Jan 27 2019

Insurance Law - 1/25/2019


FIFTH CIRCUIT    Tripartite (T)

The Fifth Circuit has ruled an insured’s personal counsel was immune from a law suit by an excess insurer alleging that the firm was liable for negligent misrepresentations in withholding information concerning the value of a case that went to trial and resulted in a large excess verdict. In Ironshore Europe DAC v. Schiff Hardin, LLP, No. 18?40101 (5th Cir. Jan. 2, 2019), the court ruled that "attorney immunity doctrine" under Texas law shields an attorney against claims by a non?client based on negligent misrepresentations made in the course of a counsel's representation of his clients. Whereas the Texas District Court had ruled that Schiff Hardin could not be liable for statements actually made in reports that were provided to the excess insurer but might be liable for omissions in its reporting, the Fifth Circuit ruled that both types of conduct were within the scope of the lawyer's client representation and therefore immune from suit under the theory of negligent misrepresentation set forth in Section 552 of the Restatement (2nd) of Torts.

EIGHTH CIRCUIT    Class Action/TCPA/Jurisdiction/Renewals/Estoppel (MO)

The U.S. Court of Appeals the Eighth Circuit has ruled in American Family Mutual Ins. Co. v. Vein Centers for Excellence, Inc., No. 17-3266 (8th Cir. Jan. 3, 2019) Missouri law) that a liability insurer was not obligated to provide coverage for a class action brought against the insured for sending unsolicited advertisements to various hospitals. In light of an exclusion in the policy for "distribution of material in violation of statutes" the eighth circuit agreed with the Missouri district court that the underlying TCPA claims were excluded from coverage. The court rejected the insured's argument that the exclusion constituted a constructive nonrenewal of its policy for which it had not received written notice as required by Mo. Rev. Stat. Section 379.883(2) declaring that American Family was entitled to the presumption under Missouri law of receipt of mailed materials. It was therefore a presumption that the insured had received the Coverage Summary letter that American Family had mailed out more than 60 days prior to the renewal of this policy that referenced this new exclusion. The eighth circuit also rejected the insured's argument that this court should not have maintained jurisdiction, declaring that the aggregate value of the class action claims was exponentially greater than the $75,000.00 statutory threshold for jurisdiction.

TENTH CIRCUIT    Bad Faith/Fees/Experts (OK)  

 The Tenth Circuit has ruled in Hamilton v. Northfield Ins. Co, No. 17?7049 (10th Cir. Dec. 18, 2018) that an Oklahoma trial court did not err in granting summary judgment to a property insurer on the insured's bad faith claim as Northfield had an objectively reasonable basis for its decision to deny coverage. Further, the court declined to find that the insured was the "prevailing party" and thus entitled to recover its costs and fees. The court distinguished between the offer of settlement that Northfield had communicated in this case and "offers of judgment," declaring that offers of settlement need not include costs and fees. On the other hand, the Tenth Circuit rejected Northfield's cross-appeal that the insured's bad faith expert should have been precluded from testifying.

KANSAS    Notice/Consent Judgments

The Kansas Supreme Court has refused to forbid the insurer of an accident victim to pursue a garnishment action against the tortfeasor’s auto insurer’s, holding in Geer v. Eby  (Kan. Jan. 19, 2019) that even though the insurer received notice of the original accident, the failure to alert it to the subsequent suit established prejudice as a matter of law. Even though the original claims correspondence had contained a threat to file suit, the Supreme Court declined to find that such assertion gave rise to a duty on the part of the insurer to monitor court dockets for a subsequent case filing.


The New Hampshire Supreme Court has ruled in Santos v. Metropolitan Property and Casualty Insurance Company, 2017-0717 (N.H. Jan. 17, 2019) that a trial court did not err in holding that an insured's failure to purchase the requisite limits of underlying insurance for his motorcycle did not preclude recovery for excess UIM benefits from his umbrella carrier. Further, the court ruled that interpreting the excess policy to eliminate the UIM coverage would conflict with the insurance requirements set forth in RSA 264:15, As a result, the court ruled that, while Metropolitan could take a set off equal to the amount of coverage that should have been purchased, the insured’s breach did not void coverage altogether.

NEW JERSEY    TCPA Claims/Class Actions

The New Jersey Supreme Court announced this month that it will not grant further review of Penn National Insurance Company v. Group C Communications, Inc., A-0754-15T1 (App. Div. July 31, 2018), a case in which the Appellate Division ruled last year that allegations that recipients of unsolicited advertising solicitations suffered a “loss of use” but only required coverage of the class representatives, as no evidence was presented that other class members similarly suffered “property damage.”

WASHINGTON    Bad Faith/Independent Counsel

Having previously ruled that Travelers only owed coverage for a portion of claims involving the insured’s defective piping but was nonetheless responsible for paying 100% of the insured’s defense costs, the federal district court has now ruled in Travelers Property Cas. Co. of America v. Northwest Pipe Co., No. 17-5098 (W.D. Wash. Jan. 3, 2019) that Travelers did not act in bad faith in delaying payment with respect to Oregon counsel that the insured had hired to defend this Canadian litigation. Judge Settle questioned the quality of the insured’s notice as well as why Oregon counsel was necessary in a Canadian case but found that there were reasonable bases for Travelers’ actions and that it ultimately paid the fees once proper documentation was provided to it.


* * * Inside the Insurance Industry * * *

New data from trade industry groups appears to confirm a dramatic turnaround in the underwriting fortunes of domestic P/C companies. Compared to a 21 billion in underwriting losses in 2017, insurers earned nearly $5 billion in the first nine months of 2018.

A new Aon “Insight” report on “Weather, Climate and Catastrophe” declares that 394 natural weather event combined in 2018 to cause $225 billion in losses, of which government and private insurance only covered about $90 billion, leaving a full 60% uncovered. 

* * *  “High”way Safety Dept. * * *

William Corbett Jr. and Laura Brady are leaving Drinker Biddle to hang up their shingles at Coughlin Duffy in New Jersey.


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