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Insurance Law

CaseWatch: Insurance – Decisions from The Insurance and Reinsurance Report – January 3, 2011 subscribers may access the enhanced versions of the cases above. Non-subscribers may access the free, unenhanced versions on lexisONE, if available.

Actions & Proceedings

State Farm Mut. Auto. Ins. Co. v. Patterson
7 A.3d 454 [ / lexisONE] (Del., November 8, 2010)
In a 3-2 decision, the Supreme Court of Delaware, applying the tort "choice of law" rules, as opposed to the contract "choice of law" rules, has held that an insurer must provide its insured, a Delaware resident injured in a motor vehicle accident with a New Jersey resident in New Jersey, with uninsured motorist ("UM") benefits despite the fact that she had not suffered a serious enough injury to pierce the New Jersey "verbal threshold."

Lexington Ins. Co. v. Sewerage & Water Board of New Orleans
2010 U.S. Dist. LEXIS 114794 [] (E.D.La., October 27, 2010)
Claim Accrues When Insurer Denies Coverage
Defendant sought indemnification for third-party property damage from pollutants for which the EPA held it liable.  The insurer moved to dismiss, arguing that defendant's contract claim was barred by the 10-year prescription.  The court rejected the insurer's argument that defendant's claim accrued when the United States filed suit against it, ruling that the claim accrued when the insurer denied coverage.

In Re: Katrina Canal Breaches Litigation v. State Farm Fire & Casualty Co., et al.
2010 U.S. App. LEXIS 23399 [ / lexisONE] (La. Ct. of App., November 11, 2010)
Katrina Class Certification Denied
This Claim Stems from the Hurricane Katrina Disaster in Louisiana.  The plaintiff sought certification of statutory penalty claims for the defendant's alleged bad faith in adjusting the Katrina related insurance claims.  The district court held that class certification was improper because claims required an analysis of myriad individualized, fact-specific issues.

Allstate Insurance Co. v. Clancy
2010 Ind. App. LEXIS 1953 [ / lexisONE] (Ind. Ct. of App., October 26, 2010)
Advice of Counsel Defense Does Not Waive Attorney-Client Privilege
In an action engaged in bad faith settlement practices the insurer appealed the trial court's order granting a motion to compel the production of documents that were subject to the attorney client privilege on the grounds that the insurer had implicitly waived in advice of counsel defense thereby waiving the attorney-client privilege.  The Appellate Court reversed the trial court after analyzing the case law in various jurisdictions determined that the fact the insurer received advice from counsel prior to making its decision was not sufficient to constitute a waiver of the attorney-client privilege. The court also concluded that the "fairly debatable defense, absent any other connection to rely upon its advise of counsel, was tantamount to a good faith defense and insufficient in and of itself to waive the attorney-client privilege."

Bad Faith

Sanderson v. American Family Mutual Insurance Company
2010 Colo. App. LEXIS 1665 [ / lexisONE] (Col. App., November 10, 2010)
The Fairly Debatable Standard
The appellate court held that the fairly debatable standard was not a threshold inquiry that was outcome determinative as a matter of law, nor was it both the beginning and end of the analysis in a bad faith case.  The court held that in defending a fairly debatable claim an insurer must exercise reasonably care in good faith.  While fair debatability is a necessary condition to avoid a claim of bad faith, is not always a sufficient condition.  The appropriate inquiry is whether there is sufficient evidence from which reasonable jurors could conclude that in the investigation, evaluation and processing of the claim the insurer acted unreasonably and either knew or was conscious of the fact that its conduct was unreasonable.

United Services Automobile Association v. Admiral James Lisanby
2010 Miss. LEXIS 615 [ / lexisONE] (Miss., November 18, 2010)
No Emotional Damages Where Insurer Had an Arguable Basis for Denial
This case involves an alleged breach of contract in bad faith denial of a homeowner's insurance claim following her Hurricane Katrina. The jury awarded the insureds over $900,000 in compensatory damages, but the trial judge directed a verdict in favor of the insurer on the issue of punitive damages.  Both parties appealed and the appellate court reversed in part, stating that the insurer demonstrated an arguable basis for its denial of claims and thus, the trial judge erred in submitting the emotional damages claim to the jury and awarding attorney fees and litigation expenses to the insureds.


Deguchi v Allstate Insurance Company
2010 U.S. App. LEXIS 22593 [ / lexisONE] (9th Cir.(Haw.), October 29, 2010)
Insured's Failure To Provide Financial Information Results In Dismissal Of Case
The action arises from the loss of a boat under suspicious circumstances.  The insurer sought an Examination Under Oath as allowed under the policy.  The insureds cooperated, but refused to provide financial information, including information related to the purchase of the boat.  The court held the refusal constituted a material breach of contract.  Furthermore, although the insureds had requested, as an alterative, the opportunity to re-appear and provide the information sought, the court denied this request finding too much time had passed thus prejudicing the insurer.  The case was dismissed.

American Family Mut. Ins. Co. v. Bower
2010 U.S. Dist. LEXIS 118567 [] (N.D.Ind., November 5, 2010)
Severability of Insureds: Innocent Co-Insured Entitled to Defense
In an underlying lawsuit, the plaintiff alleged sexual molestation by one insured and negligent failure to supervise and prevent the molestation by two other co-insureds. The alleged perpetrator pleaded guilty to molestation-related crimes. The innocent co-insureds tendered the suit to their insurer for defense, which refused. The insurer argued there was no occurrence and that exclusions applied pertaining to intended injury, sexual molestation, and criminal acts. The court determined that whether there was an occurrence and whether any exclusions applied must be adjudged from the standpoint of each individual insured because the policy included a severability clause. As to the innocent insureds, the complaint alleged an occurrence where it alleged only negligent supervision claims and not any intentional acts.

Deductibles/Self-Insured Retention

Axis Specialty Ins. Co. v. The Brickman Group, Ltd.
2010 U.S. Dist. LEXIS 123050 [] (E.D.Pa., November 18, 2010)
Excess Carrier Not Entitled to Reimbursement from Policyholder's Unpaid Retention
A slip-and-fall suit was filed against a policyholder with a self-insured retention of $250,000. The policyholder had an excess policy providing $750,000 in coverage above the SIR, and another excess policy providing $5 million above that. The policyholder's broker informed the second layer excess insurer that its defense counsel estimated the value of the case at over $2 million. The second layer excess insurer eventually took over and settled the suit for $1.15 million. At the time of settlement, it was aware that the SIR had not been met. The court determined an insurer, in some circumstances, could make a settlement then seek reimbursement from the insured, but that the settlement here was paid by the second excess insurer knowing that the payment obligation was in dispute and that it settled in order to protect its own interests from a substantially higher judgment.

Coffeyville Resources Refining & Marketing, LLC v. Liberty Surplus Ins. Corp.
2010 U.S. Dist. LEXIS 113457 [] (D.Kan., October 25, 2010)
Amounts Paid by Other Insurance Qualify To Reduce Excess Insurer's SIR
With regards to the exhaustion of the SIR, the excess insurer's policy stated:  "If there is. . . Other Insurance applicable to a Loss, amounts received through such . . . Other Insurance for payment of the Loss may be applied to reduce or exhaust the above Self-Insured Retention if such policies were purchased by the Named Insured to specifically apply as underlying insurance to this policy."  There is no dispute that the purpose of the primary insurance was to apply and there is no dispute that the primary insurance has exhausted its $25 million limit.  Therefore, under the provision, the SIR is exhausted and defendant excess insurer must pay any additional claims.

Duty to Defend

Billings v. Commerce Ins. Co.
936 N.E.2d 408 [ / lexisONE] (Mass. Sup. Ct., November 4, 2010)
No Duty to Defend Malicious Prosecution Claim where Complaint Forming Basis of Action was Filed Prior to Policy
A policy began in March 2000. In December 2000, the policyholder was sued for malicious prosecution based on the filing of a complaint in 1998. The court determined the triggering event for coverage was the insured's filing of the complaint in January 1998, prior to the policy inception date, thus there was no coverage.

Selective Way Ins. Co. v. Gingrich
2010 U.S. Dist. LEXIS 114310 [] (M.D.Pa., October 27, 2010)
No Duty to Defend Where There is No Possibility of Indemnity
A husband drove his wife's car and caused an accident that proved fatal to another driver. The decedent's estate brought a wrongful death action against the husband, including claims of negligent entrustment against the wife. The wife's auto policy contained a named driver exclusion, which specifically excluded coverage for the husband. In a coverage action with the insurer, the wife admitted that the insurer had no duty to indemnify her due to the named driver exclusion but that the insurer nonetheless had a duty to defend her against the negligent entrustment claim. She relied upon the principal that an insurer's duty to defend is broader than the duty to indemnify. The court recognized the breadth of a duty to defend when there is the mere possibility of coverage, but held that, where no set of circumstances could trigger a duty to indemnify, the duty to defend is not triggered.

Environmental - Actions and Proceedings

New Salida Ditch Co. v. United Fire and Casualty Ins. Co.
2010 U.S. App. LEXIS 22345 [ / lexisONE] (10th Cir.(Col.), October 28, 2010)
Total Pollution Exclusion Eliminates Coverage For Disturbing River Sediments
Plaintiff operated an irrigation ditch in Salida, Colorado along the Arkansas River. In May 2005, it initiated maintenance activity adjacent to its ditch, disturbing dirt, rock, soil, and fill material, and allegedly causing the materials to come into contact with the river. The Army Corps of Engineers, the Bureau of Land Management, and the Environmental Protection Agency, as well as the Colorado Department of Public Health and Environment, sent the policyholder orders requiring it to engage in corrective action to remediate the alleged damage caused by the policyholders maintenance activity. The policyholder sought coverage, asserting that the materials at issue are not pollutants within the meaning of the TPE.  The court granted summary judgment to the insurer, concluding that the definition of "pollutant" unambiguously covered dirt, rock, soil, and fill material.

Aspen Ins. UK Ltd. v. Dune Energy, Inc.
2010 U.S. App. LEXIS 23156 [ / lexisONE] (5th Cir.(La.), November 8, 2010)
Insurer Does Not Have to Reimburse for Oil Leak Cleanup
The court held that the insurer did not have to reimburse a company for cleanup after an oil leak because a seepage and pollution endorsement in the policy barred coverage.  The court held that the company occupied some of the affected property and its mineral lease gave it the right to occupy all of the land covered by the lease to explore for and produce oil and gas, triggering the endorsement.

Coffeyville Resources Refining & Marketing, LLC v. Liberty Surplus Ins. Corp.
2010 U.S. Dist. LEXIS 113457 [] (D.Kan., October 25, 2010)
Release of Crude Oil Falls Within Policy's Pollution Coverage
In a prior order, the court determined that the insurance policy's pollution coverage included property damage from the July 1, 2007 release of crude oil from plaintiff's refinery because the release was abrupt and neither expected or intended by plaintiff.  On reconsideration, the court ruled that defendant had not shown that the court misapprehended the facts or law, or that its conclusion amounted to clear error.

Prime Tanning Co. v. Liberty Mutual Ins. Co.
2010 U.S. Dist. LEXIS 120036 [] (D.Me, November 10, 2010)
Insurer Not Obligated to Defend Claims Based on Industrial By-Product
The policyholder operated a leather tanning business in Missouri which utilized chemicals to remove hair from animal hides. A byproduct of the process was a sludge which, from 1983 to 2009, it shipped and applied to local farm fields as a fertilizer. Farm owners brought suit against the policyholder when it was discovered that the sludge contained high levels of hexavalent chromium, an environmental pollutant. The policyholder sought coverage from its insurer, which denied coverage based on the pollution exclusion. The court agreed, finding that twenty-six years of applying thousands of tons of sludge could not be considered "sudden and accidental."

Great American Restoration Serv. Inc. v. Scottsdale Ins. Co.
911 N.Y.S.2d 142 [ / lexisONE] (N.Y.A.D., 2nd Dept., November 9, 2010)
Appellate Court Rules Against Insurer In Asbestos Coverage Claim
This environmental coverage case arises out claims of the insured's release and dispersal of asbestos throughout a building being remediated for water damage during the performance of its contract for emergency water damage services.  The policyholder submitted the claim to its insurer who disclaimed coverage based upon the asbestos exclusion clause in the policy and/or the policy's pollution exclusion. The appellate court held that the policyholder established, as a matter of law, that it was entitled to coverage under the policy.  Specifically, although the asbestos exclusion clause stated that no coverage was provided for property damage arising out of the "removal, disposal or use of asbestos," the subject clause included no terms indicating that coverage would not be provided for damages arising out of the unknowing or accidental release or dispersal of asbestos.  Thus, the court concluded that as the language was susceptible to two reasonable interpretations, the ambiguity must be construed against the insurer.

Oregon Mut. Ins. Co. v. Seattle Collision Center Inc.
2010 U.S. App. LEXIS 23587 [ / lexisONE] (9th Cir.(Wash.), November 16, 2010)
Court Affirms No Duty to Defend Because of Pollution Exclusion
The court affirmed summary judgment in favor of the insurer, ruling that there was no duty to defend the underlying action.  The allegations of the underlying complaint arise solely out of violations of Washington's Model Toxics Control Act and only claim past and future remedial action costs associated with environmental pollution. The policy's pollution exclusion clearly and unambiguously excludes coverage for such harms.

Brunswick Corporation v. Sentry Ins.
2010 Wisc. App. LEXIS 897 [ / lexisONE] (Wis. App., November 10, 2010)
Insurer Does Not Have to Pay for Pond Cleanup
The court held that a boat and sporting equipment manufacturer's liability for cleanup of a local pond was part of environmental remediation required by the government and did not address private party claims.  The policy did not cover the cost of government-required remediation.  Although the company coordinated its cleanup efforts with private property owners, the private parties never filed formal claims.


Brake Landscaping & Lawncare, Inc. v. Hawkeye-Security Ins. Co.
625 F.3d 1019 [ / lexisONE] (8th Cir.(Mo.), November 1, 2010)
Coverage Excluded for Employee's Negligence Under Business Risk Exclusions
A landscaping company sought coverage for costs incurred in re-sodding and re-seeding sections of its customers' lawns after an employee mistakenly sprayed them with non-selective herbicide. The court determined that the business risk exclusions applied because the landscaping company was performing operations when the employee sprayed the non-selective herbicide, the damage to the lawns was caused by the landscaping company's incorrect performance of its work, the lawns were the part of the real property that was the subject of the landscaping company's operations, and the landscaping company's work was not yet completed when the damage occurred and thus fell outside the "products-completed operations hazard" exception.

Doe v. Colony Ins. Co.
2010 U.S. App. LEXIS 22786 [ / lexisONE] (5th Cir.(Miss.), October 29, 2010)
Threat of Violence Sufficient to Trigger Assault and Battery Exclusion
The victim of a kidnapping and rape filed suit against the insurer of a convenience store from which she was taken. The plaintiff was told to lie down in the kidnapper's truck or he would blow her head off, although he did not show her a gun. The policy excluded coverage for bodily injury resulting from assault and battery, the failure to suppress or prevent assault and battery, and the failure to provide an environment safe from assault and battery or failure.  The plaintiff contended that the kidnapping did not involve force and therefore was not subject to the exclusion. The federal appellate court held that the threat made by the kidnapper constituted force and triggered the exclusion.


State Farm Mutual Auto. Ins. Co. v. Rabiner
2010 U.S. Dist. LEXIS 119961 [] (S.D.N.Y., November 4, 2010)
Court Upholds Right Of Insurer To Sue Fraudulently Incorporated Providers To Recover No-Fault Payments
An insurer filed declaratory action seeking to recover $2 million paid to defendant service providers. The insurer alleged that the defendant allowed its license to be fraudulently used in the formation of companies, thus allowing those providers to receive fraudulently obtained No-Fault payments. The defendants argued the insurer had no right to recover payments under the No-Fault or common law.  The court held that this position flies in the face of established law and further, to adopt defendants' position would allow fraudulently incorporated medical practices to continue to be unjustly enriched.

Quast v. State Farm Fire and Casualty Company
2010 U.S. Dist. LEXIS 114010 [] (W.D.Wis., October 26, 2010)
Insured's Bad Faith Claim Dismissed On Motion for Summary Judgment
Based upon insured's financial condition, repeated theft claims, type of materials stolen, lack of documentary support, failure to replace materials, reference to NICB indicators, reports of special investigator and other factors, the insurer's denial of claim did not constitute bad faith as a matter of law.  Plaintiff's bad faith claim dismissed leaving only the breach of contact count for failure to pay insured's loss.

Occurrence/Trigger of Coverage

Ameron Int'l. Corp. v. Ins. Co. of Pennsylvania
50 Cal. 4th 1370 [ / lexisONE] (Cal., November 18, 2010)
Federal Administrative Hearing Constituted a "Suit" Under The CGL Policy
The issue in this environmental coverage dispute is whether a federal administrative adjudication constituted a "suit" under the CGL policies. Specifically, the court held that given the insurer's reliance on a complaint for coverage determination and the court's policy of emphasizing substance over form in characterizing pleadings, it was reasonable for all parties to the insurance policy, which did not define "suit," to expect an involved federal administrative agency board proceeding to trigger the defense and indemnity provision in the policy

Republic Underwriters Ins. Co. v. Moore

2010 U.S. Dist. LEXIS 115597 [] (N.D.Ok., October 28, 2010)
Court Finds More Than One Occurrence in E. coli Coverage Action
The court held that even under the insurers' cause theory, that the preparation, handling, or storage of contaminated food by the policyholder during the relevant time period is the reference point to determine "occurrence", the court held there were two distinct places of injury, and two separate occurrences.  Accordingly, the amount of liability must be determined under the aggregate, and not "each occurrence" limit provision.

Advanced Environmental Recycling Tech. Inc. v. American Int. Specialty Lines Ins. Co.
2010 U.S. App. LEXIS 21837 [ / lexisONE] (5th Cir.(Tex.), October 22, 2010)
Mold Claims Do Not Allege An Occurrence Under The Policy
Plaintiff-appellant was named as a defendant in two separate class action lawsuits wherein customers sought damages based on allegations that its products were defectively designed.  The policyholder sought coverage for the Mold Lawsuits under its Umbrella Policies; however, the insurer American declined to defend. The court held that the policyholder failed to establish that the Mold Lawsuits alleged an occurrence under the umbrella policies, concluding that "faulty workmanship is not an accident" based on Arkansas precedent in Essex Ins Co. v. Holder, 372 Ark. 535 (Ark. 2007).

Indemnity Ins. Co. of North America v. City of Tacoma
2010 Wash. App. LEXIS 2427 [ / lexisONE] (Wash. Ct. of App., November 1, 2010)
No Coverage for Known Property Damage
The City of Tacoma constructed two dams on the North Fork of the Skokomish River in the 1920's. At the time of construction, Tacoma was aware of the potential for property damage to nearby residents caused by the dam. In the 1950's, Tacoma was made aware of property damage being caused to landowners as a result of high water and other issues from operation of the dam. In the 1970's and 1980's, Tacoma procured multiple insurance policies. In 1999, a landowner brought suit against Tacoma alleging property damage caused by operation of the dam. In subsequent coverage litigation, the court determined none of Tacoma's policies covered the allegations because Tacoma was aware that the dams were causing property damage before the policies were purchased. Thus, there was no occurrence to trigger coverage and exclusions for expected or intended injuries excluded coverage.

USF Ins. Co. v. Orion Development RA XXX, LLC
2010 U.S. Dist. LEXIS 123085 [] (N.D.W.V., November 18, 2010)
No Duty to Defend Allegations of Sexual Molestation by the Policyholder's Contractor
A lawsuit was filed against a policyholder corporation alleging that a foreman on a construction project owned by the policyholder engaged in sexual misconduct with three minors on the project. The court determined that the insurer was not obligated to defend the insured because the suit was not covered. In considering whether the underlying complaint alleged an occurrence, although it was a "close call", the court found an alleged occurrence. From the standpoint of the policyholder, the policyholder's alleged negligent failure to prevent the sexual misconduct was an occurrence. Nonetheless, the court determined there was no alleged "bodily injury" because the complaint only sought damages for emotional and psychological harms but not physical harm. Thus, the insurer had no duty to defend due to no allegations of bodily injury required to trigger coverage.

Other Insurance

NIC Ins. Co. v. First Financial Ins. Co.
2010 Cal. App. Unpub. LEXIS 8699 [] (Cal. Ct. of App., October 29, 2010)
Insurer that Rescinded Policy After Settling Suit Entitled Contribution
A policyholder builder was sued after construction defects in a residence resulted in severe water intrusion, mold, and related damages to the home. The builder had its own insurance and was listed as an additional insured on a subcontractor's policy. The builder's insurer defended and eventually settled the claim but subsequently rescinded the policy. The insurer then brought an action for equitable contribution against the sub-contractor's insurer. The subcontractor's insurer argued that it had no duty to contribute to defense costs because the two insurers insured different risks at different times and because the other insurer had rescinded its policy. The court held the rescission of the builder's policy after defense costs had been incurred did not affect the insurer's right to contribution from the other insurer on the risk.

Hudson Ins. Co. v. Colony Ins. Co.
624 F.3d 1264 [ / lexisONE] (9th Cir.(Cal.), November 5, 2010)
Insurer Entitled to Equitable Contribution from Other Insurer who Failed to Defend
A policyholder was sued by the National Football League for selling allegedly counterfeit NFL jerseys. The suit included numerous causes of action including trade dress infringement and slogan infringement. The policyholder tendered the suit to two of its insurers. One insurer defended under a reservation of rights. The other refused to defend. The court found the trademark infringement claim was precluded from coverage but that the NFL's slogan infringement claim, as alleged in the NFL's complaint, was potentially covered by the second insurer's policy, triggering a duty to defend. The defending insurer was entitled to equitable contribution.

Tocci Building Corp. of New Jersey, Inc. v. Virginia Surety Co.
2010 U.S. Dist. LEXIS 116488 [] (D.Mass., November 2, 2010)
Declaratory Judgment Action Regarding Excess Insurance Ripe
Excess carrier filed a motion to dismiss, claiming the policyholder's claim against it was not ripe until the underlying policies were exhausted. The court, finding that there was an actual controversy as to whether the excess insurer had any duty to defend or indemnify as the insurer raised more than ten exclusions to coverage, held that a declaratory judgment action could proceed against an excess insurer prior to resolution of the underlying claim. The court further explained that the excess insurer's involvement in the coverage litigation was necessary for a proper resolution of the underlying and coverage actions because its potential coverage was a factor in possible settlement of all litigation and its involvement in the coverage action would avoid duplicative litigation.

Policy Construction

Sell v. Nationwide Mut. Ins. Co.
2010 U.S. Dist. LEXIS 121513 [] (E.D.Cal., November 17, 2010)
"Occupies" Under Personal And Advertising Injury Provision Does Not Necessarily Require Actual Possession
Plaintiff policyholder contends that defendant insurer had a duty to defend under the personal and advertising injury provision. Defendant insurer countered that the provision stated it would only defendant for the "wrongful eviction from, wrongful entry into, or invasion of the right of private occupation of a room, dwelling or premises that person occupies."  Defendant insurer contended that the word "occupies" is unambiguous and required the policyholder to have actual possession.  Court rejected this view and determined that the definition of occupies includes those with interest in real property and actual possession and control is not required.  Therefore, defendant insurer owed a duty to defend under the disputed provision.

Property Coverage

Formosa Plastics Corp. v. Ace American Ins. Co. et. al.
2010 U.S. Dist. LEXIS 119382 [] (NJ D., November 9, 2010)
District Court Denies Claims For Losses To Replace Manufacturing Plant Based On Code Upgrades
This coverage dispute arose out of an April 2004 explosion at an Illiopolis, Illinois plastics manufacturing plant operated.  The parties cross-moved regarding whether the policyholder, may claim additional losses under the policy's "Code Upgrade" provision for the increased costs of constructing a replacement plant in compliance with applicable environmental laws and ordinances.  The court ruled that the policyholder did not demonstrate that it would incur costs from complying with "laws or ordinances regulating the demolition, construction, repair, replacement or use of its buildings or structures."  In the absence of laws or ordinances requiring compliance with specific standards for buildings and structures, the policyholder could not pursue code upgrade claims on the basis of industry standards and guidelines.  Thus, summary judgment was granted in favor of the insurers.

Professional Liability

Radianse Inc. v. Twin City Fire Ins. Co.
2010 U.S. Dist. LEXIS 106778 [] (4th Cir.(W.V.), (D.Mass., October 6, 2010)
Contract Exclusion Applies to Bar Coverage for D&O Claim
The policyholder was sued for tortious interference with contract and sought coverage under a D&O policy issued by defendant.  However, coverage was denied based, in part, upon an exclusion precluding coverage for all losses arising out of a contract or agreement.  At a minimum, plaintiff sought a defense in the underlying action.  In support of this claim, Radianse argued that the underlying claim arose out of tort law and not contract.  The court disagreed noting that the exclusion applies to all claims "in any way related to any liability under any contract or agreement."  Accordingly, the court held that the insurer was not required to provide coverage in response to the underlying claim.


Guy Carpenter & Company LLC v. Lockton RE
2010 U.S. Dist. LEXIS 117510 [] (S.D.N.Y., November 4, 2010)
Claim of Unjust Enrichment Not Allowed Where There is a Valid Contract
During their business relationship, a reinsurance broker earned brokerage fees from reinsurers.  Before the full commissions were paid, the reinsurers left that broker and retained a different broker.  The first broker sued the second broker under 3 theories of liability for its unpaid fees and the second broker moved to dismiss the claims.  The court allowed the causes of action in conversion and tortuous interference to stand, but granted the second broker's motion with respect to the cause of action for unjust enrichment.  The court noted that New York Courts do not allow an unjust enrichment claim when there is a valid contract between the parties.  Here, the right to the fees were governed by a brokerage agreement and thus, made the claim invalid.

This edition of CaseWatch: Insurance was originally published in the The Insurance and Reinsurance Report blog.

CaseWatch: Insurance provides timely summaries of and access to insurance law decisions and legislation. It is distributed bi-weekly. For ease of reference, the cases are organized by topic. CaseWatch is the collaborative effort of Goldberg Segalla LLP's Global Insurance Services Practice Group, as is its blog The Insurance and Reinsurance Report. Goldberg Segalla's Global Insurance Service Group is comprised of over 25 attorneys throughout 10 offices in the firm's four states (New York, New Jersey, Connecticut, and Pennsylvania). The Global Insurance Services Group routinely handles matter of national and international importance for both domestic and foreign insurers, cedents and reinsurers. This includes: comprehensive audits, policy reviews, regulatory advice,  positioning dispute for resolution at the business level (either through interim funding or non-waiver agreements), negotiations among counsel, mediation or fully-involved arbitration or litigation.

   The editors, Daniel W. Gerber and Sarah J. Delaney appreciate your interest and welcome your feedback.