subrogation and Recovery Alert! - What factors determine whether manufacturers or sellers of products incorporated into an improvement to a structure are protected by the statute of repose?
August 06, 2012
On June 18, 2012, the Supreme Court of Georgia issued Hoover v. Maxum Indemnity Company, Nos. S11S1681, S11G1683, 2012 WL2217040 (Ga. June 18, 2012), dramatically changing Georgia's ''Reservation of Rights'' law. In short, Hoover held insurers may no longer disclaim coverage under a specific policy provision, while reserving the right to do so under others. Id. at *3. The court held that a carrier waives coverage defenses that do not form the basis of the claim denial. Id. According to Hoover, a carrier cannot ''both deny a claim outright and attempt to reserve the right to assert a different defense in the future.'' Id. at *2.
July 31, 2012
Jeep Grand Cherokees and Dodge Ram 1500s-Investigations by NHTSA - Subrogation and Recovery Alert! - The National Highway Traffic Safety Administration (NHTSA) has opened two preliminary investigations into the 2012 Jeep Grand Cherokee SUV and 2009-2012 Dodge Ram 1500 pickup. The NHTSA investigation affects 106,863 2012 Grand Cherokee vehicles and 230,000 Dodge Ram trucks. This Alert reviews what is known about the preliminary investigations into these vehicular investigations involving potential fires.
July 27, 2012
Washington Court Concludes Umbrella Insurer Has a Duty to Defend Suit Against Insured Even Though Underlying Primary Insurer Similarly Has a Duty to Defend - Global Insurance Alert - In a surprising unpublished decision, the Washington State Court of Appeals recently ruled that an umbrella insurer had a duty to defend a suit against its insured despite the fact the underlying primary insurer had also previously been found to have a duty to defend the same parties in the same suit.
July 24, 2012
Recent Arizona Court Opinion Reduces Ratio of Bad Faith Punitive Damages Award to a 1:1 Ratio to Compensatory Damages - Global Insurance Alert - In its recent decision, the Arizona Appellate Court, Division One, affirmed a bad faith verdict in the amount of $155,000 and held that the $55 million punitive damages award against the insurer was “unconstitutionally excessive.”
July 20, 2012
First Circuit Court of Appeals Holds Bank’s Online Security Measures “Commercially Unreasonable” in Landmark Decision - Global Insurance Group Alert - In a landmark decision, the 1st Circuit Court of Appeals held in PATCO Construction Company, Inc. v. People's United Bank, No. 11-2031 (1st Cir. July 3, 2012) that People's United Bank (d/b/a Ocean Bank) was required to reimburse its customer, PATCO Construction Co., for approximately $580,000 that had been stolen from PATCO's bank account...
July 05, 2012
General Motors is recalling nearly all Chevy Cruze models built in the United States since the vehicle’s introduction two years ago. The company knows of 30 fires caused by the problem, but no injuries have been reported, spokesman Alan Adler said. Flames engulfed and destroyed cars in two cases reported to federal safety officials.
July 02, 2012
New Ninth Circuit Decision Purportedly Imposes Duty on California Insurers to Negotiate a Settlement within Policy Limits - Global Insurance Alert! - The recent Du v. Allstate Ins. Co. opinion is the 9th Circuit’s Erie guess of the proper interpretation of a long-standing issue
of California bad faith law: whether an insurer has a duty to attempt to settle within policy limits even if there is no policy limits demand, and, if so, when that duty attaches. The 9th
Circuit ruled that an insurer does have the duty to attempt to settle a claim within policy limits when it is “reasonably clear”
June 29, 2012
Exhaustion Implications for Multi-Policy Settlements - Global Insurance Alert - In JP Morgan Chase & Co. v. Indian Harbor Ins. Co., 2012 N.Y. App. Div. LEXIS 4627 (N.Y. App. Div. June 12, 2012), the Appellate Division of the New York Supreme Court, applying Illinois law, affirmed the lower court’s grant of summary judgment in favor of certain upper-level excess insurers, agreeing that the insured failed to prove that certain underlying policies had been properly exhausted.
June 28, 2012
50 State Survey of Measure of Damages For Injury to Real and Personal Property - Jurisdictions Comparative Chart - This chart provides a general overview of the case law addressing the measure of damages for property damage in all 50 states as well as the District of Columbia.
June 27, 2012
The Potential Implications of the JOBS Act on D&O Coverage - Global Insurance Alert - On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act, better known as the JOBS Act. The JOBS Act is intended to help smaller and new companies raise capital, and, to accomplish this goal, institutes fundamental changes to existing securities laws in the areas of fundraising and emerging growth companies (EGCs).
June 25, 2012
Maximus Opinion Permits Functional Exhaustion of Underlying Insurance - Global Insurance Alert - Excess insurers should carefully note both trends in the law, and particular policy language, that may potentially influence whether their policyholders can exhaust underlying policies without actually receiving payment of the full underlying limits. In its recent opinion in Maximus, Inc. v. Twin City Fire Insurance Company, No. 11-CV-1231, the U.S. District Court for the Western District of Virginia determined that an ambiguously worded follow-form excess policy permitted this result.
June 25, 2012
Colorado Burning - Subrogation and Recovery Alert! - Due to lower than expected snowpack this past winter, recent high temperatures and low humidity, the Colorado high country has become a tinderbox.
June 19, 2012
Confidentiality Agreements and Standstill Provisions; the Delaware Chancery Court Broadly Construes Confidentiality Agreements and Enjoins a Hostile Bid Despite the Absence of Standstill Provisions Relating to Stock Transactions - Global Insurance Alert - In a significant recent decision, Martin Marietta Materials, Inc. v. Vulcan Materials Company, the Delaware Chancery Court reiterated the preference of Delaware courts to enforce confidentiality agreements and to construe them broadly as a matter of public policy.
June 15, 2012
On May 31, 2012, the Florida Supreme Court rendered its 32 page, long-awaited decision in QBE Insurance Corp. v. Chalfonte Condominium Apartment Association, Inc. The court reaffirmed that Florida does not recognize the common law duty of good faith and fair dealing in the context of a first-party claim, a claimant only has a statutory first-party bad-faith cause of action, and Florida courts shall not rewrite insurance contracts.
June 14, 2012
Diminution of Value and Property Damage Claims in Georgia - Subrogation and Recovery Alert! - On May 29, 2012, the Georgia Supreme Court significantly changed the landscape for first party property insurance claims and claims handling by holding (in Royal Capital Development, LLC v. Maryland Casualty Company, 2012 WL 1909842)...
June 01, 2012
Pennsylvania Supreme Court Rules "Any Exposure" to Asbestos Fibers Does Not Pass Evidentiary Muster Under Frye (in a Decision with Significant Implications for Insurers - Global Insurance Alert - On May 23, 2012, a unanimous Pennsylvania Supreme Court rejected the admissibility of “any exposure” expert opinion testimony, which is commonly advanced by asbestos plaintiffs.
June 01, 2012
Proving Fine Art Damage: It's All in the Details - Claims Magazine - To Maximize Subrogation Recoveries, Pay Attention of damages and hiring the right damages experts
are as important as proving the cause of
June 01, 2012
When Loss Ensues: Washington State Supreme Court Issues Mixed Messages on Ensuing Loss Provisions in All-Risk Policies - Global Insurance Alert - All‐risk property insurance policies generally provide coverage for any peril that causes property damage, except when the damage is caused by a risk specifically excluded in the policy.
May 17, 2012
Washington Court Holds that a Corporate Officer's Breach of Contract is Not a Covered 'Loss' from a 'Wrongful Act' Under a D&O Policy - Global Insurance Alert - In a recent case, Sauter v. Houston Cas. Co., No. 66809-9-1, (May 14, 2012), a Washington appeals court analyzed a type of policy not often considered by Washington courts – a director and officer (D&O) policy.
May 08, 2012
Don’t Forget Contract Claims! Another Possible Theory of Recovery in Cases Against the United States - Subrogation and Recovery Alert! - Do you have a claim against the United States? You already may know about how to proceed under the Federal Tort Claims Act. Have you also considered a breach of contract claim, in addition to any tort claim? If not, you need to assess whether the Contract Disputes Act, 41 U.S.C. section 7101, et seq. applies to your contract claim.
May 01, 2012
Split Decisions: The Outcome of Court Cases Concerning Appraisals Varies from State to State for Insurers - Best’s Review -
April 20, 2012
Spontaneous Combustion Alert - Subrogation and Recovery Alert! - After speaking to your cause and origin expert on a new large loss you learn that there was no electrical device or other product in the area of origin. You also learn that the usual series of potential causes have been ruled out-arson, negligently discarded smoking material, or the structural wiring to the property. So you ask: How can a fire start when there is nothing there to ignite the fire? Welcome to spontaneous combustion fires.
April 09, 2012
Reinsurer and Third Party Claims Administrators Not Proper Defendants in Asbestos Coverage Action - Global Insurance Alert! - On February 29, 2012, Judge Rita Novak, of the Circuit Court of Cook County, Ill., issued a ruling of major significance granting the Motion to Dismiss filed by Cozen O’Connor on behalf of its clients and holding that a policyholder could
not hold a reinsurer or third-party claims administrators liable for allegedly assuming the direct insurer’s insuring obligations or tortious interference.
April 03, 2012
Evaluating Subrogation Claims Arising from the Lower North Fork Wildfire in Jefferson County, Colorado - Subrogation and Recovery Alert! - On Monday, March 19, 2012, the Colorado State Forest Service initiated a controlled burn on property owned by the Denver Water Board located in Jefferson County, Colo. This 50 acre prescribed burn was part of an ongoing fuel management program in the Lower North Fork area as part of a service agreement between the Colorado State Forest Service and the Denver Water Board.
March 26, 2012
Indiana Supreme Court Again Finds the Pollution Exclusion Ambiguous, But Indicates a Possible Way Forward - Global Insurance Alert! - Enforcing the pollution exclusion clause in a commercial general liability policy continues to be problematic for insurers in the state of Indiana. On March 20, 2012, the Indiana Supreme Court once again held that the absolute pollution exclusion is unenforceable because of the term "pollutant" is ambiguous.
March 13, 2012
When It Comes to Data Breaches: Show Me The Injury - Global Insurance Alert! - Two recent decisions, one by Oregon's highest court and the other by the 1st Circuit Court of Appeals, reveal a growing trend finding legitimacy in claims asserted by plaintiffs whose personal information has been stolen or compromised only if such information is actually used by a third-party to cause harm or perpetuate identity theft
March 08, 2012
Personal Jurisdiction Over Foreign Defendants Under the Supreme Court's Recent Decision J. McIntyre Mach., Ltd. v. Nicastro - Subrogation and Recovery Alert! - Although recovery professionals often assert that the movement of goods from a foreign manufacturer to domestic consumers - sometimes referred to as "the stream of commerce" - allows one to maintain jurisdiction over a foreign defendant in a state, the U.S. Supreme Court's decision in J. McIntyre Mach., Ltd. v. Nicastro, _U.S._, 131 S. Ct. 2780 (2011) (plurality op., Kennedy, Roberts, Scalia,
March 01, 2012
Subrogation In Fire Cases With No Known Cause - Not Just Blowing Smoke! - Subrogation and Recovery Alert! - The immediate investigation of loss sites, especially those involving fires, enhances subrogation recognition and maximizes recovery.
February 17, 2012
Virginia Supreme Court Grants Rehearing on Whether Emission of Carbon Dioxide Constitutes an "Occurrence" - Global Insurance Alert! - On January 17, 2012, the Supreme Court of Virginia set aside its groundbreaking judgment in AES Corporation v. Steadfast Insurance Company, 282 Va. 252 (2011), which held that the emission of carbon dioxide was not an “occurrence” within the meaning of a general liability policy.
February 17, 2012
Do Appliance Installers Have to Follow Instructions - Subrogation and Recovery Alert! - When homeowners purchase household appliances, the oftentimes hire the retailer to install the appliance in their homes. The appliance manufacturer's installation manual typically will specify the use of an accessory, such as a heavy duty power cord, a metal dryer vent, or a copper water line.
February 13, 2012
The Erosion Continues: Washington Supreme Court Expands the Olympic Steamship Rule and Finds a Viable Bad Faith Claim by a PIP "Insured" - Global Insurance Alert! - In Matsyuk v. State Farm Fire & Cas. Co., 2012 Wash. LEXIS 119 (Feb.9 2012), the Washington Supreme Court held that: (1) a tortfeasor's insurer that provides both Personal Injury Protection (PIP) and liability coverage must pay a pro rata share of the attorney fees incurred by the PIP insureds via the equitable "common fund" doctrine, even though the insurer derived no benefit from the "fund"
February 07, 2012
New York's Appellate Division Holds that Insurers Cannot Delay Issuing a Disclaimer of Coverage on a Known Coverage Defense While It Investigates Other Potential Grounds for Disclaiming - Global Insurance Alert! - In George Campbell Painting v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa, 2012 N.Y. Slip Op. 254 (1st Dept. 2012), New York's Appellate Division, First Department, expressly overruled its prior holding in DiGuglielmo v. Travelers Prop. Cas., 6 A.D.3d 544, 766 N.Y.S.2d (1st Dept.2004), which held that "[a]n insurer is not required to disclaim on timeliness grounds before conducting a prompt, reasonable investigation into other possible grounds for disclaimer."
February 06, 2012
California, Washington and New York to Require Most Insurers Doing Business in Their States to File Climate Change Disclosures - Global Insurance Alert! - On February 1, 2012, California's Insurance Commissioner, Dave Jones, announced that California would join New York and Washington in requiring insurers to disclose how climate change may affect their business. The three states will now require all insurers writing in excess of $300 million in direct premiums to respond to a climate change survey form developed by the National Association of Insurance Commissioners (NAIC).
February 02, 2012
California Supreme Court Limits Asbestos Liability for Valve and Pump Manufacturers - Global Insurance Alert! - The California Supreme Court sharply limited asbestos liability for valve and pump manufacturers (and their insurers) in O’Neil
v. Crane Co., 2012 WL 88533 (Jan. 12, 2012).
January 31, 2012
Good-Faith Basis of Settlement Agreements Between Ceding Insurers and Insureds Is a Question of Fact - Global Insurance Alert! - The "follow the fortunes" and "follow the settlements" doctrines often preclude reinsurers from re-examining the conduct of cedents in settling claims. However, a recent ruling by Supreme Court of New York, Appellate Division, calls into question this conventional wisdom.
January 23, 2012
Texas Federal Court Enforces Anti-Assignment Clause to Preclude Assignment of Insurance Policy and $4.7 Million Hurricane Ike Claim - Global Insurance Alert! - On January 10, 2012 Judge Vanessa Gilmore of the Southern
District of Texas, Houston Division, issued an important opinion
concerning the purported assignment of an insurance policy and
a $4.7 million Hurricane Ike property damage claim.
January 23, 2012
Washoe Drive Wildfire - Subrogation and Recovery Alert -
December 22, 2011
Professional Liability: J.P. Morgan Securities: Ill-Gotten Profits are Not a Prerequisite for Disgorgement - Insurance Coverage Alert! - In December 13, 2011, the New York Appellate Division, First Department, issued a decision in J.P. Morgan Securities Inc. v. Vigilant Insurance Co., Index No. 600979/09 (N.Y.A.D. 1st Dep’t Dec. 13, 2011), that significantly adds to the jurisprudence regarding what constitutes disgorgement that is uninsurable under a directors and officers liability policy.
December 15, 2011
Recovering From Subcontractors Under Builders' Risk Policies: Ontario Court of Appeal Opens the Door for Subrogation - Subrogation and Recovery Alert! - Pursuing subrogation under a builders' risk policy against a subcontractor whose fault caused a loss always presents distinct legal challenges. In Canada, the courts have sometimes shielded subcontractors from liability, but a recent decision by the Ontario Supreme Court of Justice in Brookfield Homes v. Nova Plumbing has opened the door to recovery against negligent subcontractors where the policy language permits it.
December 07, 2011
NFPA Issues its U.S. Fire Loss Report Summary for 2010 - Subrogation and Recovery Alert! - A new report by the National Fire Protection Association discusses in detail U.S. fire losses for 2010. This provides interesting data for property and subrogation claim handlers regarding total as well as average property damage losses in 2010.
December 05, 2011
Professional Liability: Keep Your Friends Close, But Your Facebook Posts Closer - Insurance Coverage Alert! - “Facebook helps you connect and share with the people in your life.” That is the Facebook mantra, as displayed on its homepage, and the opening line of a recent – and extremely thorough – Pennsylvania trial court decision regarding the discoverability of a plaintiff’s relevant Facebook information. The court’s conclusion: a plaintiff’s Facebook information is discoverable, provided the defendant has a good faith basis for seeking the material,
December 01, 2011
EDRs for the Claims Adjuster - Claims Magazine -
December 01, 2011
Sentence First/Verdict Afterwards-Justice in Afghanistan - CAFI -
December 01, 2011
In this Winter 2011, Volume 46 Issue 2 edition of the Tort Trial & Insurance Practice Law Journal, published by the American Bar Association, Jonathan Toren of the Global Insurance Department co-authors a chapter with other leading industry professionals, titled “Recent Developments in Excess Insurance, Surplus Lines Insurance, and Reinsurance Law.”
November 21, 2011
Foreign Arbitration Clauses Invalid Under Carmack - Subrogation and Recovery Alert! - Foreign arbitration clauses are more prevalent than ever in commercial contracts. However, in interstate shipping contract claims under the Carmack Amendment, foreign arbitration clauses have recently been found invalid. This Alert reviews the recent Ninth Circuit Court of Appeals decision in Smallwood v. Allied Van Lines, Inc.
November 16, 2011
Thailand Flood Losses - Cozen O'Connor White Paper - Thailand’s two principal river systems are the Chao Phraya and the Mekong. There are a number of other smaller rivers which run through Thailand and drain into the Gulf of Thailand and the Andaman Sea. The Mekong drains into the South China Sea. Beginning in July, Thailand’s rivers have been flooding. The floods have caused 506 deaths and an estimated $5.1 billion in damage. According to government reports the flooding has affected almost 15 million acres of land in 58 provinces.
November 07, 2011
Colorado Statute Concerning Insurance for Construction Defects Does Not Apply Retroactively, but Property Damage Caused by Poor Workmanship is an Occurrence - Insurance Coverage Alert! - 10th Circuit Court of Appeals held that a Colorado statute regarding insurance for construction defects does not apply retroactively, but that any property damage caused by poor workmanship may nevertheless qualify as an “occurrence” so long as the resulting damage is to nondefective property. Greystone Const., Inc. v. National Fire & Marine Ins. Co., Case No. 09-1412 (10th Cir. Nov. 1, 2011).
November 01, 2011
Follow the Yellow Brick Recovery Road-Social Media Enhances Subrogation Evaluation - Claims Magazine -
October 31, 2011
Corporate Liability for Human Rights Abuses by Foreign Operatives? U.S. Supreme Court to Consider if Victims Can Recover Damages from Corporations - Insurance Coverage Alert! - On October 18, 2011, the Supreme Court of the United States agreed to consider whether corporations can be sued in U.S. courts for acts that take place outside of the country. Kiobel v. Royal Dutch Petroleum, S. Ct. Dkt. No. 10-1491. The Supreme Court arguments will most likely be heard in early 2012, followed by the Court’s written decision sometime before the Court’s term ends in June 2012.
October 28, 2011
Eleventh Circuit Rejects Office Depot's Claim for Defense Costs Incurred During Voluntary Compliance with an Informal SEC Investigation - Insurance Coverage Alert! - In an unpublished per curium opinion, the U.S. Court of Appeals for the 11th Circuit affirmed that Office Depot’s Executive and Organization Liability policy did not cover defense costs incurred in voluntarily responding to an informal Securities and Exchange Commission (SEC) inquiry, nor costs incurred in conducting an internal investigation and audit triggered by a whistleblower complaint over alleged accounting improprieties. Office Depot, Inc. v. National Union Fire Ins. Co. et al.,
October 24, 2011
State Immunity Laws and the FTCA - Subrogation and Recovery Alert! - Have a claim involving a federal government agency under the Federal Tort Claims Act (FTCA)? Is the federal agency asserting an immunity defense under state law? If so, it's necessary to analyze whether a state law immunity defense can be raised by a federal agency. This Alert discusses state immunity laws in the context of FTCA tort claims.
October 19, 2011
Tenth Circuit 'Dishes Out' Important Opinion Addressing the Scope of Advertising Injury Coverage for Patent Infringement Claims - Insurance Coverage Alert! - On October 17, 2011, the U.S. Court of Appeals for the 10th Circuit issued a much anticipated decision addressing the scope of “Advertising Injury” (AI) coverage for patent infringement claims. Dish Network Corp. v. Arch Specialty Ins. Co., No. 10-1445, __ F.3d __ , 2011 U.S. App. LEXIS 20955 (10th Cir. 2011), rev’g, 734 F. Supp. 2d 1173 (D. Colo. 2010). The court, applying Colorado law, reversed an order from the District of Colorado that granted summary judgment to the insurers.
October 18, 2011
Court Issues Significant Ruling Regarding Personal Injury Claims in the Deepwater Horizon Litigation - Insurance Coverage Alert! - In a recent Alert, we advised of an important decision affecting maritime interests and their insurers in the multidistricted Deepwater Horizon litigation currently pending before Judge Barbier in federal court in New Orleans. (In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, MDL No. 2179.) On October 4, 2011, Judge Barbier rendered yet another significant decision, this time relating primarily to personal injury claims.
October 17, 2011
I'm . . . Too Faxy For the Courts: "Blast Faxers" Face Substantial Uninsured Damages - AVVO.COM - In these difficult economic times, businesses are seeking inexpensive, time-efficient ways to market their products and services to prospective customers. Ostensibly as one such alternative, some businesses have resorted to “blast faxing,” i.e., sending advertisements en masse to prospective customers’ fax machines.
October 17, 2011
New York Court Upholds Denial of Coverage Where Policyholders Breached D&O Policy's Consent-to-Settle Provision - Insurance Coverage Alert! - In Federal Ins. Co. v. Safe Net, Inc., 2011 WL 4005353 (S.D.N.Y. Sept. 9, 2011), a New York federal judge granted partial summary judgment in favor of Federal Insurance Company (Federal), holding that SafeNet, Inc. (SafeNet) and its vice president and chief financial officer failed to comply with the consent-to-settle provision in their D&O policy and were thus precluded from recovering under the policy with respect to their settlement of a securities fraud class action.
October 12, 2011
Law Firm Disqualified After Its Client’s Party-Appointed Arbitrator Provided It With Panel Deliberations - Insurance Coverage Alert! - On October 3, 2011, the U.S. District Court for Southern District of New York disqualified a law firm from acting as counsel in a reinsurance arbitration. Northwestern National Ins. Co. v. Insco, Ltd., No. 11 Civ. 1124 (S.D.N.Y. Oct. 3, 2011).
October 04, 2011
Texas Supreme Court Issues Important Opinion Concerning Plaintiff's Burden of Proof in Products Liability Matters - Insurance Coverage Alert! - The Texas Supreme Court recently issued an important opinion concerning products liability. Merck & Co. v. Garza, 2011 Tex. LEXIS 638 (Tex. 2011) stemmed from litigation involving the diet drug Vioxx. The court held that plaintiffs seeking to prove general causation with epidemiological evidence must provide at least two independent case studies demonstrating that subjects who used the product under circumstances substantially similar to those encountered by the plaintiff doubled their
October 03, 2011
General Jurisdiction Over Foreign Manufacturers of Defective Products - Cozen O'Connor White Paper - In our increasingly globalized economy, there is a growing need to establish jurisdiction in U.S. courts over foreign manufacturers of defective products. Recent legal developments will, in some cases, make that task more
October 01, 2011
Through the Looking Glass-Subrogation Issues for the Catastrophe Adjuster - Claims Magazine -
October 01, 2011
Wildfire Losses: Igniting a Recovery Claim - Claims Advisor Online -
September 20, 2011
Revisiting the Scope of the Panel’s Authority to Rewrite the Reinsurance Contract: Harper Insurance Limited v. Century Indemnity Company 10 Civ. 7866 (S.D. N.Y. July 28, 2011) - Insurance Coverage Alert! - In recent years, the question of whether the arbitration panel has the authority to rewrite terms of the reinsurance contract in resolving disputes between cedents and reinsurers has played prominently in the courts in the United
States. In visiting the question in 2010, the U.S. Court of Appeals for the 3rd Circuit affirmed the trial court’s vacatur of an arbitration award where the panel crafted a remedy beyond
the terms of the contract.
September 20, 2011
MDL Judge in Deepwater Horizon Multidistrict Litigation Issues Major Ruling Construing the Oil Pollution Act of 1990 (“OPA”) - Insurance Coverage Alert! - The allegations include claims under OPA and various state laws, including claims for negligence, gross negligence, strict liability, and punitive damages, as well as claims under the Florida Pollutant Discharge Prevention and Control Act, Fla. Stat. §§ 376.011,
September 15, 2011
Texas Wildfires - Subrogation and Recovery Alert! - Background information and investigation summaries are provided on the ongoing catastrophic Texas Wildfires. This Alert provides a review of currently available information on the Bastrop County Complex, Steiner Ranch, and Spicewood/Pedernales Bend wildfires.
September 14, 2011
2011 Floods: Evaluation of Subrogation Potential During Natural Disasters - Cozen O'Connor White Paper - Many regions of our country still are suffering from the tragic consequences of Hurricane Irene, as well as prior and subsequent tropical storms. In the midst of this sometimes overwhelming damage, the insurance industry will be called upon to respond to claims which frequently entail multiple perils such as flood, wind and collapse. These claims, while complex, still are amenable to application of Cozen O'Connor's time tested subrogation methodology.
September 13, 2011
Hurricane Irene Strikes the Eastern Seaboard: An Overview of the Facts and Coverage Issues - Cozen O'Connor Report - On the sixth anniversary of Hurricane Katrina, another such storm was devastating the eastern coastline of the United States. Irene – the first hurricane of the 2011 season – was thankfully not as destructive as the 2005 storm that ravaged New Orleans and the Gulf Coast area. Nevertheless, Irene was a powerful and destructive storm that hit areas of the country that seldom see this kind of event.