We previously discussed the opinion of the U.S. Court of Appeals for the Fifth Circuit in Crownover v. Mid-Continent Cas. Co., No. 11-10166 (5th Cir June 27, 2014)—an opinion that seemed to revive the contractual liability exclusion by distinguishing a landmark Texas decision that had narrowed the exclusion's scope. That was then. Late last year, the U.S. Court of Appeals for the Fifth Circuit withdrew that order and issued a new opinion on rehearing. The new opinion ... Keep Reading »
General Liability
A DJ is a Sometime Thing: In Declaratory Judgment Actions Over Coverage, the Sixth Circuit Gives Trial Courts a Wide Berth
The Declaratory Judgment Act, 28 U.S.C. § 2201, gives federal district courts "unique and substantial discretion" over whether to hear suits seeking a declaration of rights. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). To guide the exercise of that discretion, Courts of Appeals have created lists of relevant considerations—most of which were borrowed from Moore's Federal Practice. See Reifer v. Westport Ins. Co., 751 F.3d 129, 145 n.20 (3d Cir. 2014) ... Keep Reading »
Like Hats and Belt Buckles, Indemnity Agreements in Texas Must be CONSPICUOUS
It pays to be obvious, especially if you have a reputation for subtlety. –Isaac Asimov Earlier this month, the U.S. Court of Appeals for the Tenth Circuit held that Texas law allows an indemnity agreement to insulate a party from the consequences of its own, allegedly negligent conduct, but only if that feature of the agreement is disclosed conspicuously. In Martin K. Eby Construction Co., Inc. v. Kellogg Brown & Root, Inc., No. 13-3027 (10th Cir. Dec. 9, ... Keep Reading »
Partial Recall: Product Contamination Coverage Has Its Limits
In disputes over the scope of liability coverage, courts must often draw a line between (1) providing insurance against errors that harm others and (2) broadly guaranteeing the work product of the insured. The problem is most obvious in construction cases, when claims against the insureds arise from their own faulty workmanship. Recently, it has also emerged in connection with the food and drug industries. Last month, in Hot Stuff Foods, LLC v. Houston Casualty Co. ... Keep Reading »
Et tu, Buddy?: When Excess Insurers Sue for Bad Faith
Insurers don’t, as a rule, like bad faith suits. But life can play funny tricks—as when a judgment against an insured breaches a layer of excess coverage, because the primary carrier failed to settle within its policy limits. In those circumstances, a number of jurisdictions hold that the excess carrier is subrogated to the insured’s right to sue the primary insurer for bad faith failure to settle. Northwestern Mut. Ins. Co. v. Farmers Ins. Co., 76 Cal App. 3d 1031 ... Keep Reading »
Apartment Complexity: Appellate Court Sorts Out Multiple Coverage Claims for Construction of Uninhabitable Residence
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 »
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 »
Cut! Eighth Circuit Excludes Non-Board Member from CGL Coverage for “Directors”
Directors and Officers liability policies are typically precise in defining the job descriptions of the individuals to whom they offer coverage. Recently, in United Fire & Cas. Ins. Co. v. Thompson, No. 13-2352 (8th Cir. July 11, 2014), the U.S. Court of Appeals for the Eighth Circuit had to decide whether the term "director," which was left undefined in a corporation's Commercial General Liability policy, could apply to a supervisory employee, whom one party ... Keep Reading »
You’re Not on the List: Failure to Name Names Knocks Lloyd’s Out of Federal Court
It is impossible today to imagine a world without insurance. Individuals can't buy houses or cars without insuring them against loss. Businesses cannot operate without any number of coverages—against damage to their property and equipment, against interruptions to their operations and against liability to employees, customers and the world at large. But ‘twas not ever thus. Recently, in a dispute over whether a group of Lloyd's underwriters could establish diversity ... 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 »
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