Mealey's California Insurance : Mealey's : Legal News & Analysis

Mealey's California Insurance

July 17, 2024
Fact Issues Remain On Whether Pollution Exclusion Applies To Coronavirus Losses

SANTA ANA, Calif. — A California federal judge denied an insurer’s motion for summary judgment on the issue of the applicability of a pollution and contamination exclusion after determining that questions of fact exist as to whether the exclusion bars coverage for business losses sustained by an insured in the wake of the COVID-19 pandemic; however, the judge granted the insurer’s motion on a bad faith claim after determining that the claim cannot survive because a legitimate coverage dispute exists.
July 16, 2024
Judge Grants Dismissal In FCA Violations Suit Against Calif. Specialty Laboratory

LOS ANGELES — Without providing explanation, a California federal judge on July 15 granted parties’ joint stipulation of dismissal in a relator’s qui tam suit against a California special laboratory, alleging violations of the federal False Claims Act and similar California statutory provisions for the lab’s role in inducing physicians and offering remuneration to them to refer government-insured patients to the lab.
July 16, 2024
Judge Allows Insurer To Seal Portions Of Complaint Disputing Coverage For Diocese

SANTA ANA, Calif. — A federal judge in California on July 15 granted an insurer’s administrative motion to seal references to confidential information and documents in its declaratory judgment lawsuit disputing coverage for underlying sexual abuse lawsuits brought under the California Child Victims Act against The Roman Catholic Bishop of Orange.
July 15, 2024
California High Court Dismisses Tribe’s Appeal In Coronavirus Coverage Dispute

SAN FRANCISCO — The California Supreme Court dismissed an Indian tribe insured’s appeal of a state appellate court’s finding that the insured and its experts failed to present sufficient evidence to demonstrate that the coronavirus caused property damage to the tribe’s casino and resort.
July 12, 2024
Panel Affirms No Coverage Ruling In Television Producer’s Coronavirus Coverage Suit

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on July 11 affirmed a lower federal court’s grant of an insurer’s motion for judgment on the pleadings in a television series producer insured’s breach of contract lawsuit seeking coverage for its losses incurred from coronavirus-related disruptions and delays in the production of its show, rejecting the insured’s contention that the lower court should have permitted it to present extrinsic evidence before it granted the insurer’s motion.
July 12, 2024
Federal Judge Refuses To Dismiss Coverage Dispute Over False Advertising Claims

LOS ANGELES — A federal judge in California denied a professional liability insurer’s motion to dismiss insureds’ breach of contract and bad faith lawsuit seeking coverage for an underlying putative class action alleging that they falsely advertised a penis enlargement device, finding that the court is unable to determine as a matter of law that the insureds’ alleged statements and omissions fail to arise out of work performed by the insureds that involves “specialized training, knowledge and skill in the pursuit of urology, including surgery.”
July 11, 2024
Insurer Seeks To Void Policy, Deny Fire Damage Coverage For Code Violation Fraud

LOS ANGELES — A commercial insurer sued its insured limited liability company in a California federal court, seeking rescission of the insured’s policy and a declaration that the insurer is not obligated to pay for fire damage to the property due to the insured’s material misrepresentations in the policy application regarding the absence of safety code violations and liens on the property when an investigation revealed otherwise.
July 10, 2024
9th Circuit Affirms Judgment For Insurer In Dispute Over Misrepresentation

SAN FRANCISCO — A split Ninth Circuit U.S. Court of Appeals panel on July 9 affirmed a district court’s grant of partial summary judgment to an insurer seeking a determination that a medical professions liability policy issued to its insured behavioral health provider provides no coverage for an underlying Oregon state court suit, finding that summary judgment was proper because the insured “made a material misrepresentation in its renewal application.”
July 09, 2024
Panel Affirms District Court’s Bad Faith Ruling, Judgment In Water Damage Suit

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeal affirmed a district court’s $125,000 judgment in favor of an insured in a water damage dispute after determining that the lower court did not abuse its discretion in denying the insured’s request for appraisal or in entering partial summary judgment on the insured’s bad faith claim because there is no evidence that the parties agreed to arbitrate the dispute and no evidence that the insurer acted in bad faith in handling the insured’s claim.
July 09, 2024
Judge: Insureds Failed To Show Their Damage Was Not Caused By Defect, Deterioration

LOS ANGELES — A federal judge in California held that damages to insureds’ property “were caused by a defect, weakness, inadequacy, fault, or unsoundness in design, repair, construction, or materials — which in turn caused wear, tear, . . . deterioration, and wet or dry rot” and that, as a result, their loss is excluded from coverage under their homeowners insurance policy.
July 08, 2024
Insureds Say 9th Circuit Should Affirm Coverage Opinion In Pollution Suit

SAN FRANCISCO — A district court correctly found that an insurer owes coverage for an underlying environmental contamination lawsuit because the insureds met their burden of proving that the underlying lawsuit alleges a potential for coverage under the policies at issue, the insureds maintain in an appellee brief filed in the Ninth Circuit U.S. Court of Appeals.
July 02, 2024
Judge: CGL Insurer Has No Duty To Defend Suit Alleging Substandard Work By Insured

SANTA ANA, Calif. — A federal judge in California granted a commercial general liability insurer’s motion for judgment on the pleadings in its declaratory judgment lawsuit disputing coverage for an underlying action alleging that its insured did substandard work on a Los Angeles luxury apartment project before being fired and it was liable for flooding damage to switchgear, finding that the insurer has no duty to defend or indemnify because the insured’s alleged “shoddy work” fails to constitute “property damage” to trigger coverage.
June 28, 2024
Beneficiary’s Claims Fail Based On Proper Rescission Of Policy, Judge Says

SACRAMENTO, Calif. — A beneficiary’s breach of contract and bad faith claims cannot proceed against a life insurer because the beneficiary’s wife made a material misrepresentation on the policy application that justified the insurer’s rescission of the policy, a California federal judge said in granting the insurer’s motion for summary judgment.
June 28, 2024
Judgment Entered In CGL Coverage Suit After Insurer, Contractor Seek Dismissal

OAKLAND, Calif. — A judgment was entered declaring that a commercial general liability insurer has no duty to defend or indemnify a contracting company insured and its owner against an underlying lawsuit alleging defective work on a home renovation project the same day a California federal judge signed the parties’ stipulation and proposed order for entry of final judgment.
June 24, 2024
High Court Again Extends Response Deadline In Review Of 9th Circuit FCA Reversal

WASHINGTON, D.C. — The U.S. Supreme Court on June 21 granted a district court qui tam plaintiff’s second request for additional time to respond to pharmaceutical companies’ petition that seeks review of the Ninth Circuit U.S. Court of Appeals’ ruling reversing the district court’s dismissal of a suit accusing the companies of violating the False Claims Act (FCA) by artificially inflating drug prices.
June 24, 2024
Panel: Professional Services Exclusion Bars D&O Coverage For Anti-Kickback Settlement

SAN FRANCISCO — A California appeals panel on June 21 held that an insured’s loss resulting from its settlement with the United States of claims that it violated the federal Anti-Kickback Statute is barred by its primary and excess directors and officers liability insurance policies’ professional services exclusion, affirming a lower court’s ruling in favor of the insurers in the insured’s breach of contract lawsuit.
June 21, 2024
Revised $195,000 Class Deal Gets Initial OK In Suit Alleging Fraudulent Policies

SANTA ANA, Calif. — Ruling various revisions sufficient, a California federal judge granted preliminary approval to a $195,000 settlement in a suit over alleged fraud involving captive reinsurance, also modifying the preliminarily certified settlement class.
June 19, 2024
California High Court Reverses, Says Vertical Exhaustion Applies To Policies

SAN FRANCISCO — The California Supreme Court reversed an appeals court’s ruling in a long-running asbestos insurance coverage dispute after determining that a vertical exhaustion method, rather than a horizontal exhaustion method, must be applied to excess policies that sit over an insured’s primary policies because the language of the excess policies and the insured’s reasonable expectations support a vertical exhaustion method.
June 19, 2024
Federal Judge: Employee’s Suit Alleges ‘Securities Claim’ Under D&O Policy

LOS ANGELES — A federal judge in California partly granted a biopharmaceutical company insured’s motion for judgment on the pleadings in a directors and officers liability coverage dispute, finding that a lawsuit brought by the insured’s former employee asserts a “securities claim” based on the policy’s clear language.
June 17, 2024
Lakers, Insurer Dismiss Coronavirus Coverage Dispute In California Federal Court

LOS ANGELES —The Los Angeles Lakers and its commercial property insurer filed a stipulation asking a California federal court to dismiss with prejudice the insured’s lawsuit arising from its property damage and business interruption claims for losses related to the COVID-19 pandemic.
June 13, 2024
Magistrate: Defendant CGL Insurer Owes Defense For Negligence Suit Against Insured

FRESNO, Calif. — A federal magistrate judge in California held that underlying allegations that an insured negligently conducted cyclic steaming operations constitute an “occurrence” under a defendant commercial general liability insurer’s policy, granting the plaintiff CGL insurer’s joint motion for summary judgment as to the defendant insurer’s duty to defend against an underlying lawsuit brought against their mutual insured.
June 13, 2024
Insurers’ Motion For Summary Judgment Denied In Row Over Jet Insurance Coverage

SAN DIEGO — A California federal judge denied summary judgment to insurers in their suit seeking rescission of a policy covering a private jet but granted in part the jet owners’ motion for partial summary judgment regarding their reliance “on a misrepresentation theory,” finding that the insurers failed to show that the insureds made misrepresentations about the identity of the jet’s pilots.
June 13, 2024
Judge Sustains Insurer’s Demurrer As To Bad Faith Claim In Suit Over Netflix Show

LOS ANGELES — A California judge sustained an insurer’s demurrer without leave to amend as to a breach of the implied covenant of good faith and fair dealing brought by the producers of the Netflix show “House of Cards” and overruled the insurer’s remaining demurrers in a coverage dispute arising from the insureds’ claims that the revised final season of House of Cards was not as successful as was anticipated before Kevin Spacey's departure from the show.
June 07, 2024
9th Circuit Gives Agencies Win In Crop Insurance ‘Farming Activity’ Fight

SAN FRANCISCO — Ruling that the challenged interpretation of “farming activity” survives scrutiny under Auer v. Robbins and the Administrative Procedure Act (APA), a Ninth Circuit U.S. Court of Appeals panel affirmed a decision for government agencies in a crop insurance dispute involving federal reinsurance and the structure of a farming operation.
June 07, 2024
Disability Claimant Says Any-Occupation Benefits Are Owed By Disability Insurer

SAN DIEGO — A disability insurer abused its discretion in determining that a disability claimant is not disabled from performing the duties of any occupation based on symptoms related to the claimant’s diagnoses of fibromyalgia and ankylosing spondylosis because the medical evidence submitted by the claimant supports a finding that the claimant is disabled from performing the duties of any occupation, the claimant maintains in a June 6 complaint filed in California federal court.