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 »
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 »
Ask the Experts About Bad Faith; Just Be Careful How You Do It
In bad faith cases, juries must often decide if the way an insurer processed a claim lacked a "reasonable" basis. Courts have consistently held that experts can help—by explaining how a claim is supposed to be handled. The same courts also insist, however, that experts may not "tell the jury what result to reach." Three recent cases from an assortment of federal courts enforced that rule by excluding expert opinions. But the real lesson of these cases might be that ... Keep Reading »
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 »
McCarran-Ferguson vs. the FAA: Judge Posner Declares TKO in Favor of Arbitration
In a bout before the U.S. Court of Appeals for the Seventh Circuit, two heavyweight federal statutes squared off, with coverage for hundreds of long-tail, asbestos-related personal injury lawsuits on the line. In one corner: the Federal Arbitration Act, enacted by Congress to overcome federal courts’ erstwhile reluctance to enforce arbitration agreements. In the other corner: the McCarran-Ferguson Act, created to curb those courts’ over-reach into insurance regulation ... Keep Reading »
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