CASES OF CONSEQUENCE
NINTH CIRCUIT E&O/"Claims Made" (WA)
The Ninth Circuit has ruled that a Washington District Court erred in holding that a suit for copyright infringement did not trigger a professional liability policy’s "claims made" coverage because the insured had received a demand letter prior to the issuance of the policy. In an unpublished opinion, the court tartly observed in National Union Fire Ins. Co. of Pittsburgh, PA v. Zillow, Inc., No. 17-35404 (9th Cir. Feb. 18, 2020), that "unlike a number of other claims-first-made policies cited by both parties, the Policy does not contain a provision expressly providing for the integration of factually related Claims. Had National Union wanted factually similar Claims to be integrated under the Policy’s coverage provision, it could have easily drafted the Policy to include such a requirement."
CALIFORNIA Coverage B/"Malicious Prosecution"
The California Court of Appeal issued an order last week agreeing to publish its January 13 order in Travelers Property & Cas. Co. v. KLA Tencor, H044890 (Cal. App. Feb. 13, 2020) affirming summary judgment for Travelers on the issue of whether a "Walker Process claim that the insured fraudulently procured a patent from the Patent and Trademark Office (PTO) and used that patent to attempt to monopolize the market for a product constituted "malicious prosecution" for purposes of triggering "personal injury" coverage under a CGL policy.
IOWA Assignments/Public Adjusters
The Iowa Supreme Court ruled last week in 33 Carpenters, Inc. v. The Cincinnati Ins. Co., No. 17-1979 (Iowa Feb. 14, 2020) that a building contractor lacked standing to pursue an assigned claim for hail damage to the insured’s home. In light of the fact that the contractor was not a licensed public adjuster, the court ruled that the assignment was invalid.
TEXAS "Claims Made"/E&O/Notice/Authorized Agents
A federal magistrate in Houston has ordered a professional liability insurer to provide a defense to allegations that particles in the "proppant" that it had supplied to a fracking operator had jammed pumps and valves. In Evanston Ins. Co. v. OPF Enterprises LLC, No. 17-2048 (S.D. Tex. Feb. 13, 2020), the court ruled that Evanston’s coverage was triggered by the notice of a potential claim that the insured gave to its insured’s broker, rejecting Evanston’s argument that its policy required direct written notice to the insurer and/or that the broker was not authorized to receive notice on its behalf. Magistrate Judge Palermo observed that the policy merely stated that the insured "may" give notice by contacting the insurer directly and that this was therefore not the sole means of acceptable notice.
WISCONSIN Declaratory Relief/Fee Awards
Where a liability insurer refuses to defend but thereafter brings an action for declaratory relief and moves to stay the underlying action against its insured, the Wisconsin Supreme Court has ruled that the insurer has not breached its defense obligations and is therefore not obliged to reimburse its policyholder for fees incurred in the coverage litigation even if the court ultimately ruled that the insurer had a defense obligation. In Choinsky v. Employers Ins. Co. of Wausau, 2020 WI 13 (Wis. Feb. 13, 2020), the court rejected the insured's argument that Wausau had breached its defense obligation because it failed to pay for the insured's defense for almost a year after its initial denial and because of subsequent delays in issuing payment and a failure to fully reimburse the school district for its claimed attorney's fees. The court took note of the fact that insurers are only obliged to reimburse a policyholder for the "reasonable" cost of defense and that it took some time in this case to determine what those fees should be.
OTHER DEVELOPMENTS OF NOTE
Inside the Insurance Industry
Following favorable fourth quarter results, AIG announced last week that it plans to invest $1.3 billion over the next two years to improve technology and core services.
Aspen Insurance Holdings announced this week that former Swiss Re America executive Crystal Ottaviano will be its new group chief risk officer.
IP Claim Update
Brooks Running, the sports apparel division of Berkshire Hathaway, sued Brooks Brothers for trademark infringement in Seattle last week, claiming that Brooks Brothers’ use of "Brooks" infringes its own mark and would violate a 1980 agreement between the companies.
Chinese Drywall Update
Fifteen years after a surge in construction activity caused by rebuilding following Hurricane Rita and Katrina led to the use of sub-standard drywall products from China, the federal judge in New Orleans who has overseen the Multi-District Litigation for the last decade has given final approval to a $248 million settlement.
After months of negotiations failed to yield a comprehensive resolution of claims arising out of decades of alleged sexual abuse by Scoutmasters and youth leaders, the Boy Scouts of America filed for bankruptcy protection in Delaware this week.
Insurance Coverage Boot Camp
The Federation of Defense and Corporate Counsel are rolling out their insruance coverage and bad faith stars for a boot camp on March 3 at the Phoenix Camelback Hotel in Phoenix that is specially deisgned for young claims professionals and outside coverage counsel. FDCC membership is not required.
On the Road Again
Boston partner Michael Aylward will be speaking on a panel about the key insurance decisions of 2019 at this week’s mid-year meeting of the ABA Insurance Litigation section in Phoenix.
Mark Your Calendars
ABA Insurance Section Mid-Year Meeting
February 20-22, 2020
IADC Winter Meeting
February 24-27, 2020
FDCC Winter Meeting
March 4-8, 2020
DRI Insurance Coverage and Claims Institute
April 1-3, 2020
EECMA Annual Claims Conference
May 6-8, 2020