Aug 1 2018

MM Insurance News 8/3/2018

active case links 

NOTEWORTHY NEW  RULINGS

THIRD CIRCUIT  First Party/Sandy/Conflicts of Law (NJ)

The Third Circuit has issued an unpublished decision in Fin Associates LP, et al. v. Hudson Specialty Ins. Co.,  No. 16-3541 (3d Cir. July 25, 2018) that clauses in a commercial property policy designating New York law as controlling and requiring that any coverage dispute be resolved through arbitration are enforceable and not against the public policy of New Jersey.

CALIFORNIA  Declaratory Relief/Jurisdicton

 The California Court of Appeal ruled in JPH Consulting, Inc. v. Universal Reinsurance Co. LTD, G053882  (Cal. App. July 27, 2018)(unpublished) that California courts lacked jurisdiction over the plaintiff’s suit against two Bermuda-based companies for their alleged negligence in creating a self-insured plan for the plaintiff’s health insurance operations.

CALIFORNIA  Auto/”Use”

The California Court of Appeal has ruled that a claimant was not making any "use" of the insured tractor trailer so as to qualify as a permissive user where the tractor trailer had already been fully loaded with hay and been driven away from the subject property when the insured was directed to stop and re-tie a tarp covering the hay to make the load safe.  Under the circumstances, the Fourth District ruled in Monterey Ins. Co. v. Peerless Indemnity Ins. Co., D072539 (Cal.App. July 27, 2018) that the insured vehicle did not play any role in the injuries that the worker suffered when he fell from the haystack on the back of the tractor trailer and that Peerless therefore did not have any obligation to provide coverage for the loss. 

ILLINOIS  Expected or Intended Injuries/Innocent Insureds

The Appellate Court has ruled that a trial court erred in ruling that an “expected injury” exclusion in Allstate’s homeowner’s policy precluded coverage for a claim brought against a day care operator for failing to prevent the plaintiff’s child from being sexually assaulted.  Despite the fact that the exclusion in question applied to injuries that were expected by “any insured,” the Appellate Court ruled that in Allstate Ind. Co. v. Contreras, 2018 IL App (2d) 170964 (Ill. App. Ct. July 20, 2018), the Second District  found that the husband’s intentional acts could not be imputed to his wife or the day care center.  Since neither entity was alleged to have participated in the abuse, the Appellate Court ruled that Allstate was not entitled to a judgment on the pleadings.

INDIANA  Enviromental/”Damages”

Notwithstanding the Indiana Supreme Court’s declaration in Cinergy Corp. v. Associated Elec. And Gas Ins. Servs., Ltd, 865 N.E.2d. 571 (Ind. 2007) that CGL insurers do not owe coverage for costs that an insured would have to incur to bring its factory emissions into compliance with the Clean Air Act, a federal judge has ruled in Great American Excess & Surplus Ins. Co. v. Coupled Products, LLC, 2018 U.S. Dist. LEXIS 120662 (N.D. Ind. July 19, 2018) that costs incurred by the owner of an electroplating facility pursuant to RCRA to deal with contamination resulting from a tenant’s prior operations are covered “damages” because they are on account of existing property damage.  The court left open the issue of whether coverage might be excluded as involving damage to the insured’s own property.

MASSACHUSETTS   Limitations Periods/93A

The Massachusetts Appeals Court has ruled in Brown v. Savings Bank Life Ins. Co. of Massachusetts, No. 16-P-1106 (Mass. App. Ct. July 18, 2018) that an insured’s failure to bring suit against her life insurer within the two year limitations period in the policy did not preclude a tort claim for deceitfully misrepresenting how to reinstate coverage or a similar bad faith under the Massachusetts Consumer Protection Act (G.L. c.93A) because these were not claims “on the contract.”

MICHIGAN  Auto/PIP/Rescission/Innocent Parties

The Michigan Supreme Court has ruled in Bazzi v. Sentinel Ins. Co., No. 154442 (Mich. July 18, 2018) that its ruling in Titan Insurance Company v. Hyten, 491 Mich. 547 (2012) has equal application to the right of third parties to obtain PIP benefits under an auto policy that had been fraudulently obtained by another party.  The majority opinion declared that Titan had implicitly abrogated the innocent third-party rule and that an insurer may seek rescission of an auto policy on the basis of the insured's fraud even with regard to a third party seeking to recover statutorily mandated PIP benefits because the no fault act does not limit an insurer's ability to rescind a policy on that basis.  However, the majority also found that an insurer is not entitled to automatic rescission of a policy with regard to a third party even though the policy was procured by the insured through fraud.  Instead, a trial court must balance the equities between the insurer and the third party to determine whether, in the court's discretion, the policy could be rescinded as between those parties.  The case was therefore remanded to the trial court to balance the equities between the claimants to determine whether, in the court's discretion, the policy should be rescinded.

PENNSYLVANIA  “Occurrence”/Firearms

The Pennsylvania Supreme Court has agreed to review Erie Ins. Exchange v. Moore, 2017 PA Super 372 (Pa. Super. Nov. 22, 2017).  At issue is the Superior Court’s 2017 ruling that a homeowner’s policy provided coverage for injuries suffered by a by-stander who was shot in the course of attempting to prevent the insured’s murder of his wife and subsequent suicide.  In short, are intentional acts that are certain to cause injury (ie.  shooting a gun) accidental if no injury was expected or intended?

WASHINGTON  Subrogation/Deductibles

The Washington Court of Appeals has ruled in Daniels v. State Farm Mutual Automobile Ins. Co., No. 75727-0-I (Wash. App. July 16, 2018) that State Farm was only obligated to reimburse its insured for a pro rata portion of her policy deductible in proportion to the amount of the insured loss that it was able to obtain a subrogation recovery for.  The court rejected the insured's contention that State Farm's rights to subrogation only arose after she was "fully compensated" for her damages, agreeing instead with State Farm that "fully compensated" meant payment of the insured's property loss less the deductible.  Writing dissent, Justice Becker argued that Daniels was entitled to be reimbursed for 100 percent of her $500 deductible, not a mere $350.  Citing Professor's Keaton's treatise on insurance, Becker argued that the insured must be made whole first before an insurer is entitled to any subrogation recovey.

OTHER DEVELOPMENTS OF NOTE


* * * Inside the Insurance Industry * * *

The recent departure of senior executives and a loss of $2.4 billion last year has reportedly prompted Lloyd’s of London to undertake a stem to stern review of its organization and procedures.

Chubb European Group S.E and Ace Europe Life S.E converted to Societas Europaea on July 19, allowing them to redomicile from the UK to elsewhere in the European Union.

Tokio Marine has announced that Susan Rivera will replace Chris Williams as its CEO effective September, 1, 2018.

Arch Capital has agreed to open a major claims operations in Raleigh, North Carolina.

Hanover Insurance has hired Munich Re’s Eric Cernack head up its cyber practice claims group.

 * * * California Burning * * *

By week’s end, the Carr wildfire in Northern California had destroyed nearly a thousand homes and threatened thousands more.

* * * Environmental Coverage Litigation * * *

An article in Saturday’s New York Times criticized the record of the Trump Administrations’ nominee to head up EPA’s Superfund program, noting Peter Wright’s past service on behalf of Dow Chemical’s Superfund liabilities.

* * * New Coverage Litigation * * * 

Michigan State University filed suit last week against United Educators and a dozen other liability insurers, demanding coverage for pending claims arising out of the sexual misconduct of Dr. Larry Nassar and a $500 million settlement fund that it agreed to create last May to resolve hundreds of other claims.

* * * Stigma Damages * * *

The Kentucky Supreme Court has ruled in Muncie v. Wiesemann, 2017-SC-00235 (Ky. July 14, 2018) that even though a property owner accepted $60,000 to settle property damage claims arising out of a discharge of oil from the defendant’s property, he could still sue for stigma damages if the payment had not made him whole for the diminished value of the property.

 * * * Words to Live By * * *

Forty years ago, my torts professor at Boston College Law School introduced us to the wisdom of Racehorse Haynes.  In words that have odd currency today, here’s how the flamboyant Houston lawyer defended a dog bite case years earlier:

Say you sue me because you say my dog bit you.

Well now this is my defense:

My dog doesn't bite.
And second, in the alternative, my dog was tied up that night.
And third, I don't believe you really got bit.
And fourth, I don't have a dog.

active case links 

Back to Newsletters