Sarah J. Delaney, Author at The Insurance & Reinsurance Report

February 11, 2016 Occurrence

One at a Time! Anti-Stacking Provision Upheld

The Eighth Circuit Court of Appeals denied appellants’ attempts to classify the language of an anti-stacking provision ambiguous in Gohagen v. The Cincinnati Ins. Co., (8^th Cir., January 6, 2016).

The plaintiff was severely injured by a tree being removed by the policyholder. He reached a settlement with the policyholder, which included the insurer’s payment of $1,000,000; that figure represented the per-occurrence limit under the commercial general liability policy (CGL). The policyholder also had a business owners package (BOP) with a $1,000,000 per-occurrence …

January 28, 2016 Duty to Defend

Insurer Entitled to Reimbursement of Defense Costs for Non-Covered Claims

In Chiquita Brands Int’l, Inc. v. Nat’l Union Fire Ins. Co., 2015-Ohio-5477 (Oh. Ct. App. Dec. 30, 2015), the Court of Appeals of Ohio held that an insurer was entitled to recover defense costs and prejudgment interest pursuant to restitution theory. Ultimately, however, the net effect of Chiquita Brands Int’l, Inc. is somewhat diminished by the Court of Appeals’ statement that its holding was narrow and limited to the particular posture and facts of the case, which while not exceeding rare, may be difficult …

January 26, 2016 First Party Property

Which Came First? Turns Out, It May Not Matter. Illinois Appeals Court Weighs in on Anticoncurrent-Causation Clause for the First Time

For the first time, an Illinois court addressed an anti-concurrent causation clause. In Bozek v. Erie Ins., 2015 IL App.(2d) 150155 (Dec. 17, 2015) , an Illinois appellate court held a homeowner’s insurance policy’s anti-concurrent causation clause precluded coverage because an excluded event, hydrostatic pressure, contributed to a single loss (the lifting of a pool out of the ground). The plaintiffs incurred damage to their in-ground swimming pool after a heavy rain storm. The large amount of rain saturated the soil, producing significant uplift …

January 20, 2016 Life, Health, Disability & ERISA

A Supreme Lesson on Diligence and Equity: Court Bars Recovery of Equitable Lien Under ERISA Plan

The Supreme Court issued its decision in Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan , holding that the fiduciary could not enforce its equitable lien against general assets. The court reversed the Eleventh Circuit, finding that where a plan participant has obtained a settlement from a third party — but has dissipated the settlement on nontraceable items — the fiduciary cannot bring a suit under Section 502(a)(3) to attach the general assets of the participant as the claim is not …

December 21, 2015 Personal and Advertising Injury

Non-Party’s Claim of Employment Relationship with Plaintiff Creates Question of Fact in DJ Action

A complaint clearly and repeatedly alleges the plaintiff was the employee of the defendant, but for purposes of the employment practices exclusion, was she really? At this point, it’s unclear after her “real” employer claims her as its own in the declaratory judgment action.

Bikram Choudhury founded the popular Bikram (or hot yoga) in the 1970s. A former student accused Bikram of raping her in 2010. As Bikram’s legal counsel was looking into that rape accusation, she alleges that Bikram harassed her into halting the …

December 17, 2015 Fraud

Daughter Does Not Have to Pay for the Sins of Her Mother: Insurer Entitled to Restitution from Insureds but Appellate Court Remands Damage Award

The 2015 holiday season might be a bit tense for a mother-daughter team ordered to pay restitution to their insurer for fraud and misrepresentation. Secura Ins. v. Thomas, 2015 Mich. App. LEXIS 2230 (Mich. App. December 1, 2015). While restitution was owed for the wrongful acts, the court held joint and several liability did not apply to frauds in which a party (the daughter) was not directly involved. This case presents an example an insurer performing excellent due diligence in discovering fraud, and a …

December 2, 2015 Life, Health, Disability & ERISA

Employee’s Equitable Interest in Boss’s Life Insurance Policy Trumps Boss’s Ability to Designate Wife as Beneficiary

In Shuttle v. Ligor (Mass. App. Ct., Nov. 20, 2015) the Massachusetts Court of Appeals held an employer was equitably estopped from changing the beneficiary of his life insurance policy from his employee to his wife, but the wife (who received the policy proceeds) owed nothing to the employee.

An employee of many years had been informed by her boss that she was designated as a beneficiary under his life insurance policy. The employee was told that her boss’s designation of her as beneficiary …

November 23, 2015 Life, Health, Disability & ERISA

Equity Trumps “Love.” And Designated Beneficiaries. With ERISA’s Blessing. Court Imposes Constructive Trust on Life Insurance Proceeds and Insurer Triumphs Through Interpleader

In McCarthy v. Estate of McCarthy, 2015 U.S. Dist. LEXIS 153107 (SDNY, November 10, 2015), a federal judge imposed a constructive trust on the proceeds of a life insurance policy in favor of the decedent’s ex-wife and children over his girlfriend. Equity required the constructive trust due to the decedent’s breach of his divorce agreement, regardless of who was actually the designated beneficiary.

Pursuant to the terms of a 2012 divorce settlement, the decedent agreed to a number of conditions regarding spousal and child …

November 18, 2015 Industry News

Exceptionally Navigating Abstention: Northern District of Illinois Applies the Colorado River Doctrine to Stay Arbitration

An insurer and a policyholder entered into an agreement, or didn’t they? Either way, the Northern District of Illinois doesn’t have to decide because “exceptional circumstances” triggered the Colorado River abstention doctrine, allowing the court to stay the case asking it to determine whether the agreement existed.

A policyholder and one of its insurers began having disputes about who had to provide coverage for certain claims. As a result of those disputes, the policyholder and the insurer allegedly entered into an agreement in 2007, where …

October 28, 2015 Automobile Coverage

Attorney-Negotiated Medical Discounts Reduce Tort Victim’s Recovery

The Louisiana Supreme Court has issued the first ruling from a state’s highest court on the issue of whether a tort victim’s potential recovery in a lawsuit is diminished when her attorney negotiates medical discounts on her behalf. The court ruled that tort victims can only recover the lower rate for medical services they actually pay.

The case, Hoffman v. 21st Century N Am. Ins. Co., No. 14-2279, 2015 La. LEXIS 1962 (La. Oct. 2, 2015), dealt with the collateral source rule. Under the …