Insurance Coverage


Insurance Update
November 20, 2017 | Robert Tugander
Exclusions are front and center in this month’s Insurance Update. We discuss the ubiquitous but seldom applicable war exclusion, the professional services exclusion, the intellectual property exclusion, and the workmanship and earth movement exclusions. Other topics in this month’s update include late notice and prejudice, a Missouri appellate court’s allocation ruling, and what happens when …
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New York Insurance Coverage Law Update
October 27, 2017 | Alan C. Eagle
Appellate Division Rules That Policy Covered Loss Caused By A Defect That Began Before Policy’s Effective Date The insured made a claim under its insurance policy for losses that resulted when a power-generating turbine was taken out of operation due to excessive vibrations. The vibrations were found to have been caused by a crack in …
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Insurance Update
October 12, 2017 | Robert Tugander
Our Insurance Update for October covers several topics. We begin with a pair of state high court decisions.  One addresses the elements of a bad faith action in Pennsylvania.  The other, from Nevada, serves as a reminder to insurers that cancellation notices must follow the letter of the law. We also discuss a pair of …
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Insurance Update
September 18, 2017 | Robert Tugander
For many of us, September marks the end of summer, back to school, and the return of football. Sticking with that theme, our September Insurance Update includes two cases by parents whose children had a little too much time on their hands. Our update also includes two cases involving a common summertime activity – boating.  …
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Employee Benefit Plan Review – From the Courts
| Norman L. Tolle
Insurer Could Offset Monthly Disability Payments Against Plaintiff’s Part-Time Earnings, Third Circuit Rules The plaintiff in this case, a gastroenterologist, suffered a debilitating injury to her shoulder and underwent surgery in an attempt to repair the damage. The surgery was only partly successful and the damage from her injury prevented her, for a time, from …
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New York Insurance Coverage Law Update
September 2, 2017 | Alan C. Eagle
Insurer Failed To Demonstrate Insured’s Noncooperation, Second Department Rules The claimant sued ML Specialty Construction, Inc., alleging that her property had been damaged by construction work performed by ML on a neighbor’s property.  ML’s insurer retained counsel to defend ML. The insurer disclaimed coverage on the ground that ML stopped cooperating after five years, and …
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New York Insurance Coverage Law Update
August 22, 2017 | Alan C. Eagle
“Vertical Exhaustion” Of Primary Policies Triggered Excess, But Excess Policies’ Prior Insurance Provision Limited Insured’s Recovery, Second Circuit Holds  Olin Corporation, a chemical manufacturer, contended that an excess insurer that had issued three consecutive annual policies had to indemnify it for environmental con-tamination that had taken place over a number of years at several manufacturing …
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Rutkin Publishes A.M. Best Article Entitled, “Cyber Concerns”
August 15, 2017 | Alan S. Rutkin
Alan Rutkin’s article entitled, “Cyber Concerns,” has been published in the August 2017 issue of Best’s Review magazine. The article discusses how spyware, installed on computers by retailers, led to lawsuits involving insurance companies. Click here to read the article. Best’s Review:  August 2017. Copyrighted A.M. Best Company, Inc. 2017.  All Rights Reserved, Reprinted with Permission. …
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Employee Relations Law Journal – From the Courts
| Norman L. Tolle
Claims Administrator Did Not Wrongly Deny Benefits to Ex-Employee, Seventh Circuit Rules The plaintiff in this case was hired by General Motors as an electrical engineer in 1991. A year later, General Motors circulated a “summary plan description” detailing the disability benefits available to its employees. This document provided that employees who became disabled before accruing …
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Employee Benefit Plan Review – From the Courts
| Norman L. Tolle
Agreement That Settled Arbitrations Also Barred Former Employee’s ERISA Action, Ninth Circuit Says In December 2010, the plaintiff in this case, a physician, filed wrongful termination lawsuits against Kaiser Foundation Hospitals (Kaiser) and The Permanente Medical Group, Inc. (TPMG). Both of those lawsuits were consolidated in arbitration. The plaintiff, Kaiser, and TPMG settled those arbitrations in …
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Insurance Update
August 9, 2017 | Robert Tugander
We bring you our Insurance Update for August. We lead off this month’s issue with a cybercrime case decided by a Michigan federal district court. The case arises out of a spoof email and the issue is whether the loss was directly caused by the use of a computer. A handful of cases involving similar …
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New York Insurance Coverage Law Update
July 28, 2017
No Additional Insured Coverage Where Alleged Accident Occurred Off Leased Space An employee of Linea 3 allegedly was injured in the parking lot while walking from his car to space Linea leased in a building owned by Atlantic Ave. Sixteen AD, Inc. The employee sued Atlantic, which sought additional insured coverage under Linea’s policy. The …
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Insurance Update
July 14, 2017
Our July Insurance Update features three cases from state high courts. The Massachusetts Supreme Judicial Court, on certified question from the First Circuit, addresses whether the duty to defend (or pay defense costs) includes the costs to prosecute the insured’s counterclaims. The Texas Supreme Court considers whether the underlying proceeding was sufficiently adversarial when assessing …
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No Coverage for Suit Claiming Insured Attacked, Assaulted, Struck, and Stabbed Victim, Even If It Sought Damages for Negligence
June 21, 2017 | Robert Tugander
A federal district court in Illinois has ruled that an insurer was not obligated to defend its insured in an action alleging that he had attacked, assaulted, struck, and stabbed someone, even if the complaint against him asserted that he had been negligent. The Case After Connie McElhaney sued Robert Heitbrink, alleging that he had …
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No Coverage for Fraudulent Transfer Claims Where Acts Preceded Policy’s Effective Date
| Robert Tugander
The U.S. Court of Appeals for the Eleventh Circuit has ruled that an insurance policy’s prior acts exclusion precluded coverage for claims against a bankrupt company’s officers relating to alleged fraudulent transfers. The Case The U.S. Treasury Department’s Office of Thrift Supervision (“OTS”) began investigating BankUnited FSB in January 2008. By August, news reports were …
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No Coverage for Suit Alleging Restaurant Had Refused to Allow Customer to Bring in His Service Dog
| Robert Tugander
A federal district court in West Virginia has ruled that an insurance policy did not cover claims that a restaurant had refused to allow a customer to bring his service dog into the restaurant. The Case Scott Ullom sued Grand China Buffet & Grill, Inc., and Qi Feng Chen in his capacity as “Director, Incorporator, …
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No Coverage Where Final Judgment Found That Insured Had Engaged in Intentional Fraud
| Robert Tugander
A magistrate judge has recommended that a federal district court dismiss a coverage action brought by an insured where a final judgment had determined that the insured had engaged in intentional fraud in his securities transactions. The Case Daniel Imperato sued the insurance company that had issued a directors and officers liability insurance policy to …
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No Coverage for Damage from Insured’s Operations That Had Not Been “Unexpected”
| Robert Tugander
A federal district court in Alabama has ruled that commercial environmental insurance policies did not cover claims for damage caused by the insured’s business operations where the damage had not been “unexpected.” The Case SmarterFuel Inc. and Smarter Fuel South, LLC, bought and picked up catfish waste from catfish farms and used cooking oil from …
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Home Builder’s Schematics Were Not Advertisements for Purposes of Advertising Injury Coverage
| Robert Tugander
The U.S. Court of Appeals for the Eleventh Circuit has ruled that an insurance company had no duty to indemnify an insured home builder that allegedly infringed copyrighted house designs, finding that the builder’s schematics were not advertisements for purposes of the policy’s advertising injury provisions. The Case Home Design Services, Inc., sued Highland Holdings, …
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Insurers Had No Duty to Defend Insured in Spyware Action
| Robert Tugander
The U.S. Court of Appeals for the Ninth Circuit has ruled that insurers were not obligated to defend their insured against claims that the insured had violated a person’s “right of privacy” where one complaint had not alleged publication of private material and the other fell within the Recording and Distribution exclusion. The Case Aspen …
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Insured Did Not Own Earnings Allegedly Stolen from Limited Partnership, Dooming Coverage Bid
| Robert Tugander
The U.S. Court of Appeals for the Eighth Circuit has ruled that 3M Company was not entitled to insurance coverage for fraud losses it allegedly had suffered in a limited partnership. The Case 3M invested assets from its employee benefit plan in WG Trading Company LP, in a transaction that it structured as a limited …
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Professional Liability Exclusion Precluded Coverage for Suits against Inspection Company
| Robert Tugander
A federal district court in South Carolina has ruled that a professional liability exclusion in insurance policies issued to an inspection services company precluded coverage for lawsuits alleging that the company had been negligent. The Case Eight state lawsuits against Morningstar Consultants, Inc. (“MCI”) alleged property damage to certain construction projects for which MCI allegedly …
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New York Insurance Coverage Update
June 14, 2017 | Alan C. Eagle
New York Court Of Appeals Limits Scope Of Additional Insured Coverage  An excavator contracted with the New York City Transit Authority (“NYCTA”) to perform tunnel excavation work on a subway construction project. Its excavation machine touched a live, buried electrical cable, resulting in an explosion and injury to the claimant. The claimant sued the City, …
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New York Insurance Coverage Law Update
May 31, 2017
Court Rejects Insurers’ Defenses To Coverage For Bear Stearns’ Settlement With SEC Bear Stearns agreed to pay $250 million to resolve claims by the Securities and Exchange Commission that it had facilitated its customers’ late trading and market timing practices in its performance of clearing services on their behalf.  Of that amount, part was labeled …
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Rock “N” Roll’s Insurer Had No Duty to Defend Breach of Contract Claims, West Virginia Court Decides
May 15, 2017
A federal district court in West Virginia has ruled that a commercial general liability (“CGL”) insurance company had no obligation to defend its insured against claims for breach of contract. The Case Rock “N” Roll Coal Company, Inc., was sued for allegedly failing to make certain royalty payments under a lease. Rock “N” Roll filed …
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Policyholder’s Settlement with Underlying Plaintiff Was Not Enforceable against Its Insurer, Eighth Circuit Affirms

The U.S. Court of Appeals for the Eighth Circuit has affirmed a district court’s decision that a settlement agreement reached between a policyholder and the company that was suing it was not enforceable against the policyholder’s insurance carrier. The Case The Interlachen Property Owners Association sued Kuepers Construction, Inc., alleging design and construction defects in …
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Employee Benefit Plan Review – From the Courts
May 9, 2017
Employee Who Left Job Due to Terminal Illness Was Entitled to Severance Pay, Ninth Circuit Rules The wife of the plaintiff in this case was employed by the American Society for Technion-Israel Institute of Technology (ATS) until her terminal illness forced her to leave her job. The plaintiff contended that his wife was entitled to severance …
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New York Insurance Coverage Law Update
April 28, 2017
Court Holds Insurer Did Not Establish Insured’s Failure To Cooperate An insurer’s disclaimer based on the insured’s lack of cooperation was challenged in court. The Appellate Division, Second Department, found that the insurer made diligent efforts that were reasonably calculated to obtain its insured’s cooperation. However, the court ruled that the disclaimer could not be …
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Multiple Sales of Tabletop Torches Were Multiple Occurrences
April 21, 2017
The U.S. District Court for the Southern District of Ohio has ruled that multiple sales of tabletop torches amounted to separate occurrences for purposes of triggering the torch seller’s excess insurance policy. The Case Several lawsuits were filed against Big Lots Stores, Inc., by plaintiffs in Illinois, New Jersey, Pennsylvania, and Texas alleging that they had …
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Losses Allegedly Caused by Debit Card Holders’ Use of Phones Rather Than Computers Were Not Covered by Policy’s Computer Fraud Provisions

The U.S. District Court for the Northern District of Georgia has ruled that a company that claimed it suffered losses resulting from the use of telephones to access its processing system could not recover from its insurer for “computer fraud.” The Case InComm Holdings, Inc., and Interactive Communications International, Inc. (together, “InComm”) provided a service …
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Absence of Allegations That Insured Disparaged Underlying Plaintiff Doomed Its Bid for Coverage of Lawsuit

A federal district court in Maryland has ruled that an insured was not entitled to “personal and advertising injury” coverage of a lawsuit that did not allege that it had disparaged the underlying plaintiff. The Case Sprint Solutions, Inc., and Sprint Communications Company (together, “Sprint”) sued Unwired Solutions, Inc., d/b/a Linq Services, Inc. (“Linq”) and …
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Pollution Exclusion Precluded Coverage for Suits Alleging Violation of Environmental Laws

The U.S. District Court for the Northern District of Ohio has ruled that the absolute pollution exclusion precluded coverage for lawsuits against a construction company alleging that it had violated federal and state environmental laws by discharging dredged or fill materials into protected wetlands. The Case JTO, Inc., an Ohio-based construction company, was sued by …
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Exclusions Precluded Coverage for Construction Defect Lawsuit against General Contractor, Ninth Circuit Decides

The U.S. Court of Appeals for the Ninth Circuit has affirmed a decision by a federal district court in California that two policy exclusions precluded coverage for a construction defect lawsuit brought against the insured general contractor. The Case Archer Western Contractors, Ltd., was the general contractor for the San Diego County Water Authority’s emergency water …
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“Your Work” Exclusion Precluded Coverage for Breach of Warranty of Habitability Claim Against Subcontractor, Seventh Circuit Says

The U.S. Court of Appeals for the Seventh Circuit has affirmed a decision by a federal district court in Illinois that the “your work” exclusion in a commercial general liability insurance policy precluded coverage for a lawsuit against the insured subcontractor stemming from its allegedly defective installation of windows. The Case Metro North Condominium Association …
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Neither Crime Nor Commercial Property Policy Covered Consultant’s Theft, Seventh Circuit Rules

The U.S. Court of Appeals for the Seventh Circuit has affirmed a decision by a federal district court in Indiana that theft by a company’s consultant was not covered by either a crime insurance policy or a commercial property insurance policy. The Case Telamon Corporation, an Indiana telecommunications firm, engaged Juanita Berry – through a …
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McAloon and Kruglyak Co-Author Article For ABA’s Tort Trial and Insurance Practice Law Journal
April 13, 2017
Sean McAloon and Viktoriya Kruglyak co-authored the section on Appraisal in Recent Developments in Property Insurance Law, which was published in the Winter 2017 issue of the American Bar Association’s Tort Trial & Insurance Practice Law Journal. To read the article, Click Here. This information or any portion thereof may not be copied or disseminated …
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Employee Benefit Plan Review – From the Courts
March 30, 2017
Failure to Timely File ‘Charge’ with EEOC Doomed Plaintiff’s ADA Suit, Seventh Circuit Rules The plaintiff in this case, a senior customer service representative of Christian Brothers Services (CBS), was in an automobile accident in March 2011 as a result of which she had to use a cane and limped. According to the plaintiff, CBS fired …
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Connecticut Appeals Court Broadly Interprets “Occupational Disease” Exclusion
March 23, 2017
A Connecticut appeals court, in a coverage dispute stemming from thousands of underlying lawsuits alleging injuries from exposure to industrial talc that purportedly contained asbestos, has ruled that the occupational disease exclusion is not limited only to claims by the policyholder’s own employees. The Occupational Disease Exclusions Variations of the occupational disease exclusion were before the …
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New Jersey Joins Majority of Courts Holding That Anti-Assignment Clauses Do Not Apply After a Loss

The New Jersey Supreme Court, joining the majority of courts, has ruled that an anti-assignment clause in an “occurrence” insurance policy did not bar the assignment of a post-loss claim even if the claim had not been reduced to a money judgment. The Case Givaudan Fragrances Corporation faced liability as a result of environmental contamination …
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Washington’s Insurance Fair Conduct Act Did Not Permit Insureds to Sue Their Insurers for Regulatory Violations Alone, State’s Highest Court Says

The Supreme Court of Washington has ruled that the state’s Insurance Fair Conduct Act (“IFCA”) did not permit insureds to sue their own insurers for violation of regulations adopted under the IFCA in the absence of an unreasonable denial of coverage or benefits. The Case A driver injured in an accident sued his insurer under …
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Texas Supreme Court Enforces Insured-Versus-Insured Exclusion in D&O Liability Insurance Policy

The Texas Supreme Court has ruled that an insured-versus-insured exclusion in a directors and officers (“D&O”) liability insurance policy applied to preclude coverage of a lawsuit brought against a former director and treasurer of a condominium association by an assignee of the association. The Case After Robert Primo resigned as a director and treasurer of …
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Public Policy Did Not Prohibit Enforcement of Indoor Air Exclusion, Oklahoma Supreme Court Decides

The Oklahoma Supreme Court, in response to a question certified by the U.S. District Court for the Western District of Oklahoma, has ruled that the public policy of Oklahoma did not prohibit enforcement of an indoor air exclusion in a commercial lines insurance policy. The Case Several guests inside a hotel in Siloam Springs, Arkansas, …
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Excess Insurer Was Not Bound by Primary Insurer’s Interpretation of “Prior Acts” Exclusion, Maryland’s Top Court Rules

Maryland’s highest court, the Maryland Court of Appeals, has enforced a prior acts exclusion in a primary insurance policy and ruled that an excess insurer was not bound by the primary insurer’s interpretation of that language. The Case A class action lawsuit filed against Cristal USA, Inc., on April 12, 2010, alleged that Cristal had …
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Principles of Judicial Estoppel May Constrain the Assignability of Legal Malpractice Claims to Former Litigation Adversaries
March 15, 2017
In a recent decision, the United States District Court for the Southern District of New York considered whether principles of judicial estoppel may prevent an assignee of a legal malpractice claim from prevailing on a claim against his former adversary’s attorneys. Molina v. Faust Goetz Schenker & Blee, LLP, 2017 U.S. Dist. LEXIS 13568 (S.D.N.Y. …
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Employee Relations Law Journal – From the Courts
| Norman L. Tolle
Tenth Circuit Upholds Pension Trust’s Decision to Honor IRS Levies When the plaintiffs in this case retired, they began receiving monthly benefits from the Boilermaker-Blacksmith National Pension Trust, a pension plan in which they participated. However, after the trust received notices of levy for both of them from the Internal Revenue Service (IRS), the trust …
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New York Insurance Coverage Law Update
March 7, 2017
Claims-Made Policy Afforded Insured 60 Days After End Of Term To Notify Insurer  An employee of New York Institute of Technology (“NYIT”) sued NYIT for defamation on February 26, 2009, and NYIT received notice of the action on August 6, 2009. NYIT’s claims-made-and-reported insurance policy ended on September 1, 2009. NYIT notified its insurer of …
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Employee Benefit Plan Review – From the Courts
February 22, 2017
Seventh Circuit, Joining Other Circuits, Rejects ERISA Plan’s “Coordination of Benefits” Lawsuit Against Health Insurers The plaintiff in this lawsuit, filed in a federal district court in Illinois, was the trustee of the Central States, Southeast and Southwest Areas Health and Welfare Fund, a self-funded plan under the Employee Retirement Income Security Act of 1974 …
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Insurer’s “Generic” Reservation of Rights Letters Found Inadequate by South Carolina Supreme Court
February 21, 2017
The South Carolina Supreme Court has found that letters issued by a commercial general liability insurer to its insureds were inadequate to reserve its rights as they amounted to “generic denials of coverage coupled with furnishing the insured with a verbatim recitation of all or most of the policy provisions (through a cut-and-paste method).” The …
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Indiana District Court: Claims-in-Process Exclusion Precluded Coverage for Pollution That Began Before Insureds Had Purchased Their Property

A federal district court in Indiana has ruled that a claims-in-process exclusion in a commercial general liability insurance policy precluded coverage for the insureds’ claim where pollution at the insureds’ property had begun before the insureds even had purchased the property. The Case Property in Lake Station, Indiana, was used as a dry cleaning facility …
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Eleventh Circuit: Insurer Was Not Required to Pay Pre-Tender Defense Fees

The U.S. Court of Appeals for the Eleventh Circuit has ruled that a Florida claims handling statute did not preclude an insurer from declining to pay pre-tender defense fees and costs incurred by its insured prior to tendering its claim to the insurer. The Case After EmbroidMe.com, Inc., was sued in federal district court for …
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