Aug 15 2018

MM Insurance News 8/17/18

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FOURTH CIRCUIT    Coverage B/”Privacy” (NC)

The Fourth Circuit has ruled that allegations that a law firm violated the Federal Driver's Privacy Protection Act by obtaining the names and addresses of prospective clients from official accident reports that is used to solicit business failed to trigger the firm’s “personal and advertising” insurance coverage.   In an unpublished disposition, the court ruled in Hartford Cas. Ins. Co. v. Ted A. Greve and Associates, PA, No. 17-2407 (4th Cir. August 7, 2018)that the allegations were excluded as  "arising out of the violation of a person's right of privacy created by any state or federal act, unless the liability would have occurred even in the absence of a state or federal statute."  Despite the law firm's argument that the exclusion should not apply since the underlying claimants could have pleaded a common law claim for violation of privacy by intrusion, the court ruled that the claims in this case did not constitute an intrusion upon seclusion under North Carolina law nor could they be reconfigured as involving the tort of "appropriation of likeness." 

FIFTH CIRCUIT    Cyber/Contractual Liability Exclusion (TX)

The Fifth Circuit has affirmed a Texas District Court’s declaration that a contractual liability exclusion in a D&O policy did not eliminate coverage for sums that the insured was required to repay to a credit card processing company (First Data Merchant Services) for losses that banks suffered in connection with a data breach that compromised credit card payment information maintained by the insured.  The court ruled in Spec's Family Partners, Ltd. v. The Hanover Ins. Co., 2018 U.S. App. LEXIS 17245 (5th Cir. June 25, 2018) that the insured's liability for its negligent failure to comply with PCI data security standards was independent of contractual undertakings between the insured and First Data and therefore fell within an exception to the exclusion for liability that would have attached in the absence of a contract.

ELEVENTH CIRCUIT    Coverage B/Trademark Infringement/”Slogan” (FL)

The Eleventh Circuit has refused to require a liability insurer to defend a dispute between two property companies concerning the use of the mark “”Land’s End.”  In an unpublished opinion, the court ruled in Land's End at Sunset Beach Community Association Inc. v. Aspen Specialty Ins. Co., No. 17-14948 (11th Cir. Aug. 9, 2018) that claims for false designation of origin and unfair competition by an Alaskan resort against a Florida condominium were excluded from coverage as "arising out of the infringement of a trademark."  The court found that the underlying claims made no mention of facts other than the trademark infringement that would support these claims.  Further, the court found that the insured did not  use "Land's End" as a "slogan." 

CONNECTICUT    Auto/UIM/Public Policy

Notwithstanding its ruling in Orkney v. Hanover Ins. Co., 727 A.2d 700 (Conn. 1999) that self-insured entities are not required to provide UIM coverage, the Connecticut Supreme Court has ruled that Orkney no longer applies in light of legislation that has since been enacted by Congress immunizing rental car companies from vicarious liability for the negligence of lessees of rental vehicles.  In Tannone v. Amica Mut. Ins. Co., SC 20020 (Conn. Aug. 7, 2018), the court declared that the federal legislation resulted in an impermissible contradiction between the underinsured motorist statute and § 38a-334-6 (c) (2) (B) of the regulations, as the plaintiffs’ inability in this context to obtain a remedy in this case rendered the policy exclusion authorized by § 38a-334-6 (c) (2) (B) inconsistent with the public policy behind the underinsured motorist statute.  Further, the court concluded that the lessee in this case was could not be considered to be a “self-insurer” since it was statutorily immune from being sued.

ILLINOIS    Direct Actions/Sanctions

The Appellate Court has ruled in Marque Medicos Archer LLC v. Liberty Mutual Ins. Co., 2018 IL App (1st) 163350 (Ill. App. Ct. June 26, 2018 that an Illinois trial court did not err in dismissing a chiropractor's lawsuit against a workers' compensation insurer for failing to pay its bills owing to the fact that Illinois law does not provide for a direct right of action against insurers for their claimed delay in paying medical bills.

MASSACHUSETTS    Agents and Brokers/Malpractice

The Appeals Court has ruled in Perreault v. AIS Affinity Insurance Agency of New England Inc., No. 17-P-1139 (Mass. App. Ct. August 2, 2018) that an insured’s assignee could not sue an insurance agent for its alleged negligence in not purchasing the right professional liability insurance.  The Appeals Court affirmed the general rule in Massachusetts that an insurance agent has no obligation to provide coverage that is adequate for the needs of a policy holder in the absence of "special circumstances."  The court found that in this case no rational finder of fact could have concluded that special circumstances existed as there were only limited contacts with the agent and that the firm's insurance needs were quite straightforward.  Further, the court refused to find that the conduct in question warranted an allegation of unfair or deceptive acts for which recovery might be had under the Massachusetts Consumer Protection Act.


* * * Inside the Insurance Industry * * *

Business Insurance reported last week that Liberty Mutual Holding Co. Inc. earned $981 million in the second quarter of 2018, compared to net income of $126 million in the same period in 2017.  The increase is due in large part to the company’s sale of Liberty Life Assurance Company. 

* * * IBNR Dept. * * *

The Ninth Circuit has ruled in Gordon v. Drape Creative, Inc., No. 16-56715 (9th Cir. July 30, 2018) that a California District Court erred in ruling that the Rogers doctrine immunized a greeting card company from Lanham Act liability for its appropriation of catch phrases invented by the plaintiff such as “Honey Badger Don’t Give A S___.”  The court found that the defendant had “merely appropriated the goodwill associated with the claimant's mark and had not made any expressive use of these phrases that added value protected by the First Amendment.

* * * Insuring Pot * * *

The NAIC announced last week that it has formed a Cannabis Insurance Working Group to address insurance issues arising out of the legalization of marijuana in a growing number of state.  California Insurance Commissioner Dave Jones, who will chair the Working Group. Commissioner Jones stated, “As state insurance regulators, one of our responsibilities is to understand new legal businesses and their insurance needs, and then work to encourage the availability of insurance to meet these new risks and coverage needs.”

* * * New Coverage Litigation * * *

Following on the heels of a recent summary order from the Second Circuit, Travelers has filed Travelers Cas. & Sur. Co. v. Pacific Employers Ins. Co., No. 18-1286 (D. Conn.) seeking a declaration that PEIC’s excess coverage must contribute to the defense of sexual abuse allegations against the St. Francis Hospital in light of the exhaustion of the HPL limits in Travelers’ primary policies.

A home security company has sued its liability insurers, alleging in Monitronics Int’l v. Everest National Ins. Co., No. 18-2052 (N.D. Tex.) that Everest National, AXIS Surplus and Navigators Specialty owe coverage for $28 million that it paid to settle claims that it made calls to consumers in violation of the federal Do Not Call Registry.

 * * * California Burning * * *

Climate change advocates have acquired a surprising supporter:  electric utilities.  Pacific Gas & Electric, which is lobbying to avoid being held strictly liable for wildfires that may have been sparked by downed utility lines, is arguing that global warming is to blame for the hot, dry conditions that have allowed these fires to spread so widely.

* * * Across the Bar * * *

The West Virginia House of Delegates voted on Monday to approve articles of impeachment against all four siting justices of the West Virginia Supreme Court for financial mismanagement and using state funds to renovate their own offices.  If the justices are convicted followed a trial in the Senate, the entire Supreme Court will be appointed by Republican Governor Jim Justice pending the next regular election.

* * * Mark Your Calendars * * *

The Environmental and Emerging Claim Manager Association (EECMA) and AIRROC are co-hosting a symposium on the scientific, legal and insurance coverage implications of climate change at the Cira Centre in Philadelphia on September 6.         

The American College of Coverage and Extra-Contractual Counsel will be holding its annual legal symposium at the American University law school in Washington, D.C. on October 26.

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