LexisNexis® Legal Newsroom
    Mealey's Insurance - Judge Finds Innocent Insured Provision Does Not Apply To Partner, Firm

    SAVANNAH, Ga. - A federal judge in Georgia on Aug. 9 awarded summary judgment to an insurance company seeking to rescind a general liability policy issued to a law firm, ruling that the innocent insured provision did not apply to the firm and a partner because misrepresentations on the policy application were material (Proassurance Casualty Company v. Wilson R. Smith, et al., No. 15-CV-51, S.D. Ga.; 2016 U.S. Dist. LEXIS 105033).

    Mealey's Insurance - Insured's Defective Work Is Not An 'Occurrence' Under Pennsylvania Law, Judge Says

    JOHNSTOWN, Pa. - An insured's faulty workmanship does not constitute an "occurrence" under a commercial general liability insurance policy, a Pennsylvania federal judge ruled Aug. 9, relying on Kvaerner Metals Division of Kvaerner U.S., Inc. v. Commercial Union Ins. Co. (589 Pa. 317, 908 A.2d 888, 896 [Pa. 2006]) to find an insurer has no duty to defend or indemnify (Acuity, a mutual insurance company v. Knisely & Sons, Inc., et al., No. 15-76, W.D. Pa.; 2016 U.S. Dist. LEXIS 104431).

    Mealey's Insurance - Judge: Insured Did Not Show That Adjusters Violated Insurance Code

    SHERMAN, Texas - A claims adjuster and adjusting company were improperly joined in an insurance breach of contract and bad faith lawsuit because an insured failed to provide any fact to show that those defendants' actions were in violation of the Texas Insurance Code, a federal judge in Texas ruled Aug. 8 in denying the insured's motion to remand (Lillian Elizondo v. Metropolitan Lloyds Insurance Co. of Texas, et al., No. 16-306, E.D. Texas; 2016 U.S. Dist. LEXIS 103878).

    Mealey's Insurance - Panel: Excess Insurer Has Alleged Viable Equitable Subrogation, Bad Faith Claims

    LOS ANGELES - A California appeals panel on Aug. 5 held that the lack of an excess judgment against Warner Brothers Entertainment Inc. in an underlying employment injury dispute that settled does not preclude the equitable subrogation and breach of the duty of good faith and fair dealing lawsuit that the entertainment company's excess insurer brought against its primary insurer (Ace American Insurance Co. v. Fireman's Fund Insurance Co., No. B264861, Calif. App., 2nd Dist., Div. 4; 2016 Cal. App. LEXIS 647).

    Mealey's Insurance - NFIA Does Not Preempt Policy Procurement Claims, 6th Circuit Says In Reversal

    CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Aug. 8 found that the National Flood Insurance Act (NFIA) does not preempt insureds' state law claims to the extent that they arise solely from the process of procuring a federal flood insurance policy, reversing a lower federal court in part in a dispute arising from flood damage (Michael H. Harris, et al. v. Nationwide Mutual Fire Insurance Company, et al., No. 15-6132, 6th Cir.; 2016 U.S. App. LEXIS 14501).

    Mealey's Insurance - All-Sums Allocation Must Be Applied In Asbestos Coverage Dispute, Federal Judge Says

    NEW YORK - Based on a recent decision by the New York Court of Appeals regarding allocation, a New York federal judge on Aug. 8 granted an insured's motion for reconsideration and said that in light of the Court of Appeals' decision, an all-sums method of allocation, not a pro rata method of allocation, must be applied to policies with noncumulation clauses (Liberty Mutual Insurance Co. v. The Fairbanks Co., Nos. 13-3755, 15-1141, S.D. N.Y.; 2016 U.S. Dist. LEXIS 104250).

    Mealey's Insurance - Court Did Not Consider Whether Parties Were Properly Aligned, Panel Says, Reverses

    CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Aug. 3 held that a lower federal court failed to consider whether parties were properly aligned in a dispute over whether an insurer owes an additional $1 million to $3 million to satisfy an underlying $3,736,278 judgment against its insured for breaching its duty to exercise ordinary care to maintain its common areas (Evanston Insurance Company v. Housing Authority of Somerset and Griffin, et al., No. 16-5018, 6th Cir.; 2016 U.S. App. LEXIS 14465).

    Mealey's Insurance - No Coverage For Water Damage; Incomplete Roof Is Not A Roof, Utah Panel Says

    SALT LAKE CITY - An insurer owes no coverage for water damage to its insureds' home and personal property caused when rain entered the home before a new roof installation was complete because the incomplete roof does not constitute a roof as required by the policy, the Utah Court of Appeals affirmed Aug. 4 (Annalee Poulsen et al. v. Farmers Insurance Exchange, No. 20150498, Utah App.; 2016 Utah App. LEXIS 175).

    Mealey's Insurance - New Jersey Panel Allows Claims Related To Contamination That Predate Sale Of Company

    TRENTON, N.J. - A company successor is entitled to allege claims for breach of contract and breach of the duty of good faith and fair dealing as long as those claims pertain to coverage for environmental contamination that predated the successor's acquisition of the insured's company, the Appellate Division of the New Jersey Superior Court said Aug. 4 (Haskell Properties LLC v. The American Insurance Co., et al., No. A-1452-14T2, N.J. Super., App. Div.; 2016 N.J. Super. Unpub. LEXIS 1836).

    Mealey's Insurance - Panel: Contractual Liability Exclusion Bars Directors, Officers Liability Coverage

    SEATTLE - The Ninth Circuit U.S. Court of Appeals on Aug. 3 affirmed a lower federal court's ruling that a directors and officers liability insurer has no duty to defend its insured against an underlying lawsuit arising from the insured's termination of a technology license agreement (TLA), finding that coverage is barred by the policy's contractual liability exclusion (X2 Biosystems Inc. v. Federal Insurance Co., No. 14-35125, 9th Cir.; 2016 U.S. App. LEXIS 14153).

    Mealey's Insurance - Questions Of Fact Exist As To Whether Measures Are Remediation Costs, Panel Says

    NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on Aug. 4 vacated a Louisiana federal judge's ruling in favor of an insured seeking coverage for mitigation projects undertaken to address alleged violations of the Clean Air Act (CAA) because questions of fact exist as to whether the measures undertaken by the insured are "remediation costs" as defined by the policy at issue (Louisiana Generating LLC, et al. v. Illinois Union Insurance Co., et al., No. 15-30914, 5th Cir.; 2016 U.S. App. LEXIS 14344).

    Mealey's Insurance - Pennsylvania Federal Judge Says Motor Vehicle Statute Saves Claim From Preemption

    SCRANTON, Pa. - A Pennsylvania federal judge on Aug. 2 partially denied a life insurance company's motion to dismiss a putative class action for benefits under an Employee Retirement Income Security Act plan, finding that a section of a state motor vehicle statute "regulates insurance" and is therefore saved from ERISA preemption (Eric Yost, et al. v. Anthem Life Insurance Co., No. 3:16-cv-00079, M.D. Pa.; 2016 U.S. Dist. LEXIS 101202).

    Mealey's Insurance - Judge: Fact Issues Exist On If Insured's Faulty Window Wall Systems Caused Damages

    NEW YORK - Uncertain as to whether the claims for which an insured is liable are related to damages to window wall systems themselves or to other property owned by the condominium unit owners, a New York federal judge on Aug. 2 denied summary judgment to an insurer on the duty to defend and indemnify an underlying action (American Home Assurance Co. v. Allan Window Technologies, Ltd., No. 15-5138, S.D. N.Y.; 2016 U.S. Dist. LEXIS 101118).

    Mealey's Insurance - Faulty Work's Consequential Damages Are Insured, New Jersey High Court Finds

    TRENTON, N.J. - Consequential damages caused by the subcontractors' faulty workmanship constitute "property damage," and water damage from rain flowing into the interior of the property due to that faulty work is an "occurrence" under a commercial general liability insurance policy, the New Jersey Supreme Court ruled Aug. 4 (Cypress Point Condominium Association Inc. v. Adria Towers LLC, et al., No. A-13/14, N.J. Sup.; 2016 N.J. LEXIS 847).

    Mealey's Insurance - Judge Certifies Class In Hailstorm Coverage Suit Challenging Insurance Practices

    KANSAS CITY, Mo. - A Missouri federal judge on Aug. 1 granted insureds' motion to certify a class in a lawsuit alleging that their homeowners insurer unlawfully applied a policy's $1,000 deductible to an actual cash value (ACV) payment in a hailstorm coverage dispute (Eric Lafollette v. Liberty Mutual Fire Insurance Co., No. 14-04147, W.D. Mo.; 2016 U.S. Dist. LEXIS 99980).

    Mealey's Insurance - Judge: Extraordinary Circumstances Excuse Untimely Filing Of Affidavits Of Merit

    CAMDEN, N.J. - A New Jersey federal judge on Aug. 2 found that extraordinary circumstances excuse insureds' untimely filing of affidavits of merit in a Superstorm Sandy coverage dispute (Brian McMullin, et al. v. Harleysville Insurance Co., Inc., et al., No. 14-7537, D. N.J.; 2016 U.S. Dist. LEXIS 101491).

    Mealey's Insurance - Judge Overrules Doctor's Argument That Materiality Is Required To Find Fraud

    ABINGDON, Va. - A federal judge in Virginia on Aug. 2 affirmed the convictions of the owners of a laboratory who were found guilty of health care fraud and conspiracy to commit health care fraud for conducting unnecessary drug screenings and billing insurers, holding that the U.S. Supreme Court's recent ruling in Universal Health Services Inc. v. United States (135 S. Ct. 1989 [2016]) did not apply to the present case (United States of America v. Beth Palin, et al., No. 14cr00023, W.D. Va.; 2016 U.S. Dist. LEXIS 100743).

    Mealey's Insurance - Policy's Limitations Period Is Enforceable, 8th Circuit Panel Determines

    ST. PAUL, Minn. - A group disability policy's three-year limitations provision is not unconstitutional or invalid under Minnesota law because Minnesota's statutes pertaining to the statute of limitations for filing suits do not apply to group policies, the Eighth Circuit U.S. Court of Appeals said Aug. 2 (Lora Walker v. Hartford Life and Accident Insurance Co., No. 15-2570, 8th Cir.; 2016 U.S. App. LEXIS 13988).

    Mealey's Insurance - Judge Finds Requirement Met For Insurance Coverage Dispute Over Defects Suit

    LOS ANGELES - Because homeowners seek more than $7.5 million in an underlying construction defects lawsuit, a California federal judge ruled Aug. 1 that the amount-in-controversy requirement has been met for an insurance coverage dispute involving three insurers (Maryland Casualty Co. and Northern Insurance Company of New York v. Ironshore Specialty Insurance Co., No. 16-00186, E.D. Calif.; 2016 U.S. Dist. LEXIS 100462).

    Mealey's Insurance - Illinois Panel Dismisses Appeal, Cross-Appeal For Lack Of Jurisdiction

    CHICAGO - An Illinois appeals panel on Aug. 1 dismissed an insurer's appeal and insureds' cross-appeal for lack of jurisdiction in a coverage dispute over a racial discrimination lawsuit filed against the insureds (Country Mutual Insurance Co. v. Best Pallet Company, LLC, et al., No. 1-14-1269, Ill. App., 1st Dist., 1st Div.; 2016 Ill. App. Unpub. LEXIS 1575).

    Mealey's Insurance - Panel Certifies Question On Meaning Of 'Suit' For Insurance Policy Under Florida Statute

    ATLANTA - The 11th Circuit U.S. Court of Appeals on Aug. 2 certified a question to the Florida Supreme Court regarding whether the notice and repair process set forth in Florida Statutes Chapter 558 constitutes a "suit" within the meaning of commercial general liability insurance policies (Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Co., No. 15-12816, 11th Cir.; 2016 U.S. App. LEXIS 14005).

    Mealey's Insurance - Judge Dismisses Fraud Suit Due To State Farm's Failure To Establish Diversity

    DETROIT - A federal judge in Michigan on Aug. 1 dismissed an insurance fraud lawsuit brought by State Farm Automobile Insurance Co. after finding that the insurer was unable to sufficiently establish that complete diversity existed between the parties (State Farm Mutual Automobile Insurance Company v. Elite Health Centers Inc., et al., No. 16-cv-12380, E.D. Mich.; 2016 U.S. Dist. LEXIS 99958).

    Mealey's Insurance - Judge Orders Conservatorship Of Insurer In Hazardous Financial Condition

    SAN FRANCISCO - A California judge on July 28 ordered an insurer into conservatorship and named the state's insurance commissioner as conservator (Dave Jones, Insurance Commissioner of the State of California v. CastlePoint National Insurance Company, and DOES 1-50, No. CPF-16-515183, Calif. Super., San Francisco).

    Mealey's Insurance - Judge: Insurer's Reading Of Opinion On Bad Faith Claim 'Overreaching'

    COLUMBUS, Ohio - A federal judge in Ohio on July 29 denied an insurer's motion for reconsideration of an earlier ruling granting in part and denying in part a pair of summary judgment motions, ruling that the insurer's interpretation of the opinion for the earlier ruling is "overreaching" (The Burlington Insurance Co. v. Eden Cryogenics LLC, et al., No. 14-0066, S.D. Ohio; 2016 U.S. Dist. LEXIS 99692).

    Mealey's Insurance - Fact Issues Remain On If Insured Breached Cooperation Clause, Federal Judge Holds

    HOUSTON - A cooperation clause applies to an insured's conduct in declining a settlement in an underlying lawsuit over a faulty flex connector, a Texas federal judge ruled July 29, also finding that genuine issues of material fact exist regarding whether the insured breached that duty (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas; 2016 U.S. Dist. LEXIS 99896).