SDV Insights

Top 10 Insurance Cases of 2017


1. Nat’l Union Fire Ins. Co. of Pittsburgh, PA. v. The Fund for Animals, Inc.
451 Md. 431 (2017)
Court of Appeals of Maryland
January 27, 2017

Does an insurer have to prove actual or hypothetical prejudice in order to deny coverage due to alleged late notice?

National Union Fire Insurance Company of Pittsburgh, Pa insured FFA, a non-profit organization dedicated to animal protection, under a claims made and reported liability policy. FFA sued a circus owner alleging mistreatment of elephants, and in response, the circus owner (Feld Entertainment, who owns Ringling Bros. and Barnum & Bailey Circus) counterclaimed allegeing racketeering claims against FFA. National Union denied coverage due to FFA’s late notice of the racketeering claims. The Maryland appellate court held that National Union owed coverage as it failed to prove it was prejudiced by the late notice. Specifically, the court explained that demonstration of actual, not just hypothetical, prejudice from late notice is necessary in order to properly disclaim coverage.

To read more, here is the decision.

 

2. R.T. Vanderbilt Company v. Hartford Accident and Indemnity Company
171 Conn. App. 61 (2017)
Appellate Court of Connecticut
March 7, 2017

How does a court tackle allocation issues related to long tail exposure to talc claims spanning 60 years?

On March 7, 2017, the Connecticut Appellate Court issued a mixed-decision for policyholders – one which also could significantly impact asbestos manufacturers. The insured produced industrial talc (which allegedly contained asbestos) from 1948 to 2008, and sought coverage from its various insurers over a 60 year period, for defense and indemnity for thousands of underlying asbestos related lawsuits. In analyzing the availability of coverage, the Appellate Court came to three conclusions: (1) the continuous trigger theory applied to long developing latent diseases; (2) the insured should be excluded from the allocation formula during years when insurance was unavailable; and (3) the occupational disease exception was unambiguous and referred to all individuals who contracted an occupational disease in their course of work.

To read more, here is the decision.

 

3. Thompson v. National Union Fire Insurance Company
249 F. Supp. 3d 606 (D. Conn. 2017)
United States District Court for the District of Connecticut
April 6, 2017

Could an insurer’s failure to define a “wrap up” lead to coverage despite a wrap up exclusion?

Following the Kleen Energy Systems’ power plant explosion, individuals and estates obtained a judgment against one of the subcontractors on the project. The subcontractor’s excess insurer denied coverage on the basis that the power plant was insured by a CCIP and the policy contained a wrap-up exclusion. The court interpreted the wrap exclusion narrowly, focusing on the insurer’s failure to define the term “wrap up”, and declined to apply the exclusion.

The full decision is available here and, for more information on wrap-up exclusions and a further analysis of Thompson, check out Greg Podolak’s Expert Commentary IRMI Article, Overbroad Wrap Exclusion Can Hamper Risk Transfer, available here.

 

4. Xia v. ProBuilders Specialty Ins. Co.
188 Wash.2d 171 (Wash. 2017)
Supreme Court of Washington
April 27, 2017

Is the efficient proximate cause doctrine applicable to a pollution claim under a CGL policy?

The Washington Supreme Court extended the efficient proximate cause doctrine – commonplace in first-party insurance – to a commercial general liability (“CGL”) pollution claim. In doing so, the court determined that the negligent installation of a water heater, rather than the carbon monoxide emitted therefrom, was the proximate cause of injury and could not be excluded via a pollution exclusion.

For more, here is SDV’s case alert and the full decision.

 

5. Erie Insurance Property and Casualty Company v. Chaber
239 W.Va. 329 (W.Va. 2017)
West Virginia Supreme Court
June 1, 2017

Will a landslide bring down coverage?

The West Virginia Supreme Court (perhaps listening to too much Fleetwood Mac) said yes. The court held that an insurance policy’s exclusion for loss resulting from earth movement “caused by an act of nature or is otherwise caused” unambiguously excluded coverage for property damage from a landslide that resulted, at least in part, from manmade causes. This result stands in contrast to an older Florida Supreme Court case, which held that an earth movement exclusion did not bar coverage for a similar loss. The holdings illustrate the importance of reading policy exclusions carefully, as small changes in language can drastically change the scope of available insurance coverage.

For more, here is SDV’s case alert and the full decision.

 

6. The Burlington Insurance Company v. NYC Transit Authority, et al.
29 N.Y.3d 313 (2017)
Court of Appeals of New York
June 6, 2017

Is negligence on behalf of the named insured required for additional insured coverage?

This landmark decision concerns the meaning of “caused, in whole or in part, by” in the additional insured context. In a split decision, the court rejected Burlington Insurance Company’s argument that the language implied a “negligence” standard, but held that coverage is available to the additional insured only where the named insured’s acts or omissions were a proximate cause of the injury. Contrary to what some commentary might suggest, this decision preserves coverage in the vast majority of additional insured claims, so long as the additional insured is not solely responsible for the loss.

For more, here is SDV’s case alert and the full decision.

 

7. Amberleigh Hudson v. GEICO Insurance Agency
161 A.3d 1150 (R.I. 2017)
Rhode Island Supreme Court
June 16, 2017

Could leaving your vehicle to help an accident victim abrogate coverage?

The Rhode Island Supreme Court, relying in part on an SDV amicus brief, said no, deciding this case favorably for policyholders. The Court held that an automobile passenger was still “occupying” the vehicle for purposes of uninsured motorist coverage after exiting the vehicle to help an accident victim.

For more, here is SDV’s case alert and the full decision.

 

8. Medidata Solutions Inc. v. Federal Insurance Co.
No. 15-CV-907 (ALC), 2017 WL 3268529 (S.D.N.Y. 2017)
U.S. District Court for the Southern District of New York
July 21, 2017
Note: This case is on appeal to the Second Circuit and is expected to be decided in 2018

Is computer fraud coverage available for email phishing scams?

In a pro-policyholder decision, a New York federal judge found that a thief’s use of emails to trick employees of Medidata into wiring money overseas was a covered incident under the company’s computer fraud policy, weakening insurers’ arguments that such coverage is meant to apply only to “hacking” into the insureds’ computers.

For more, here is SDV’s case alert and the full decision.

 

9. Traveler’s Prop. Cas. Co. of Am. v. Actavis, Inc.
16 Cal. App. 5th 1026 (Ct. App. 2017), review filed (Dec. 11, 2017)
California Court of Appeal
November 6, 2017

Will big pharma have coverage for cases arising from the nation’s opioid crisis?

This decision from an intermediate appellate court sends a powerful message to the nation in the midst of a public health crisis: there is no insurance coverage for ads allegedly encouraging opioid use. The California appellate court decided that the allegations against the pharmaceutical company, which included engaging in an intentional “scheme of deception” in marketing of its opioids, were not accidental or fortuitous. Instead, the court found that the allegations described intentional conduct, and therefore, were excluded from coverage because they do not constitute an accident.

For more, here’s the decision.

 

10. Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co.
No. SC16-1420, 2017 WL 6379535 (Fla. 2017)
Florida Supreme Court
Dec. 14, 2017

Does notice of a right to repair constitute a “suit” triggering coverage under a CGL policy?

In late December, the Florida Supreme Court acknowledged a contractor’s right to a defense under its CGL policy during the right-to-repair process. Under Florida law, a property owner may not sue a contractor for construction defects without first providing written notice of the alleged defect and an opportunity to repair. SDV argued in favor of coverage on behalf of amicus curiae United Policyholders, contending that ISO’s standard definition of “suit” includes Florida’s notice to repair procedure, and – in a significant victory for policyholders – the Court agreed.

For more, here’s SDV’s case alert, and the full decision
 

Cases to Watch in 2018:

Gilbane v. St. Paul Insurance
On appeal from: New York Supreme Court, Appellate Division, 1st Department

Argument before the New York Court of Appeals is scheduled for February 7, 2018, with the long anticipated decision by New York’s highest court to be issued shortly thereafter. Gilbane presents an opportunity for the Court to address the growing number of divergent decisions regarding the prerequisites for qualifying as an additional insured, as it considers an Appellate Division’s holding that a construction manager is not entitled to coverage as an additional insured under a contractor’s policy because the two companies did not enter into a direct contract. At issue is whether contractual privity is required based on the language of the additional insured endorsement.

 

Patriarch Partners LLC v. Axis Insurance Company
On appeal from: United States District Court, Southern District of New York

The Second Circuit is poised to review whether an SEC investigation triggers coverage under a D&O Policy. The insured, Patriarch, incurred over $25 million defending against an SEC probe, and sought to recover $5 million of that from one of its excess insurers, AXIS. The U.S. District Court for the Southern District of New York sided with AXIS, holding that the SEC investigation qualified as a “prior and pending” claim, and was therefore excluded from coverage. Due to the prevalence of these types of exclusions in D&O policies, the decision could have a far-reaching impact.

For more information on any of these decisions, please contact Jeffrey Vita at jjv@sdvlaw.com or Grace Hebbel at gvh@sdvlaw.com.






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