In QBE Ins. Corp. v. Adjo Contracting Corp. (N.Y. App. Div. 2d Dep't Oct. 29, 2014), an intermediate appellate court in New York confronted cross-appeals involving 15 different insurers embroiled in multiple lawsuits, including consolidated class actions. The core issue of the case was whether the insurers for a variety of subcontractors were obligated to provide a defense to tenants' lawsuits against the developer and general contractor of a doomed residential ... Keep Reading »
Duty to Defend
Well, That Seemed Exhausting: When Is an Excess Insurer Obligated to Post an Appellate Bond?
"You say to-may-toe; I say to-mah-toe," or so the saying goes. According to the Eastern District of Pennsylvania in Charter Oak Insurance Company v. Maglio Fresh Food, No. 12-3967 (E.D. Penn. Sept. 9, 2014), the same can be said of a "cost of appellate bond" provision in a liability policy: Debating whether this "hybrid" term is part of the duty to defend or the duty to indemnify "is not easily nor necessarily answerable." The underlying Maglio Fresh Food case involved ... Keep Reading »
New Jersey Appellate Court Keeps “Running Spigot” Open on Allocation of Defense Costs Under Non-Eroding-Limit Fronting Policies (and Other Spooky Tales from the Towers of Coverage Past)
New Jersey's Appellate Division recently affirmed each of several challenged rulings rendered in a long-running coverage dispute between plaintiff IMO Industries and its many historical insurers arising from asbestos exposure-related injuries dating back to the 1940's. IMO sought declaratory and other relief to establish IMO's and the defendant insurers' respective obligations for defense and indemnity of underlying personal injury lawsuits against IMO. Plaintiff IMO ... Keep Reading »
“So What?”: Montana’s Supreme Court Turns a Deaf Ear to Insurers Charged With Breaching the Duty to Defend
Earlier this year, in K2 Investment Group v. American Guaranty & Liability Ins. Co., 983 N.Y.S.2d 761 (N.Y. 2014), New York’s highest court adopted—but then decided against—a rule under which a liability insurer that has breached its duty to defend would be prevented from asserting coverage defenses in connection with the duty to indemnify. That rule is settled law in Montana, however, and last month, in Tidyman’s Management Services, Inc. v. Davis, 330 P.3d 1139 ... Keep Reading »
If a Tree Falls on the Internet … An Insurer Has a Duty to Defend
Legal bloggers sometimes ask themselves: If my post appears on the Internet, but there’s no evidence anyone has read it, have I been published? The question has not yet been finally resolved among law firm compensation committees, but, in the data privacy context, a federal court in Virginia recently offered an emphatic "yes." In Travelers Indemnity Company of America v. Portal Healthcare Solutions, LLC, No. 1:13-cv-917(GBL) (E.D. Va. Aug. 7, 2014), the court found ... Keep Reading »
Nutmeg, Sí, Palmetto, No!: Travelers Wins Both Sides of Insurer-vs.-Insurer Dispute
Although large or protracted losses can implicate more than one liability policy, sometimes only one insurer steps up to provide a defense. When that happens, the insurer can try any of several ways to recover its expenses from other carriers, including a declaratory judgment action, an action for equitable subrogation and a claim for contribution. But the law in this area is not uniform, as two recent cases illustrate. In Travelers Cas. & Surety Co. of America ... Keep Reading »
Business Risk Exclusions in CGL Policies Produce a Patchwork of Decisions
On July 23 and 24, 2014, respectively, intermediate appellate courts from South Carolina and Massachusetts released opinions upholding the application of the "your work" exclusion in a commercial general liability policy against claims based on contracted work that had been performed improperly. These two decisions buttress application of the "your work" exclusion, but they also illustrate the fact that the area of business risk exclusions (which typically refers to the ... Keep Reading »
“Mend the Hold”: A Nineteenth-Century Wrestling Doctrine Keeps its Grip on Coverage Litigation in the WWE Era
The issue confronting an Illinois appellate court in BNSF Railway Company v. Probuild North LLC, No. 1-12-3648 (Ill. App. Ct. June 11, 2014), was not uncommon. The plaintiff sought coverage from its insurer under a commercial general liability policy. In defending the suit, the insurer asserted a different defense from the one it had identified in its original denial letter. The plaintiff argued that the insurer was estopped from changing its rationale for denying ... Keep Reading »
If the Suit Fits: A Washington Court Clarifies Triggers for the Duty to Defend
Like many other federal and state environmental laws, Washington’s Model Toxics Control Act (MTCA) exposes property owners to strict liability, regardless of fault or intent, for certain types of environmental contamination. Twenty years ago, in Weyerhaeuser Co. v. Aetna Cas. & Surety Co., 874 P.2d 142 (Wash. 1994), the Supreme Court of Washington held that a property owner’s efforts to remediate polluted sites triggers a liability insurer’s duty to indemnify the ... Keep Reading »
Peeking Around Four Corners: Wisconsin Insurers Have Found a Way to Use Extrinsic Evidence to Excuse the Defense of Pending Claims
It is a truism that a liability insurer’s duty to defend is extremely broad—especially in states that apply the “four corners rule.” Under that rule, the insurer has a duty to defend whenever the underlying complaint alleges facts that could constitute a covered claim—“even though facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered.” Capstone Building Corp. v. American Motorists Ins. Co., 67 A.3d 961, 992 (Conn. ... Keep Reading »
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