Mealey's Emerging Insurance Disputes : Mealey's : Legal News & Analysis

Mealey's Emerging Insurance Disputes

September 30, 2024
Judge Orders Parties To File Stipulation Of Dismissal In Insurer Liquidation Case

TOPEKA, Kan. — After being advised of a settlement in the liquidation proceedings of an insolvent medical malpractice insurer, a Kansas federal judge in a docket-only entry ordered the parties to file a stipulation of dismissal by Nov. 18.
September 30, 2024
Alaska High Court Sides With ‘Overwhelming Majority’ In Coronavirus Coverage Suit

ANCHORAGE, Ala. — Finding “no reason to differ from the overwhelming majority” in answering “no” to two certified questions from an Alaska federal court, the Alaska Supreme Court held Sept. 27 that neither the presence of the coronavirus at an insured’s property nor operating restrictions that were imposed on an insured property by pandemic-prompted governmental orders constitute “direct physical loss of or damage to” the insured property to trigger coverage.
September 30, 2024
Dismissal Granted To D&O Insurer In Coverage Dispute With Insurance Commissioner

OKLAHOMA CITY — An Oklahoma federal judge granted a D&O insurer’s motion to dismiss a declaratory judgment suit filed against it by the Oklahoma insurance commissioner, as receiver of another insurer in liquidation whose parent company was insured under a policy issued by the D&O insurer, finding that neither the liquidation order nor the Oklahoma Uniform Insurers Liquidation Act (OUILA) gives the insurance commissioner standing to “succeed” to the rights of the directors or officers.
September 27, 2024
Farmers, USDA Spar Over Decision Regulators Made On Remand Of Crop Insurance Row

BAY CITY, Mich. — Farmers and federal regulators are again sparring in a Michigan federal court over a crop insurance dispute involving a dry-bean revenue endorsement (DBRE), with issues of contention now including whether the court retains jurisdiction after having awarded attorney fees under the Equal Access to Justice Act (EAJA) and whether regulators followed the court’s directions on remand.
September 27, 2024
Pennsylvania Supreme Court Reverses Coverage Ruling In Dentist’s Coronavirus Suit

PITTSBURGH — The Pennsylvania Supreme Court on Sept. 26 held that a dental practice insured is not entitled to commercial property insurance coverage for its financial losses incurred during the COVID-19 pandemic and the state’s nonessential business shutdown orders because its covered properties did not incur any physical loss or damage, reversing a Pennsylvania Superior Court majority’s ruling and ordering the case remanded for the trial court to enter summary judgment in favor of the insurer.
September 27, 2024
No Coverage Owed For Tavern Owner, Pennsylvania High Court Rules In COVID-19 Suit

PITTSBURGH — The Pennsylvania Supreme Court in a one-page order issued Sept. 26 affirmed a Pennsylvania Superior Court reversal of a lower court’s ruling in favor of a tavern owner insured in a coronavirus coverage dispute, citing the high court’s reasoning in Ungarean v. CNA, et al. that addressed the same issue on the same day.
September 27, 2024
Panel Denies Insurer’s Petition For Interlocutory Appeal In Coronavirus Dispute

DALLAS — A Texas appeals panel denied a commercial property insurer’s petition for an interlocutory appeal of a partial summary judgment order in a coronavirus coverage dispute, finding that an immediate appeal “would not materially advance the ultimate resolution of the case.”
September 26, 2024
Insurer Has Duty To Defend Sex Trafficking MDL, 9th Circuit Affirms

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on Sept. 25 affirmed a lower federal court’s dismissal of a commercial insurer’s declaratory judgment arising from an underlying multidistrict litigation alleging that the insured is liable under Texas’ sex trafficking statutes, finding that the insurer’s duty to defend has not been extinguished because the underlying claims may impose liability on the insured that triggers coverage.
September 25, 2024
Insurers File Claims In Ship Owner’s Suit Seeking Exoneration For Bridge Collapse

BALTIMORE — New York Marine and General Insurance Co. and Certain Underwriters at Lloyd’s of London, Axis Syndicate 1686, on Sept. 24 became the fifth and sixth insurers to file a claim and answer to a petition for exoneration from or limitation of liability filed by the owner and technical manager of the ship that allided with and destroyed the Francis Scott Key Bridge in Baltimore on March 26.
September 25, 2024
Judge Refuses To Dismiss Breach Of Contract Claim In Coronavirus Coverage Suit

NEW YORK — A federal judge in New York denied “all risk” insurers’ motion to dismiss a breach of contract claim in a lawsuit filed by a holding company for the U.S. interests in the Mandarin Oriental Hotel Group alleging the “Special Perils Provision” in an endorsement of the policies provided coverage for its $14 million in business interruption/interference losses caused by infectious or contagious diseases that were “manifested by any person within a 5-mile radius of” its four hotels in Boston, New York, Miami and Washington, D.C., finding the insured plausibly alleged that its losses were covered by the endorsement.
September 25, 2024
Couple Urges 5th Circuit To Say Ross Remains Its Standard For Insurance Cases

NEW ORLEANS — Asking the Fifth Circuit U.S. Circuit Court of Appeals to reverse a U.S. Tax Court ruling concerning what they unsuccessfully argued were microcaptive insurance arrangements entitled to tax benefits, appellants contend in their opening brief that the Internal Revenue Service and Tax Court “restricted the meaning of the term ‘insurance’ contrary to Fifth Circuit and Supreme Court precedent.”
September 24, 2024
No Special Relationship Existed Between Broker And Insured, 9th Circuit Affirms

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s summary judgment ruling in favor of an insurance broker in an insured’s negligence and broker malpractice lawsuit prompted by the losses it incurred from its replacement of defective, recalled light bulbs, finding that there was no special relationship between the broker and the insured based on the professional services the broker offered.
September 24, 2024
1st Circuit Majority Affirms Ruling In Favor Of Professional Liability Insurer

BOSTON — A majority of the First Circuit U.S. Court of Appeals affirmed a lower federal court’s judgment in favor of a professional liability insurer in a breach of contract lawsuit brought by the attorney insured’s assignee, rejecting the assignee’s contention that the insurer must demonstrate that it was prejudiced by the late notice of the underlying legal malpractice claim in order to deny coverage.
September 23, 2024
Noting ‘Evergreen Problem,’ Panel Remands Coverage Suit For Jurisdictional Discovery

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Sept. 20 held that an insurer and its television production company insured failed to establish the citizenship of limited liability companies in a coverage dispute arising from underlying injury claims brought against the insured by participants of the reality television show “My 600-lb Life,” remanding to a Texas federal court for jurisdictional discovery.
September 23, 2024
Pollution Exclusion Does Not Preclude Coverage For Suit Stemming From Breath Mints

ST. LOUIS — A Missouri federal judge on Sept. 20 granted a motion to dismiss an insurer’s suit seeking a declaration that no coverage is owed for an underlying suit seeking damages caused by a child’s ingestion of liquid breath mints that contained a chemical that damaged the child’s esophagus because the policy’s pollution exclusion cannot be interpreted as a bar to coverage for the underlying suit.
September 23, 2024
California High Court Tosses Certified Question Following COVID-19 Coverage Ruling

SAN FRANCISCO — In light of the recent ruling in John's Grill, Inc. v. The Hartford Financial Services Group, Inc., the California Supreme Court dismissed its consideration of a certified question from the Ninth Circuit U.S. Court of Appeals asking whether an insurance policy’s virus exclusion is unenforceable in a coverage lawsuit brought by owners, operators and managers of two Napa Valley, Calif., restaurants in the wake of the coronavirus pandemic.
September 20, 2024
Insured’s Assignees Ask 11th Circuit To Vacate No Coverage Ruling

ATLANTA — Assignees of an accounting services provider insured asked the 11th Circuit U.S. Court of Appeals to vacate its ruling that affirmed a lower federal court’s grant of summary judgment in favor of a professional liability insurer in their breach of contract lawsuit, asking the circuit court to reaffirm “the principle that only the New Jersey Supreme Court has the right to define the grammatical constructions that create the official natural readings of contracts and statutes in its state.”
September 20, 2024
Judge: CGL Insurer Owes Defense For Sex Trafficking Claims Against Hotel Insured

ATLANTA — A federal judge in Atlanta granted a hotel operator insured’s motion to dismiss a commercial general liability insurer’s complaint to the extent that the insurer seeks a declaration that it has no duty to defend against an underlying lawsuit alleging that the insured did not uphold its duty of care concerning the safety of its hotel and hotel guests by failing to prevent and respond to evidence of sex trafficking, rejecting the insurer’s argument that the policy’s “Abuse or Molestation” and “Assault or Battery” endorsements bar coverage.
September 20, 2024
Panel Affirms Judgment In Coverage Suit Arising From Agency’s Breach Of Contract

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals affirmed a lower federal court’s finding that an excess insurer breached its duties to defend and indemnify and a primary insurer violated its Stowers duty when it did not accept a marina owner’s settlement demands in an underlying breach of contract lawsuit brought against their mutual insured.
September 18, 2024
No Coverage Owed For Footwear Chain’s Coronavirus Losses, Illinois Panel Affirms

CHICAGO — An Illinois appeals court panel on Sept. 17 affirmed a lower court’s grant of a commercial property insurer’s motion to dismiss the owner of retail footwear chain DSW Designer Shoe Warehouse’s breach of contract and declaratory judgment lawsuit seeking coverage for its losses arising from the COVID-19 pandemic, finding that the policy’s “law and ordinance” and “contamination” exclusions bar coverage.
September 18, 2024
Class Action Alleges Insurance Provider Negligently Failed To Prevent Data Breach

NEW YORK —A class action complaint was filed in a New York federal court against a financial organization that offers insurance, retirement and investment services primarily to teachers, alleging that the defendant failed to prevent a May 2023 data breach that resulted in the theft of the personally identifiable information (PII) of its current and former clients.
September 17, 2024
9th Circuit Denies Insurers’ Petition For Rehearing In Coronavirus Coverage Suit

SEATTLE —The Ninth Circuit U.S. Court of Appeals on Sept. 16 denied insurers’ petition for rehearing and rehearing en banc asking it to reconsider its Feb. 29 opinion that affirmed a federal court’s finding that a tribal court has subject matter jurisdiction over a COVID-19 coverage suit involving tribal properties on tribal land, but with a dissenting judge saying that “this case cried out for rehearing en banc.”
September 17, 2024
U.S. Tax Court Now Has 8 Rulings For IRS, 0 Against In Microcaptive Insurance Rows

WASHINGTON, D.C. — In a Sept. 16 ruling that he said brought the court’s record on purported microcaptive insurance cases to 8-0 in favor of the commissioner of Internal Revenue, a U.S. Tax Court judge found that the corporation that paid purported premiums “achieved no transfer of risk”; that the putative reinsurer “accomplished no meaningful distribution of risk”; and that “the arrangements at issue did not remotely resemble insurance in the commonly accepted sense.”
September 17, 2024
Parties, 10 Amici Weigh In On Economic Substance Doctrine In Microcaptive Case

WASHINGTON, D.C. — Ten amicus curiae briefs regarding the “economic substance doctrine” have been filed at the invitation of a U.S. Tax Court judge who is presiding over consolidated cases involving purported microcaptive insurance companies and considering the remaining issue of accuracy-related penalties.
September 17, 2024
Judge Refuses To Dismiss Contractor’s Coverage Suit Arising From Hotel Collapse

NEW ORLEANS — A federal judge in Louisiana denied builders risk insurers’ motion to dismiss a contractor’s breach of contract lawsuit seeking additional insured coverage for its $89,877,694 in losses arising from the aftermath of the partial collapse of a Hard Rock Hotel project in New Orleans, rejecting the insurers’ contention that the contractor’s lawsuit is untimely.