Majority: Labor Costs May Not Be Depreciated When Deciding Actual Cash Value

    LITTLE ROCK, Ark. - In answer to a certified question from a federal district court, a majority of the Arkansas Supreme Court held Nov. 21 that the costs of labor may not be depreciated when determining the actual cash value under an indemnity insurance policy (Mark Adams, et al. v. Cameron Mutual Insurance Co., No. CV-13-456, Ark. Sup.; 2013 Ark. LEXIS 564).

    Flood Coverage Dispute Against Insurers Properly Dismissed, 8th Circuit Rules

    ST. LOUIS - Insureds' lawsuit against a federal flood insurer and an excess insurer seeking recovery for additional losses allegedly caused by flood damage was properly dismissed by a federal district court, the Eighth Circuit U.S. Court of Appeals ruled Nov. 21 (Glenn K. Gunter. v. Farmers Insurance Company, Inc., et al., No. 12-3445, 8th Cir.; 2013 U.S. App. LEXIS 23397).

    Illinois High Court Says Jury Verdict Not Offset In Dramshop Case Involving Insolvent Insurer

    SPRINGFIELD, Ill. - In a Dramshop Act case involving the Illinois Insurance Guaranty Fund (IIGF), substituting for an insolvent insurer, the Illinois Supreme Court on Nov. 21 held that the reduction for "other insurance" recoveries under Illinois Insurance Code Section 546(a) does not apply against a jury's verdict or against an insured's maximum statutory liability (Roy Dean Rogers II, et al. v. Gani Imeri, individually and d/b/a Johnny's Bar and Grill, No. 115860, Ill. Sup.; 2013 Ill. LEXIS 1371).

    Panel: Professional Services Exclusion Bars Coverage For Claims Against Broker

    NEW YORK - The Second Circuit U.S. Court of Appeals on Nov. 21 affirmed a lower federal court's ruling that underlying claims against a securities broker-dealer insured and its president are precluded from coverage by a professional services exclusion in a directors and officers and private company liability insurance policy (David Lerner Associates Inc. v. Philadelphia Indemnity Insurance Co., No. 13-1612, 2nd Cir.; 2013 U.S. App. LEXIS 23386).

    Panel: Policy Rescission Does Not Moot Negligence Claims Against Insurance Agents

    TRENTON, N.J. - The rescission of an insurance policy does not render moot an insured's claims for indemnification and professional negligence against insurance agents regarding denied coverage for hurricane damage, a New Jersey appeals panel held Nov. 20 (Those Certain Underwriters at Lloyd's, London subscribing to policy number BUY1780 v. Cleopatra LLC d/b/a Eden ROC Motel and Affifa Michael v. KK Insurance Agency Inc. and Kiran M. Sondhi, No. A-1312-12T3, N.J. Super. App. Div.; 2013 N.J. Super. Unpub. LEXIS 2797).

    Panel Finds No Coverage Triggered Under Additional Insured Endorsement

    JACKSON, Miss. - An additional insured endorsement only covered liability that arose from "ongoing operations," the Mississippi Court of Appeals held Nov. 19, finding that homeowners' damage did not arise until well after the additional insured had completed its operations and, thus, the homeowners' claims did not trigger coverage under the endorsement (Arthur H. Noble, individually and Noble Real Estate Inc. v. Wellington Associates Inc., et al., No. 2012-CA-01269, Miss. App.; 2013 Miss. App. LEXIS 783).

    Judge: Construction Defect Exclusion Does Not Preclude Insured's Costs In Loss

    DENVER - A construction defect exclusion under a homeowners insurance policy does not bar coverage for the cost of removing and replacing portions of a deck to repair a drain system and for rental income lost while the deck was being repaired, a Colorado federal judge ruled Nov. 19 (R. Chris Lux v. Great Northern Insurance Co., No. 12-02632, D. Colo.; 2013 U.S. Dist. LEXIS 164973).

    Panel Says Faulty Work Does Not Constitute 'Occurrence' Under CGL Insurance Policy

    CINCINNATI - Under Kentucky law, a subcontractor's allegedly faulty preparation of a building pad that resulted in subsequent settling and structural damages to the building did not constitute an "occurrence" under a commercial general liability (CGL) insurance policy, the Sixth Circuit U.S. Court of Appeals held Nov. 19 (Liberty Mutual Fire Insurance Co. v. Kay and Kay Contracting LLC and MW Builders Inc., No. 12-5791, 6th Cir.).

    Judge Finds Allegedly Incomplete Inspection Could Support Bad Faith Claim

    PHOENIX - Evidence of an allegedly incomplete inspection of a storm-damaged home could constitute evidence of an insurer's bad faith, an Arizona federal judge held Nov. 18, partly denying the insurer's motion for summary judgment (Margo Hanks v. American Family Mutual Insurance Co., et al., No. 2:12-cv-00880, D. Ariz.; 2013 U.S. Dist. LEXIS 163802).

    Panel Upholds Verdict That Insurance Broker Negligently Failed To Procure Insurance

    KANSAS CITY, Mo. - An insured presented evidence to support a claim that an insurance broker negligently failed to procure insurance, a Missouri appeals panel held Nov. 19; however, the panel ruled that the broker was entitled to a setoff in the amount of the insured's settlements with its insurers (Bucksaw Resort LLC v. Eugene Mehrtens, No. WD75877, Mo. App., West. Dist., Div. 1; 2013 Mo. App. LEXIS 1380).

    Judge: Negligence Claim Against Insurance Agents Fails After Release Of Insurer's Liability

    PROVIDENCE, R.I. - Agents of an insurer are not liable for alleged negligence when an insured already released claims against the insurer regarding denied coverage for fire damage, a Rhode Island federal judge ruled Nov. 19 (Northfield Insurance Co. v. Kelvin Sanders v. Troy, Pires & Allen and Vrania Coelho, No. 11-013, D. R.I.; 2013 U.S. Dist. LEXIS 164431).

    Tennessee Federal Judge Dismisses Medicare False Claims Case

    NASHVILLE, Tenn. - A Tennessee federal judge on Nov. 18 dismissed a qui tam case in which the operator of multiple health care facilities was accused of submitting false claims to Medicare, saying the plaintiff failed to support his allegations (United States of America ex rel. Stephen McCullen v. Ascension Health, et al., No. 12-501, M.D. Tenn.).

    Judge Precludes Testimony Of Bad Faith Expert, Citing Jury's Fact-Finding Duty

    SCRANTON, Pa. - Noting that a determination of whether an insurer acted in bad faith does not involve "delving into matters that are scientific in nature," a Pennsylvania federal judge on Nov. 15 granted the insurer's motion to preclude testimony of the plaintiff's bad faith expert in a dispute over underinsured motorist (UIM) coverage (Michael Scott v. GEICO General Insurance Co., No. 3:11-cv-01790, M.D. Pa.; 2013 U.S. Dist. LEXIS 162642).

    Policy Does Not Cover Theft Of Client's Property, Judge Rules, Dismisses Claims

    SEATTLE - A Washington federal judge on Nov. 18 dismissed a third party's breach of contract, bad faith and violation of the Consumer Protection Act claims against an insurer, finding that the policy does not cover theft of the insured's client's property (Muse Apartments LLC v. Travelers Casualty and Surety Company of America, No. 12-2021, W.D. Wash.; 2013 U.S. Dist. LEXIS 164015).

    Panel: Insured's OK Not Needed To Remove Lawsuit Over Faulty Work Settlement

    RICHMOND, Va. - An insured contractor was a nominal party in a contribution lawsuit between its insurers over a $1 million settlement of faulty construction claims and, therefore, did not have to give permission for the lawsuit to be removed to federal court, the Fourth Circuit U.S. Court of Appeals affirmed Nov. 15 (Hartford Fire Insurance Co. v. Harleysville Mutual Insurance Co., et al., No. 12-1761, 4th Cir.; 2013 U.S. App. LEXIS 23095).

    Nursing Home Operator To Pay $48 Million For Medicare False Billing

    LOS ANGELES - In two separate cases, skilled nursing provider Ensign Group Inc. agreed to pay $48 million to resolve allegations that it knowingly submitted Medicare false claims for medically unnecessary rehabilitation services, according to a Nov. 19 press release issued by the U.S. Department of Justice (United States of America ex rel. Gloria Patterson v. Ensign Group Inc., No. 06-6956, United States of America ex rel. Carol Sanchez v. Ensign Group Inc., No. 06-0643, C.D. Calif.).

    Claim Was Made Before Inception Of Professional Liability Policy, Judge Rules

    SHERMAN, Texas - There is no professional liability coverage for an underlying claim against a title company insured because the claim was made before the inception of the policy, a Texas federal judge ruled Nov. 15, granting the insurer's motion for judgment on the pleadings (Regency Title Company LLC v. Westchester Fire Insurance Co., et al., No. 4:11-cv-390, E.D. Texas; 2013 U.S. Dist. LEXIS 162772).

    Panel Stays Dispute Pending Rehabilitation Proceeding Of Party's Insolvent Insurer

    WACO, Texas - A Texas appeals panel on Nov. 15 stayed a dispute between the owner of a nightclub and a woman involved in an accident with a drunk patron, pending the rehabilitation proceedings of the nightclub's insolvent insurer (In re Arcababa d/b/a OK Corral, No. 10-13-00097-CV, Texas App., 10th Dist.; 2013 Tex. App. LEXIS 14087).

    Panel Reverses Ruling Against Insurer In Suit Over $4M Wrongful Death Judgments

    ST. LOUIS - Finding that an umbrella insurance policy's business property exclusion unambiguously precludes coverage for $4 million in underlying wrongful death judgments against insureds, the Eighth Circuit U.S. Court of Appeals on Nov. 14 reversed and remanded a lower court's ruling against the insurer (Barbara Eichholz, et al. v. Secura Supreme Insurance Co., Nos. 12-3170 and 12-4032, 8th Cir.; 2013 U.S. App. LEXIS 23028).

    Smells From Hog Farm Are Not Pollution, Illinois Appellate Panel Determines

    SPRINGFIELD, Ill. - A pollution exclusion clause in an umbrella policy does not bar coverage for underlying claims arising out of the operation of a confinement hog farm because the smells emanating from the farm are not pollutants, the Fourth District Illinois Appellate Court said Nov. 13 (Country Mutual Insurance Co. v. Hilltop View LLC, et al., No. 4-13-0124, Ill. App., 4th Dist.; 2013 Ill. App. LEXIS 788).

    Federal Judge Dismisses Civil Conspiracy Claims Against Insurance Agents

    SACRAMENTO, Calif. - A federal judge in California on Nov. 14 refused to dismiss claims for misappropriation of trade secrets against insurance agents but dismissed civil conspiracy claims against the agents with leave to amend (Farmers Insurance Exchange, et al. v. Steele Insurance Agency Inc., et al., No. 13-00784, E.D. Calif.; 2013 U.S. Dist. LEXIS 162575).

    Delay Due To Investigation Of Suspicious Fire Was Reasonable, Judge Rules

    DAYTON, Ohio - An insurer's delays in payment for claims over a business fire were reasonable due to an investigation into the fire, which was the result of arson, an Ohio federal judge found Nov. 15, granting summary judgment in the insurer's favor (Paragon Molding Ltd. v. American Economy Insurance Co., No. 3:05-cv-00422, S.D. Ohio; 2013 U.S. Dist. LEXIS 163137).

    Third-Party Claimant Has Standing To Defend Insured's Interests, Federal Judge Says

    HATTIESBURG, Miss. - A Mississippi federal judge on Nov. 14 denied a motion for entry of default judgment against an insured on the basis that a third-party claimant has standing to defend the insured's coverage interests (Travelers Casualty and Surety Co., et al. v. Mississippi Valley Silica Co. Inc., et al., No. 13-136, S.D. Miss.; 2013 U.S. Dist. LEXIS 162414).

    New York Federal Judge Partially Dismisses Health Care Reimbursement Suit

    WHITE PLAINS, N.Y. - A New York federal judge on Nov. 14 partially granted the defendants' motion to dismiss a health care reimbursement dispute (Bridget M. Curran v. Aetna Life Insurance Co., et al., No. 13-289, S.D. N.Y.; 2013 U.S. Dist. LEXIS 163162).

    8th Circuit Affirms Ruling In Favor Of Insurer In Professional Liability Dispute

    ST. LOUIS - The Eighth Circuit U.S. Court of Appeals on Nov. 18 affirmed a lower federal court's finding that coverage for underlying claims against a title insurance company insured and its employees is barred by a professional liability insurance policy's customer funds exclusion (Charles E. Bethel II, et al. v. Darwin Select Insurance Co., No. 12-3528, 8th Cir.; 2013 U.S. App. LEXIS 23183).