Mar 23 2020

Insurance Law – 3/23/2020

CASES OF CONSEQUENCE

TENTH CIRCUIT     Fracking/Auto/”Use” (NM)

In a dispute between a trucking company’s auto and GL carriers with respect to which owed coverage for the defense and settlement of bodily injury claims resulting from an accident involving a fracking well fire that was ignited when the insured’s truck driver lit a cigarette while walking back to his truck after filling it with oil, the Tenth Circuit has ruled in Burlington Ins. Co. v, Carolina Cas. Co., No. 18-8071 (10th Cir. Feb. 23, 2020) that the claims in question were solely covered by the CGL policy and did not arise out of the ownership, maintenance or use of the truck. As a preliminary matter, the court applied the law of Wyoming (rather than New Mexico, where the accident occurred) as having the most significant relationship to this coverage dispute. The Court of Appeals ruled that the exclusion was not “the natural and reasonable incident or consequence of the use of an insured vehicle.’ Further, the court ruled that Carolina Casualty was not barred from obtaining reimbursement for sums that it had voluntarily contributed to a joint settlement of the underlying claims as, under Wyoming law, an insurer that makes a payment in good faith under the reasonable belief that it was necessary for its protection is not a "volunteer."

ELEVENTH CIRCUIT Anti-Trust (FL)

The Eleventh Circuit has ruled in Automotive Alignment & Body Service Inc. v. State Farm Mutual Automobile Ins. Co., No. 16-13596 (11th Cir. Mar. 6, 2020) that a Florida District Court erred in completely dismissing anti-trust claims brought by automotive body shops in Indiana, Mississippi, and Utah against State Farm. While agreeing that the Indiana and Utah plaintiffs had been properly dismissed since they had not filed a timely amended complaint within the time provided, the court ruled that the Mississippi claims should be permitted to go forward, since their amendment was timely and set forth sufficient facts to avoid dismissal at this stage. While concurring that the plaintiff’s price-fixing and boycott claims were not sufficiently pleaded, the court ruled that the Mississippi claimants cold go forward with their claims for tortious interference based on allegations that auto insurers had misleadingly steered customers to other body shops based upon a promise that they would guarantee the repair work if they did so.

COLORADO     Procedure/Intervention/Consent Judgment

The Colorado Supreme Court announced this week that it has accepted review of Bolt Factory Lofts Owners Association, Inc. v. Auto-Owners Insurance Company, 2019 WL 3483901(Colo. App. 2019) in which the Court of Appeals ruled that an insurer that is defending a construction defect suit could not intervene in the underlying action to challenge a so-called Nunn consent judgment. The lower court found that the right to intervene was contingent upon a determination of the subcontractor’s liability and not an absolute matter of right.

FLORIDA     First Party/Injunctive Remedies

The Florida District Court of Appeal has ruled that a trial court erred in granting injunctive relief to a homeowner and ordering her insurer to undertake repairs for hurricane damage to her home. In Peoples Trust Ins. Co. v. Bravo, No. 3D-18-2160 (Fla. DCA3 Feb. 19, 2020), the court ruled that the trial court had not complied with the formalities of entering a temporary injunction and therefore remanded the case for further proceedings.

ILLINOIS     Professional Liability/Fee Exclusions

The Appellate Court ruled this week in Illinois State Bar Assoc. Mut. Ins. Co. v. Canulli, 2020 IL App (1st) 190142 (Ill. App. Mar. 13, 2020) that a lower court erred in ruling that a professional liability insurer did not have a duty to defend a client’s malpractice suit against an attorney for pursuing frivolous third party claims in connection with her divorce. Even though the policy’s definition of “damages” excluded coverage for attorney’s fees, the First Department ruled that this case was not about a fee dispute. Rather, it was a malpractice case in which the client’s “complaint stems from the allegedly negligent way Canulli represented her in the divorce, and it is that negligent representation that caused her to expend more money than necessary.”

MASSACHUSETTS     Fee Awards

In an opinion that it is highly critical of a Boston law firm's "Odyssean quest" to recover legal fees that it in representing a policyholder, Judge Sterns has entered an order rejecting the Boyle Shaughnessy firm's claim that it was entitled to recover nearly $200,000.00 that it incurred in its suit against Vermont Mutual. In Duane v. Vermont Mutual Ins. Co., 17-11982 (D. Vt. Feb. 21, 2020), the District Court was critical of litigation conduct by the firm and refused to find that its client was the prevailing party given the fact that the amount awarded by the jury was actually half the amount that Vermont Mutual had earlier offered in settlement.

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

Lloyd’s has announced that it will be offering a liability policy designed to coverage claims arising out of the theft or loss of Bitcoins and other forms of crypto-currency.

COVID-19

RIMS has become the latest group to cancel its annual meeting due to health concerns occasioned by the novel Coronavirus.

The New York Department of Financial Services has issued a new bulletin direction commercial property insurers to provide information to their policyholders outlining what first party coverage may be available for business interruption that may result from the novel coronavirus.

The owners of the Oceana Grill in New Orleans have sued Lloyd’s for business interruption losses based on claimed “Civil Authority” directives that have shut down restaurant operations in the Crescent City. The suit alleges that the presence of virus particles within the insured premises has resulted in “direct physical loss” to the property.

Uber and Lyft has cancelled their “shared ride” option for the time being.

New Coverage Litigation

Western National Mutual Insurance has sued Agri-Systems in the federal district court in Minnesota, seeking to avoid coverage for claims arising out of contamination at the insured’s sugar silo.

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