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Dentons on Taylor v. Allstate Insurance Co.: When Is a Texas Liability Insurer Liable for Inadequate Defense of a Case?

In Taylor v. Allstate Insurance Co.,[1] a Texas court of appeals held that the only common-law tort causes of action available against a liability insurer for allegedly inadequate defense of its insured are breach of contract and a Stowers[2] (failure to settle) claim, but that a contract claim might...

Notable Insurance Coverage Rulings in the First Half of 2014

By Jonathan Hardin and Feola Odeyemi 2014 is shaping up to be a momentous year in insurance coverage law. State and federal courts have already issued several important coverage decisions this year that nevertheless may have slipped "under the radar." This commentary examines such key rulings...

Oops, Insurer’s Poorly Drafted Language Applied As Written; Double Oops, Insured Can’t Complain When New York Law is Applied After It Chose to Reject Missouri Tax

By Jill Berkeley , Partner, Neal, Gerber & Eisenberg LLP An insured under an errors and omissions policy gives timely notice of circumstances during the policy period in effect when it first became aware of its potential civil liability. The E&O insurer acknowledges notice. Many years later...

Supreme Court Awards The Kitchen Sink For Insurer’s Breach Of The Duty To Defend

If an insurer is determined to have breached the duty to defend, consequences will attach. It may be that the insurer must pay for the defense costs that it otherwise owed. Or the consequences may be much harsher – the insurer may lose the right to assert otherwise applicable defenses to indemnity...

Insurer Had No Duty to Defend or Indemnify Trademark Infringement Claim Because It Fell Within the Scope of an Intellectual Property Exclusion

North Coast Med., Inc. v. Hartford Fire Ins. Co. , 2014 U.S. Dist. LEXIS 20701 (N.D. Cal. Feb. 17, 2014), [ enhanced version available to lexis.com subscribers ]. In North Coast Medical , the district court held that the insurer had no duty to defend or indemnify its insured in connection with an...

No Coverage — No Duty to Defend: Personal Injury Offenses Must Be Alleged

Business relationships are often contentious. When a contract to sell a product devolves into a dispute by selling the product under a slightly different name, suits are filed. Insurance is designed to protect the party insured against certain enumerated causes or risks of loss. However, no policy provides...

A-L-Hi To Coverage For Pre-Tender Defense Costs: ALI Principles Looking To Shift The Law

If you’ve been reading Coverage Opinions of late you’ve seen me take issue with certain aspects of the American Law Institute’s “Principles of the Law of Liability Insurance” Project. In general, my beef has been with certain proposed Principles that open the door to insureds...

Breaching the Duty to Defend: Remedy for Recovering Peace of Mind

By Jill Berkeley , Partner, Neal, Gerber & Eisenberg LLP Given the American Law Institute’s recent discussion at its May 2015 meeting, regarding Preliminary Draft No. 1 of the Restatement on Liability Insurance , Chapter 2, Sections 20 and 21, I would like to add my voice to those who...

Insurer’s Duty to Defend Did Not Arise until Insurer Was Provided with All Necessary Information to Determine the Existence of Coverage

Carrier’s Right to Control the Defense Includes the Right to Appoint Counsel of Its Choosing and to Settle Claims without the Participation of the Insured Travelers Prop. Cas. Co. of Am. v. Kaufman & Broad Monterey Bay, Inc ., 2015 U.S. Dist. LEXIS 16952 (N.D. Cal. Feb. 11, 2015) [subscribers...

Insurance Coverage for Subcontractor Non-Compliance with Prevailing Wage Laws?

One Court Says There Is At Least a Duty to Defend. Subcontractor non-compliance with prevailing wage laws is unfortunately not uncommon. But might that be covered by the General Contractor's insurance? For one design-build project that included coverage for professional liability a federal...

Insurer Did Not Breach any Duty by Settling Claims without Insured’s Consent and Prior to Appointing Counsel

In American Western Door , the Central District of California granted a CGL carrier’s motion to dismiss an insured’s complaint and held that a carrier has the right to settle covered claims without the participation of the insured. American Western Door involved a putative class action...

Counterclaim Asserted Against Insured in Underlying Environmental Cleanup Action Triggered Duty to Defend

In Haskins , [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ], the Northern District of California held that the insurer’s duty to defend under a CGL policy was triggered by a counterclaim asserted against the insureds in an underlying action brought by the...

E&O Carrier’s Duty to Defend Was Triggered because Allegations that the Insureds Mismanaged Debtor’s Trust Account Concerned Professional Services for Others

In C.M. Meiers , [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ], the Bankruptcy Court for the Central District of California found that handling of an insurance trust account implicated “professional services” and, therefore, ruled against an E&O...

Duty to Defend Triggered by Extrinsic Evidence Showing Insurer-Insured Relationship Existed

By Matthew E. Hedberg Last month, the Oregon Court of Appeals issued another decision that rejects a rigid application of the four-corners rule to determining the duty to defend. Previously, in Fred Shearer & Sons, Inc. v. Gemini Ins. Co. , 237 Or App 468, 476, 240 P3d 67 (2010), [subscribers...

How Broad Can The Duty To Defend Be? Really Broad

We all know that the duty to defend is broad. But just how broad? You’ll see. Bear with me here. This is worth reading – but it takes a lot of set up to get there. Zhaoyun Xia v. Probuilders Specialty Insurance Co., No. 71951-3-I (Wash. Ct. App. Aug. 24, 2015), [subscribers can access...

California Court Considers Reimbursement of Legal Fees Under D&O Policy

In its recent decision in Clark v. Travelers Cas. Ins. Co. of America, 2015 U.S. Dist. LEXIS 114877 {subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ] (C.D. Cal.), the United States District Court for the Central District of California had occasion to consider when...

A Win For Insurers: Nevada Supreme Court Adopts “Cumis” Rule

Tapas: Small Dishes of Insurance Coverage News & Notes Answering a Certified Question from a Nevada District Court, the Supreme Court of Nevada held as follows in State Farm v. Hansen, No. 64484 (Nev. Sept. 24, 2015), [subscribers can access an enhanced version of this opinion: lexis.com | Lexis...

Nevada Adopts Cumis Independent Counsel Rule; Holds Reservation of Rights Is Not a Per Se Conflict

The Nevada Supreme Court has adopted the "Cumis" independent counsel doctrine first adopted in California more than 30 years ago. In State Farm Mut. Auto. Ins. Co. v. Hansen , 131 Nev. Adv. Op. 74 (9/24/2015), [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance...

Very Significant Duty To Defend Case: If You Read Only One Article In This Issue Of Coverage Opinions….

If you read only one article in this issue of Coverage Opinions, make it the one about my webinar – “The Definitive Reservation of Rights Checklist: 50 Things That Every ROR Needs.” If you read two, make this one the other. There have been a lot of cases over the past few years,...

Insurer Must Still Defend Even if Covered Claims Are Dismissed

We encounter the following scenario from time to time: The defense counsel just scored a big victory, knocking out a key cause of action. The only problem is—the carrier now says that claim was the only covered cause of action, and since that claim has been dismissed, the insurer has no ongoing...

Breach the Duty to Defend: Court Has Sobering Words for Insurers on the Rates to Be Paid to the Insured’s Counsel: “Reasonableness Inquiry Is Inappropriate”

The rates to be paid to the insured’s personal counsel is often-times an issue where there is not a lot of common ground between insurers and insureds. The issue arises in a few of different contexts: an insurer is obligated to defend an insured using independent counsel; an insurer is found to...

West Virginia Supreme Court Finds No Duty to Defend or Indemnify under CGL Policy for Contractor’s Work

In yet another decision arising from the construction of a home, the West Virginia Supreme Court of Appeals (“WVSCA”) in SER Nationwide v. Wilson , No. 15-0424, [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ], (W.Va. October 7, 2015) examined coverage...

Insurer Satisfied Duty to Defend By Obtaining Dismissal of Counterclaim Without Prejudice

In Haskins , the court granted the insurer’s (“Wausau”) motion for summary judgment, finding that it did not breach its duty to defend the insured (“Haskins”) in connection with an underlying environmental cleanup action. Haskins owned commercial property in San Francisco...

Professional Services Exclusion in a D&O Policy Barred Coverage for Underlying Claims for Failure to Render Payroll Services

In Begun v. Scottsdale Ins. Co. , the Ninth Circuit affirmed the district court’s determination that a professional service exclusion in a D&O policy precluded coverage for former directors of a payroll services company that allegedly stole a client’s funds. The directors first tendered...

Wisconsin: Comp Insurer Need Not Defend Employee Accused of Sexual Assault on Co-Employee

An employer’s workers’ compensation insurer had no duty to defend an employee, Rydberg, who had been sued by af co-employee who claimed that Rydberg sexually groped her while both were at work on the employer’s premises. The Wisconsin appellate court indicated that the co-employee had...