Mealey's Emerging Insurance Disputes : Mealey's : Legal News & Analysis

Mealey's Emerging Insurance Disputes

September 24, 2024
No Special Relationship Existed Between Broker And Insured, 9th Circuit Affirms

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s summary judgment ruling in favor of an insurance broker in an insured’s negligence and broker malpractice lawsuit prompted by the losses it incurred from its replacement of defective, recalled light bulbs, finding that there was no special relationship between the broker and the insured based on the professional services the broker offered.
September 24, 2024
1st Circuit Majority Affirms Ruling In Favor Of Professional Liability Insurer

BOSTON — A majority of the First Circuit U.S. Court of Appeals affirmed a lower federal court’s judgment in favor of a professional liability insurer in a breach of contract lawsuit brought by the attorney insured’s assignee, rejecting the assignee’s contention that the insurer must demonstrate that it was prejudiced by the late notice of the underlying legal malpractice claim in order to deny coverage.
September 23, 2024
Noting ‘Evergreen Problem,’ Panel Remands Coverage Suit For Jurisdictional Discovery

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Sept. 20 held that an insurer and its television production company insured failed to establish the citizenship of limited liability companies in a coverage dispute arising from underlying injury claims brought against the insured by participants of the reality television show “My 600-lb Life,” remanding to a Texas federal court for jurisdictional discovery.
September 23, 2024
Pollution Exclusion Does Not Preclude Coverage For Suit Stemming From Breath Mints

ST. LOUIS — A Missouri federal judge on Sept. 20 granted a motion to dismiss an insurer’s suit seeking a declaration that no coverage is owed for an underlying suit seeking damages caused by a child’s ingestion of liquid breath mints that contained a chemical that damaged the child’s esophagus because the policy’s pollution exclusion cannot be interpreted as a bar to coverage for the underlying suit.
September 23, 2024
California High Court Tosses Certified Question Following COVID-19 Coverage Ruling

SAN FRANCISCO — In light of the recent ruling in John's Grill, Inc. v. The Hartford Financial Services Group, Inc., the California Supreme Court dismissed its consideration of a certified question from the Ninth Circuit U.S. Court of Appeals asking whether an insurance policy’s virus exclusion is unenforceable in a coverage lawsuit brought by owners, operators and managers of two Napa Valley, Calif., restaurants in the wake of the coronavirus pandemic.
September 20, 2024
Insured’s Assignees Ask 11th Circuit To Vacate No Coverage Ruling

ATLANTA — Assignees of an accounting services provider insured asked the 11th Circuit U.S. Court of Appeals to vacate its ruling that affirmed a lower federal court’s grant of summary judgment in favor of a professional liability insurer in their breach of contract lawsuit, asking the circuit court to reaffirm “the principle that only the New Jersey Supreme Court has the right to define the grammatical constructions that create the official natural readings of contracts and statutes in its state.”
September 20, 2024
Judge: CGL Insurer Owes Defense For Sex Trafficking Claims Against Hotel Insured

ATLANTA — A federal judge in Atlanta granted a hotel operator insured’s motion to dismiss a commercial general liability insurer’s complaint to the extent that the insurer seeks a declaration that it has no duty to defend against an underlying lawsuit alleging that the insured did not uphold its duty of care concerning the safety of its hotel and hotel guests by failing to prevent and respond to evidence of sex trafficking, rejecting the insurer’s argument that the policy’s “Abuse or Molestation” and “Assault or Battery” endorsements bar coverage.
September 20, 2024
Panel Affirms Judgment In Coverage Suit Arising From Agency’s Breach Of Contract

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals affirmed a lower federal court’s finding that an excess insurer breached its duties to defend and indemnify and a primary insurer violated its Stowers duty when it did not accept a marina owner’s settlement demands in an underlying breach of contract lawsuit brought against their mutual insured.
September 18, 2024
No Coverage Owed For Footwear Chain’s Coronavirus Losses, Illinois Panel Affirms

CHICAGO — An Illinois appeals court panel on Sept. 17 affirmed a lower court’s grant of a commercial property insurer’s motion to dismiss the owner of retail footwear chain DSW Designer Shoe Warehouse’s breach of contract and declaratory judgment lawsuit seeking coverage for its losses arising from the COVID-19 pandemic, finding that the policy’s “law and ordinance” and “contamination” exclusions bar coverage.
September 18, 2024
Class Action Alleges Insurance Provider Negligently Failed To Prevent Data Breach

NEW YORK —A class action complaint was filed in a New York federal court against a financial organization that offers insurance, retirement and investment services primarily to teachers, alleging that the defendant failed to prevent a May 2023 data breach that resulted in the theft of the personally identifiable information (PII) of its current and former clients.
September 17, 2024
9th Circuit Denies Insurers’ Petition For Rehearing In Coronavirus Coverage Suit

SEATTLE —The Ninth Circuit U.S. Court of Appeals on Sept. 16 denied insurers’ petition for rehearing and rehearing en banc asking it to reconsider its Feb. 29 opinion that affirmed a federal court’s finding that a tribal court has subject matter jurisdiction over a COVID-19 coverage suit involving tribal properties on tribal land, but with a dissenting judge saying that “this case cried out for rehearing en banc.”
September 17, 2024
U.S. Tax Court Now Has 8 Rulings For IRS, 0 Against In Microcaptive Insurance Rows

WASHINGTON, D.C. — In a Sept. 16 ruling that he said brought the court’s record on purported microcaptive insurance cases to 8-0 in favor of the commissioner of Internal Revenue, a U.S. Tax Court judge found that the corporation that paid purported premiums “achieved no transfer of risk”; that the putative reinsurer “accomplished no meaningful distribution of risk”; and that “the arrangements at issue did not remotely resemble insurance in the commonly accepted sense.”
September 17, 2024
Parties, 10 Amici Weigh In On Economic Substance Doctrine In Microcaptive Case

WASHINGTON, D.C. — Ten amicus curiae briefs regarding the “economic substance doctrine” have been filed at the invitation of a U.S. Tax Court judge who is presiding over consolidated cases involving purported microcaptive insurance companies and considering the remaining issue of accuracy-related penalties.
September 17, 2024
Judge Refuses To Dismiss Contractor’s Coverage Suit Arising From Hotel Collapse

NEW ORLEANS — A federal judge in Louisiana denied builders risk insurers’ motion to dismiss a contractor’s breach of contract lawsuit seeking additional insured coverage for its $89,877,694 in losses arising from the aftermath of the partial collapse of a Hard Rock Hotel project in New Orleans, rejecting the insurers’ contention that the contractor’s lawsuit is untimely.
September 17, 2024
11th Circuit Rejects Insurer’s Challenge To Ruling In Favor Of Contractor’s Assignee

ATLANTA — The 11th Circuit U.S. Court of Appeals denied an insurer’s petition seeking reconsideration of its ruling that affirmed a lower federal court’s $557,500 summary judgment in favor of a contractor insured’s assignee in a lawsuit seeking coverage for damage incurred as a result of the insured’s misconduct.
September 16, 2024
Michigan Panel: Additional Insured Coverage Triggered For Premises Liability Suit

DETROIT — A Michigan appeals court held that it is clear that defendants are additional insureds because the insured entered into a written lease that required it to name them as additional insureds and an underlying death arose out of the decedent’s use of the part of a premises that was leased to the insured, affirming a lower court’s grant of summary disposition in favor of the defendants in the insurer’s declaratory judgment lawsuit.
September 16, 2024
Texas High Court Refuses To Review Insured’s Petition In Suit Challenging Practices

AUSTIN, Texas — The Texas Supreme Court denied an insured’s petition to review an appeals court’s reversal of a class certification order in a lawsuit alleging that an insurer withheld interest that was due on life insurance policies; one justice filed an opinion concurring in the denial of the petition but opining that “in the future, the lower courts should expressly resolve any jurisdictional objections, whether complex or simple, before turning to any merits issue.”
September 16, 2024
Bump-Up Exclusion Unambiguously Bars Coverage, Insurers Argue To 4th Circuit

RICHMOND, Va. — Asserting that an appellant insured “has it backward,” insurers asked the Fourth Circuit U.S. Court of Appeals to affirm a lower federal court’s holding that a “bump-up” exclusion unambiguously precludes directors and officers liability insurance coverage for the $90 million settlement of two underlying lawsuits arising from a 2015 merger.
September 13, 2024
Panel: Insured Did Not Show It Provided Timely Notice Of Medical Malpractice Suit

BROOKLYN, N.Y. — A New York appeals court concluded that an insured failed to demonstrate that it timely notified its insurer of an underlying medical malpractice lawsuit, affirming a lower court’s denial of the insured’s motion for summary judgment in its lawsuit seeking a declaration that the insurer has to duty to defend and indemnify it against the underlying action and a related third-party complaint.
September 13, 2024
Utah Judge Rules For Insurer In Coverage Dispute Over Ill. BIPA Violation Claims

SALT LAKE CITY — A Utah judge entered judgment in favor of a general liability insurer in its declaratory judgment lawsuit disputing coverage for an underlying action alleging its insured violated the Illinois Biometric Information Privacy Act (BIPA), finding that various policy exclusions bar coverage.
September 11, 2024
BIPA Violation Suit Did Not Trigger Coverage, Illinois Majority Rules In Reversal

CHICAGO — A majority of an Illinois appeals court panel on Sept. 10 held that an underlying lawsuit alleging that an insured violated the Biometric Information Privacy Act did not trigger coverage under its “Cyber, Data Risk, and Media Insurance” policies, reversing the lower court’s summary judgment ruling in favor of the insured and remanding for the court to enter summary judgment in favor of the insurer on the issue of its duty to defend.
September 11, 2024
5th Circuit Affirms Ruling In Insurer’s Subrogation Suit On Other Grounds

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Sept. 10 held that an oil well operator is not liable to the excess insurer of an oilfield consultancy, affirming on other grounds a lower federal court’s grant of summary judgment in favor of the oil well operator in the insurer’s subrogation breach of contract lawsuit seeking reimbursement for the $5 million it paid toward the settlement of an underlying injury lawsuit.
September 11, 2024
Panel: Court Lost Subject Matter Jurisdiction When It Allowed Insurer To Intervene

ATLANTA — The 11th Circuit U.S. Court of Appeals vacated a lower federal court’s grant of summary judgment in favor of hotel owners and operators in a negligence lawsuit arising from a slip-and-fall injury, finding that the lower court lost subject matter jurisdiction over the lawsuit when it granted an insurer’s motion to intervene.
September 11, 2024
Judge Dismisses $1M Crime Coverage Suit Following Stipulation By Law Firm, Insurer

FLINT, Mich. — Following a stipulation of dismissal by the parties, a federal judge in Michigan dismissed with prejudice a law firm insured’s breach of contract and bad faith lawsuit alleging that its insurer owed $1 million in crime coverage for its $1,602,107.98 in total losses stemming from a fraudulent funds transfer.
September 10, 2024
Panel Refuses To Reconsider Ruling In Insurer’s Favor In Suit Prompted By Pandemic

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals refused to reconsider its ruling that affirmed a federal court’s grant of summary judgment in favor of an insured in its breach of contract and bad faith lawsuit arising from the COVID-19 pandemic.