Mar 14 2019

MM Insurance Law Update – 3/15/2019


FIFTH CIRCUIT    "Damages"/Duty to Cooperate (TX)

The Fifth Circuit has ruled that a leak of petroleum due to the insured’s alleged negligent installation of an underground storage tank fell within the policy’s coverage for "money damages." Further, the Court of Appeals ruled in Mid-Continent Cas. Co. v. Petroleum Solutions, Inc., No. 17-20652 (5th Cir. Feb. 26, 2019) that coverage was not voided by the insured's refusal to relinquish claims of its own in the case. Finally, the court ruled that an exclusion for "loss caused intentionally or at the direction of the insured" did not apply here because there was no persuasive evidence that the leak was intended by the insured.

FIFTH CIRCUIT    Misrepresentation (MS)

The Fifth Circuit has ruled in Imperium Ins. Co. v. Shelton & Associates, No. 16-60730 (5th Cir. Mar. 6, 2019) that while it would grant panel rehearing of its August 30, 2018 opinion, it continued to believe that the underlying claims satisfied the court’s "amount in controversy" requirement and that the court had correctly ruled that the claims in question were not covered. Applying Mississippi law, two of the judges ruled that the insured’s failure to disclose its knowledge of circumstances that were likely to lead to a claim against the firm was a material misrepresentation that voided any malpractice coverage that would otherwise have applied. Writing in dissent, Judge Haynes disputed that any reasonably attorney would have known that a claim was likely to be made against it based upon these circumstances.

EIGHTH CIRCUIT    Arbitrations/FAA/Crop Insurance (MO)

The Eighth Circuit has ruled that a Missouri District Court erred in vacating an arbitration panel’s award of damages against a crop insurer on the basis of the panel’s failure to provide a break down with respect to insured’s loss by corn or soybean crops or by county unit. In Great American Ins. Co. v. Russell, No. 17-2441 (8th Cir. Jan. 31, 2019), the court declared the panel’s findings met the FAA’s requirements for a "mutual, final and definite award" and that, so long as it adequately explained the basis for the disposition of each claim at issue, it should be upheld.

NINTH CIRCUIT    Procedure/Removal (WA)

The Ninth Circuit has ruled that an auto insurer’s removal to federal court was timely. In Anderson v. State Farm Mut. Automobile Ins. Co., No. 15-35981 (9th Cir. Mar. 8, 2019), the Ninth Circuit joined the Fourth Circuit in holding that receipt of an initial pleading by a statutorily designated agent does not begin the thirty-day removal clock under 28 U.S.C. § 1446(b)(1), and that it was instead actual receipt by State Farm that started the removal clock.

GEORGIA    Bad Faith/Failure to Settle

The Georgia Supreme Court has overturned an intermediate appellate court’s declaration that an auto insurer was liable for a multi-million judgment against its insured owing to its failure to settle the case for its 25/50 policy limit. The Supreme Court ruled in First Acceptance Ins. Co. v. Hughes, S18G0517 (Ga. March 11, 2019) that the Court of Appeals had erred in finding First Acceptance liable for failing to settle the claims against its insured. The court emphasized that the settlement demand that plaintiff’s counsel had submitted did not contain a deadline for acceptance and was withdrawn by counsel before First Acceptance had an opportunity to accept it. Further, the Supreme Court ruled that an insurer’s duty to settle arises only when the injured party presents a valid offer to settle within the insured’s policy limits.

LOUISIANA    Bad Faith/Statute of Limitations

The Louisiana Court of Appeals has reversed itself on the issue of whether bad faith claims are subject to a one year limitations period. On reconsideration, the Third Circuit ruled in Fils v. Starr Indemnity & Liability Co., No. 17-896 (La. App. Ct. Feb. 8, 2019) that the prescriptive period for bad faith claims in Louisiana should be the ten year period for contract claims set forth in Section 3499 of the Louisiana Civil Code.


* * * Inside the Insurance Industry * * *

Aon Plc has pulled the plug on plans to acquire Willis Towers Watson after preliminary talks were leaked to the press.

Illinois Governor JB Pritzker named Chicago attorney Robert Muriel to serve as Director of the Illinois Department of Insurance.

Lloyd’s has named Hayley Spink as its new head of global operations.

A.M. Best now projects that 2018 will prove to be the third year in a row in which domestic P/C companies suffered an underwriting loss albeit less than in past years. The estimated underwriting loss in 2018 is $12.1 billion, down from $25.3 billion in 2017.

The New York State Department of Financial Services has issued a subpoena to Aon seeking information about possible exaggerated claim valuations by the Trump Organization.

Lockton Inc. has formed a global reinsurance business called Lockton Global Re that will be helmed by Tim Gardner, (current CEO of North America operations for Guy Carpenter), Claude Yoder (current managing director and product development officer for Guy Carpenter) and Nick Durant (current president of Marsh Captive Solutions).

* * * IBNR Dept. * * *

Stanley Black & Decker has sued Sears for breach of contract and trademark infringement arising out of Sears marketing of tools under the Craftsman Ultimate Collection brand.


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