SDV Insights

As businesses reopen amid rising COVID-19 cases, employers must navigate through the hurdles of maintaining a safe workplace during a pandemic.

Those of us who suffered through law school are familiar with the argument that there are fundamental rules applicable to contract interpretation and that a certain contract language interpretation would "swallow the rule." However, insurance companies have long advocated for an interpretation of the CGL policy's pollution exclusion that would "swallow the coverage" that the insureds thought they were purchasing.

The Fifth Circuit Court of Appeals recently held that an insurer was not obligated to pay damages associated with a hydrochloric acid spill based on a pollution exclusion in the policy.

To state the obvious, the global "COVID-19" pandemic has resulted in substantial financial losses for many businesses and furloughed workers. Forced shutdowns, lower consumer demand, and reduced capacity/shortened hours of operation have translated to lower revenues for many companies, causing them to make hard decisions. These tough choices include cost-cutting measures (layoffs or furloughs), bankruptcy restructuring, or even permanent closure.

A Missouri federal district court recently provided a significant victory for insurance policyholders for COVID-19 losses. In Studio 417, Inc. v. The Cincinnati Insurance Company 6:20-cv-03127-SRB (W.D. MO, So. Div., Aug. 12, 2020), the Court was called upon to decide whether allegations involving the presence of COVID-19 in and around physical structures qualifies as "direct physical loss or damage" to covered property.

Risk transfer in the construction industry depends heavily on industry-standard insurance language. Insurance provisions in subcontracts typically reference ISO standard insurance terminology or endorsements in order to guarantee (or, at least, attempt to secure) coverage for upstream parties.

In Nagog Real Estate Consulting Corp. v. Nautilus Insurance Co.,1 the United States District Court for the District of Massachusetts held that an insurer had no duty to defend its insureds against claims brought by an injured subcontractor, based on an overbroad employer's liability exclusion in the policy.

In a victory for policyholders, the Sixth Circuit affirmed that a landlord's insurer owed a duty to defend the landlord in a bodily injury claim arising out of a fire that killed three and injured one. The Court held that the insurer breached its duty to defend and was bound to the insured's $3 million consented judgment.

The Third Circuit Court of Appeals recently concluded, in Nautilus Insurance Co. v. 200 Christian Street Partners, LLC., that a duty to defend is triggered when product-related allegations are pled in connection with a claim for defective construction.

Fresh off the heels of the California Supreme Court's landmark decision in Montrose Chemical Corp. v. Super. Ct. of L.A. Cty., policyholders scored another victory as another California court rejected horizontal exhaustion in the context of continuous injury cases.