Insurers’ Pre-Disclaimer Legal Privileges Against Disclosure Still Under Attack

Otsuka America, Inc. and Pharmavite LLC v. Crum & Forster Specialty Insurance Company[1] is the latest in what looks like ongoing erosion of an insurer’s right to rely on attorney-client privilege and the work product doctrine in connection with a determination of insurance coverage.

The insurer denied coverage to the plaintiffs for a nine million dollar product recall loss. The plaintiffs filed this action to resolve the insurance coverage issue.

The court correctly identified the governing law, recognizing that “attorney-client privilege attaches if information …

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Unreasonable Expectations: New Jersey Appellate Court Rejects Commercial Insured’s Reliance Solely on Policy’s Declarations Page

Key Takeaways:

  1. New Jersey courts have been increasingly reluctant to extend the protections of the reasonable expectations doctrine to commercial insureds
  2. In addition to making the usual policy-based arguments, an insurer facing a coverage action in New Jersey based on the reasonable expectations doctrine should be sure to challenge the sufficiency (or lack) of evidence presented by the insured with respect to its actual expectations of coverage
  3. New Jersey courts will consider extrinsic evidence to assess whether an insured’s claimed expectations are objectively reasonable

Further …

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Washington State Supreme Court Holds That Insurance Adjusters Cannot Be Liable for Bad Faith

In a highly anticipated decision, the Supreme Court of Washington closed the door on statutory bad faith claims against insurer-employed adjusters. The case is Moun Keodalah and Aung Keodala v. Allstate Insurance Company, Tracey Smith., and John Doe Smith, — P.3d – (2019, 2019 WL 4877438 (Wash. Oct. 3, 2019).

The case arose out of a 2007 accident, when an uninsured motorcyclist struck the plaintiff’s truck, killing the motorcyclist and injuring the plaintiff. The police investigated the collision and determined the motorcyclist had …

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Part 3: Coverage Considerations Under CGL Policies for CCPA Violations

This blog post is our third in a multi-part series addressing what insurers need to know about the California Consumer Privacy Act (CCPA).

Imagine this: You own a successful string of sporting goods stores across California. Not only do you sell goods directly, but you also finance large purchases to well-qualified buyers and have a generous rewards program.

When customers log in to your website, you gather personal information (e.g., name, email address, cell number, etc.). In order to participate in the rewards …

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Illinois Federal Court Refuses to Extend NY Insurance Law 3420 to Policy Not Issued or Delivered in New York

An Illinois federal district court in Frankenmuth Mutual Insurance Company v. The Hockey Cup, LLC held that an insurer was excused from its defense obligations due to late notice, since the court found that New York Insurance Law Section 3420(a)(5)’s requirement that insurers show prejudice to deny coverage based on late notice did not apply because the policy was not issued or delivered in New York. 

The underlying lawsuit, in which the National Hockey League was one of the plaintiffs, alleged the insureds, A&R Collectibles, …

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Texas Supreme Court Asked to Decide if Texas Recognizes Limited Exception to Eight-Corners Rule

In State Farm Lloyds v. Richards, the federal appellate court asked the Texas Supreme Court to decide whether Texas law recognizes a limited exception to the so-called eight-corners rule applied when evaluating an insurer’s duty to defend its insured for a third-party liability claim.[1]

Under the eight-corners rule (referred to as the four corners rule in some jurisdictions), an insurer’s duty to defend is measured by the allegations of the complaint and the language of the policy.  Evidence outside of these materials is …

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Insurer Entitled to Reimbursement for Defense Costs Prohibited by Statute

In October 2017, the California Attorney General (AG) filed a complaint against Adir, doing business as department store chain Curacao, and its CEO under the state’s Unfair Competition Law (UCL) and False Advertising Law (FAL).[1]

Adir presented a claim based on the AG’s action under a directors and officers liability policy issued by Starr Indemnity and Liability Company. Starr initially denied coverage, but after receiving a letter from Adir, Starr agreed to provide a defense, subject to a reservation of rights. Starr later received …

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No Defense Owed to Insured for Mediation Involving Environmental Contamination

The Illinois Appellate Court recently held that the term “suit” in a commercial general liability policy does not include a pre-suit mediation between the insured and others over the allocation of costs incurred to remediate environmental contamination. As a result, the court ruled that the insurers had no obligation to reimburse the insured for its legal fees incurred in the mediation.[1]

The insured operated a manufacturing facility on a property that was eventually declared a Superfund site by the U.S. EPA. To avoid litigation …

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Seventh Circuit Holds That Replacement Cost Coverage Requires Aesthetic Matching in Hailstorm Claim

In the latest entry of “matching” jurisprudence under first party property policies, the Seventh Circuit Court of Appeals, acknowledging that jurisdictions have reached conflicting results and applying Illinois law, held that a carrier was required to replace undamaged siding to match the panels replaced due to damage in a hailstorm.[1] In doing so, the court affirmed the Northern District of Illinois’ award of summary judgment in favor of the insured on that issue.

The parties’ dispute arose out of a May 2014 hailstorm that …

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No Privilege for Communications Between Insurance Adjuster and In-House Counsel

Courts around the country continue to refine the scope of the attorney-client privilege and the attorney work-product doctrine in the context of communications between an insurance company adjuster and the insurer’s in-house counsel. Recently, the United States District Court for the District of Colorado held that a claims adjuster’s emails, claim notes, and interoffice memoranda are not privileged, even though they involved the carrier’s in-house attorney. Olsen v. Owners Ins. Co., No. 18-CV-1665-RM-NYW, 2019 WL 2502201 (D. Colo. June 17, 2019)

In Olsen, …

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