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Legal News & Headlines

Federal Judge Says Bad Faith Claim Is Not Contingent On Insurer's Duty To Indemnify
ST. LOUIS - A Missouri federal judge on Sept. 30 granted an insured's motion for summary judgment on an insurer's affirmative defenses to the insured's bad faith failure to settle counterclaim after determining that the bad faith claim is not contingent on whether the insurer had a duty to indemnify the insured for a $300 million settlement of underlying bodily injury claims stemming from the insured's lead-smelting operations (Zurich American Insurance Co. v. Fluor Corp., et al., No. 16-429, E.D. Mo., 2019 U.S. Dist. LEXIS 168333).

High Court Denies Review Of Recusal Decision In Lead Paint Poisoning Coverage Suit
WASHINGTON, D.C. - The U.S. Supreme Court on Oct. 7 denied a petition for writ of certiorari in a lead paint poisoning coverage suit, refusing to consider whether the plaintiffs' state and federal constitutional due process rights were violated by a trial court judge's refusal to recuse himself (Jonathan Quinn, et al., v. Truck Insurance Exchange, et al., No. 19-173, U.S. Sup.).

Pro Rata Allocation Method Is Proper For Lead-Based Exposure Claims, Judge Says
BALTIMORE - A Maryland federal judge on Oct. 1 denied a defendant's motion to stay an insurer's suit seeking a coverage declaration for an underlying lead exposure claim and denied the defendant's motion for certification on the proper allocation method for the lead-based exposure claim after determining that Maryland state and federal courts have established that the pro rata allocation method is the proper method for lead-based exposure claims (Allstate Insurance Co. v. Tornesha Gaines, et al., No. 19-239, D. Md., 2019 U.S. Dist. LEXIS 170042).

Judge Enters Judgment Of $6.25M Against Reinsurer In Asbestos Settlements Dispute
UTICA, N.Y. - Pursuant to a jury verdict, a New York federal judge on Oct. 1 entered judgment in favor of an insurer and against its reinsurer under two separate reinsurance certificates in the amount of $6.25 million in a dispute between the parties over coverage for settlements of asbestos claims (Utica Mutual Insurance Co. v. Century Indemnity Co., No. 13-995, N.D. N.Y.).

Federal Asbestos Coverage Suit Stayed Until Parallel State Lawsuit Is Resolved
CINCINNATI - An Ohio federal judge on Oct. 2 stayed an insured's breach of contract and bad faith suit arising out of an insured's liability for underlying asbestos claims after determining that the insured's federal suit presents the same issues as a prior state court lawsuit filed by the insured and currently on appeal (William Powell v. National Indemnity Co. et al., No. 14-807, S.D. Ohio, 2019 U.S. Dist. LEXIS 170833).

Kaiser Gypsum Insurer's Suit Alleging Breaches Of Policies Stayed By Judge
CHARLOTTE, N.C. - An attempt by an insurer of Chapter 11 debtors Kaiser Gypsum Co. Inc. and Hanson Permanente Cement Inc. failed in its attempt to have an adversary case it filed moved from federal bankruptcy court to federal district court when a North Carolina federal judge on Oct. 1 stayed its transfer request pending action in the bankruptcy court on competing reorganization plans for the debtors (Truck Insurance Exchange v. Kaiser Gypsum Company, Inc., et al., No. 3:19-cv-467, W.D. N.C.).

Homeowners Insurer Breached Contract In Denying Water Damage Claim, Judge Says
LAS VEGAS - A Nevada federal judge on Sept. 30 determined that a homeowners insurer breached its contract in denying a claim for water damage caused by vermin or rodents chewing on a water supply line because the policy clearly afforded coverage for the loss; however, the judge determined that questions of fact exist as to whether the insurer acted in bad faith in its handling of the insureds' claim (Robert and Myrna Danganan v. American Family Mutual Insurance Co., No. 17-2786, D. Nev., 2019 U.S. Dist. LEXIS 169806).

Sinkhole Collapse Exception To Earth Movement Exclusion Does Not Trigger Coverage
BALTIMORE - A federal judge in Maryland on Sept. 30 held that there is no genuine dispute of material fact that an insured's collapse claim was not covered under an insurance policy, granting the insurer's motion for summary judgment as to the insured's breach of contract and promissory estoppel claims (Blissful Enterprises, Inc. v. Cincinnati Insurance Company, No. 18-1221, D. Md., 2019 U.S. Dist. LEXIS 169768).

Coverage Barred For Contamination Suit Under 1 Group Of Primary Policies
NEW YORK - A New York federal judge on Sept. 20 partially granted an insurer's motion for summary judgment regarding coverage under a group of primary policies that required the insured to provide timely notice of an occurrence because the insured failed to provide timely notice of two occurrences of environmental contamination that form the basis for an underlying lawsuit filed against the insured (Travelers Indemnity Co. v. Northrup Grumman Corp., No. 16-8778, S.D. N.Y., 2019 U.S. Dist. LEXIS 161154).

Insureds Were Entitled To Defense In Dispute Stemming From Property Contamination
CHICAGO - An insurer had a duty to defend its insureds against an underlying dispute stemming from the environmental contamination of a property owned by the insureds because the underlying complaint against the insureds and the insurer potentially fell within coverage of the applicable policies, the Second Division of the First District Illinois Appellate Court said Sept. 17 in affirming a trial court's ruling (Allied World Specialty Insurance Co. v. John Sexton Sand & Gravel Corp., et al., No. 1-18-2468, Ill. App., 1st Dist., 2nd Div., 2019 Ill. App. Unpub. LEXIS 1733).

Kaiser Gypsum Insurer Files Suit, Alleges Breaches Of Policies By Debtors
CHARLOTTE, N.C. - An insurer of Chapter 11 debtors Kaiser Gypsum Co. Inc. and Hanson Permanente Cement Inc. says in an Aug. 28 adversary complaint in North Carolina federal bankruptcy court that it should be relieved of its duty to pay to defend asbestos personal injury claims because of the debtors' breach of cooperation agreements (Truck Insurance Exchange v. Kaiser Gypsum Company, Inc., et al., No. 19-03052, W.D. N.C. Bkcy.).

Imerys, Truck Insurance Settle Defense Costs Dispute With $2.4M From Insurer
WILMINGTON, Del. - An insurer of an affiliate of Chapter 11 debtor Imerys Talc America Inc. will pay more than $2.4 million to settle claims by the debtor for a share of the costs to defend against asbestos personal injury suits, with a Delaware federal bankruptcy judge signing off on the deal on Sept. 18 (In re: Imerys Talc America, Inc., et al., No. 19-10289, D. Del. Bkcy.).

6th Circuit Set To Hear Oral Arguments In Asbestos Coverage Dispute
CINCINNATI - The Sixth Circuit U.S. Court of Appeal will hear oral arguments on Oct. 16 in an asbestos coverage dispute that has been pending for almost 14 years and in which an insurer seeks reversal of a district court's refusal to enforce a judgment entered in favor of the insurer (Continental Casualty Co., et al. v. Indian Head Industries Inc., No. 18-2152, 6th Cir.).

Water Damage Caused By Faulty Work Did Not Occur During Subcontractor's Policy Period
ROCHESTER, N.Y. - No coverage is afforded for water damages caused by the faulty installation of a sprinkler system by a subcontractor because the general contractor and its insurer failed to prove that the damages occurred during the applicable policy period of the subcontractor's commercial general liability policy, a New York federal judge said Sept. 16 (Welliver McGuire Inc. et al., v. ACE American Insurance Co., No. 17-6040, W.D. N.Y., 2019 U.S. Dist. LEXIS 159047).

No Coverage Owed For Deterioration Of Basement Walls, Judge Determines
ROCKVILLE, Conn. - No coverage is afforded for cracking and deterioration of insured homeowners' basement walls caused by the use of defective concrete when the home was built because the damage is clearly excluded by the policy's exclusion for cracking and settling and deterioration, a Connecticut state judge said Aug. 10 in granting an insurer's motion for summary judgment (Richard Musgrave, et al. v. State Farm Fire and Casualty Co., No. TTDCV156009840S, Conn. Super., Tolland Co., 2019 Conn. Super. LEXIS 2370).

Excess Insurers' Motions To Dismiss Denied In Formaldehyde Laminate Flooring Suit
MADISON, Wis. - In two separate opinions issued Sept. 9, a Wisconsin state judge denied motions to dismiss filed by excess insurers in a suit regarding coverage for underlying claims arising out of toxic levels of formaldehyde in Lumber Liquidators Inc.'s laminate flooring after determining that a ruling on the applicability of the pollution exclusion in one of the excess insurer's policies cannot be made at this stage of the litigation and after finding that the insured sufficiently alleged that a primary policy was exhausted by an underlying settlement (Lumber Liquidators Inc. v. American Guarantee & Liability Insurance Co., et al., No. 15-1089, Wis. Cir., Dane Co.).

Montana Federal Judge Says Issues Of Fact On Pollution Condition Preclude Judgment
GREAT FALLS, Mont. - A Montana federal judge on Sept. 12 determined that issues of fact preclude summary judgment in favor of an insurer because it is not clear whether two underlying suits filed against the insureds allege a pollution condition for which coverage is afforded (Endurance American Specialty Insurance Co. v. Dual Trucking and Transport LLC, et al., No. 18-134, D. Mont., 2019 U.S. Dist. LEXIS 156895).

Insurer Seeks To Compel Reinsurers To Produce Info On Allocation Of Settlement
BOSTON - An insurer in a Sept. 13 motion asks a Massachusetts federal court to compel reinsurers to produce documents and interrogatory responses relating to their allocation and billing of its own 2009 settlement with an insured in a separate matter (Certain London Market Company Reinsurers v. Lamorak Insurance Co., No. 18-10534, D. Mass., 2019 U.S. Dist. LEXIS 38909).

Insured Cannot Be Substituted As Third-Party Defendant In Asbestos Suit, Judge Says
MILWAUKEE - A Wisconsin federal judge on Sept. 13 denied an insured's request to substitute itself for one of its insurers as a third-party defendant after determining that the insurer is the real party in interest and that a settlement between the insured and the insurer did not extinguish the insurer's liability for contribution costs for underlying asbestos claims filed against the insured (Eaton Corp. v. Westport Insurance Co., et al., No. 15-1157, E.D. Wis., 2019 U.S. Dist. LEXIS 156564).

Judge Addresses Motions In Limine In Breach Of Contract Case Between Reinsurer, Insurer
UTICA, N.Y. - Before a jury trial, a New York federal judge on Sept. 13 addressed a reinsurer and an insurer's various motions in limine seeking rulings on the admissibility of certain matters in their dispute over the insurer's breach of contract claim concerning coverage for settlements of asbestos claims (Utica Mutual Insurance Co. v. Century Indemnity Co., No. 13-995, N.D. N.Y.).

Insurer Removes Reinsurers' Breach Of Contract Case To New Jersey Federal Court
TRENTON, N.J. - An insurer on Aug. 27 removed to a New Jersey federal court a breach of contract and breach of the implied covenant of good faith and fair dealing lawsuit regarding the insurers' handling of payments for underlying asbestos claims and the indemnification the insurers sought under facultative reinsurance agreements (Certain Underwriters at Lloyd's London, et al. v. The North River Insurance Co., et al., No. 19-17231, D. N.J.).

Excess Insurer's Suit Stayed; Parties Ordered To Arbitrate Asbestos Coverage Dispute
CLEVELAND - An Ohio federal judge on Sept. 9 stayed an excess insurer's suit seeking a declaration that it is not required to reimburse another excess insurer for overpayments made on behalf of a mutual insured for underlying asbestos claims because a 2005 settlement agreement requires the insurers to arbitrate the dispute (First State Insurance Co. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 18-1775, N.D. Ohio, 2019 U.S. Dist. LEXIS 153454).

Coverage May Exist For Water, Mold Damages Under Homeowners Policy, Judge Says
TACOMA, Wash. - A Washington federal judge on Sept. 9 determined that no coverage is owed under one homeowners policy for an insured's water and mold damages caused by a leak in an exterior water pipe, but said coverage may be afforded under a second homeowners policy because a question of fact exists as to whether the damages were caused by a latent defect in the exterior water pipe (Vanessa Camper v. State Farm Fire and Casualty Co. et al., No.18-5486, W.D. Wash., 2019 U.S. Dist. LEXIS 153337).

CGL Insurer Says Insurer's Argument Is 'Red Herring' In Suit Seeking Contribution
BOSTON - A commercial general liability insurer on Aug. 19 argued to the First Circuit U.S. Court of Appeals that another insurer's argument that it is estopped from enforcing its policy terms because its notification of a coverage decision was untimely is a "red herring" and that the appeals court should affirm a lower federal court's ruling that it has no duty to defend an apartment management company insured against an underlying property damage lawsuit (Clarendon National Insurance Company v. Philadelphia Indemnity Insurance Company, No. 19-1212, 1st Cir.).

Breach Of Contract, Bad Faith Claims To Proceed Against Insurer In Water Damage Suit
PHOENIX - An Arizona federal judge on Sept. 4 said claims for breach of contract and bad faith in a water damage coverage suit can proceed because issues of fact exist as to whether additional coverage is afforded under a commercial general liability policy and as to whether the insurer reasonably adjusted the insured's claim for damages (Adams Craig Acquisitions LLC, et al. v. Atain Specialty Insurance Co., et al., No. 18-00817, D. Ariz., 2019 U.S. Dist. LEXIS 150227).

Judge Rejects Insured's 'Ensuing Loss' Argument Over Water Intrusion
SEATTLE - A Washington federal judge on Sept. 4 denied summary judgment to an insured on its "ensuing loss" argument over water intrusion damage because Washington law supports the position that an insurer can protect from an "ensuing loss" provision where an excluded peril such as defective work is the cause of the damage (Belmain Place Condominium Owners Association v. American Insurance Co., No. 19-156, W.D. Wash., 2019 U.S. Dist. LEXIS 150555).

No Coverage Owed For Deterioration Of Basement Walls; Suit Dismissed
NEW HAVEN, Conn. - A Connecticut federal judge on Sept. 4 dismissed a breach of contract and bad faith suit filed against a homeowners insurer after determining that the policy at issue clearly excludes coverage for the deterioration of the insureds' foundation walls as a result of the use of defective concrete when the home was built (Marianne Gilmore, et al. v. Teachers Insurance Co., No. 18-1856, D. Conn., 2019 U.S. Dist. LEXIS 151006).

No Coverage Owed For Oil Contaminated By Insured's Work, Insurer Argues
LOS ANGELES - The Second District California Court of Appeal should affirm a trial court's ruling that an insurer was entitled to rescind a policy issued to an insured seeking coverage for contamination of oil in a storage tank caused by an insured's work, the insurer argues in an Aug. 9 reply brief (NRG Delta LLC v. Endurance American Specialty Insurance Co., No. B285909, Calif. App., 2nd Dist., Div. 5, 2019 CA App. Ct. BRIEFS LEXIS 3817).

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.