LexisNexis® Legal Newsroom
    Judge: No Bad Faith In Insurer's Decision Not To Defend Kmart In Injury Suit

    CHICAGO - Even though an Illinois federal judge ultimately found that an insurer owed a duty to defend Kmart Corp. in a personal injury suit that involved an employee of an outside company that operated the retailer's footwear section, the judge on Dec. 18 held that because the coverage was "fairly debatable," the insurer's denial of defense was not in bad faith (Kmart Corp. v. Footstar Inc., et al., No. 1:09-cv-03607, N.D. Ill.; 2013 U.S. Dist. LEXIS 177763).

    Insurer Is Entitled To Rebate From Insurance Broker, 7th Circuit Says

    CHICAGO - A revenue-sharing agreement (RSA) between an insurer and an insurance broker is ambiguous, the Seventh Circuit U.S. Court of Appeals affirmed Dec. 19, finding that the insurer was entitled to a rebate it earned during the period of the 2009 reinsurance placements (Homeowners Choice Inc. v. Aon Benfield Inc., No. 13-1846, 7th Cir.; 2013 U.S. App. LEXIS 25194).

    Federal Judge Denies Class Certification Over Ambiguous Insurance Exclusions

    SEATTLE - A Washington federal judge on Dec. 17 denied class certification of an insured's lawsuit regarding claims that exclusions for "water seepage" and "wear and tear" are ambiguous and that her claim for water damage was wrongly denied (Wanda Bunch v. Nationwide Mutual Insurance Co., et al., No. 12-1238, W.D. Wash.; 2013 U.S. Dist. LEXIS 177057).

    Panel Upholds Dismissal Of Negligence, Misrepresentation Claims Against Insurance Brokers

    NEW YORK - The First Department New York Supreme Court Appellate Division on Dec. 17 affirmed dismissal of negligence and negligent and fraudulent misrepresentation claims against insurance brokers (Structure Tone Inc. v. Thomas Niland, et al., No. 11357, N.Y. Sup., App. Div., 1st Dept.; 2013 N.Y. App. Div. LEXIS 8332).

    11th Circuit Affirms Document Discovery Ruling For Ecuador

    ATLANTA - The 11th Circuit U.S. Court of Appeals on Dec. 18 affirmed a decision requiring an expert to produce certain documents for use in foreign proceedings, finding that the materials did not contain any core opinion work product of Chevron Corp.'s attorneys (Republic of Ecuador, et al. v. Chevron Corp., No. 12-16216, 11th Cir.; 2013 U.S. App. LEXIS 25102).

    Insurance Broker Had Duty To Procure Full Coverage For Insured, Panel Finds

    INDIANAPOLIS - An insurance broker, based upon a long-term relationship, had a duty to procure full coverage insurance for an insured, the Indiana Court of Appeals held Dec. 17, also finding that there is a genuine issue of material fact as to whether the broker is an insurer's agent (Indiana Restorative Dentistry P.C. v. The Laven Insurance Agency Inc., et al., No. 49A05-1212-PL-627, Ind. App.; 2013 Ind. App. LEXIS 621).

    Insurer Owed No Coverage For Claimed Damage To Designed Arches, Panel Says

    MINNEAPOLIS - There is no insurance coverage for alleged property damage to originally designed building arches, a Minnesota appeals panel held Dec. 16; however, it found genuine issues of fact regarding claims on the implementation of a new design in four arches and water infiltration (Westfield Insurance Co. v. Wensmann Inc. f/k/a Wensmann Homes of Rochester Inc. and Diseworth at Somerby, No. A13-0532, Minn. App.; 2013 Minn. App. LEXIS 112).

    N.Y. Federal Judge Dismisses Medicare Provider Termination Suit

    ROCHESTER, N.Y. - A New York federal judge on Dec. 17 dismissed a suit challenging the termination of a Medicare and Medicaid provider agreement without a pretermination hearing and other administrative review procedures, saying the termination was proper (Blossom South v. Kathleen Sebelius, et al., No. 13-6452, W.D. N.Y.; 2013 U.S. Dist. LEXIS 176996).

    Low Settlement Offers When Liability Was Unclear Were Not Bad Faith, Judge Finds

    PITTSBURGH - Noting that both parties in an underinsured motorist (UIM) benefits dispute "could have been somewhat more reasonable at the negotiation table," a Pennsylvania federal judge on Dec. 13 ruled that an insurer did not act in bad faith in its settlement offer, which was well below the insured's policy limits demand, in light of "an honest dispute" over the amount of his injuries that was attributable to the underlying auto accident (Nicholas Schifino v. GEICO General Insurance Co., et al., No. 2:11-cv-01094, W.D. Pa.; 2013 U.S. Dist. LEXIS 174574).

    California Federal Judge Remands Reimbursement Suit, Finds No Preemption Exists

    SAN JOSE, Calif. - A California federal judge on Dec. 16 remanded a reimbursement dispute to state court, holding that the Employee Retirement Income Security Act did not preempt the state law claims (Bay Area Surgical Management v. United Healthcare Insurance Co., et al., No. 13-2512, N.D. Calif.; 2013 U.S. Dist. LEXIS 176682).

    Pennsylvania Supreme Court Sustains Claim's Priority Level With Insolvent Insurer

    HARRISBURG, Pa. - The Pennsylvania Supreme Court on Dec. 16 affirmed a determination by an insolvent insurer's liquidator of an environmental insurance claim as a priority level (b) as arising under a policy and the liquidator's assignment of that claim with a zero value on the basis that the policy did not cover the claim (Raybestos Products Co. v. Reliance Insurance Co. in liquidation, No. 11 MAP 2012, Pa. Sup.; 2013 Pa. LEXIS 3015).

    Panel: Joint Venture Violated Policies By Failing To Obtain Insurer's Consent For Settlement

    RICHMOND, Va. - A joint venture violated the terms of both its primary and excess insurance policies by not obtaining the insurer's consent before settlement and, thus, cannot now claim reimbursement under the policies, the Fourth Circuit U.S. Court of Appeals affirmed Dec. 16 (Perini/Tompkins Joint Venture v. ACE American Insurance Co., No. 12-2415, 4th Cir.; 2013 U.S. App. LEXIS 24865).

    Federal Judge Finds Fact Issues Exist As To Cause Of Policyholder's Damage

    SEATTLE - Material questions of fact remain as to whether there may be different causes, including construction defects, rain and water seepage, that resulted in some or all of an insured's damage, a Washington federal judge held Dec. 13, denying summary judgment to the insured and her insurer (Shelmina Babai v. Allstate Insurance Co., No. 12-1518, W.D. Wash.; 2013 U.S. Dist. LEXIS 175336).

    Insurer Owes No Defense For Contract, Negligence Claims In Construction Practices, Judge Says

    HONOLULU - An insurer has no duty to defend or indemnify an insured against claims for breach of contract and negligence regarding alleged improper construction practices because the claims are not based on "occurrences" or an accident, a Hawaii federal judge ruled Dec. 13 (State Farm Fire & Casualty Co. v. Henry K. Kaaihue Jr. and Advanced Home Builder LLC, No. 13-00185, D. Hawaii; 2013 U.S. Dist. LEXIS 175395).

    Judge Grants Injunction, Dismisses Plaintiffs In Birth Control Suit

    BROOKLYN, N.Y. - A New York federal judge on Dec. 16 granted non-Diocesan plaintiffs' motion for summary judgment as to their Religious Freedom and Restoration Act (RFRA) claim and issued a preliminary injunction in their favor in a challenge to the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) but granted the government's motion for summary judgment as to claims made by Diocesan plaintiffs (The Roman Catholic Archdiocese of New York, et al. v. Kathleen Sebelius, No. 12-2542, E.D. N.Y.).

    Homeowner Sufficiently Alleged Bad Faith Over Higher Premium, Judge Finds

    KNOXVILLE, Tenn. - Partly denying an insurer's motion to dismiss, a Tennessee federal judge on Dec. 13 held that an insured sufficiently alleged bad faith and breach of contract by claiming that her homeowners insurer falsely assessed a claim, which led to the improper raising of her insurance premiums (Joanna Hall v. Liberty Insurance Corp., No. 3:13-cv-000206, E.D. Tenn.; 2013 U.S. Dist. LEXIS 174522).

    Insurer Claims That Reinsurer Has Failed To Honor $100,000 Billing

    NEW HAVEN, Conn. - An insurer told a federal court in Connecticut on Dec. 11 that although its reinsurer has not objection to a reinsurance billing, it has failed to pay more than $100,000 that it allegedly owes the insurer (Travelers Indemnity Company v. Excalibur Reinsurance Corporation, No., 13-cv-01838, D. Conn.).

    Judge Refuses To Certify Class Over Force-Placed Hazard, Flood Insurance

    SACRAMENTO, Calif. - A federal judge in California on Dec. 11 refused to certify a class for nationwide borrowers and subclasses for California and New York consumers over SunTrust Mortgage Inc.'s purchase of force-placed hazard and flood insurance policies, finding that calculating the replacement value of each class member's homes was an individual issue that predominated over classwide issues (Shelia Gooden, et al. v. SunTrust Mortgage Inc., No. 11-cv-02595-JAM-DAD, E.D. Calif.; 2013 U.S. Dist. LEXIS 173511).

    New Jersey Appeals Court Affirms Dismissal Of Denial-Of-Benefits Suit

    TRENTON, N.J. - A New Jersey appeals court on Dec. 11 affirmed the dismissal of a wrongful-denial-of-health-benefits suit, saying that the plaintiff brought his challenge of the final decision denying the benefits in the wrong court (Irvin B. Beaver v. Magellan Health Services Inc., No. A-1311-12T3, N.S. Super., App. Div.; 2013 N.J. Super. LEXIS 175).

    Supreme Court Rules On Limitations Period In ERISA Denial Case

    WASHINGTON, D.C. - The U.S. Supreme Court ruled Dec. 16 that the contractual limitations provision of a disability benefits plan that requires participants to bring suit within three years after "proof of loss" is due is enforceable under the Employee Retirement Income Security Act, even if the limitations period commences before the plan resolved the claim for benefits (Julie Heimeshoff v. Hartford Life & Accident Insurance Co., et al., No. 12-729, U.S. Sup.).

    Federal Judge Remands Homeowners Insurance Coverage Action

    LOS ANGELES - A California federal judge on Dec. 12 granted a motion to remand filed by homeowners seeking insurance coverage for plumbing issues, finding that diversity jurisdiction did not exist (Josie Rodis, et al. v. Allstate Insurance Co., et al., No. 13-07686, C.D. Calif.; 2013 U.S. Dist. LEXIS 174276).

    Lenders' Buying Of Foreclosed Properties Negated Title Insurance Claim, Judge Finds

    PHOENIX - When two lending organizations purchased properties that had gone into foreclosure, their purchase payments "reduced to nil" the amount of title insurance due, an Arizona federal judge concluded Dec. 11, partly granting a title insurer's motion for summary judgment on the amount of its obligation to the purchasers (Equity Income Partners LP, et al. v. Chicago Title Insurance Co., No. 2:11-cv-01614, D. Ariz.; 2013 U.S. Dist. LEXIS 173432).

    Unfair Claims Practices Count Dismissed As Improperly Pleaded In Bad Faith Claim

    LAS VEGAS - An insured seeking coverage for an underinsured motorist (UIM) claim improperly pleaded his Nevada Unfair Claims Practices Act (UCPA) claim against his insurer within a bad faith claim despite the fact that they "are two different legal claims," a Nevada federal judge held Dec. 11, granting dismissal of the UCPA claim (William Paul Matthews v. State Farm Fire and Casualty Co., et al., No. 2:13-cv-01929, D. Nev.; 2013 U.S. Dist. LEXIS 173417).

    Coverage Barred By Assault And Battery Exclusion, 2nd Circuit Affirms

    NEW YORK - The Second Circuit U.S. Court of Appeals on Dec. 11 found that both an original general liability insurance policy and the policy in effect at the time of an underlying assault allegation exclude coverage for the underlying action, rejecting the insured's contention that undisclosed changes to the exclusion constitute insurance fraud (Atlantic Casualty Insurance Co. v. Theodore J. Coffey d/b/a TJ Coffey's, et al., No. 13-0216, 2nd Cir.; 2013 U.S. App. LEXIS 24572).

    Triable Issues Over Lupus Condition, Treatment Bar Summary Judgment, Judge Says

    SAN FRANCISCO - Although he found no problems with an insurer's definition of disability, a California federal judge on Dec. 10 held that triable issues of fact surrounding an employee's diagnosis and treatment of her lupus precluded him from granting summary judgment to an insurer on a bad faith claim against it (Cassaundra Ellena v. Standard Insurance Co., et al., No. 3:12-cv-05401, N.D. Calif.; 2013 U.S. Dist. LEXIS 173163).