On June 28, 2023, the Eleventh Circuit Court of Appeals issued an opinion in Southern-Owners Insurance Co. v. Waterhouse Corp. affirming that fungi or bacteria exclusions did not apply because a cooling tower that allegedly contained Legionella bacteria was neither a “building” nor a “structure” within the meaning of the exclusions. In Waterhouse, a horticultural manufacturer hired Waterhouse Corp. to perform monitoring, maintenance, and water treatment services for ... Keep Reading »
Exclusions/Exceptions
Seventh Circuit Declines to Enforce Plain Language of Distribution of Material Exclusion in Business Liability Policy
On June 15, 2023, in Citizens Insurance Company of America v. Wynndalco Enterprises LLC, the Seventh Circuit Court of Appeals affirmed the U.S. District Court for the Northern District of Illinois’ decision holding that a Citizens’ business liability insurance policy exclusion for the distribution of material in violation of statutes gave rise to an ambiguity. The ruling stems from two putative consumer class actions filed against Wynndalco Enterprises LLC, an ... Keep Reading »
7th Cir. Holds Insurance Coverage Applies to Settlement Payments for Alleged Anti-Kickback and False Claims Act Violations
On May 3, 2023, the Seventh Circuit Court of Appeals, in Astellas US Holding Inc. v. Federal Insurance Co., held that a liability insurer was required to contribute its limits toward its insured’s payment to settle potential anti-kickback claims because the insurer did not show that such amounts were uninsurable restitution. Astellas, a Japanese drugmaker, launched a drug to treat metastatic prostate cancer in 2012. Astellas priced the treatment at $7,800 per month, ... Keep Reading »
Second Circuit Affirms Ruling That Prior Knowledge Exclusion Barred Coverage for Legal Malpractice Lawsuit
The Second Circuit Court of Appeals recently affirmed a lower court’s ruling, which declared that North River Insurance Co. had no duty to defend or indemnify its insured in connection with a legal malpractice lawsuit. Background In September 2019, Max Leifer and his law office applied for professional liability insurance with North River. Leifer’s application was approved, and North River issued the policy, which covered damages and defense expenses for claims ... Keep Reading »
11th Cir. Affirms That Georgia’s Implied Waiver Doctrine Cannot Be Used to Create Coverage
In Century Communities of Georgia LLC v. Selective Way Insurance Co., the Eleventh Circuit Court of Appeals affirmed that the Georgia Supreme Court’s 2012 opinion in Hoover v. Maxum Indemnity Co. does not apply to “coverage defenses” — that is, whether a loss is potentially covered under a policy in the first place. Rather, under Hoover, only certain “policy defenses,” meaning whether a procedural condition of the insurance contract has been fulfilled, may be subject to ... Keep Reading »
No Coverage for Delinquent Payments: Mobile Home Park Operator Cannot Recover for “Expected or Intended” Injuries
On May 1, 2023, in West American Insurance Co. v. Del Ray Properties Inc., the U.S. District Court for the Western District of Washington held that general liability insurers owed no coverage obligations to a mobile home park operator in connection with delinquent payments of utility bills that jeopardized its residents’ water and garbage services because the underlying claims were for “expected or intended” injuries. Del Ray Properties Inc. is a Washington ... Keep Reading »
Mass. Court Holds Unprovoked Attack Not “Physical Abuse” Within Meaning of Abuse and Molestation Exclusion
In Dorchester Mutual Insurance Co. v. Miville, the Supreme Court of Massachusetts discussed the basis for its reversal of the Superior Court’s grant of summary judgment in favor of Dorchester Mutual based on its interpretation of what constitutes “physical abuse” in the context of an abuse and molestation exclusion as it applies to the insured’s unprovoked attack on an individual. The facts regarding the unprovoked attack by the insured, William Brengle, on Leonard ... Keep Reading »
Seventh Circuit Finds Notice-of-Impairment Exclusion Bars Coverage for Warehouse Fire
In Frankenmuth Mut. Ins. Co. v. Fun F/X II, Inc., the U.S. Court of Appeals for the Seventh Circuit considered whether loss from a warehouse fire was excluded from coverage because of the insureds' failure to notify the insurer of a known impairment to the building’s fire protection systems prior to the fire. The defendants were owners of a costume and theatrical supply retailer that stored inventory in a warehouse insured by the plaintiff, Frankenmuth Mutual ... Keep Reading »
NY Federal Court Finds “Insured v. Insured” Exclusion in D&O Policy Trumps General Allocation Clause
On December 9, 2022, the U.S. District Court for the Southern District of New York considered whether an “insured v. insured” (IvI) exclusion applied to bar coverage for an underlying lawsuit brought against insureds under a directors & officers (D&O) liability policy by another insured under the same policy, and another noninsured party. Thomas L. Gregory v. Navigators Insurance Company, Case No. 1:22-cv-04834. Thomas Gregory was an employee of Tarter Gate ... Keep Reading »
New York Federal Judge Finds No Duty to Defend Based on War Exclusion’s Insurrection Clause
In Hartford Fire Ins. Co. v. The Western Union Co. et al., No. 22-CV-0557 (JMF) (S.D.N.Y. Sept. 22, 2022), a federal judge in New York granted Hartford Fire Insurance Company’s motion for judgment on the pleadings and motion to dismiss Western Union’s counterclaims, ruling that the war exclusion and financial services exclusion in its commercial general liability insurance policy both independently operated to bar coverage for the underlying lawsuit. Underlying ... Keep Reading »
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