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Legal News & Headlines

Issue Of Fact Exists On Insured's Notice Of Environmental Claims
LAFAYETTE, Ind. - An Indiana federal magistrate judge on Oct. 5 denied an insured's motion for summary judgment on the duty to defend and indemnify in an environmental liability coverage suit after determining that an issue of fact exists as to whether the insured's notice of the underlying environmental liability claims was timely pursuant to the policies at issue (Landis+Gyr, et al. v. Zurich American Insurance Co., No. 16-82, N.D. Ind., 2018 U.S. Dist. LEXIS 173197).

Insured Seeks Coverage For Sugar Contaminated By Excess Chlorine In Water
BOISE, Idaho - An insured claims in an Oct. 15 complaint filed in Idaho federal court that its insurer breached its contract and acted in bad faith by denying coverage for the contamination of the insured's sugar caused by an excess of chlorine contained in the water used to liquefy the sugar for the insured's customers (The Amalgamated Sugar Co. LLC v. The Cincinnati Insurance Co., No. 18-448, D. Idaho).

Panel Says Transfer Order In Water Damage Suit Cannot Be Reviewed On Appeal
WASHINGTON, D.C. - After a rehearing, the District of Columbia Circuit U.S. Court of Appeals on Oct. 12 determined that it lacks jurisdiction to consider whether a suit was properly transferred, but affirmed its original ruling that an insurer has no duty to cover water and mold damages in an insureds' beach house because the insureds left the home for more than 72 hours and failed to turn off the water supply to the home as required by the policy (Vasilli Katopothis, et al. v. Windsor-Mount Joy Mutual Insurance Co., et. al., No. 16-7132, D.C. Cir., 2018 U.S. App. LEXIS 28739).

Insureds Cannot Recover Emotional Distress Damages, Federal Magistrate Judge Says
ALBUQUERQUE, N.M. - Insureds are not entitled to recover emotional distress damages as a result of an insurer's alleged bad faith handling of their claim for water damages because the insureds suffered no physical injury that would entitle them to such damages under New Mexico law, a New Mexico federal judge said Oct. 10 (Hector Fava, et al. v. Liberty Mutual Insurance Corp., No. 17-456, D. N.M., 2018 U.S. Dist. LEXIS 175153).

Subcontractor's Faulty Work Is Not Covered By CGL Policy, Ohio High Court Says
COLUMBUS, Ohio - The Ohio Supreme Court ruled Oct. 9 that a commercial general liability insurer has no duty to defend a contractor against a university's lawsuit because subcontractor faulty workmanship is not fortuitous and does not meet the definition of an "occurrence" (Ohio Northern University v. Charles Construction Services Inc. v. The Cincinnati Insurance Co., No. 2017-0514, Ohio Sup., 2018 Ohio LEXIS 2375).

Insurer's Contribution Claim Survives; Contractual Indemnity Claim Is Dismissed
DENVER - An insurer's contractual indemnity claim against a contractor survived dismissal; however, a Colorado federal judge held Sept. 27 that the insurer's contribution claim is barred under a settlement release regarding damages from a collapse (Pennsylvania Lumbermens Mutual Insurance Co., et al. v. RStart LLC, No. 18-00478 c/w 18-00564, D. Colo., 2018 U.S. Dist. LEXIS 166429).

Claims Trimmed In Insurance Bad Faith Suit Over Sinkhole Coverage
TRENTON, N.J. - A federal judge in New Jersey on Oct. 9 ruled that insureds in a homeowners insurance dispute failed to show that their insurer acted in bad faith in denying their claim for coverage because the insurer relied on information provided by two engineers showing that property damage to the home was not covered under the insurance policy (Natalie Orban, et al. v. Liberty Mutual Fire Insurance Co., No. 16-3050, D. N.J., 2018 U.S. Dist. LEXIS 173212).

No Coverage Owed For Combustible Explosion At Oil Refinery, Judge Says
LONDON, Ky. - No coverage is owed to an insured for an explosion at an oil refinery because the policy at issue clearly excludes coverage for combustible explosions, a Kentucky federal judge said Oct. 4 in granting the insurer's motion for summary judgment (Continental Refining Co. LLC v. The Hartford Steam Boiler Inspection and Insurance Co., No. 17-74, E.D. Ky., 2018 U.S. Dist. LEXIS 171772).

2nd Circuit: No Insurance For Damage Caused By Collapse, Cracking
NEW YORK - The Second Circuit U.S. Court of Appeals on Oct. 5 affirmed that an insured home's foundation damage was not covered because the policy excludes coverage for a collapse that was caused by cracking based upon the use of faulty materials (Geung-Ho Kim, et al. v. State Farm Fire and Casualty Insurance Co., No. 17-2304, 2nd Cir., 2018 U.S. App. LEXIS 28300).

Insured Files Complaint, Says Excess Insurer Owes Coverage For Asbestos Claims
ERIE, Pa. - An excess insurer should be ordered to defend an insured in underlying asbestos bodily injury suits because the underlying primary policies are exhausted, an insured claims in an Oct. 3 complaint filed in Pennsylvania federal court (Zurn Industries LLC v. Allstate Insurance Co. et al., No. 18-299, W.D. Pa.).

Judge Denies Remand Of Defective Drywall Suit, Finds Insurer Improperly Joined
NEW ORLEANS - A federal judge in Louisiana on Oct. 3 denied a couple's motion to remand their lawsuit seeking damages for Chinese-made drywall that was installed in their home following Hurricane Katrina, finding that they improperly joined their insurer as a defendant (Cedric Richmond, et al. v. National Gypsum Services Co., No. 17-7453, E.D. La., 2018 U.S. Dist. LEXIS 170814).

Judge: Defense Owed For Mold, Water Damages From Insured's Faulty Installation
MIAMI - An insurer has a duty to defend mold and water damages caused by an insured's negligent installation of windows, a Florida federal judge held Oct. 5, adopting a magistrate's recommendation to deny summary judgment to the insurer (National Builders Insurance Co. v. RQ Building Products Inc., et al., No. 17-61474, S.D. Fla., 2018 U.S. Dist. LEXIS 172705).

Bad Faith Claim Against Insurer's Parent Company Cannot Survive, Judge Says
SAN FRANCISCO - An insured's bad faith claim cannot be sustained against the parent company of a homeowners insurer because the insured failed to prove that the parent company acted in bad faith in the handling of her claim for water damages, a California federal judge said Oct. 3 (Tam Vu v. Liberty Mutual Insurance Co., et al., No. 18-3594, N.D. Calif., 2018 U.S. Dist. LEXIS 171347).

Judge: Some Defective Construction Is Covered Under Insurance Policies
GREENVILLE, S.C. - Because some damages arising out of construction defects are covered by commercial general liability insurance policies and because insurers did not effectively reserve their right to contest coverage, a South Carolina federal judge on Sept. 28 granted summary judgment to a condominium association (Stoneledge at Lake Keowee Owners Association Inc. v. Cincinnati Insurance Co., et al., No. 14-01906, D. S.C., 2018 U.S. Dist. LEXIS 167792).

Judge Addresses Motions In Dispute Between Insurer, Reinsurer Over Asbestos Losses
UTICA, N.Y. - In a dispute between a primary insurer and a reinsurer over settlements of asbestos claims, a New York federal judge on Sept. 26 denied summary judgment to the parties on various issues but dismissed the insurer's extracontractual claims (Utica Mutual Insurance Co. v. Century Indemnity Co., No. 13-995, N.D. N.Y., 2018 U.S. Dist. LEXIS 165110).

Single Aggregate Limit Applies To Excess Policies, Federal Judge Determines
BRIDGEPORT, Conn. - A Connecticut federal judge on Sept. 28 granted motions for summary judgment filed by two excess insurers in an asbestos coverage dispute after determining that a single aggregate limit applies to each policy regardless of whether the policy was in force for more than a year (First State Insurance Co., et al. v. Ferguson Enterprises, et al., No. 16-1822, D. Conn., 2018 U.S. Dist. LEXIS 167086).

Insurer Takes Fight To Arbitrate Garlock Coverage Dispute To 4th Circuit
CHARLOTTE, N.C. - An asbestos insurer on Sept. 17 asked the Fourth Circuit U.S. Court of Appeals to decide if a North Carolina federal court correctly ruled that the insurer's obligations to the Garlock Sealing Technologies LLC bankruptcy estate under a $5 million policy must be determined through litigation, not arbitration (Safety National Casualty Corp. v. Garlock Sealing Technologies LLC, et al., No. 3:17-cv-00458, W.D. N.C.).

Insurer Is Entitled To Reimbursement For Excess Settlement Payment
JACKSON, Miss. - An insurer is entitled to reimbursement of almost $300,000 from another insurer because the insurer seeking contribution paid more than its allocated share to settle an underlying silica exposure lawsuit after the other insurer refused to contribute anything more than the remainder of one of its policy limits, a Mississippi federal judge said Sept. 29 (Union Insurance Co. v. The Travelers Indemnity Company of Connecticut, et al., No. 09-283, S.D. Miss., 2018 U.S. Dist. LEXIS 168645).

Mold Exclusion Precludes Coverage For Damages To Interior Of Sailboat
BRIDGEPORT, Conn. - No coverage is owed to an insured under a policy insuring a sailboat that was allegedly damaged by fire and vandalism because there is no evidence that there actually was a fire and the policy clearly excludes coverage for the mold or mildew growth for which the insured seeks coverage, a Connecticut federal judge said Sept. 26 (National Liability & Fire Insurance Co. et al., v. John Jablonowski, No. 16-2031, D. Conn., 2018 U.S. Dist. LEXIS 164784).

No Coverage Owed For Continuous, Repeated Water Damage, Judge Says
SPRINGFIELD, Ill. - No coverage is owed to insureds for water damage discovered in their hotel property because the policy's exclusion for continuous water leakage precludes coverage, an Illinois federal judge said Sept. 24, noting that the evidence shows that there were years of leaks and dampness in the room where the water damage was discovered (Tracy Holdings LLC v. West Bend Mutual Insurance Co., No. 16-3100, C.D. Ill., 2018 U.S. Dist. LEXIS 162363).

Insurers Appeal $62.7M Judgment In Coverage Dispute Over Contaminated Heparin
RICHMOND, Va. - Insurers recently asked the Fourth Circuit U.S. Court of Appeals to reverse a lower federal's court $62.7 million judgment in favor of insureds in a dispute over coverage for underlying product liability lawsuits involving contaminated heparin (Charter Oak Fire Insurance v. American Capital, 17-2015 and 17-2068, 4th Cir.).

Attorney Fee Award Was Appropriate In Light Of Evidence, Panel Says
SEATTLE - A trial court did not abuse its discretion in awarding insureds attorney fees and costs at a rate lower than requested because the insureds failed to prove that the requested fees, incurred as a result of environmental contamination costs, were appropriate, the Division I Washington Court of Appeals said Sept. 17 (Ronald A. Baker, et al. v. Fireman's Fund Insurance Co., No. 76218-4-I, Wash. App., Div. 1, 2018 Wash. App. LEXIS 2116).

Judge Affirms $3.5 Million Award To Asbestos Trust Against Fire Brick Insurer
OAKLAND, Calif. - A California federal bankruptcy judge properly entered a more than $3.5 million judgment against an insurance company in a long-running dispute over the amount of coverage owed to a company's liquidating trust for asbestos personal injury claims, a federal judge held Sept. 17 in affirming the award, plus a $60,000 penalty for the insurer's "vexatious and unreasonable conduct" (Continental Casualty Company v. Barry A. Chatz, Nos. 17-cv-05281, 17-cv-06989, N.D. Calif., 2018 U.S. Dist. LEXIS 158352).

Insurer's Duty To Defend Lawsuit Should Proceed, Magistrate Judge Finds
ALBUQUERQUE, N.M. - A commercial general liability insurer's declaratory judgment case against an insured contractor and homeowners should proceed regarding coverage for noxious gas found in a home after spray foam insulation work, a New Mexico federal magistrate judge held Sept. 20 (International Insurance Company of Hannover SE v. Connors & Sons Classy Construction LLC, et al., No. 17-0825, D. N.M., 2018 U.S. Dist. LEXIS 161805).

Maryland Panel Affirms Dismissal Of Bad Faith Claim, Reverses On Negligence Claim
ANNAPOLIS, Md. - The Maryland Court of Special Appeals on Sept. 18 affirmed a trial court's dismissal of breach of contract and bad faith claims because the insured, who is seeking coverage for damages caused by an overflow of sewage in his home, failed to exhaust all remedies under Maryland law before filing suit against the insurer (Kevin C. Betskoff v. Standard Guaranty Insurance Co., No. 1444, Md. Spec. App., 2018 Md. App. LEXIS 877).

No Coverage Due For Deterioration Of Foundation Walls, Judge Determines
HARTFORD, Conn. - No coverage is owed to a homeowner seeking coverage for the deterioration of her home's foundation as a result of a chemical reaction in the concrete used to build the home because the damage gradually occurred over time and was not sudden and accidental as required by the policy, a Connecticut federal judge said Sept. 20 (Maureen E. Carney v. Allstate Insurance Co., No. 16-592, D. Conn., 2018 U.S. Dist. LEXIS 161401).

Judge: Insureds' Losses Fall Within Definition Of 'Caving In' Under Policy
HARTFORD, Conn. - In a coverage dispute over damages to insureds' basement walls from cracking, a Connecticut federal judge on Sept. 18 denied summary judgment to a homeowners insurer on a breach of contract claim because the insureds' damages fall within their reasonably proposed definition of "caving in" under the policy (Michael M. Sirois, et al. v. USAA Casualty Insurance Co., No. 16-1172, D. Conn., 2018 U.S. Dist. LEXIS 158508).

Judge Dismisses Insureds' Bad Faith Claim, Allows Breach Of Contract To Remain
HARTFORD, Conn. - A Connecticut federal judge on Sept. 17 dismissed claims for bad faith and declaratory judgment against an insurer regarding its refusal to pay for damages to basement walls; however, the insureds' breach of contract claim survived (James T. Ainsworth, et al. v. Amica Mutual Insurance Co., No. 16-01139, D. Conn., 2018 U.S. Dist. LEXIS 157886).

The above is not legal advice. That can only come from a qualified attorney who is familiar
with all the facts and circumstances of a particular, specific case and the relevant law.