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May 19, 2009 Policy Conditions, Considerations, Construction, and Formation

Second Circuit Remands Lloyd’s Dispute on Policy Terms

Crucible Materials Corp v. Certain Underwiters at Lloyd's

(2d Circ. May 14, 2009 (New York))

The plaintiff insured alleged that defendant insurer breached an excess insurance contract insuring against property damage claims arising from the insured's manufacturing operations at 18 sites across the United States. Concluding that the insured failed to present evidence of the terms of the contract, the United States District Court New York granted summary judgment to the insurer. The district court based its decision awarding summary judgment in favor of the insurer on …

May 5, 2009 Reinsurance

Court Upholds Sanctions for Party’s Failure to Arbitrate in Good Faith

SECOND CIRCUIT

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK V.

EMC NATIONAL LIFE COMPANY

(CIVIL ACTION NO.: 07-CV-0828 – April 9, 2009)

Appellant appealed a judgment from the United States District Court for the Southern District Court of New York vacating a portion of an arbitration award on the grounds that the arbitration panel went beyond its authority in awarding attorneys’ fees and arbitrator’s fees as sanctions for a party’s failure to arbitrate in good faith pursuant to the parties’ coinsurance agreement.

The arbitration section …

June 2, 2015 Regulatory

FSOC Replies to MetLife Lawsuit Challenging Nonbank SIFI Status

In early 2015, MetLife filed a lawsuit challenging its designation as a nonbank systemically important financial institution (nonbank SIFI). On May 11, 2015, the Financial Stability Oversight Council (FSOC) filed a redacted motion to dismiss (or in the alternative a motion for summary judgment) in response to MetLife’s lawsuit.

One of MetLife’s key arguments in its complaint is that FSOC’s designation was arbitrary and capricious. FSOC argues in its motion to dismiss, dated May 11, 2015, that its decision to designate MetLife as a nonbank …

August 22, 2013 Policy Conditions, Considerations, Construction, and Formation

Calculation of Defense Contribution Not Reliant On Same Layer of Coverage

Continental Casualty Company v. National Union Fire Insurance Company of Pittsburgh, PA
(D.C. Minn. Case 09-cv-00287-JRT-JJG, August 9, 2013)

In a coverage matter involving exposure to benzene, one insurer, among five others, sought additional contribution from another for defense costs. Previously, the Minnesota Federal Court had granted summary judgment in favor of the plaintiff insurer, finding that the defendant insurer owed one-seventh of the defense costs associated with the action pursuant to Cargill, Inc. v. Ace Am. Ins. Co., 784 N.W.2d 341, 354 (Minn. …

August 6, 2013 Emerging Issues

California Supreme Court Authorizes UCL Lawsuits Against Insurers

Yanting Zhang v. California Capital Insurance Company

In a decision by the state’s highest court, the California Supreme Court harmonized years of split opinions among California courts regarding the inability to bring a private action under the Unfair Insurance Practices Act (UIPA). The inability to do so arose out of a 1988 decision by the same court, which stated that UIPA never intended to create a private cause of action for commission of the unfair practices listed therein. Moradi-Shalal v. Fireman’s Fund Ins. Co., …

June 11, 2013 Environmental

Fourth Circuit Finds Arsenic and Lead Contamination Subject to Absolute Pollution Exclusion

Ross Development Corporation v. Fireman’s Fund Insurance Company, et al. (Index No. 12-2059) (June 6, 2013)

On appeal from the U.S. District of South Carolina, the Fourth Circuit affirmed the court’s ruling that the insurer’s had no duty to defend or indemnify a CERCLA action brought against the insured due to the absolute pollution exclusion in the policies.

Specifically, the parties debated whether, and how quickly, arsenic and lead leached into surrounding soils and when this contamination migrated to and damaged surrounding properties. The policies …

May 13, 2013 Policy Conditions, Considerations, Construction, and Formation

Alabama’s Highest Court Settles Ambiguity and Declares Faulty Work is not an Occurrence

Shane Traylor Cabinetmaker, LLC and Michael Shane Traylor v. American Resources Insurance Company, Inc. (Ala.)

The highest court in Alabama confirmed and clarified current law addressing whether there could be an occurrence due to faulty work in and of itself, where there was no damage to any surrounding property. In this case, the insured was hired to perform cabinetry and woodworking work for a homebuilder. The insured sued the homebuilder and was later countersued for breach of contract, negligence, and mental-anguish, among other things. This …

April 29, 2013 Policy Conditions, Considerations, Construction, and Formation

Federal Court Maintains No Property Damage, No Occurrence Stance for Intentional Breach of Contract

NWS Corp. v. Hartford Fire Ins. Co. (D. Mass.) (12-30113-KPN)
The U.S. District Court for Massachusetts relied on long-standing state law to deny coverage for an insured television programmer who was sued by DirectTV for setting prices below those set forth in its contract with DirectTV, and fraudulently concealing its conduct with numerous material misrepresentations. In the underlying matter, the arbitrator awarded DirectTV $5 million, finding that the insured “materially breached its contract,” “made intentional, deliberate misrepresentations” and “was also liable for … conversion.” A …

April 15, 2013 Policy Conditions, Considerations, Construction, and Formation

Re-Evaluating “Occurrence” in the Construction Defect Realm

K&L Homes, Inc. v. American Family Mutual Ins. Co., 2013 ND 57 (N.D. 2013) (Index No. 20120060)

The highest court in North Dakota re-evaluated a lower court’s decision concerning a construction defect matter, deciding in favor of the insured. In this matter, the plaintiff, a homebuilder, sought coverage for a judgment entered against them for over $250,000. The damages related to a defective home that the underlying plaintiff purchased from the plaintiff. The underlying plaintiff sued for breach of contract and breach of implied warranties. …

March 4, 2013 Policy Conditions, Considerations, Construction, and Formation

Florida Widens Insurer’s Liability for Defense Costs

An intermediate appeals court in Florida held that an insurer’s decision to refuse separate independent counsel for an additional insured (AI) was wrong and awarded the AI indemnification for attorney’s fees and costs for independent counsel. In University of Miami v. Great American Assurance Company, etc., (No. 3D09-2010, Florida Third District Court of Appeal), the insured ran a summer swim camp on the AI’s campus. The claimant sued both entities for lack of supervision, claiming bodily injuries from being pulled unresponsive from the …