When a claim goes south, the insured often pursues a bad faith claim. But even when the bad faith claim settles, that doesn't always mean the litigation is over. And that means it's still necessary to be vigilant about preserving the confidentiality of privileged communications. One way that insurers often waive the privilege inadvertently is by making statements during discovery that put the advice of counsel "at issue." Last month, in Seneca Insurance Co. v. Western ... Keep Reading »
Rumors of Revival Were Greatly Exaggerated: Fifth Circuit Reverses Opinion on Contractual Liability Exclusion
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 »
Connecticut Insurers Get a Day in Court to Resolve Regulatory Investigations
As Hillary Clinton can attest,some government investigations tend to drag on, and they create problems for their targets as long as they last. In late 2011, the targets of a lingering investigation by the Connecticut Insurance Department tried to lift the cloud over their business, by filing a declaratory judgment action in Superior Court. The trial court dismissed their suit, on the ground that the Department's proceedings had not yet run their course. But last ... Keep Reading »
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 »
New York District Court Rejects Excess Carrier’s Attempt to Stack Primary Limits in Continuous Exposure Case
Cases involving continuous exposure present unique challenges. Determining when the alleged injury occurred is critical in evaluating causation, damages, and statute of limitations defenses. The date and nature of the alleged occurrence is also often determinative of coverage. And as a recent decision from the Northern District of New York reminds us, the question is not only whether there is coverage in the first instance, but also which carrier has to pay. The ... Keep Reading »
Carhops and Cash Deposit Bags: Insurer Skates From the “Dual Purpose” Doctrine
For many, Sonic Drive-In restaurants stir thoughts of juicy burgers, neon-blue sodas, ‘50s rock ‘n’ roll, and roller-skating carhops. Recently, however, in Hudson Specialty Insurance Company v. Brash Tygr, LLC, Nos. 13-1688, 13-1742 (8th Cir. Oct. 7, 2014), the Eighth Circuit Court of Appeals served up an opinion in a commercial insurance coverage dispute with a little less flavor and fanfare, in analyzing the proper application of the "dual purpose" doctrine in the ... 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 »
“Voluntary” ≠ “Obligatory”: Good Deeds Do Not Trigger Coverage
Liability policies typically provide coverage for amounts the insured "become[s] legally obligated to pay"—but they leave open the question of how that obligation should be determined. Judgments and settlements clearly create "legal obligations." Sometimes, a statute can, too: several courts require insurers to pay for remediation efforts mandated by environmental laws, even if government authorities have not yet ordered any action at the polluted site. But the ... Keep Reading »
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