LexisNexis® Legal Newsroom
    Mealey's Insurance - Ohio Federal Judge Rejects Recommendation That Bad Faith Suit Be Remanded

    DAYTON, Ohio - An Ohio federal judge on Jan. 22 rejected a magistrate judge's recommendation that an insured's bad faith suit be remanded to Ohio state court where an underlying wrongful death suit against the insured is pending because the federal court is better equipped to address any issues arising out of federal aviation regulations as they apply to whether the insured's airplane was unlawfully used by the insured's son (Peter H. Heins v. Commerce and Industry Insurance Co., et al., No. 17-0110, S.D. Ohio, 2018 U.S. Dist. LEXIS 9931).

    Mealey's Insurance - Bad Faith Claim Based On Alleged Failure To Notify Insured Survives Dismissal

    JACKSON, Miss. - A Mississippi federal judge on Jan. 22 dismissed a number of an insured's claims alleged against its insurer in a mold coverage dispute on the basis that the policy's organic pathogen exclusion precludes coverage but refused to dismiss the insured's claim for breach of the duty of good faith and fair dealing after determining that the insured stated a plausible bad faith claim regarding the insurer's alleged failure to notify the insured of the claim denial (Heritage Properties Inc. v. Ironshore Specialty Insurance Co., et. al., No. 17-637, S.D. Miss., 2018 U.S. Dist. LEXIS 9598).

    Mealey's Insurance - Panel Finds No Conflict To Support Insured's Right To Independent Counsel

    SACRAMENTO, Calif. - Any possible or potential conflict is not legally sufficient to require an insurer to provide independent counsel, a California appeals panel ruled Jan. 22, affirming summary judgment against an additional insured regarding a coverage dispute over defense provided in a construction defect lawsuit (Centex Homes, et al. v. St. Paul Fire and Marine Insurance Co., No. C081266, Calif. App., 3rd Dist., 2018 Cal. App. LEXIS 45).

    Mealey's Insurance - Good Faith Investigation Is Not A Condition Precedent To Invoking Appraisal Clause

    SHERMAN, Texas - A Texas federal judge on Jan. 22 granted an insurer's motion to compel appraisal after rejecting the insured's argument that the insurer's failure to complete a good faith investigation of the insured's property damage claim precludes the insurer from invoking appraisal (Darold Adami v. Safeco Insurance Company of Indiana, No. 17-574, E.D. Texas, 2018 U.S. Dist. LEXIS 9486).

    Mealey's Insurance - Insurer Has No Duty To Pay For Independent Counsel In Copyright Suit, Panel Says

    CHICAGO - An Illinois appeals panel on Jan. 22 affirmed a lower court's ruling that a commercial general liability insurer has no obligation to reimburse its insured for more than $16,000 in independent counsel fees incurred in an underlying copyright infringement dispute, rejecting the insured's contention that a conflict of interest entitled it to independent counsel (Bean Products, Inc. v. Scottsdale Insurance Co., No. 1-17-0421, Ill. App., 1st Dist., Div. 1, 2018 Ill. App. Unpub. LEXIS 89).

    Mealey's Insurance - Parallel State Court Proceeding Warrants Dismissal Of Federal Suit, 3rd Circuit Says

    PHILADELPHIA - The Third Circuit U.S. Court of Appeals on Jan. 23 found that a homeowners insurer's state court lawsuit seeking a declaration as to its duty to defend an underlying child endangerment lawsuit "unquestionably" qualifies as a parallel proceeding to the federal declaratory judgment lawsuit, dismissing the federal suit (Esurance Insurance Company v. Lavada Bowser, et al., No. 17-2265, 3rd Cir., 2018 U.S. App. LEXIS 1554).

    Mealey's Insurance - Judge Refuses To Dismiss UCL, Contract Claims Against Geico

    SAN JOSE, Calif. - A California federal judge on Jan. 19 granted the majority of an insurer's motion for summary judgment as to claims for fraud and declaratory relief asserted against it by an insured who sought coverage for vehicle theft, but allowed part of his claim for violation of California's unfair competition law (UCL) and breach of contract to proceed, finding that issues of triable fact exist as to whether the coverage claim was denied based solely on his inability to produce cell phone records that were not available (Christopher T. Monroe v. Geico General Insurance Company, No. 5:14-cv-05174, N.D. Calif., 2018 U.S. Dist. LEXIS 9106).

    Mealey's Insurance - Magistrate Judge Partially Grants Motion To Compel In Lead Paint Coverage Suit

    BALTIMORE - A Maryland federal magistrate judge on Jan. 19 determined that an insurer is required to produce documents related to its knowledge of any lead paint conditions at its insured's buildings prior to the date on which the insured's insurance application and endorsement became effective (CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited v. Devon S. Johnson, No. 15-3132, D. Md., 2018 U.S. Dist. LEXIS 8594).

    Mealey's Insurance - Panel Declines To Reopen Insurer's Liquidation For Decades-Old Proofs Of Claim

    TRENTON, N.J. - A Michigan state road agency cannot reopen the liquidation of Integrity Insurance Co. to recover payouts from car accident claims, a New Jersey appeals panel affirmed Jan. 19, finding that the liquidation was properly finalized (In the matter of the liquidation of Integrity Insurance Co., No. A-3285-15T3, N.J. Super., App. Div., 2018 N.J. Super. Unpub. LEXIS 134).

    Mealey's Insurance - Judge: Insurer Breached Duty To Defend Architect For Subcontractor's Work

    MINNEAPOLIS - An insurance company breached its duty to defend an architecture firm from a lawsuit arising from construction defects that resulted from a subcontractor's negligence, a federal judge in Minnesota ruled Jan. 19, holding that the damages were not excluded from coverage under the business risk doctrine and a products-completed operations hazard clause (Westfield Insurance Company v. Miller Architects & Builders Inc., No. 17-400, D. Minn., 2018 U.S. Dist. LEXIS 8539).

    Mealey's Insurance - Government Cannot Introduce Evidence Of Insurance Payments During Fraud Trial

    BILLINGS, Mont. - The government cannot introduce evidence regarding the extent of damages, injuries and insurance payments that resulted from a December 2012 explosion that was caused when a trucking company was hauling natural gas condensate, a federal judge in Montana ruled Jan. 22, finding that the evidence has little probative value (United States of America v. Woody's Trucking LLC, et al., No. CR 17-138, D. Mont., 2018 U.S. Dist. LEXIS 9749).

    Mealey's Insurance - Oregon Supreme Court: Bad Faith Claim Does Not Constitute Elder Financial Abuse

    SALEM, Ore. - Answering a certified question from the Ninth Circuit U.S. Court of Appeals, the Oregon Supreme Court on Jan. 19 found that bad faith allegations that an insurer delayed the processing of claims and refused to pay benefits owed to vulnerable persons under long-term care insurance policies do not state a claim under the state's Elder Financial Abuse Statute (Lorraine Bates, et al. v. Bankers Life and Casualty Company, et al., No. SC S064742, Ore. Sup., 362 Ore. 337; 2018 Ore. LEXIS 7).

    Mealey's Insurance - Facebook IPO Class Action Barred By Professional Services Exclusion, Panel Affirms

    NEW YORK - The Second Circuit U.S. Court of Appeals on Jan. 22 held that a directors and officers (D&O) liability insurance policy's professional services exclusion unambiguously bars coverage for claims in an underlying Facebook IPO class action lawsuit, affirming a lower court's ruling against an excess errors and omissions (E&O) insurer seeking coverage from the D&O insurer (Beazley Insurance Co. Inc. v. Ace American Insurance Co., et al., No. 16-2812, 2nd Cir., 2018 U.S. App. LEXIS 1372).

    Mealey's Insurance - Judicial Notice Of Documents Addressed In Case Between Insolvent Insurer, Former Owner

    WILMINGTON, Del. - In a dispute between an insolvent insurer and the insurer's former owner who is now in prison for wire fraud, a Delaware master in chancery on Jan. 18 recommended that the court take judicial notice of certain documents and statements pertaining to the insurer's liquidation proceeding and the owner's criminal trial (Indemnity Insurance Corp., RRG v. Jeffrey Cohen, C.A. No. 8985-CB, Del. Chanc., 2018 Del. Ch. LEXIS 16).

    Mealey's Insurance - Bifurcation Warranted, Federal Magistrate Judge Says In Granting Insurer's Motion

    ALBUQUERQUE, N.M. - A New Mexico federal judge on Jan. 17 bifurcated an insured's breach of contract claim from the insured's bad faith claim in an auto coverage dispute after determining that bifurcation is warranted because under New Mexico law, a finding of breach of contract is necessary for a bad faith claim to survive (Steve P. Shultzaberger v. State Farm Mutual Automobile Insurance Co., No. 17-1028, D. N.M., 2018 U.S. Dist. LEXIS 7915).

    Mealey's Insurance - Texas Federal Judge Opts To Transfer Dispute Between Insolvent Insurer, Reinsurer

    AUSTIN, Texas - Rather than remand or compel arbitration, a Texas federal judge on Jan. 19 transferred venue of a reinsurance agreement dispute between a reinsurer and an insolvent insurer to a Georgia federal court based upon a forum-selection clause (Gramercy Insurance Co. v. Contractor's Bonding Ltd., No. 17-723, W.D. Texas, 2018 U.S. Dist. LEXIS 8674).

    Mealey's Insurance - Judge Grants Judgment To Mortgagors, Reinsurer On RESPA, Unjust Enrichment Claims

    PITTSBURGH - In a mortgage insurance reinsurance scheme case, a Pennsylvania federal judge on Jan. 19 granted judgment on the pleadings to mortgagors and a reinsurer with regard to a Real Estate Settlement Procedures Act (RESPA) claim and an unjust enrichment claim (Linda Menichino, et al. v. Citibank, N.A., et al., No. 12-00058, W.D. Pa., 2018 U.S. Dist. LEXIS 8648).

    Mealey's Insurance - No Coverage Owed For Cleanup Costs Incurred As The Result Of Oil Tank Leak

    PHILADELPHIA - A Pennsylvania federal judge on Jan. 19 granted an insurer's motion for summary judgment after determining that the policy's pollution exclusion clearly bars coverage for cleanup costs incurred by the insureds as a result of a heating oil tank leak (Irl S. Barg et al. v. Encompass Home & Auto Insurance Co., No. 16-6049, E.D. Pa., 2018 U.S. Dist. LEXIS 8951).

    Mealey's Insurance - Indiana Federal Judge Says Plan's Denial Of Disability Benefits Must Be Affirmed

    SOUTH BEND, Ind. - Noting that an arbitrary and capricious standard of review applies in a disability benefits dispute based on a district court's prior decision, an Indiana federal judge on Jan. 17 affirmed the disability insurer's denial of benefits on the basis that there is rational support for the insurer's denial of benefits (Donald Fessenden v. Reliance Standard Life Insurance Co., et al., No. 15-370, N.D. Ind., 2018 U.S. Dist. LEXIS 7754).

    Mealey's Insurance - Erroneous Jury Instruction Warrants Reversal Of Hailstorm Coverage Suit, Panel Says

    WEST PALM BEACH, Fla.- A Florida appeals panel on Jan. 17 found that a lower court wrongly applied the efficient proximate cause doctrine in instructing the jury and improperly shifted the burden of proof in a hailstorm coverage dispute, reversing and remanding (Richard W. Jones, et al. v. Federated National Insurance Company, No. 4D16-2579, Fla. App., 4th Dist., 2018 Fla. App. LEXIS 561).

    Mealey's Insurance - Employment Practices Liability Coverage Was Not Triggered, Ohio Panel Affirms

    COLUMBUS, Ohio - Finding that the gravamen of an underlying complaint was that insureds breached a stock purchase agreement and not that they violated an employment agreement, an Ohio appeals panel on Jan. 18 affirmed a lower court's finding that an insurance policy's employment practices liability coverage was not triggered (Orthopedic & Neurological Consultants, Inc., et al. v. The Cincinnati Insurance Company, No. 17AP-407, Ohio App., 10th Dist., 2018 Ohio App. LEXIS 171).

    Mealey's Insurance - 7th Circuit Upholds Fraud Sentences For Medical Office Manager, Billing Agent

    CHICAGO - A federal judge in Illinois did not err when sentencing a home health care office manager and billing specialist following their convictions for health care fraud and conspiracy to commit health care fraud, a Seventh Circuit U.S. Court of Appeals panel ruled Jan. 19, holding that the reasoning behind the sentences was correct (United States of America v. Rick E. Brown, et al., Nos. 15-3117, 15-3261, 7th Cir., 2017 U.S. App. LEXIS 1284).

    Mealey's Insurance - Employment Practices Liability Insurer Has Duty To Defend, 9th Circuit Affirms

    SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Jan. 17 affirmed a lower federal court's finding that an employment practices liability insurer has a duty to defend its insured against an underlying class action lawsuit (PHP Insurance Service Inc., et al. v. Greenwich Insurance Co., No. 16-15083, 9th Cir., 2018 U.S. App. LEXIS 1128).

    Mealey's Insurance - Judge Dismisses Breach Of Fiduciary, Negligence Claims Against Reinsurance Broker

    NEW YORK - An insurer failed to establish its negligence and breach of fiduciary counterclaims against a reinsurance broker, a New York federal judge ruled Jan. 17, finding no special relationship between the parties (Holborn Corp. v. Sawgrass Mutual Insurance Co., No. 16-09147, S.D. N.Y., 2018 U.S. Dist. LEXIS 7848).

    Mealey's Insurance - Appeals Panel Says Questions Of Fact Exist On Insured's Bad Faith, Fraud Claims

    INDIANAPOLIS - The Indiana Court of Appeals on Jan. 16 reversed a trial court's ruling in favor of insurers on fraud and bad faith claims because the insured's claims are based on the behavior of the insurer defendants in a separate breach of contract lawsuit and were not filed in an attempt to impermissibly attack the judgment in the breach of contract lawsuit (Kimberly S. Earl,et al., v. State Farm Mutual Automobile Insurance Co., No. 36A01-1703-CT-542, Ind. App., 2018 Ind. App. LEXIS 9).