Mealey's California Insurance : Mealey's : Legal News & Analysis

Mealey's California Insurance

February 29, 2024
California Judge Finds Insurer Need Not Cover Damages Caused By Subcontractor

LOS ANGELES — A California judge has dismissed with prejudice a building owner and general contractor’s lawsuit seeking payment from a subcontractor’s insurer for an underlying $1.1 million default judgment entered against the subcontractor, agreeing with the insurer that coverage is barred by a policy exclusion precluding coverage for damage caused by the subcontractor’s faulty work.
February 28, 2024
9th Circuit Sets Argument In Dispute Involving What Are ‘Farming Activities’

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals has set oral argument for April 5 in a crop insurance dispute involving federal reinsurance, the term “farming activities” and the structure of a farming operation.
February 26, 2024
9th Circuit Affirms Judgment For Insurer In Fraud Suit, Deems Appeal ‘Frivolous’

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a district court’s default judgment entered against a man and his daughter accused of defrauding a long-term care insurer by claiming that the man qualified as a “chronically ill individual,” finding that the appeal is “frivolous” and that the lower court did not abuse its discretion in entering a default judgment in response to the defendants violating court orders.
February 21, 2024
Magistrate Judge Grants Motion To Strike Bad Faith Claim In Water Damage Suit

SAN FRANCISCO — A California federal magistrate judge denied a business insurer’s motion to dismiss claims for promissory estoppel and unfair competition but granted the insurer’s motion to strike a bad faith claim in the insured’s complaint, which seeks coverage for water damages at the insured’s business, after determining that the bad faith claim is duplicative of the insured’s claim for breach of the implied covenant of good faith and fair dealing.
February 21, 2024
Tortfeasor’s Vehicle Is Not Underinsured Vehicle As Required By Umbrella Policy

SAN FRANCISCO — A California federal judge dismissed a breach of contract and bad faith suit filed against a personal umbrella liability insurer after determining that the insureds’ claims fail because the tortfeasor’s vehicle is not an underinsured vehicle as defined by the insureds’ primary auto policy and as required by the insureds’ personal umbrella liability policy.
February 21, 2024
9th Circuit Denies Insurer’s Petition For Rehearing Of Pollution Exclusion Ruling

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 20 denied an insurer’s petition for panel rehearing, refusing to reconsider the panel majority’s finding that a pollution exclusion does not bar coverage for an underlying toxic exposure suit stemming from the cleanup of wildfire debris.
February 20, 2024
Insured Cannot Present Evidence On Request For Future Policy Benefits

RIVERSIDE, Calif. — An insured is not permitted to present evidence in an environmental contamination coverage suit concerning its request for future insurance policy benefits that the insured seeks as damages for an insurer’s alleged bad faith conduct because the request for future policy benefits was not timely filed, a California federal judge said in granting the insurer’s motion in limine.
February 16, 2024
Dispute Over Applicability Of Pollution Exclusion Transferred To D.C. Federal Court

SANTA ANA, Calif. — A suit filed by insurers seeking a declaration that their policies’ pollution exclusion bars coverage for an underlying class action alleging that an insured restaurant’s grain and salad bowls contain harmful levels of fluorine and biocides will be transferred to District of Columbia federal court because the insurance contracts were signed in the District of Columbia and the majority of the witnesses are located in the District of Columbia, a California federal judge said in granting the insured’s motion to transfer the suit.
February 16, 2024
Class Certification Affirmed In Dispute Over Insurer’s Square Footage Calculation

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s ruling that granted an insured’s motion for class certification in a lawsuit alleging that a homeowners insurer improperly calculated the square footage of California homes, finding that the lower court did not abuse its discretion in redefining the certified class.
February 16, 2024
California Panel Affirms Judgment, $264,440 Attorney Fee Award Against Surety

SAN DIEGO — A California appeals panel affirmed a lower court’s judgment and $264,440 attorney fee award in favor of a plaintiff in her lawsuit seeking to collect under a surety bond for a fraud judgment entered against an automobile dealer, finding that because the plaintiff prevailed on her claim that the dealer violated the California Consumers Legal Remedies Act, she was statutorily entitled to recover her attorney fees from the dealer as an item of costs and the insurer is also liable for these costs because its liability as surety is commensurate with that of its principal.
February 14, 2024
Consent Decree Entered Under 1 Dismissal In Case Over Alleged Counterfeit Policies

LOUISVILLE, Ky. — A variety of claims and parties have been dismissed under agreements in a sprawling suit over allegations of fraud, trademark counterfeiting and trademark infringement involving captive reinsurance programs, with a Kentucky federal court permanently enjoining two defendants “from future infringement of Plaintiffs’ trademarks.”
February 14, 2024
Insured’s Damages Covered Under Power Interruption Provision, Judge Says

SAN JOSE, Calif. — A homeowner is entitled to coverage under a policy’s power interruption provision for damages caused to her home because it is clear from the provision’s terms that it provides coverage for the damages caused to the insured’s home by the loss of power to the home’s thermostat, a California federal judge said in granting the insured’s motion for summary judgment and in denying the insurer’s motion for summary judgment on the insured’s bad faith and unfair competition law claims.
February 14, 2024
Injunction Entered Under Agreement To Resolve Lloyd’s Trademark Infringement Case

HOUSTON — After Lloyd’s America Inc. and Corporation of Lloyd’s and the individual they sued over alleged defamation and trademark infringement reported reaching an agreement to resolve the suit, a Texas federal court entered a permanent injunction according to the terms of their agreement.
February 14, 2024
Federal Judge: Potential For D&O Coverage Exists For SEC Subpoenas, Defense Costs

SAN JOSE, Calif. — A federal judge in California held that on the limited record before the court, there is a potential for directors and officers liability coverage for subpoenas issued by the Securities and Exchange Commission to former directors and officers of a biotech company insured and, therefore, the insured is entitled to advancement of the defense costs consistent with its policies’ “Advancement” clause.
February 13, 2024
9th Circuit Panel Says No Coverage Due For $1M Judgment Entered Against Insured

PASADENA, Calif. — A district court correctly found that no coverage is owed to an insured for a $1 million arbitration judgment because the employment practices liability insurance policy excluded coverage for deliberate fraudulent acts when any final adjudication establishes that a deliberate fraudulent act was committed by the insured, the Ninth Circuit U.S. Court of Appeals said in also finding that the insured’s claims for breach of contract and bad faith fail.
February 12, 2024
Insureds File Suit, Seek Coverage For Costs Incurred To Remediate Riverbank

SAN FRANCISCO — Insureds filed suit against their umbrella liability insurer in California federal court, alleging that the insurer breached its contract and acted in bad faith by relying on the policy’s pollution exclusion to deny coverage for costs incurred in remediating a riverbank.
February 12, 2024
Insured Seeks Rehearing, Certification Of Questions In Opioid Coverage Dispute

SAN FRANCISCO — A prescription drug distributor insured on Feb. 9 asked the Ninth Circuit U.S. Court of Appeals to reconsider its ruling that there is no coverage owed for underlying lawsuits prompted by the opioid epidemic because the underlying claims “describe exclusively deliberate conduct,” arguing that a panel rehearing or rehearing en banc is warranted so the panel can certify two “undecided, critical questions of California law” to the California Supreme Court.
February 12, 2024
Injunction Is Part Of Agreement To Resolve Lloyd’s Trademark Infringement Case

HOUSTON — Lloyd’s America Inc. and Corporation of Lloyd’s and the individual they sued in Texas federal court over alleged defamation and trademark infringement have reported reaching an agreement to resolve the suit, with terms including entry of a permanent injunction.
February 09, 2024
Bad Faith, Breach Of Contract Claims Against Auto Insurer Fail, 9th Circuit Affirms

PASADENA, Calif. — A district court correctly determined that bad faith and breach of contract claims against a business auto insurer could not proceed because a genuine dispute over coverage existed and the insurer paid the amount owed under the policy shortly after an arbitration award in favor of the insured was confirmed, the Ninth Circuit U.S. Court of Appeals concluded in a Feb. 8 unpublished opinion.
February 09, 2024
Insurer Petitions 9th Circuit For Panel Rehearing Of Pollution Exclusion Ruling

SAN FRANCISCO — A district court’s ruling that a pollution exclusion bars coverage for an underlying toxic exposure suit stemming from the cleanup of wildfire debris should be affirmed because a panel majority of the Ninth Circuit U.S. Court of Appeals failed to consider two applicable California appellate decisions before concluding that the insurer’s pollution exclusion does not apply to toxic dust, an insurer argues in its petition for panel rehearing.
February 08, 2024
Insured Fails To Establish Coverage ‘Occurrence’ Under Policy, 9th Circuit Affirms

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s dismissal of an advertising company insured’s breach of contract lawsuit against its commercial general liability insurer, finding that the insured failed to demonstrate facts establishing a covered “occurrence” under its policy.
February 07, 2024
Disability Claimant Says Insurer Fails To Show Policy Rider Is Clear, Unambiguous

SAN FRANCISCO — A disability insurer fails to show that a rider included in its disability income policy is not ambiguous and should be enforced, a disability claimant says, maintaining in his appellant reply brief filed in the Ninth Circuit U.S. Court of Appeals that a district court incorrectly interpreted the policy’s monthly benefit rider.
February 05, 2024
Judge: No Coverage Owed For Unfair Competition Suit Brought Against Insured

SAN DIEGO — A federal judge in California concluded that an insurer has no duty to defend its furniture delivery company insured against an underlying misappropriation of trade secrets and unfair competition lawsuit brought by a competitor, granting the insurer’s motion for summary judgment in the insured’s breach of contract and bad faith lawsuit.
February 02, 2024
Judgment Granted For Insurer In Row Over Misrepresentation Of Harassment Suit

SANTA ANA, Calif. — A California federal judge granted summary judgment to an employment practices liability insurer in a declaratory judgment suit against its insured, finding that the insurer is entitled to rescind the policies because it would not have issued the policies had it known of the insured’s false affirmation in the policy application that no harassment suits were made against it in the last five years.
February 01, 2024
Airline And Insurer Agree To Dismiss UCL, Bad Faith Suit Over Passenger’s Coma

SAN FRANCISCO — A California federal judge on Jan. 31 entered an order of dismissal after an airline and two insurers entered a joint stipulation requesting dismissal of the airline’s suit accusing one insurer of violating California’s unfair competition law (UCL) and bad faith based on an allegedly improper denial of coverage for a separate lawsuit brought against the airline by the family of a quadriplegic man who fell into a coma while traveling, which recently settled for $30 million.