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

Mealey's Emerging Insurance Disputes

February 28, 2024
Reinsurers Turn To 2nd Circuit In Oil Seizure Row Involving Insurrection Clause

NEW YORK — Reinsurers who were ordered to pay CITGO Petroleum Corp. more than $72.5 million following a jury trial in a suit stemming from the February 2020 seizure of crude oil at a Venezuelan port and involving a marine cargo reinsurance policy have obtained a supersedeas bond and initiated an appeal.
February 27, 2024
Judge Clarifies Discovery Scope After Confusion About AI Insurance Tools

CHICAGO — Given the court’s and parties’ own confusion about the scope of artificial intelligence tools potentially used in sorting complex and potentially fraudulent claims from more standard ones, homeowner plaintiffs and their insurer should confer and determine what exactly is at issue before conducting further discovery, a federal judge in Illinois said in a docket entry order in a case involving the Fair Housing Act.
February 27, 2024
Delaware High Court: Letter About Paraquat Exposure Does Not Constitute Claim

WILMINGTON, Del. — The Delaware Supreme Court on Feb. 26 affirmed a lower court’s finding that an insurer owes a duty to defend its insured against underlying bodily injury suits arising out of exposure to paraquat, a chemical compound manufactured by the insured for use in herbicides, because a letter from a law firm sent to the insured a year before the policies at issue incepted did not constitute a claim for damages.
February 27, 2024
Louisiana High Court Refuses To Disturb Rulings In Favor Of Insurer, Engineer

NEW ORLEANS — The Louisiana Supreme Court on Feb. 27 refused to review an appeals court’s affirmation of a lower court’s summary judgment rulings in favor of an insurer and engineer in a lawsuit arising from a contractor’s claims that plans, specifications and bidding documents were inadequate and insufficient to properly construct a road in Terrebonne Parish, refusing to disturb the appeals court’s conclusion that because an engineer insured has no liability to Terrebonne Parish Consolidated Government (TPCG) as a matter of law, the engineer’s professional liability insurer also cannot be held liable to TPCG.
February 27, 2024
Michigan Panel Affirms Ruling In Favor Of Insurance Agent In Negligence Suit

DETROIT — A Michigan appeals panel affirmed a lower court’s grant of summary disposition in favor of an insurance agent and agency in an insured’s negligence lawsuit arising from its lack of flood coverage, finding that the defendants did not owe the insured a duty to assess and ensure the adequacy of its business insurance coverage and that the insured failed to establish a special relationship giving rise to that duty.
February 27, 2024
Debtors Of Cryptocurrency Company Seek Recovery Of $22.5M Improper Premium Payment

JERSEY CITY, N.J. — The wind-down debtors of a cryptocurrency company have sued directors and officers liability insurers in a New Jersey court seeking to recover no less than $22.5 million in premiums plus interest and costs, accusing the insurers of a “cash grab” and alleging that the premium funds were part of transactions that unfairly or improperly depleted the debtors’ assets or improperly diluted the claims against those assets.
February 26, 2024
U.S. High Court Vacates Administrative Stay In Boy Scouts’ Bankruptcy Plan Dispute

WASHINGTON, D.C. — The U.S. Supreme Court vacated Justice Samuel A. Alito Jr.’s Feb. 16 order that administratively stayed a Delaware federal court’s order affirming a bankruptcy judge’s confirmation of the Boy Scouts of America’s third modified, fifth amended Chapter 11 reorganization plan that contemplates the creation of a settlement trust to “assume liability for all Abuse Claims,” denying the application for stay.
February 26, 2024
4th Circuit Refuses To Rehear No Coverage, No Bad Faith Ruling

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals denied an insured’s petition to rehear its opinion that affirmed a lower federal court’s summary judgment ruling in favor of a professional liability insurer in a breach of contract and bad faith lawsuit, standing by its holding that the insured failed to create a genuine dispute of fact about the reasonableness of the insurer’s refusal to defend her against an underlying lawsuit.
February 23, 2024
Pa. High Court Tosses State Law Question Of Joint Underwriting Association Status

PHILADELPHIA — The Pennsylvania Supreme Court dismissed a previously granted petition for certification of a state law question regarding the private or public entity status of the Pennsylvania Professional Liability Joint Underwriting Association (JUA), which provides coverage to health care providers, including those previously insured by insurers in liquidation, finding that the high court “improvidently granted this certification request” because the question “is principally one of federal law.”
February 23, 2024
1st Circuit Says Insurer Not Entitled To Reimbursement For Settlement, Defense Costs

BOSTON — A district court erred in finding that an insurer is entitled to reimbursement for defense and settlement costs paid on behalf of its insureds to settle an underlying bodily injury suit stemming from an employee’s contact with raw sewage because the insureds never agreed to reimburse the insurer for any settlement costs and the policy does not include a provision allowing for the reimbursement of costs paid on behalf of the insureds, the First Circuit U.S. Court of Appeals said Feb. 22 in reversing the district court’s rulings related to the insurer’s claim for reimbursement.
February 23, 2024
New York Appeals Court Modifies Summary Judgment Order, Vacates Attorney Fee Award

NEW YORK — A New York appeals court held that conflicting testimony as to a contractor’s request for insurance coverage precludes summary judgment in its favor in a lawsuit arising from an injury at a construction site, unanimously modifying the trial court’s order to deny the contractor’s cross-motion for summary judgment and vacating the attorney fee award in its favor.
February 23, 2024
Delaware Judge: Securities Suit Unrelated To SEC Subpoena; D&O Coverage Triggered

WILMINGTON, Del. — A Delaware judge concluded that an underlying federal securities lawsuit brought in 2016 against a pharmaceutical company insured is not “meaningfully” related to a May 7, 2015, subpoena issued by the Securities and Exchange Commission, granting the insured’s motion for summary judgment in its lawsuit seeking directors and officers liability coverage.
February 23, 2024
E&O Insurer Owes Coverage For Negligence Claims Against Brokerage, Panel Affirms

ATLANTA — The 11th Circuit U.S. Court of Appeals affirmed a lower federal court’s rulings in favor of an insured in a real estate errors and omissions liability insurer’s lawsuit disputing coverage for underlying negligent misrepresentation and negligent employee training claims brought against the insured, finding that the policy’s conversion and future-value exclusions do not bar coverage.
February 22, 2024
Judge: Insurer Breached Its Duty To Defend Baltimore Sun From Suits Over Shooting

CHICAGO — A federal judge in Illinois on Feb. 21 held that an insurer breached its duty to defend Tribune Publishing Co. LLC and The Baltimore Sun Co. LLC against underlying wrongful death and negligence lawsuits arising from a 2018 shooting in which five newspaper employees were killed, further finding that the amount of underlying defense costs the insureds are entitled to “remains unresolved.”
February 22, 2024
New Jersey Panel Affirms No Coverage Owed To YMCAs For Losses Arising From Pandemic

TRENTON, N.J. — The New Jersey Superior Court Appellate Division on Feb. 21 affirmed a lower court’s summary judgment ruling in favor of commercial property and casualty insurers in a coverage dispute arising from the coronavirus pandemic, finding that YMCA insureds’ business interruption claims are restricted by their policies’ clear and plain meaning that the court cannot rewrite to cover the “unfortunate losses” they incurred.
February 22, 2024
Liability Insurer Seeks Extension To Respond In Dispute With Health Insurer

DENVER — A liability insurer moved for an extension to file an answer brief in a health insurer’s appeal to the 10th Circuit U.S. Court of Appeals of a district court’s ruling that the liability insurer does not owe a duty to indemnify the health insurer in an underlying multidistrict litigation antitrust dispute involving an excess errors and omissions (E&O) policy issued by a now-insolvent insurer.
February 21, 2024
U.S. High Court Reverses Ruling In Dispute Over Maritime Choice-Of-Law Provisions

WASHINGTON, D.C. — The U.S. Supreme Court on Feb. 21 held that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law with narrow exceptions that are not applicable to the dispute between a marine insurer and the owner of a yacht that ran aground, reversing an appeals court’s ruling against the insurer.
February 21, 2024
Parties Seek Dismissal Of Federal Coverage Dispute Over Arbitration Proceeding

BOSTON — An insured and a private company management liability insurer asked a Massachusetts federal court on Feb. 15 to dismiss with prejudice their dispute over whether the insurer has a duty to defend its insured in an underlying arbitration proceeding alleging that it violated its fiduciary duty and breached an operating agreement.
February 21, 2024
9th Circuit Denies Insurer’s Petition For Rehearing Of Pollution Exclusion Ruling

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 20 denied an insurer’s petition for panel rehearing, refusing to reconsider the panel majority’s finding that a pollution exclusion does not bar coverage for an underlying toxic exposure suit stemming from the cleanup of wildfire debris.
February 20, 2024
Panel: Insurer Can Rescind Professional Liability Policy Due To Misrepresentation

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Feb. 16 affirmed a lower federal court’s summary judgment ruling in favor of a professional liability insurer in its lawsuit seeking a declaratory judgment that it can rescind an insurance policy issued to a clinic, finding no genuine dispute of material fact that the clinic’s founder made a material misstatement in her applications for coverage.
February 20, 2024
U.S. High Court Stays Order Affirming Confirmation Of Boy Scouts’ Bankruptcy Plan

WASHINGTON, D.C. — U.S. Supreme Court Justice Samuel A. Alito Jr. on Feb. 16 administratively stayed a Delaware federal court’s order affirming a bankruptcy judge’s confirmation of the Boy Scouts of America’s third modified, fifth amended Chapter 11 reorganization plan that contemplates the creation of a settlement trust to “assume liability for all Abuse Claims” pending further order by the Third Circuit U.S. Court of Appeals or the high court on the appeals of two sets of abuse claimants.
February 20, 2024
Judgment Granted For Insurer In Yacht Fire Coverage Row Due To Misrepresentations

MIAMI — A Florida federal judge on Feb. 16 adopted a federal magistrate judge’s report and recommendation that because an insured yacht owner made material misrepresentations in a policy application, including falsely stating that the proposed captain of an 85-foot yacht had no recent driving under the influence (DUI) convictions, summary judgment should be granted to a marine insurer seeking a judgment that it is not obligated to cover the insured’s fire damage losses.
February 20, 2024
Judge Grants FDIC Motion To Dismiss D&O Coverage Suit Arising From Failed Bank

NEW ORLEANS — A federal judge in New Orleans on Feb. 16 granted the Federal Deposit Insurance Corp.’s motion to dismiss with prejudice its lawsuit against a failed bank’s former officials and related declaratory judgment lawsuits against directors and officers liability insurers one day after FDIC filed a stipulated motion to dismiss announcing that the parties reached a settlement.
February 16, 2024
New York High Court: Restaurateur Fails To Allege Direct Physical Loss Or Damage

ALBANY, N.Y. — The New York Court of Appeals on Feb. 15 held that the owner and operator of numerous restaurants failed to allege persistent contamination or total uninhabitability of its restaurants to trigger coverage for “direct physical loss or damage,” affirming the First Department New York Supreme Court Appellate Division’s affirmation of a lower court’s dismissal of the insured’s coverage lawsuit arising from an alleged tens of millions of dollars in revenue loss prompted by the coronavirus pandemic.
February 16, 2024
Class Certification Affirmed In Dispute Over Insurer’s Square Footage Calculation

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s ruling that granted an insured’s motion for class certification in a lawsuit alleging that a homeowners insurer improperly calculated the square footage of California homes, finding that the lower court did not abuse its discretion in redefining the certified class.