Jan 12 2018

MM Insurance News 1/12/2018

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NEW RULINGS OF NOTE

THIRD CIRCUIT  Property Insurance/Mold/Sandy (NJ)

The Third Circuit has affirmed a New Jersey District Court’s refusal to reinstate a New Jersey homeowner’s bad faith action against its property insurer for mold damage due to Superstorm Sandy. In Andrews v. Merchants Mut. Ins. Co., No. 17-1413 (3d. Cir. Jan. 10, 2018)(unpublished), the court declared that the evidence at trial was that the mold was excluded as being caused by groundwater that seeping into a crawlspace beneath the insured’s home and had not entered through the roof. Having refused to find coverage for the insured’s claim, the Third Circuit further found that no reasonable juror could have found that the insurer acted in bad faith in denying the claim.

ELEVENTH CIRCUIT Property Insurance/Experts/Late Notice (GA)

The U.S. Court of Appeals for the Eleventh Circuit has ruled in the Grand Reserve of Columbus, LLC v, Property-Owners Ins. Co., No. 17-10264 (11th Cir. Jan. 4, 2018) that a Georgia District Courts was correct in ruling that a commercial property insurer owed coverage for hail damage to roofs at a residential building complex. In an unpublished opinion, the Court of Appeals refused to find that the district court had abdicated its "gatekeeping" function under Daubert by allowing the inspection of a proposed expert's credentials to occur in front of the jury rather than resolving this issue before the trial commenced. The Court of Appeals also rejected Property-Owners' challenge to the expert's credentials and the subject matter of his testimony. Further the court ruled that the insured's eleven month delay in giving notice to Property-Owners was not unreasonable as it did not understand at first how wide spread the damage would prove to be.

ALASKA “Suit”/”Damages”/Coverage B

A federal court has ruled in Lynch & Kennedy Dry Goods v. American Fire & Cas. Co., No. 17-0006 (D. Alaska Jan. 2, 2018) that the federal government’s prosecution of a business for falsely representing that its goods were “Indian-produced” were not a “suit,” nor were the criminal penalties claimed “damages.” Further, despite the insured’s argument that its “use of the general concept of Alaska natives as a way to sell its goods” involved the use of “another’s advertising idea,” Judge Sedgwick declared that the “other” must be the person suing the insured for infringement. In any event, the court found that the government’s claim did not arise out of any advertising.

CALIFORNIA “Occurrence”/Liquor Liability Coverage

In a dispute between two liability insurers of Narconon, a federal court has ruled that allegations that rehab patients died after a drinking party with the insured’s employees that led them to later overdose on heroin alleged an “occurrence” since the neither the insured’s action or the resulting injuries were intentional. In Western World Ins. Co. v. Nonprofits Insurance Alliance of California, No. 14-4466 (N.D. Cal. January 9, 2018) agreed with Western World that NIAC insurer must participate in the defense of various suits against a Scientology-based program for treating drug addicts. Judge Davila also refused to find that the underlying claims were excluded from CGL coverage as arising out of the performance of “professional services.” The court did refuse to find that the informal service of alcohol by the insured’s employees did not trigger the NIAC policy’s “liquor liability” coverage part.

ILLINOIS Environmental/Missing Policies

The Appellate Court has ruled that Travelers must reimburse a trucking company for $9 million that it paid to resolve two claims involving pollution at facilities where it cleaned it trucks. In The Travelers Ind. Co. v. Rogers Cartage Co., 2017 IL App. (1st) 160780 (Ill. App. Dec. 29, 2017), the First District upheld a lower court’s ruling that Rogers Cartage had proved the terms and conditions of missing CGL policies from the 1960s and various commercial auto policies from the 1970s. The Appellate Court ruled that claims correspondence from Travelers personnel, coupled with various certificates of insurance and “bookend” policies at the beginning and end of the missing coverage period, was sufficient to establish a preponderance of evidence of the missing policies.

NEBRASKA Coverage B/”Disparagement”

A federal district court has ruled that allegations that the insured competed with the plaintiff in violation of franchise agreements and federal trademark law failed to seek recovery for any libel or slander or disparagement of another’s “goods, products or services. In Maids on Call, LLC v. Ohio Security Ins. Co., No. 17-0252 (D. Neb. Jan. 2, 2018), Chief Judge Camp ruled that whether these claims were construed in accordance with the law of Connecitcut or Nebraska, it was apparent that the underlying claimants were not seeking recovery on account of any libelous or slanderous statement, nor could there be an implied claim for “disparagement.”

OTHER DEVELOPMENTS OF NOTE

* * * Inside the Insurance Industry * * *

AIG is reportedly in talks to acquire financial services powerhouse Voya.

A federal District Court in California has ruled in Allstate Ins. Co. v. Kia Motors America, Inc., No. 16-6108 (C.D. Cal. Dec. 22, 2017) that Kia Motors’ “Drive Wise” brand does not infringe Allstate’s “Drivewise” trademark.

* * * Stormy Weather * * *

Lloyd’s reports that it has paid $1.7 billion so far for insured losses due to Hurricanes Harvey, Irma and Maria. Lloyd’s has estimated that the total bill for these storms will be $4.8 billion.

* * * Drinking Your Fill * * *

A federal district court in San Francisco has dismissed a proposed class action suit against Starbucks. Judge Rogers ruled in Strumlauf v. Starbucks Corporation, No. 16‑1306 (N.D. Cal. January 5, 2018) that a reasonable consumers would assume that the foamy component of a coffee latte counts against the stated volume of a drink.

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