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July 14, 2014 Policy Conditions, Considerations, Construction, and Formation

11th Circuit Rejects ‘Complaint Taken as a Whole’ Analysis of Insurer’s Duty to Defend, Places Reinsurer on Hook for Defense Costs

In Public Risk Management of Florida v. One Beacon Insurance Co., the 11th Circuit Court of Appeals reversed a decision relieving primary insurer Public Risk Management of Florida (PRM) of its duty to defend the City of Wintergarden because the underlying “Complaint taken as a whole” failed to state that the City committed a covered wrongful act. As a result, reinsurer OneBeacon Insurance Company was forced to pay PRM’s defense costs.

PRM is an intergovernmental risk management association that insures various local governmental entities …

April 29, 2014 Emerging Issues

TCPA Exclusion Upheld by the Eleventh Circuit

In a lawsuit brought by a distribution and marketing company, the policyholder sought coverage for a lawsuit alleging that it sent “unwanted ‘junk’ faxes in violation of the [Telephone Consumer Protection] Act.” The insurer denied coverage due to the exclusion concerning violation of statutes in connection with sending, transmitting or communicating any material or information.

The Eleventh Circuit affirmed the decision of the Middle District Court of Florida finding that the exclusion was not ambiguous or void as against public policy. Specifically, the Circuit Court …

January 27, 2014 Emerging Issues

Eleventh Circuit Blows Away $4M Verdict in Hurricane Wilma Case

The Eleventh Circuit recently reduced a $4 million jury verdict to $1,600 after finding that the policyholder, a property management company, lacked an insurable interest in the ownership of the property to justify any higher award.

The plaintiff, Banta Properties (Banta), served as the property management company for three apartment complexes in Broward County, Florida. The three complexes were all separate legal entities that were not owned by Banta. In exchange for managing the complexes, the owners paid Banta 4 percent of gross income.

Banta …

November 26, 2013 Regulatory

Force-Placed Meets the Feds – The Insurance Regulatory Field Grows

Recent news regarding lender-placed insurance (more colloquially known as “force-placed” insurance) has focused on state efforts to regulate the industry. Now the Feds are getting involved, specifically the Federal Housing Finance Agency (FHFA). FHFA is now prohibiting servicers of mortgages issued by Fannie Mae and Freddie Mac from receiving any compensation from those insurers providing the force-placed coverage. Fannie Mae and Freddie Mac write over 60 percent of all mortgages in the U.S. As such, this action is going to impact a large segment of …

October 23, 2013 Emerging Issues

No Coverage for $21 Million in Stolen Escrow Funds

A condominium project developer won a $21 million judgment against Coastal Title Services Inc., when Coastal misappropriated escrow deposits of prospective condo tenants. Coastal’s attorney failed to notify its insurer of a case against it, and later ended up in prison in connection with the missing funds. The court found the failure to notify the insurer let the insurer off the hook for providing any coverage.

A developer and Coastal were partners on a condominium project. A prospective tenant sued the developer for its escrowed …

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

Colorado Court Applies Massachusetts Law to Bar Coverage for Chinese Drywall

A Colorado state court applied Massachusetts law to deny an excess carrier’s summary judgment motion that sought to disclaim coverage for defective Chinese drywall claims. Specifically, the court found that use of the term “pollutant” within the absolute pollution exclusion to be ambiguous “at this stage in the proceedings.” In doing so, the court set the case up for trial.

The underlying claims giving rise to this coverage matter involve allegations that defective drywall, imported into the U.S. from China, was installed into homes. It …

October 7, 2013 Policy Conditions, Considerations, Construction, and Formation

Old Republic Relies Upon Escape Clause To Partially Avoid Primary Coverage In Auto-Tractor-Trailer Accident

Amerisure Ins. Co. v. Old Republic Ins. Co.,
M.D. Fla. Sept. 27, 2013 (2013 U.S. Dist. LEXIS 139251)

This declaratory judgment action arises from an underlying auto and tractor-trailer accident. At the time of the accident, the tractor was owned by Ryder Truck Rental, and the trailer was owned by an affiliate of Star Transportation Company and Star Distribution Systems, Inc. (collectively Star). The tractor was leased to Star pursuant to a Truck Lease and Service Agreement (TLSA). Ryder was insured under a business auto …

February 19, 2013 Policy Conditions, Considerations, Construction, and Formation

Number of Occurrences Limited to Just One in Pennsylvania Defective Drywall Litigation

Cincinnati Insurance Co. v. Devon International, Inc. et al. (E.D.Pa) (Index No. 2:11-cv-05930-GP)

A federal court in Pennsylvania limited the number of occurrences under a CGL policy for injuries caused by defective drywall. The case involved a sourcing agent for Chinese products who filled an order for drywall by purchasing them from a Chinese drywall manufacturer and shipping them to Florida. The drywall contained an improper amount of sulfur damaging real and personal property.

Although there were two separate consecutive policies at issue, the insurer …

January 11, 2013 Environmental

Eleventh Circuit Denies Coverage For Drywall Claims Based On Pollution Exclusions

Granite State Ins. Co. v. American Building Materials, Inc.
(11^th Cir, January 3, 2013)
This environmental coverage dispute arises out of Chinese Drywall claims and the interpretation of coverage under six separate policies issued by the plaintiff. Here, an insured alleged that another insured, American Building, supplied it with defective gypsum drywall manufactured in China for installation in residential homes in Florida. It was determined that the drywall was emitting unusual amounts of sulfide gases.

The court of appeals held that the damages …