A federal district court in Washington recently held that a claims handling mishap resulted in a waiver of the attorney-client privilege otherwise protecting a coverage opinion provided by the insurer’s internal legal department. The Underlying Action & Internal Claims Handling Phoenix issued a liability policy to Diamond Plastics Corporation (Diamond), which supplied sewer and water pipes to H.D. Fowler (Fowler). The pipes were installed during a utility ... Keep Reading »
Bad Faith
Years of Embezzlement Precluded From Coverage Under E&O Policy’s Commingling Exclusion
A federal district court in North Dakota recently granted an insurer’s motion to dismiss in Campbell Property Management LLC v. Lloyd’s Syndicate 3624, finding that both prongs of a “commingling exclusion” to coverage applied. The court granted the insurer’s motion to dismiss the breach of contract and bad faith claims asserted by Campbell Property Management, finding that there was no coverage for the subject acts, and thus there could be no bad faith. Lloyd’s issued ... Keep Reading »
Pennsylvania Court Ices General Reservation of Rights Letters: Insurers Must Specify “Emergent Coverage Issues”
In Selective Way Insurance Co. v. MAK Services Inc., the Superior Court of Pennsylvania reversed an insurer-favorable summary judgment after finding that its reservation of rights letter was insufficient. Following what appeared to be a standard slip-and-fall case, an insurer provided a defense under a reservation of rights to its insured — a snow and ice removal company. Astonishingly, the policy contained a snow and ice removal exclusion, barring coverage for bodily ... Keep Reading »
New York Court of Appeals Affirms GBL § 349 and § 350 Claims Must Have Widespread Effect on Consumers
Twenty-five years ago, the New York Court of Appeals ruled that a claim under General Business Law section 349 does not lie when the plaintiff alleges only "a private contract dispute over policy coverage and the processing of a claim which is unique to the[] parties, not conduct which affects the consuming public at large." N.Y. Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308, 321 (1995). Recently, the court was asked a different question: where an insurance contract, ... Keep Reading »
A New Bad Faith Trend Emerges in COVID-19 Business Interruption Litigation
With governments across the world ordering the shutdown of restaurants, bars, and other “non-essential” businesses due to the COVID-19 pandemic, business interruption insurance claims are, not surprisingly, on the rise. While typical commercial property policies require “direct physical loss or damage” to property — a requirement that is unlikely satisfied by the shutdowns — policyholders are getting creative, alleging that the potential presence of the novel coronavirus ... Keep Reading »
Pennsylvania Federal Court Refuses to Dismiss Bad Faith Claim, Even Though Insurer Timely Made Demanded Payments
There have been more developments in Ironshore Specialty Insurance Co. v. Conemaugh Health System Inc., the case brought by Ironshore, as excess carrier, to seek reimbursement of amounts paid in an underlying medical malpractice settlement. While we previously reported that the court denied Conemaugh's (the insured's) motion to dismiss, the court has now also ruled that Conemaugh's counterclaims for bad faith can move forward, despite the fact that Conemaugh did not ... Keep Reading »
Massachusetts High Court Upholds Consent-to-Settle Provision, Protecting Insurer Who Did Not Have the “Final Say”
The Supreme Judicial Court of Massachusetts recently heard an appeal regarding a particularly obstinate insured, ruling that recognition of a consent-to-settle provision does not in and of itself violate an insurer’s duties under Massachusetts’ claim settlement practices statute. Specifically, in Rawan v. Continental Casualty Co., the court held that Continental was not in violation of Massachusetts General Laws chapter 176D, section 3(9)(f), which mandates that an ... Keep Reading »
South Carolina Supreme Court’s Quiet Erosion of Insurers’ Attorney-Client Privilege Rights
One decision that flew under the radar in 2019 continues the recent trend of courts to dispense, under among other things the previously discussed “at-issue” waiver doctrine, with insurers’ fundamental rights to confidentiality with respect to legal advice. In the June 2019 decision In re Mt. Hawley Insurance Co., No. 2018-001170 (S.C. June 12, 2019), South Carolina directed, in response to a certified question from the Fourth Circuit Court of Appeals, the circumstances ... Keep Reading »
Eleventh Circuit Rejects Insurer-Defended Policyholder’s Bid to Expand Florida’s Bad Faith “Excess Judgment Rule” to Include Collusive Settlements Concocted Without Insurer’s Consent
In Cawthorn v. Auto-Owners Insurance Co., No. 18-12067 (11th Cir. Oct. 25, 2019), the Eleventh Circuit affirmed the U.S. District Court for the Middle District of Florida’s grant of summary judgment in favor of Auto-Owners Insurance Co., ruling that a consent judgment does not constitute an excess verdict, which is an essential element of a Florida bad faith claim. This appeal arose from an April 2014 underlying automobile accident in which David Cawthorn and Bradley ... Keep Reading »
Back to Basics: The Georgia Court of Appeals Distinguishes Acceptance From Counteroffer
The Georgia Court of Appeals recently reiterated the fundamentals of contract law within the context of insurance settlement negotiations in Yim v. Carr. In this case, the plaintiff offered to settle within policy limits and to release liability against specific persons or entities. The defendant's insurer agreed to the settlement in principle, but sought clarification about who would be included in the release. Ultimately, the court held that this did not constitute ... Keep Reading »
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