Feb 13 2019

Insurance Law – 2/15/2019

CASES OF CONSEQUENCE

EIGHTH CIRCUIT    Excess/Follow Form/”Intentional Acts” Exclusion (MT)

The U.S. Court of Appeals for the Eight Circuit has given broad effect to the “follow form” language in an excess liability policy. In Houston Cas. Co. v. Strata Corp., No. 17-3405 (8th Cir. Feb. 6, 2019), the court rejected the claimant's argument that the policy’s follow form language should not extend to endorsements and merely refer to the main body of the underlying Liberty Mutual policy. The Eighth Circuit agreed with a North Dakota District Court that the follow form language clearly applied to exclusions, whether they were in the main body of the policy or added by endorsement and that the exclusion in question unambiguously precluded coverage for allegations in the underlying wrongful death action that the mine operator's deliberate and intentional acts had caused the employee's death.

ELEVENTH CIRCUIT    Absolute Pollution Exclusion/Welding Fumes (GA)

The Eleventh Circuit has ruled that Georgia District Court did not err in declaring that a CGL insurer was not obligated to provide coverage for allegations by a railroad employee that he suffered an occupational disease known as "welders lung" in light of the absolute pollution exclusion contained in the Evanston policy. In light of rulings of the Georgia Supreme Court giving broad effect to such exclusions, the Eleventh Circuit declared in Evanston Ins. Co. v. Sandersville Railroad Company, No. 17–14487 (11th Cir. Feb. 8, 2018) (unpublished) that injuries arising from the inhalation of welding fumes containing iron particles clearly constituted an exposure to an "irritant or contaminant including…fumes" and were therefore excluded from coverage.

CONNECTICUT    Discovery/30(b)(6) Depositions

A federal judge in Connecticut has ruled that the deposition of Scottsdale’s corporate representative should go forward in Connecticut, ruling that the general presumption that a deposition should take place where the corporation was headquartered, were overcome in this case by consideration of fairness and efficiency. Further, Judge Dooley ruled in Ice Cube Building, Inc. v. Scottsdale Ins. Co., No. 17-1973 (D. Conn. Feb. 11, 2019) that the scope of the deposition should be limited to the insurer’s handling and adjustment of the insured’s claim.

FLORIDA    Conflicts of Interest

A federal district court has rejected an insurer’s bid to disqualify the Andrews Hunton law firm from representing an insured in coverage litigation against it, ruling in Ranger Construction Co. v. Allied World Nat. Assur. Co., No. 17-81226 (M.D. Fla. Jan. 29, 2019) that the law firm did not obtain an unfair information advantage as the result of documents that it obtained in the prior representation.

ILLINOIS    Bad Faith/Section 155

The Illinois Appellate Court has ruled in Charter Properties, Inc. v. Rockford Mutual Ins. Co., 2018 Il. App. (2d) 170637 (Ill. App. Ct. 2019) that a trial court did not err in awarding bad faith damages against a property insurer based upon its vexatious delay in adjusting the insured's first party claim. In affirming the lower court's Award of Section 155 damages, the Second District declared that the trial court had not abused its discretion in awarding attorney's fees to the insured and rejected the insurer's contention that it had a good faith basis for its coverage position. In particular, the court took note of the fact that even after the insured had submitted its proof of loss statements, the insurer held in in abeyance pending completion of its investigation then rejected it as premature because the rebuild was not complete and then pulled its adjuster off the project without completing a final estimate of the insured's loss.

MASSACHUSETTS    Bad Faith

Judge Woodlock has ruled in River Farm Realty Trust v. Farm Family Casualty Insurance Company, No. 16-12386 (D. Mass. Feb 4, 2019) that a property insurer did not act in bad faith in its adjustment of a homeowner's ice damn claims. In this case, the District Court found that Farm Family had paid everything that the insured was contractually entitled to. While conceding that the adjustment of the insured's claim was defective in various respects, the District Court declined to find that any inadvertent delays rose to the level of an "extreme or egregious business" so as to give rise to liability under Chapter 93A. Further, the court ruled that the insured had failed to present evidence that the insurer's investigation was unreasonable nor did it fail to effectuate settlement in a timely fashion. MM’s Bill Schneider represents the insurer in this case.

OTHER DEVELOPMENTS OF NOTE

* * * Inside the Insurance Industry * * *

CNA Financial announced this week that disappointing investment results and cat losses caused it to suffer an $84 million net loss in the final quarter of 2018, compared to a $223 million profit the year before.

Chubb CEO Evan Greenberg observed on a recent quarterly earnings call that new competition from insurers such W.R. Berkley and AIG has not affected the profitability of Chubb’s high end personal lines market.

* * * Cyber Claims * * *

A new report from Cyber Risk Management (CyRiM) estimates that a global ransomware attack could cost as much as $193 Billion and affect more than 600,000 businesses worldwide.

* * * Litigation Funding * * *

The general counsel of three dozen Fortune 500 companies have issued a joint letter to the federal courts’ Committee on Rules of Practice and Procedure in support of a proposed amendment to FRCP 26(a)(1)(A) that would mandate disclosure of third party litigation funding in civil cases.

* * * IBNR Update * * *

Breast implants, which generated billions of dollars in losses for Dow Corning, 3M, Baxter and other pharma giants during the 1990s, may now be linked to a rare form of cancer. The U.S. Food and Drug Administration has sent a letter to family doctors, nurses and other health professionals warning about the form of lymphoma that affects breast implant patients.

* * * Sins of the Fathers * * *

A new report in the Houston Chronicle details decades of sexual abuse within the Southern Baptist Convention.

 

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