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

Mealey's Emerging Insurance Disputes

August 12, 2025
Shutdown Orders Caused Insured’s Losses, Not Pandemic, Minnesota Panel Says, Reverses

ST. PAUL, Minn. — A Minnesota appeals panel on Aug. 11 reversed a lower court’s summary judgment ruling in favor of a commercial property insurer in an insured’s coverage dispute arising from the COVID-19 pandemic, ruling that the governmental orders that shut down 150 of the insured’s health and fitness clubs in response to the pandemic are the causes of the insured’s losses for purposes of determining the number of occurrences subject to the policy’s “Interruption By Communicable Disease” coverage limit.
August 12, 2025
Law Firm Credibly Alleges Breach Of Duty To Indemnify In Cyber Crime Coverage Suit

SEATTLE — A federal judge in Washington held that a law firm insured plausibly alleges that a commercial cyber insurance policy covers its liability under the Security Breach Liability provision, refusing to dismiss the insured’s claim that the insurer breached its duty to indemnify.
August 11, 2025
Judge Refuses To Dismiss Chemical Company’s Coverage Suit Arising From Explosion

BEAUMONT, Texas — A federal judge in Texas denied an insurer’s motion to dismiss a sustainable chemical company’s breach of contract and declaratory judgment lawsuit seeking to obtain coverage for the full value of its business interruption loss caused by an explosion at a Texas plant, finding that the company sufficiently pleaded a right to sue the insurer “based on an implied agreement outside the Reinsurance Agreement.”
August 11, 2025
Connecticut Judge Refuses To Strike Bad Faith Claims In Cryptocurrency Loss Suit

MILFORD, Conn.— A Connecticut judge denied a homeowners insurer’s motion to strike two claims for breach of the implied covenant of good faith and fair dealing in a coverage dispute arising from the insured’s cryptocurrency loss, finding that the insured has asserted specific conduct that indicates actions “with conscious bad faith design.”
August 08, 2025
Judge Grants Insured’s Motion To Certify Order In Suit Over False Advertising

HONOLULU — A federal judge in Hawaii on Aug. 7 granted an insured’s motion to certify an order granting summary judgment in favor of an insurer in a coverage dispute arising from claims that the insured sold coffee and falsely advertised that it contained 100% Kona coffee, allowing the insured to appeal the ruling on contract interpretation issues before discovery begins on its bad faith claim.
August 06, 2025
Shooting Death Direct Result Of Insured’s Foreseeable Actions, 6th Circuit Affirms

CINCINNATI — The Sixth Circuit U.S. Court of Appeals on Aug. 5 held that a woman’s shooting death was a direct result the insured’s foreseeable actions and, as a result, the woman’s estate and the insured fail to demonstrate that the insured’s conduct falls under a homeowners insurance policy’s definition of an “occurrence,” affirming a lower federal court’s grant of the insurer’s motion for summary judgment in its declaratory judgment lawsuit.
August 06, 2025
Magistrate Stays CGL Coverage Dispute Over Negligence Claims Against Mutual Insured

FRESNO, Calif. — A federal magistrate judge in California granted plaintiff and defendant commercial general liability insurers’ request to stay proceedings in a coverage dispute over underlying allegations that their mutual insured negligently conducted cyclic steaming operations to extract and harvest oil.
August 05, 2025
Professional Liability Insurer: No Coverage Owed For RICO Suit Against Law Firms

LOS ANGELES — A lawyers’ professional liability insurer filed suit in a federal court in California, seeking a declaratory judgment that it has no duty to defend or indemnify its law firm insureds against an underlying Racketeer Influenced and Corrupt Organizations Act lawsuit brought by Ford Motor Co., arguing that the underlying action fails to allege an act or omission in the insureds’ performance of legal services.
August 05, 2025
Financial Services Company Sues Primary, Excess D&O Insurers In Delaware Court

WILMINGTON, Del. — A financial services company insured sued its primary and excess insurers in a Delaware court, seeking directors and officers insurance coverage for its defense costs associated with an underlying arbitration arising from claims that the insured recruited a broker-dealer’s employees to steal trade secret software code and proprietary information that they used to build competing products and businesses.
August 05, 2025
Pollution Exclusion Does Not Bar Coverage For EtO Claims, Insured Says

PHILADELPHIA — A pollution exclusion does not bar coverage for underlying claims stemming from the contamination of ice cream with ethylene oxide (EtO) because the excess insurer’s policy states that the pollution exclusion will not apply if a loss is covered by the policy underlying the excess insurer’s policy, an insured says in a complaint filed in Pennsylvania court.
August 04, 2025
Majority: Restitutionary Award Not Insurable Under California Law

SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals majority on Aug. 4 affirmed a lower federal court’s grant of a business and management indemnity insurer’s motion to dismiss a venture capital firm’s breach of contract lawsuit, agreeing with the lower court that a restitutionary award made by arbitrators is not insurable under California law.
August 04, 2025
Professional Liability Insurer Announces Judgment Satisfied In Mold Coverage Dispute

LAS VEGAS — A contractor’s professional and indemnity liability insurer filed a notice in a federal court in Nevada indicating that a broker’s professional liability insurer has satisfied a judgment in its favor in a coverage dispute arising from mold and moisture-related damage.
August 04, 2025
Absolute Firearms Exclusion Bars Coverage For Negligence Suit Over Fatal Shooting

GREAT FALLS, Mont. — A federal judge in Montana granted a liquor liability insurer’s motion for summary judgment in its declaratory judgment lawsuit disputing coverage for an underlying negligence action arising from a fatal shooting at the insured’s bar, concluding that the policy’s Absolute Firearms Exclusion bars coverage.
August 01, 2025
4th Circuit Vacates, Remands Suit Against Insurer Arising From Tree Damage

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on July 31 vacated and remanded a lower federal court’s ruling that granted an insurer’s motion to dismiss an insured’s lawsuit arising from tree damage, finding that the lower court failed to parse the claims alleged solely against the insurer and to determine whether those claims were valid.
August 01, 2025
Florida Panel Reverses Ruling In Broker’s Favor In Hurricane Michael Coverage Suit

TALLAHASSEE, Fla. — A Florida appeals panel reversed a lower court’s summary judgment ruling in favor of an insurance broker in a lawsuit arising from damage to a recreational vehicle (RV) park caused by Hurricane Michael, remanding for further proceedings and declining to address the lower court’s order denying the broker’s motion for attorney fees.
July 30, 2025
Judge Dismisses Master Complaint Against Insurer In Coronavirus Coverage MDL

CHICAGO — The federal judge in Illinois who is overseeing a multidistrict litigation by hospitality industry insureds who sought business interruption protection coverage for their losses arising from the coronavirus pandemic on July 30 granted an insurer’s renewed motion to dismiss a master complaint, finding that decisions in other cases interpreting similar and mostly identical coverage provisions “almost uniformly held that there must be some physical effect or alteration to the insured property, not just a loss of its use.”
July 30, 2025
11th Circuit Reverses In Suit Seeking Policy Rescission Over Misrepresentations

ATLANTA — The 11th Circuit U.S. Court of Appeals on July 29 reversed and remanded a district court order dismissing a general liability insurer’s suit seeking a policy rescission for purported material misrepresentations in a policy renewal application and a declaration that it does not have a duty to defend or indemnify an underlying negligence action related to a parasailing accident, finding that the lower court’s dismissal of the duty to defend claim was an abuse of discretion and that the district court should exercise jurisdiction regarding the rescission claim.
July 30, 2025
Judge Dismisses Professional Negligence Suit Over Water Damage Following Settlement

CHEYENNE, Wyo. — A federal judge in Wyoming on July 29 granted a homeowners insurer, mechanical engineering firm and plumbing company’s stipulated motion to dismiss with prejudice the subrogated insurer’s negligence suit arising from water damage that was allegedly caused by improperly installed plumbing.
July 30, 2025
Illinois Majority: Cyber Event Exclusion Bars Coverage For Fraudulent Wire Transfer

CHICAGO — An Illinois appeals court majority affirmed a lower court’s ruling in favor of an insurer in its declaratory judgment lawsuit disputing coverage for the insureds’ underlying $673,384.18 loss arising from a fraudulent wire transfer, holding that the policy’s cyber event exclusion bars coverage.
July 30, 2025
Judge: Insurers Have Duty To Defend, Indemnify Hotel Against Sex Trafficking Suit

NORFOLK, Va. — A federal judge in Virginia granted an insured’s motion to dismiss its insurers’ lawsuit seeking a declaratory judgment that they have no duty to defend or indemnify against a Jane Doe’s claims that she was trafficked for sex at a hotel that was owned or operated by the insured, ruling that the policy unambiguously covers the conduct alleged in the underlying action.
July 28, 2025
4th Circuit Affirms Ruling In Dispute Over Lender’s Insurance Premiums

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals held that a mortgage lender did not violate the Credit Grantor Closed End Credit Provisions (CLEC) by retaining a portion of the appellant’s insurance premiums as a commission, affirming a lower federal court’s ruling that granted the lender’s motion for judgment on the pleadings.
July 28, 2025
U.S. Tax Court Clarifies, Maintains Ruling In Favor Of IRS In Microcaptive Case

WASHINGTON, D.C. — Stating that “the Court failed to fully clarify two important issues” in a March opinion, a U.S. Tax Court judge issued a supplemental memorandum opinion in a consolidated case maintaining that a purported captive insurance arrangement could not exclude premiums from income during the 2015 and 2016 tax years because it is not considered insurance and that it must recognize $781,977 in income for the 2015 tax year because the provisions allowing deferral of unearned premiums do not apply to entities that are not insurance companies.
July 25, 2025
Delaware High Court Remands No-Action Issue In D&O Coverage Dispute

WILMINGTON, Del. — The Delaware Supreme Court affirmed a lower court’s grant of insurers’ motions to dismiss a company and its CEOs’ lawsuit seeking directors and officers liability coverage under 2023 policies for an underlying lawsuit alleging that they undersold the value of investors’ shares in the company and its parent company but remanded for further consideration of issues related to the “No Action” clause under the 2021 insurance policies.
July 25, 2025
5th Circuit Affirms Ruling For IRS In Tax Row Over Purported Microcaptives

NEW ORLEANS — Upholding a ruling for the U.S. Internal Revenue Service in a federal tax dispute over purported microcaptive insurance arrangements, the Fifth Circuit U.S. Court of Appeals interpreted part of the Internal Revenue Code “to determine when supervisory approval was required, an issue of first impression in this circuit.”
July 25, 2025
New York Justice Partly Grants Insured’s Request To Review Discovery Order

NEW YORK — A New York justice granted in part a commodities investment manager insured’s request for review and clarification of a judicial hearing officer’s ruling regarding document discovery in an excess professional liability coverage dispute arising from underlying claims that the insured conspired to commit fraud.