January 2015 - Page 2 of 2 - The Insurance & Reinsurance Report

January 13, 2015 Bad Faith and Extra-Contractual Liability

Tenth Circuit Reminds Insurer Cannot Use the Attorney-Client Privilege as Both a Sword and a Shield

The Tenth Circuit in Seneca Insurance Co. v. Western Claims, Inc., 2014 U.S. App. LEXIS 24172 (10th Cir. Dec. 22, 2014), affirmed a district court’s decision to allow the discovery and admission into evidence of correspondence between Seneca Insurance Company (Seneca) and its counsel regarding the underlying hail damage claim and litigation. The Tenth Circuit agreed with the district court’s finding that Seneca put the advice of the attorneys at issue, thereby waiving the attorney-client privilege.

The underlying dispute stemmed from Western Claims, Inc.’s …

January 12, 2015 Uncategorized

Independent Contractors Fall within Employment-Related Practices Exclusions Says First Circuit

In Ruksznis v. Argonaut Insurance Co., 2014 U.S. App. LEXIS 23881 (1st Cir. Dec. 18, 2014), the First Circuit affirmed the district court’s grant of summary judgment in favor of Argonaut Insurance Company (Argonaut), finding that the employment-related practices exclusion in the subject Commercial General Liability Policy and Public Officials Liability Policy barred coverage.

The underlying dispute arose out of a lawsuit filed by Frank Ruksznis, the former plumbing inspector for the Town of Sangerville (the Town), against Lance Burgess, a Town Selectman. Burgess, …

January 9, 2015 Regulatory

Insurance Doomsday Averted – TRIA Extension Passes Congress

Under the cloud of the tragic terrorist attack in France, the U.S. Congress passed H.R. 26, an extension to the Terrorism Risk Insurance Act (TRIA). The House passed it overwhelmingly by a vote of 416-5. The Senate passed it by a vote of 93-4. This despite a rider which amends Dodd-Frank.

Among its provisions, the bill extends the program for six years and gradually increases the trigger from $100 million to $200 million in increments of $20 million over the course of …

January 9, 2015 Uncategorized

Wisconsin Court Will Not Enforce Intentional Acts Exclusion For Intellectual Property Infringement Claim

In Boehm v. Zimprich, 2014 U.S. Dist. LEXIS 174330 (W.D. Wis. Dec. 17, 2014), the United States District Court for the Western District of Wisconsin held that American Family Mutual Insurance Company (“American Family”) had a duty to defend its insureds against a copyright infringement claim. The plaintiffs filed suit against Dan and Ciara Zimprich, owners of sports memorabilia vendor “On 2 the Field”, alleging they made and sold prints and photo canvases of approximately two dozen of plaintiffs’ photographs without authorization. The Zimpriches …

January 8, 2015 Reinsurance

Federal Insurance Office Issues Reinsurance Report

Among other provisions, Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) authorizes the Federal Insurance Office (the FIO) to monitor all aspects of the insurance industry, including reinsurance. {Dodd-Frank Act, §§ 501-502; 31 U.S.C. § 313 (c)(1)(A) (2010)}. On December 31, 2014, pursuant to Title V of the Dodd-Frank Act, the FIO issued its report on reinsurance entitled “The Breadth and Scope of the Global Reinsurance Market and the Critical Role Such Market Plays in Supporting Insurance in …

January 7, 2015 Reinsurance

Second Circuit Holds “Loss Expenses” Not Categorically Excluded from Liability Limit of Facultative Reinsurance Certificate

In Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc., the Second Circuit Court of Appeals reversed and remanded a summary judgment determination against a reinsurer with regard to the reinsurer’s obligations to reimburse the insured’s claim expenses. Utica Mutual Insurance Company had issued an umbrella policy to Goulds Pumps, Inc. Utica incurred millions of dollars of losses under this policy due to asbestos-related litigation brought against Goulds. Munich Reinsurance reinsured Utica’s umbrella policy under a facultative reinsurance certificate that contained a $5 million …

January 6, 2015 Policy Conditions, Considerations, Construction, and Formation

Sixth Circuit Interprets ‘Direct Action’ Provision of 28 U.S.C. 1332 in the Context of Michigan’s No-Fault Insurance Law

In Ljuljdjuraj v. State Farm Mutual Automobile Ins. Co., 2014 U.S. App. LEXIS 24108 (6th Cir. Dec. 19, 2014), the U.S. Court of Appeals for the Sixth Circuit held that the ‘direct action’ provision of 28 U.S.C. § 1332(c)(1) does not destroy diversity jurisdiction in an action brought against an insurer pursuant to Michigan’s No-Fault Insurance Law where a “contract of liability insurance” was not implicated.

Elvira Ljuljdjuraj (EL) was driving a car owned by her friend, Bardhyl Mullalli, when she lost control of the …

January 6, 2015 Bad Faith and Extra-Contractual Liability

PA High Court Gives Green Light to Assignment of Bad Faith Claims

In Allstate Prop. & Casualty Insurance Co. v. Wolfe, No. 39 MAP 2014, 2014 Pa. LEXIS 3309 (Pa. Dec. 15, 2014), the Pennsylvania Supreme Court, in deciding a certified question from the Third Circuit, ruled that statutory bad faith claims under 42 Pa. C.S.A. § 8371 are assignable.

The underlying dispute arose from a motor vehicle collision involving an intoxicated driver, Zierle, who was insured by Allstate. After settlement attempts failed, Wolfe, the tort claimant, sued Zierle for compensatory and punitive damages. Following a …

January 5, 2015 Professional Liability

Settlement of Ill-Gotten Gains Suit Does Not Constitute Repayment or Restitution

On Tuesday, December 16, in U.S. Bank Nat. Ass’n v. Indian Harbor Ins. Co., 2014 WL 7183851 (D. Minn. Dec. 16, 2014), the US District Court for the District of Minnesota granted US Bank’s summary judgment motion, finding insurance coverage in an overdraft-fee dispute settlement.

The three underlying class action lawsuits were filed against US Bank National Association and US Bancorp by plaintiffs claiming the bank unlawfully inflated customers’ overdraft fees. The banks provided customers with account overdraft protection and charged a fee for each …

January 5, 2015 Professional Liability

Illinois Appellate Court Rejects Professional Liability Coverage for Junk Fax Claim

In Margulis v. BCS Insurance Co., 2014 IL App (1st) 140286, the Illinois Appellate Court affirmed a circuit court’s grant of summary judgment in favor of BCS Insurance Company (BCS), finding that it was not obligated to defend or indemnify its insured, Bradford & Associates (Bradford), under an insurance agents and brokers professional liability policy. The Appellate Court concluded that Bradford’s alleged conduct did not arise out of Bradford’s business in “rendering service for others” as an insurance agent.

The underlying lawsuit arose out …