Mealey's Catastrophic Loss : Mealey's : Legal News & Analysis

Mealey's Catastrophic Loss

July 28, 2023
Breach Of Contract, Bad Faith Suit To Remain In Oklahoma Federal Court

OKLAHOMA CITY — A breach of contract and bad faith suit filed against a homeowners insurer will remain in Oklahoma federal court because at the time of removal from state court, the insurer made a plausible showing that the amount in controversy exceeded the federal jurisdictional minimum of $75,000, an Oklahoma federal judge said in denying the insureds’ motion to remand.
July 26, 2023
Magistrate Denies Request To Add Guaranty Association In Hurricane Coverage Suit

LAKE CHARLES, La. — A Louisiana federal magistrate judge denied homeowners’ motion to amend to add the Louisiana Guaranty Association (LIGA) as a defendant in a suit against their now-insolvent insurer over failure to adequately compensate them for hurricane-related losses, finding that amendment would be “futile” because it would require dismissing the suit “for lack of subject matter jurisdiction.”
July 25, 2023
Texas High Court Accepts Certified Question As To TPPCA In Tornado Coverage Dispute

AUSTIN, Texas — The Texas Supreme Court accepted a certified question from the Fifth Circuit U.S. Court of Appeals in an insured’s lawsuit alleging that its insurer violated the Texas Prompt Payment of Claims Act (TPPCA), agreeing to answer whether an insurer’s payment of a full appraisal award for tornado damage plus any possible statutory interest bars the insured’s recovery of attorney fees.
July 24, 2023
No Coverage Owed For Gas Station’s Losses Arising From Coronavirus, Panel Affirms

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s dismissal of a gas station owner insured’s lawsuit seeking coverage for its economic losses arising from the coronavirus pandemic, concluding that the virus exclusion bars coverage because COVID-19 “is the efficient proximate cause” of the insured’s purported losses.
July 24, 2023
Panel Affirms Dismissal Of Claims Against Broker In Hurricane Maria Coverage Suit

CHICAGO — An Illinois appeals panel held that a mall owner failed to allege that an insurance broker owed it a duty of care arising from a professional relationship, affirming a lower court’s dismissal of professional negligence and tortious interference of contract claims brought against the broker in a lawsuit arising from Hurricane Maria damage.
July 24, 2023
No Additional Abrupt Collapse Coverage Owed, Insurer Argues To 10th Circuit

DENVER — An insurer and its claims service manager argue to the 10th Circuit U.S. Court of Appeals that a building owner insured is owed no coverage under an insurance policy’s additional abrupt collapse coverage, contending that the insured’s building “did not collapse because its structural capacity was not ‘substantially’ or ‘significantly’ impaired.”
July 24, 2023
District Court Erred In Reducing Contract Damages Award In Silo Collapse Suit

RICHMOND, Va. — A district court erred in reducing a jury’s $7.6 million award in favor of an insured in a coverage dispute arising out of the collapse of the insured’s silo because the court did not properly calculate the period of restoration pursuant to the policy’s terms, the Fourth Circuit U.S. Court of Appeals said in reversing a portion of the lower court’s ruling following the jury verdict.
July 24, 2023
Magistrate Allows Insurer To Add Overpayment Claim In Hurricane Coverage Row

NEW ORLEANS — A Louisiana federal magistrate judge granted an insurer’s motion to add a counterclaim in homeowners’ suit against the insurer to recover alleged hurricane-related damages, finding “no substantial reason” to deny the motion to add a counterclaim for overpayment based upon the homeowners’ alleged material misrepresentations.
July 20, 2023
Insured’s Motion To Amend Hurricane Irma Complaint Was Unduly Delayed, Panel Says

ATLANTA — The 11th Circuit U.S. Court of Appeals held that a lower federal court was within its discretion to determine that an insured’s filing of its motion to amend a Hurricane Irma coverage complaint was unduly delayed, affirming the lower court’s denial of the insured’s motion to amend.
July 19, 2023
Judge Denies Motions To Amend In Hurricane Coverage Suit Against Insolvent Insurer

LAFAYETTE, La. — A Louisiana federal judge denied a homeowner’s motions to amend and file a supplemental complaint in his suit against a now-insolvent insurer for failure to cover damages purportedly caused by Hurricanes Laura and Delta, finding that adding the Louisiana Insurance Guaranty Association (LIGA) “would be futile” because it would destroy diversity jurisdiction and require dismissal.
July 19, 2023
Judge Grants Homeowners’ Dismissal In Hurricane Damage Row With Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to dismiss their claims for breach of contract and breach of the duty of good faith and fair dealing against an insolvent insurer and the Louisiana Guaranty Association (LIGA) as the purported guarantor for the insurer, related to the insurer’s alleged failure to compensate them for damages caused by Hurricane Ida.
July 19, 2023
Texas Panel Finds Judge Abused His Discretion In 2 Hailstorm Coverage Suits

AMARILLIO, Texas — A Texas appeals panel issued two separate rulings finding that a lower court judge abused his discretion in failing to abate an underlying coverage dispute over hail and wind damage, holding that a school district insured’s notice letters addressed to the insurers were deficient.
July 19, 2023
Federal Judge Grants Parties’ Joint Motion To Dismiss Hurricane Laura Coverage Suit

LAKE CHARLES, La. — A federal judge in Louisiana granted an insurer and its insured’s joint motion to dismiss the insured’s breach of contract lawsuit arising from Hurricane Laura damage.
July 18, 2023
Settlement Notice Issued In Water Damage Coverage Row Involving Insolvent Insurer

MIAMI — An insurer on July 17 provided a Florida court with notice that it served a homeowner with a proposed settlement in the homeowner’s breach of contract suit against the insurer and an insolvent insurer, alleging failure to cover all water-related damages.
July 18, 2023
Insurers Allowed To Appeal Coronavirus Coverage Dispute To Pennsylvania High Court

PITTSBURGH — The Pennsylvania Supreme Court granted insurers’ petition to appeal a majority of the Pennsylvania Superior Court’s ruling that, at the very least, it is reasonable to interpret the phrase “direct physical loss of . . . property” to encompass the loss of use of a dental practice’s property due to the spread of the coronavirus “absent any actual damage to property.”
July 18, 2023
Pennsylvania Supreme Court Allows Tavern Owner To Appeal COVID-19 Coverage Suit

PITTSBURGH — The Pennsylvania Supreme Court granted a Pittsburgh tavern owner insured’s petition for allowance to appeal a Pennsylvania Superior Court reversal of a lower court’s ruling in its favor in a coronavirus coverage dispute, challenging the Superior Court’s finding that “the policy does not cover mere loss of use of commercial property unaccompanied by physical alteration or other condition immanent in the property that renders the property itself unusable or uninhabitable.”
July 17, 2023
Panel Refuses To Depart From ‘Overwhelming Weight Of Authority’ In COVID-19 Suit

CHICAGO — An Illinois panel held that there was no evidence that an insured incurred direct physical loss or damage required to trigger commercial insurance coverage for its business income losses arising from the coronavirus pandemic and government shutdown orders, noting that Illinois courts have consistently concluded “that economic loss sustained during the pandemic did not constitute ‘physical loss of’ or ‘physical damage’ to property under the commercial insurance policies.”
July 17, 2023
Judge Allows Adding Guaranty Association And Remands In Hurricane Coverage Dispute

NEW ORLEANS — A Louisiana federal judge on July 14 granted a homeowner’s motion to add the Louisiana Guaranty Association (LIGA) as a defendant and remanded to state court her suit against a now-insolvent insurer for its breach of contract and bad faith failure to compensate her for purported damage caused by Hurricane Ida, finding that the purpose of the amendment “is the inclusion of the proper defendant, rather than the exclusion of federal jurisdiction.”
July 17, 2023
8th Circuit Affirms Ruling In Insurer’s Favor In Coverage Suit Over Storm Damage

ST. LOUIS — The Eighth Circuit U.S. Court of Appeals concluded that the undisputed facts establish that a general liability insurer satisfied all of the elements necessary to deny coverage based on its insured’s failure to cooperate in the investigation of its claim for wind and hail damage caused by a March 2020 storm, affirming a lower federal court’s summary judgment ruling in favor of the insurer.
July 14, 2023
Breach Of Contract, Bad Faith Claims To Proceed In Wildfire Coverage Suit

SACRAMENTO, Calif. — A California federal judge denied a property insurer’s motion to dismiss insureds’ claims for breach of contract and bad faith after determining that the insureds stated sufficient facts to support both claims.
July 13, 2023
5th Circuit Certifies Question In Tornado Coverage Dispute To Texas High Court

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on July 12 certified a question to the Texas Supreme Court in an insured’s lawsuit alleging that its insurer violated the Texas Prompt Payment of Claims Act (TPPCA), asking the state’s highest court whether an insurer’s payment of a full appraisal award for tornado damage plus any possible statutory interest bars the insured’s recovery of attorney fees.
July 13, 2023
Appraisal Not Permitted After Suit Is Filed, Alaska Federal Judge Says

ANCHORAGE, Alaska — An Alaska federal judge denied a motion to compel appraisal in a breach of contract and bad faith suit stemming from roof and water damage to an insured home because the policy’s appraisal provision states that appraisal cannot be invoked after a suit is filed.
July 12, 2023
Panel Affirms Denial To Add Punitive Damages In Suit Against Now-Insolvent Insurer

DAYTONA BEACH, Fla. — A Florida appellate court affirmed a lower court’s order denying a homeowner’s request to amend his complaint to add punitive damages in his breach of the duty of good faith and fair dealing suit against a now-insolvent insurer, finding that the homeowner failed to satisfy punitive damages requirements under Florida law regarding the “general business practice” related to the insurer’s alleged lack of standards for investigating claims.
July 12, 2023
Panel: Insured Faces ‘Solid Wall Of Precedent’ In Coronavirus Coverage Appeal

SAN FRANCISCO — A California appellate court affirmed a ruling in favor of a commercial property insurer in an Orange County restaurant owner insured’s breach of contract lawsuit arising from the coronavirus pandemic, finding that the insured “faces a solid ‘wall of precedent’ that holds that direct physical loss or damage requires physical alteration of the covered property.”
July 12, 2023
Insured Appeals Denial Of Leave To Amend Coronavirus Complaint

BALTIMORE — An insured notified a Maryland federal court that it is appealing the court’s denial of its motion for leave to file a second amended complaint to address the standard for physical loss that was provided by the Maryland Supreme Court in answer to a certified question in a coronavirus coverage dispute.