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Legal News & Headlines

Excess Insurer Owes More Than $55M For Environmental Contamination Claims
NEW YORK - A New York federal judge on April 18 determined that an excess insurer owes its insured more than $55 million for environmental contamination costs incurred by the insured after an offset of approximately $2.6 million is applied based on the insured's global settlement with its other insurers (Olin Corp. v. Lamorak Insurance Co., et al., No. 84-1968, S.D. N.Y., 2018 U.S. Dist. LEXIS 65446).

Washington Federal Judge Says Nonsettling Insurers' Interests Are Protected
SEATTLE - A Washington federal judge on April 16 approved an insured's settlements with two insurers in an environmental contamination dispute and refused to allow the nonsettling insurers to seek contribution from the settling insurers because settlements adequately protect the interests of the nonsettling insurers (King County v. Travelers Indemnity Co., et al., No. 14-1957, W.D. Wash., 2018 U.S. Dist. LEXIS 64763).

Federal Magistrate Judge Allows Breach Of Contract Counterclaim To Proceed
BALTIMORE - A Maryland federal magistrate judge on April 19 denied an insurer's motion to dismiss a breach of contract counterclaim in an asbestos coverage dispute but granted the insurer's motion to dismiss a bad faith counterclaim on the basis that the insured cannot allege a claim for bad faith if the applicable policy cannot be located (Pennsylvania National Mutual Casualty Insurance Co. v. Tate Andale Inc., No. 17-0670, D. Md., 2018 U.S. Dist. LEXIS 66981).

Kaiser Gypsum Insurer Proposes Plan With Asbestos Settlement, Litigation Options
CHARLOTTE, N.C. - The primary insurer of Chapter 11 debtor Kaiser Gypsum Co. asked a North Carolina federal bankruptcy court April 17 to approve the disclosure statement for its plan of reorganization for Kaiser Gypsum, which failed to file its own plan, instead seeking to lift the bankruptcy stay so asbestos claimants can pursue their claims in the tort system, but only if they agree to have their settlements or judgments paid by the debtor's insurers (In re Kaiser Gypsum Company, Inc., et al., No. 16-31602, W.D. N.C. Bkcy.).

Insurer Seeks Reconsideration Of Reinsurance Duties For $3.2M Asbestos Settlement
SYRACUSE, N.Y. - In a dispute over whether a reinsurer is obligated to an insurer for more than $3.2 million in reinsurance proceeds for an underlying asbestos settlement, the insurer in an April 3 motion seeks reconsideration of a New York federal judge's finding of ambiguity in the reinsurance certificate provisions related to expense (Utica Mutual Insurance Co. v. Munich Reinsurance America Inc., Nos. 12-00196 & 13-00743, N.D. N.Y.).

Claimant Opposes Insurer's Bid For Protection Of Injunction For Asbestos Claims
WILMINGTON, Del. - A motion by an asbestos liability insurer of former Chapter 11 debtor W.R. Grace & Co. to enforce the protective injunction in the debtor's reorganization plan to halt claimants in Montana from pursuing asbestos claims against the insurer should be stayed or dismissed because it is procedurally unsound and untimely, considering that the same issue is about to be decided by the Third Circuit U.S. Court of Appeals, a claimant told a Delaware federal bankruptcy court on April 17 (In re: W.R. Grace & Co., et al., No. 01-01139, D. Del. Bkcy.).

Another Suit Filed Over Liability Of W.R. Grace Insurers For Their Own Actions
WILMINGTON, Del. - Two more people suffering from asbestos disease joined the fray over whether an insurer can be held liable for asbestos claims arising from the mining operations of former Chapter 11 debtor W.R. Grace & Co. in Libby, Mont., with the claimants filing an adversary complaint April 18 in Delaware federal bankruptcy court seeking a declaration that the protective injunction in the debtor's reorganization plan does not apply to their claims against the insurer (Barbara Hunt, et al. v. Maryland Casualty Company, No.18-50402, D. Del. Bkcy.).

11th Circuit Vacates Ruling On Water Exclusion, Says District Court Erred
ATLANTA - The 11th Circuit U.S. Court of Appeals on April 16 vacated a district court's ruling that coverage is barred for water damage caused by a collapsed pipe after determining that the policy's water exclusion does not apply to water damage caused by a failure within the property's plumbing system (Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 17-11907, 11th Cir., 2018 U.S. App. LEXIS 9800).

Insurer Must Prove It Was Prejudiced By Insured's Late Notice Of Saltwater Spill
WICHITA, Kan. - A Kansas federal judge on April 9 granted an insured's motion for summary judgment in a pollution liability suit arising out of a saltwater spill after determining that the insurer is required to prove that it was prejudiced by the insured's late notice of the spill (PetroSantander (USA) Inc. v. HDI Global Insurance Co. et al., No. 16-1320, D. Kan., 2018 U.S. Dist. LEXIS 59696).

Policies' Anti-Assignment Clauses Do Not Bar Coverage For Environmental Claims
TRENTON, N.J. - Insurers of an insured whose company was sold to another company in 1986 cannot rely on the policies' anti-assignment clauses to deny coverage for environmental claims arising out of their insured's business because the insured's liability for the contamination attached prior to the sale of the company and during the applicable policies' periods, the New Jersey Superior Court Appellate Division said April 13 (Cooper Industries LLC v. Columbia Casualty Co., et al., No. A-0593-15T1, N.J. Super., App. Div., 2018 N.J. Super. Unpub. LEXIS 868).

5th Circuit Certifies Questions About Voluntary Payment To Mississippi High Court
NEW ORLEANS - The Fifth Circuit U.S. Court of Appeals on April 16 certified two questions to the Mississippi Supreme Court regarding whether Mississippi's voluntary payment doctrine bars an insurer from recovering a settlement payment made on behalf of an additional insured when the insurer disputes that the additional insured was actually covered for the settlement under the applicable policy (Colony Insurance Co. v. First Specialty Insurance Corp., No. 17-60094, 5th Cir., 2018 U.S. App. LEXIS 9444).

New York Justice: Reinsurance Contracts Capped For Cedent's Asbestos Losses
ROME, N.Y. - A New York justice on March 7 ruled that a cedent is not entitled to asbestos loss and expenses beyond the stated coverage amount set forth in reinsurance certificates issued by members of a reinsurance pool (Utica Mutual Insurance Co. v. Abeille General Insurance Co., et al., No. CA2013-002320, N.Y. Sup., Oneida Co.).

Insurer, Reinsurer Propose Revised Schedule For Asbestos Coverage Dispute
SYRACUSE, N.Y. - An insurer on April 13 wrote to a New York federal court proposing a new schedule in an asbestos coverage case with its reinsurer in response to a ruling ordering document production (Utica Mutual Insurance Co. v. R&Q Reinsurance Co., No. 15-270, N.D. N.Y.).

Federal Judge: Insureds' Property Damage Occurred Prior To Policy Period
MIAMI - An all-risk commercial property insurance policy does not provide coverage for property damage to a building that occurred gradually over an extended period, a Florida federal judge ruled April 10, noting that insureds knew of the gradual deterioration before the date they allege the collapse occurred (The S.O. Beach Corp., et al. v. Great American Insurance Company of New York, No. 17-22254, S.D. Fla., 2018 U.S. Dist. LEXIS 60235).

Judge Stays Coverage Dispute Pending Resolution Of Canadian Lawsuits
NEW YORK - After finding that disputes over insurers' alleged duty to defend and indemnify were not ripe for consideration, a New York federal judge on March 31 declined to rule on summary judgment motions and stayed the case pending the outcome of underlying property damage litigation pending in Canada (Lafarge Canada Inc. v. American Home Assurance Co., No. 15-CV-8957, S.D. N.Y., 2018 U.S. Dist. LEXIS 56123).

Judge: Insurer Can't Rely On Fraudulent Misjoinder In Removal Of Bad Faith Suit
GREENVILLE, Miss. - An insurer may not rely on the doctrine of fraudulent misjoinder as a basis for removal jurisdiction, a federal judge in Mississippi ruled April 5 in remanding an insurance breach of contract and bad faith lawsuit to state court (Kenneth Strachan, et al. v. State Farm Fire and Casualty Co., et al., No. 17-0138, N.D. Miss., 2018 U.S. Dist. LEXIS 58226).

No Coverage For Asbestos Settlement; Self-Insured Retention Not Met, Panel Says
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on April 4 affirmed a district court's ruling that an insured is not entitled to reimbursement for defense expenses and settlement costs arising out of an underlying asbestos exposure claim because the settlement did not exceed the policies' self-insured retention (City of Phoenix v. First Place Insurance Company, et al., No. 16-16767, 9th Cir., 2018 U.S. App. LEXIS 8554).

All-Sums Method Of Allocation Applies In Asbestos Coverage Suit
NORFOLK, Va. - A Virginia federal judge on April 2 agreed with an insured seeking coverage for underlying asbestos liabilities that an all-sums method of allocation applies to its policies and that the policies are subject to vertical exhaustion (Hopeman Brothers Inc., v. Continental Casualty Co., et al., No. 16-187, E.D. Va.).

Asbestos Coverage Dispute Transferred From New Jersey To New York Federal Court
NEWARK, N.J. - A New Jersey federal judge on April 3 granted an insurer's motion to transfer an insured's suit seeking coverage for asbestos bodily injury claims to New York federal court after determining that New York has a greater connection to the coverage dispute (Cosmopolitan Shipping Co. Inc. v. Continental Insurance Co., No. 17-4933, D. N.J., 2018 U.S. Dist. LEXIS 57566).

Excess Insurers' Motion For Reconsideration In Asbestos Dispute Denied
MILWAUKEE - A Wisconsin federal judge on April 4 denied a motion to reconsider by four excess insurers involved in an asbestos coverage dispute and reiterated that abstention is not warranted (Eaton Corp. v. Westport Insurance Co., et al., No. 15-1157, E.D. Wis., 2018 U.S. Dist. LEXIS 57406).

Magistrate Judge Orders Insurer To Produce Nonprivileged Documents
SYRACUSE, N.Y. - In an asbestos coverage dispute, a New York federal magistrate judge on March 28 granted in part a reinsurer's motion for reconsideration of a discovery ruling and ordered an insurer to disclose nonprivileged documents on coverage issues relating to primary and umbrella policies (Utica Mutual Insurance Co. v. R&Q Reinsurance Co., No. 15-cv-270, N.D. N.Y.).

Reinsurer Says Insurer Is Owed No Coverage For Asbestos Claims
BRIDGEPORT, Conn. - An insurer is barred from coverage for underlying asbestos claims under reinsurance contracts because it breached conditions in the contracts, including the access to records clause, a reinsurer argues in its March 23 response to a complaint filed in Connecticut federal court (Travelers Casualty and Surety Co. v. Lamorak Insurance Co., No. 18-00087, D. Conn.).

Panel Majority Says Insurers Breached Contract, Acted In Bad Faith By Failing To Settle
CHICAGO - The majority of the Fifth District Illinois Appellate Court on April 5 affirmed a trial court's ruling that insurers breached their contract and acted in bad faith by refusing to settle underlying environmental contamination claims filed against an insured after determining that the insurers used the threat of denying coverage in an attempt to dissuade the insured from settling the claims (Rogers Cartage Co. et al., v. The Travelers Indemnity Co., No. 5-16-0098, Ill. App., 5th Dist., 2018 Ill. App. LEXIS 206).

Insured Breached Voluntary Payment Provisions By Choosing Environmental Consultant
LAFAYETTE, Ind. - Insurers involved in an environmental contamination coverage dispute did not waive their right to select an environmental consultant to address remediation of the contamination on the insured's site because the insured voluntarily chose its own environmental consultant in breach of the policies' voluntary payment provisions, an Indiana federal judge said March 28 (Ranburn Corp. v. Argonaut Insurance Co., et al., No. 16-88, N.D. Ind., 2018 U.S. Dist. LEXIS 51658).

Judge Allows Intervention In Third-Party Claims On Reinsurance For Settlement
NEW YORK - A New York federal judge on April 2 granted an insured's request to intervene in third-party equitable contribution claims on reinsurance obligations to its insurer regarding coverage for a settlement of claims pertaining to environmentally contaminated sites (Olin Corp. v. Lamorak Insurance Co., et al., No. 84-1968, S.D. N.Y., 2018 U.S. Dist. LEXIS 55959).

Syndicates Seek To Stop Duplicative Arbitration In Reinsurance Dispute
BOSTON - In a reinsurance treaty dispute over environmental claims, a group of insurance syndicates in a March 23 motion seek an order from a Massachusetts federal court enjoining an insurer from filing a duplicative arbitration demand (Certain Underwriters at Lloyd's, London v. Transport Insurance Co., No. 17-10618, D. Mass.).

Coverage Owed For Water Damage Caused By Cracked Water Pipe
FARGO, N.D. - An insured is owed coverage for water damage caused by an underground cracked pipe because the policy at issue includes an exception to the wear-and-tear exclusion that specifically defines water as a specified cause of loss, a North Dakota federal judge said April 2 (Spring Glen Apartments LLP v. Arch Specialty Insurance Co., No. 17-28, D. N.D.).

Panel Affirms Asbestos Claims Fall Within Policies' Completed-Operations Hazard
RICHMOND, Va. - The Fourth Circuit U.S. Court of Appeals on March 26 affirmed a number of rulings entered by a district court in favor of insurers in an asbestos coverage dispute after determining that the district court correctly found that any asbestos bodily injury claim based on an injury that occurred during one of the insured's operations and completed prior to the start of a policy falls within the completed-operations hazard of the applicable policies (General Insurance Company of America, et al. v. United States Fire Insurance Co., et al., No. 17-1585, 4th Cir., 2018 U.S. App. LEXIS 7528).

Judge Denies Summary Judgment Motions In $3.2M Reinsurance Case
SYRACUSE, N.Y. - A New York federal judge on March 20 denied cross-motions for summary judgment in a dispute over whether a reinsurer is obligated to an insurer for more than $3.2 million in reinsurance proceeds for an underlying asbestos settlement (Utica Mutual Insurance Co. v. Munich Reinsurance America Inc., Nos. 12-00196 & 13-00743, N.D. N.Y.).

Insured's Asbestos Coverage Suit Stayed Pending Completion Of Arbitration
NEW YORK - An insured's suit seeking coverage for underlying asbestos claims must be stayed until an arbitration proceeding between the insured and its insurers is completed, a New York federal judge said March 29 (Syngenta Crop Protection LLC v. Insurance Company of North America Inc., et al., No. 18-715, S.D. N.Y., 2018 U.S. Dist. LEXIS 53224).

Reinsurer Appeals Decision On Obligations For Asbestos Settlements To 2nd Circuit
UTICA, N.Y. - After a reinsurer's request for a new trial in a coverage dispute over its obligations under seven reinsurance agreements for asbestos claims settlements was denied, the reinsurer filed a notice on March 26 of its appeal to the Second Circuit U.S. Court of Appeals (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).

Excess Insurers' Asbestos Coverage Suit Transferred To Virginia Federal Court
NEW YORK - A New York federal judge on March 27 transferred an asbestos coverage dispute filed by excess insurers against their insured to the Eastern District of Virginia where the insured's suit, filed prior to the excess insurers' suit, is pending (Continental Casualty Co., et al. v. Hopeman Brothers Inc., No. 17-688, S.D. N.Y., 2018 U.S. Dist. LEXIS 50802).

New York High Court Says No Coverage Due For Time When Insurance Was Unavailable
ALBANY, N.Y. - The New York Court of Appeals on March 27 said that an excess insurer does not owe coverage to its insured for the time periods when the insured was unable to purchase environmental liability insurance coverage in the insurance marketplace because the excess insurer's policies specifically stated that coverage is afforded only for damages occurring during the policy period (KeySpan Gas East Corp. v. Munich Reinsurance America Inc., et al., No. 20, N.Y. App., 2018 N.Y. LEXIS 494).

Question Of Fact Exists On Where, When Contamination First Occurred, Judge Says
LINCOLN, Neb. - A Nebraska federal judge on March 27 denied an insurer's motion to dismiss a lawsuit filed by a city seeking coverage under an environmental liability policy after determining that a question of fact exists as to where and when the contamination first occurred (South Sioux City, Nebraska v. The Charter Oak Fire Insurance Co., et. al., No. 17-3108, D. Neb., 2018 U.S. Dist. LEXIS 50029).

Insurer Says No Coverage Owed For Remediation Costs Incurred By Insured
CHARLOTTE, N.C. - An insurer maintains in a March 26 complaint filed in North Carolina federal court that no coverage is owed to an insured for more than $3 million in remediation costs because the insured did not timely report the claim to the insurer and the location of the environmental contamination was not an insured location under the policy (Great American E&S Insurance Co. v. Butterball LLC, No. 18-113, E.D. N.C.).

Summary Judgment Denied On Insured's Breach Of Contract, Bad Faith Claims
NEW HAVEN, Conn. - A Connecticut federal judge on March 27 adopted a magistrate judge's recommendation to deny an insurer's motion for summary judgment on claims for breach of contract and bad faith arising out of insureds' claim for collapsing foundation walls after determining that the insureds sufficiently alleged a claim for breach of contract and that material issues of fact preclude summary judgment on the bad faith claim (James M. Jang and Anna S. Park v. Liberty Mutual Fire Insurance Co., No. 15-1243, D. Conn., 2018 U.S. Dist. LEXIS 51880).

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.