Emerging Issues Archives - Page 8 of 18 - The Insurance & Reinsurance Report

July 21, 2014 Emerging Issues

No Coverage for Improper Building Design

An architectural firm was sued for the improper design of a performing arts center in Louisiana and the Fifth Circuit Court of Appeals found that the firm’s insurer owed no coverage.

The architectural firm entered into a design contract with a Louisiana Parish, for the design of a performing arts center. The Parish sued the firm for defective design, asserting breach of warranty, negligence and lack of professional skill as the Parish experienced problems when the project was being constructed. The Parish alleged that the …

July 17, 2014 Emerging Issues

Primary Insurer Cannot Use Equitable Indemnification To Rewrite Unambiguous Terms Of Its Policy

The plaintiff, Arch Insurance Company (Arch), brought a declaratory judgment action against Illinois Union Insurance Company and Harleysville Worcester Insurance Company the defendants, seeking indemnification for payments made to settle a personal injury claim brought by Enio Rodrigues, an employee of the defendants’ insured, Erie Painting & Maintenance, Inc., against Arch’s insured, the New York State Thruway Authority (Authority).

The court found, and Arch conceded, that Arch could not seek contribution from other insurers for its payment to the Authority because the terms of the …

July 8, 2014 Emerging Issues

Hobby Lobby Precedent Already Undermined, Says Justice Sotomayor

Thursday, July 3, the United States Supreme Court granted an application for injunction pending appeal by Wheaton College, overriding its requirements for exemption from the contraceptive mandate under the Affordable Care Act, while calling into question the extent of the court’s holding in Burwell v. Hobby Lobby, Inc. In her dissent, Justice Sotomayor writes that this order “evinces disregard for even the newest of this Court’s precedents and undermines confidence in this institution.” Wheaton v. Burwell, 573 U.S. ____ (2014).

Wheaton College …

June 26, 2014 Emerging Issues

Federal Courts Again Unwilling To Hear TCPA Disputes

Less than two weeks after the Sixth Circuit used the anti-aggregation rule to dismiss a TCPA coverage action on grounds that it failed to satisfy the amount in controversy requirement, for purposes of diversity jurisdiction, the First Circuit likewise dismissed a TCPA action on substantially similar grounds. In CE Design, Ltd. v. American Economy Insurance Co. (1st Cir. Jun. 19, 2010), the First Circuit Court of Appeals held that the claimant-initiated insurance coverage action did not satisfy the amount in controversy requirement. Like the Sixth …

June 25, 2014 Emerging Issues

Mining Operations Exclusion Applies, but Only to Excess Layers

The Tenth Circuit overturned the lower court’s decision that would have freed a liability insurer from covering damages allegedly caused by its insured brine well operator. Specifically, the insured was alleged to have been negligent in causing destabilization of various structures caused by an underground cavern. This insurer issued primary and numerous excess/umbrella policies.

Initially, the insurer was not responsible for providing coverage due to an umbrella provision that excluded coverage due to damage or loss of use of property resulting from depressions in the …

June 25, 2014 Emerging Issues

“Other Insurance” Analysis Unnecessary If Policies Do Not Insure The Same Risk At The Same Level Of Coverage

This coverage dispute between the plaintiff, Progressive, and the defendant, St. Paul, concerns their respective rights and obligations to their mutual insured Sonoma Valley Bancorp, in an underlying lawsuit. Progressive covered the cost of the defense and settlement of the underlying lawsuit and now seeks contribution from St. Paul.

The court noted that Progressive’s policy was a primary policy, with an “other insurance” provision. On the other hand, St. Paul’s policy was an excess and umbrella policy with an “other insurance” clause obligating St. Paul …

June 17, 2014 Emerging Issues

The Streak Continues: Insurers Again Shut Out of Federal Court in Contesting Coverage for a TCPA Class Action Settlement

The Sixth Circuit ruled sua sponte in Siding and Insulating, Inc. v. Acuity Mutual Insurance Co. (6th Cir. June 10, 2014), that the subject coverage dispute, which arose out of the settlement of an underlying TCPA blast fax suit, did not satisfy the amount in controversy requirement for purposes of diversity jurisdiction. Following the Seventh Circuit’s recent holding in Travelers Property Casualty v. Good, 689 F.3d 714 (7th Cir. 2012), the Sixth Circuit concluded that the interests of the plaintiff class members could not …

June 1, 2014 Emerging Issues

11th Circuit Upholds Adequacy of Insurer’s Reservation of Rights and Rejects Estoppel Defense

In Wellons, Inc. v. Lexington Insurance Co. (May 16, 2014), the Eleventh Circuit rejected the insured’s argument that Lexington assumed and conducted its defense of the underlying lawsuit without adequately reserving its rights to disclaim coverage, affirming the district court’s finding that Lexington was not estopped from asserting its coverage defenses under the subject policies.

The Eleventh Circuit focused on interpreting the requirements for reservation of rights letters set forth by the Georgia Supreme Court in World Harvest Church, Inc. v. GuideOne Mutual Insurance Co.…

May 30, 2014 Emerging Issues

Mo’ Conflict, More Problems: Illinois Choice-of-Law Analysis Now Less Favorable for Insurers

Choice-of-law analyses are extremely significant when it comes to coverage disputes, especially those involving underlying blast fax suits brought under the Telephone Consumer Protection Act (47 U.S.C. §227, et. seq.), as the question of which state’s law applies will often be determinative of whether there is insurance coverage for the TCPA claim. The classic example involves a class representative strategically filing suit in Illinois, an historically coverage-friendly jurisdiction for TCPA lawsuits, with an eye on obtaining insurance coverage. This strategy just got easier for …

May 21, 2014 Emerging Issues

Florida Court Finds Underlying Tort Claimants Are Not Necessary Parties to DJ Action In Priority of Coverage Dispute

The plaintiff, Northern Assurance Company of America, sought a declaration as to the priority of coverage between its policy and that of the defendant, Auto-Owners, with respect to the underlying action. In the underlying action, Ray Lequerique alleged that he was injured while visiting David Giannone, Inc. (Giannone), a property owned by the Anthony Family Limited Partnership (Anthony) and leased to the Aqua Toy Store, Inc. (Aqua). Aqua Toy Store was insured by the plaintiff Northern Assurance. Giannone was insured by the defendant Auto-Owners under …