On the Fourth of July in 2011, a fire damaged a nightclub in Beaumont, Texas. The fire was not unusual, but the lawsuits it generated—O’Quinn v. General Star Indemnity Company, No. 1:13-CV-471 (E.D. Tex. Aug. 5, 2014), and Debes v. General Star Indemnity Company, No. 09-12-00527 (Tex. Ct. App. July 10, 2014)—review many of the ABCs of property insurance law in the Lone Star State. Everybody Goes to Alibi’s Alibi’s, a nightclub and restaurant, was open nightly from ... Keep Reading »
“So What?”: Montana’s Supreme Court Turns a Deaf Ear to Insurers Charged With Breaching the Duty to Defend
Earlier this year, in K2 Investment Group v. American Guaranty & Liability Ins. Co., 983 N.Y.S.2d 761 (N.Y. 2014), New York’s highest court adopted—but then decided against—a rule under which a liability insurer that has breached its duty to defend would be prevented from asserting coverage defenses in connection with the duty to indemnify. That rule is settled law in Montana, however, and last month, in Tidyman’s Management Services, Inc. v. Davis, 330 P.3d 1139 ... Keep Reading »
If a Tree Falls on the Internet … An Insurer Has a Duty to Defend
Legal bloggers sometimes ask themselves: If my post appears on the Internet, but there’s no evidence anyone has read it, have I been published? The question has not yet been finally resolved among law firm compensation committees, but, in the data privacy context, a federal court in Virginia recently offered an emphatic "yes." In Travelers Indemnity Company of America v. Portal Healthcare Solutions, LLC, No. 1:13-cv-917(GBL) (E.D. Va. Aug. 7, 2014), the court found ... Keep Reading »
If Rainwater Lands Where it Doesn’t Belong, It’s Still “Surface Water” in the Eleventh Circuit
The Eleventh Circuit recently affirmed a decision of the Southern District of Georgia, finding an insured’s claim for water damage fell within an exclusion for loss or damage caused by "surface water." In Williams v. State Farm Fire and Casualty Insurance Company, Case No. 14-11100 (11th Cir. July 17, 2014), the dispute arose after the insured’s home was damaged by "thigh deep" water runoff from a rainstorm. The water should have flowed away from the plaintiff’s home, ... Keep Reading »
“Blinded By the Light of God and Truth and Right”: Constitutional Arguments Carry the Day Against Zealous Insurance Receiver
Insurance receivers have the unenviable job of liquidating failed insurance companies: collecting the insolvent insurers’ assets and paying claims against the failed insurers in accordance with a statutory claim priority regimen. Given what they see in their line of work, receivers often come to presume that every owner of a failed insurance company has been guilty of some sort of ethical or legal misconduct. Influenced by that preconception—and by the conviction that ... 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 »
Business Risk Exclusions in CGL Policies Produce a Patchwork of Decisions
On July 23 and 24, 2014, respectively, intermediate appellate courts from South Carolina and Massachusetts released opinions upholding the application of the "your work" exclusion in a commercial general liability policy against claims based on contracted work that had been performed improperly. These two decisions buttress application of the "your work" exclusion, but they also illustrate the fact that the area of business risk exclusions (which typically refers to the ... Keep Reading »
Fifth Circuit Holding Breathes Life Back Into the Contractual Liability Exclusion
Liability insurance policies typically exclude coverage for obligations arising out of the insured’s "assumption of liability in a contract or agreement." Earlier this year, the Texas Supreme Court took a narrow view of this exclusion: in the landmark decision in Ewing Construction Co. v. Amerisure Insurance Co., 420 S.W.3d 30 (Tex. 2014), the court held that a contractor’s agreement to perform construction work "in a good and workmanlike manner" did not assume any ... Keep Reading »
A Flood by Any Other Name is Still a Flood – or Why Losses Caused by Flood Are Subject to Flood Sublimits
Lawyers are students of language, and they have a reputation for building arguments out of long-ago lessons of grammar and language arts. That reputation is not undeserved. Something as small as the placement of a comma can have a significant impact on coverage. But, at the end of the day, insurance contracts are intended to be enforced on the basis of their plain language. Two recent decisions from New York courts uphold this proposition in the context of applying ... Keep Reading »
The Meth Business is Dangerous; (En)trust No One
For a landlord, it’s a bad day when your tenant gets busted for operating a meth lab, and the local authorities condemn your house because it’s contaminated with the byproducts of his business. It’s even worse when you learn there is no coverage for the cost of cleaning up the contamination. Neighborhood Investments, LLC, leased a house in Louisville, Kentucky, to a Mr. Kenneth McCormick. As neighborhood investments go, this was not a winner. Mr. McCormick was ... Keep Reading »
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