On August 26, 2019, the Eleventh Circuit Court of Appeals, applying Florida Law, held that ill-gotten gains do not constitute covered “loss” within the meaning of a D&O policy. In Philadelphia Indemnity Insurance Co. v. Sabal Insurance Group, Inc., No. 17-14844 (11th Cir. Aug. 29, 2019), the Miami-Dade County Office of the Inspector General investigated Sabal Insurance Group and its CEO/president Ian Norris for overcharging the Miami-Dade Aviation Department for ... Keep Reading »
Seventh Circuit Finds “Based Upon or Arising Out of” Language in Contract Exclusion Renders Coverage “Illusory”
In Crum & Forster Specialty Insurance Co. v. DVO, Inc., No. 18-2571 (7th Cir. Sept. 23, 2019), the Seventh Circuit reversed a decision of the U.S. District Court for the Eastern District of Wisconsin, finding that the contractual liability exclusion in an E&O policy containing “based upon or arising out of” language rendered coverage under the policy “illusory” and therefore must be reformed to match the policyholder’s “reasonable expectations.” The appeal ... Keep Reading »
Court Finds Animals Incapable of Vandalism or Malicious Mischief for Insurance Purposes (and all other purposes, too)
I am willing to go out on a limb and say that if asked whether an animal, say, a raccoon, is capable of committing malicious criminal acts, most humans would agree that the issue is beyond dispute. But, alas, most humans would be wrong (apparently it very much can be disputed). There is good news, however. The nation’s courts have been quietly tackling the issue, and, thankfully, they have been able to allay any fear of a raccoon uprising occurring in the near future. A ... Keep Reading »
Appearance by Video Might Be More Convenient for a Nonparty in Arbitration, but It Can’t Be Compelled Under the FAA
You find yourself in an arbitration needing documents and testimony from a nonparty. Your arbitrator issues a nonparty summons, "conveniently" requiring the out-of-state nonparty to appear by video at a hearing and produce documents to the parties and the arbitrator in advance. As it goes, the nonparty objects to the summons, refusing to comply without an order compelling it to do so. So you move to enforce the arbitral summons in the district court in which the ... Keep Reading »
The Conflict Between Choice-of-Law Provisions in Insurance Policies and a State’s Fundamental Public Policy
Many contracts include a choice-of-law provision in which the parties agree to use a particular jurisdiction's set of laws to govern the contract. These provisions promote predictability. No matter where a dispute may arise under the contract, the contract will always be interpreted under the laws of the chosen jurisdiction. This practice of including choice-of-law provisions extends to policies of insurance. However, these choice-of-law provisions are not always ... Keep Reading »
New York Supreme Court Holds Documents Created By Counsel During Claims Handling Were Not Privileged
Pharmavite LLC filed a statement of loss under a policy issued by Crum & Forster Specialty Insurance Co. Crum & Forster disclaimed coverage, and Pharmavite commenced an action for breach of contract and declaratory judgment. After the parties disputed whether certain documents in Crum & Forster's privilege log were discoverable, the court conducted an in camera review and ordered Crum & Forster to disclose all documents. Crum & Forster moved to ... Keep Reading »
Seventh Circuit Reverses Prior Ruling After Reexamining Exclusion Clause
After a panel rehearing, the Seventh Circuit in Emmis Communications Corp. v. Illinois National Insurance Co., No. 18-3392 (7th Cir. Aug. 21, 2019), vacated a prior judgment and withdrew an opinion issued in July 2019, finding upon second review that Emmis Communications was entitled to summary judgment in its favor with regard to a breach of contract claim against Illinois National Insurance Co. The litigation involved Illinois National's denial of insurance coverage to ... Keep Reading »
Appraise Away Says Florida’s Fifth DCA
Many homeowners insurance policies allow the insurer or the insured to invoke appraisal to resolve disagreements about the amount of the loss. Nonetheless, when one party invokes appraisal, the other party will sometimes refuse to participate in the process, forcing the party invoking appraisal to obtain a court order compelling the other party to participate. Fortunately, the recent decision in Underwriters at Lloyd's, London, ICAT Syndicate 4242 v. Sorgenfrei, No. ... Keep Reading »
Florida Court Holds It Was “Miscarriage of Justice” to Deny Insurer Award of Appellate Fees
Florida's offer of judgment statute, Florida Statutes section 768.79, is a common technique for any litigator who wants to place additional risk on the plaintiff. The statute provides that if a defendant in a civil suit files an offer of judgment that is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable attorneys' fees and costs from the date of filing if the judgment is one of no liability or the judgment obtained by the ... Keep Reading »
The Insurer’s Howler, or How Travelers Proved Its Insured’s Case
What happens when an insurer presents evidence at trial that supports the insured's case? Answer: The evidence can be used to sustain the jury verdict for the insured-plaintiff. That is the lesson learned by Travelers in the Connecticut Supreme Court, despite: (1) Travelers' moving for directed verdict after the plaintiff's case-in-chief; (2) the trial court's reserving its ruling until after the defense's case; and (3) Travelers' renewing its motion for directed ... Keep Reading »
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