May 1 2020

Insurance Law – 5/1/2020


EIGHTH CIRCUIT     “Occurrence”/Breach of Contract Claims (AS)

The Eighth Circuit has ruled in Murphy Oil Corp. v. Liberty Mutual Fire Ins. Co., No. 19‑1140, 8th Cir. April 21, 2020) that an Arkansas court did not err in granting summary judgment to Liberty Mutual with respect to allegations that the insured breached its contractual duties as regard a refinery that it had sold a few months before it caught fire, allegedly due to the insured's failure to properly safeguard conditions and follow proper environmental regulations and standards. Although the insured argued that Arkansas courts might permit CGL coverage for breach-of-contract claims where there was a possibility of tort liability, the court observed that in this case, the statute of limitations for a negligence action had already expired. In any event, the court ruled that coverage was subject to an exclusion for contractual liability in the Liberty Mutual policy.

ALABAMA     Procedure/Mandamus Remedies

The Alabama Supreme Court has ruled in Ex Parte State Farm Fire & Cas. Co., No. 1180451 (Ala. April 25, 2020) that mandamus relief was an inappropriate solution to an insurer's claim that a trial court had erroneously failed to dismiss a tort claimant's direct action claim that was filed prior to the period permitted by Section 27-23-2. In keeping with a January 30 ruling that also involved a State Farm mandamus claim, the court ruled that "a writ of mandamus is not available merely to alleviate the inconvenience and expense of litigation for a defendant whose motion to dismiss has been denied" and should not be granted where, as here, a conventional appeal provided a satisfactory alternative remedy to State Farm.

CALIFORNIA     Procedure/Discovery Sanctions

The California Code of Appeal has issued an unpublished opinion in Black v. Fireman's Fund Insurance Company, A155428 (Cal. App. April 23, 2020) declaring that a trial court did not err in granting monetary sanctions to Fireman's Fund based upon the dilatory discovery conduct of an insured who had brought a bad-faith action arising out of earlier exchanges in which she had abused Fireman's Fund's claims adjusters and claimed that they were Nazis.

OHIO     Allocation/"Those Sums"/Products Claims

In the third significant allocation ruling in as many weeks, the Ohio Supreme Court has refused to extend its earlier "all sums" analysis to a products dispute. Notwithstanding its prior rulings in Goodyear and Park-Ohio that losses arising out of long-tail claims could be allocated to individual insurers on an “all sums” basis, the Ohio Supreme Court has ruled in Lubrizol Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, 2020-OH-1579 (Ohio April 23, 2020) that the same rule did not apply to claims involving defective resin supplied by the insured that resulted in damage to customers’ pipe to which it was applied. On a certified question from a federal judge in the Northern District of Ohio, the Supreme Court declared that its adoption of an “all sums” approach in these earlier asbestos and environmental liability cases was due to the indivisible nature of the injuries and the fact that they could not be assigned to a specific cause or policy year. By contrast, in this “a garden-variety product defect” case, the court ruled that the various claims for pipe damage involved discrete losses due to known circumstances. In such a case, the court concluded that “there is no reason to allocate liability across multiple insurers and policy periods if the injury or damage for which liability coverage is sought occurred at a discernible time.” Three of the seven judges concurred in the opinion but not its analysis, declaring that the court should have simply declared that its earlier “all sums” rulings simply were inapplicable where the policies “those sums” language.

PENNSYLVANIA     Intentional Acts/Fortuity/Duty to Defend

A narrowly-divided Pennsylvania Supreme Court has ruled that a homeowner's insurer was obliged to provide a defense to a lawsuit brought by an individual who was shot by the insured when he accidentally blundered into an altercation in which the insured had already shot his ex-wife and was about to commit suicide himself. In Erie Insurance Exchange v. Moore, J-31-2019 (Pa. April 22, 2020), the majority held that the intentional context of the incident in which these injuries arose did not eliminate the fact that the underlying lawsuit alleged that the insured had "negligently, carelessly and recklessly caused the weapon to be fired …" In particular, the majority found that the insured's "surprise encounter with Carly was not part of the insured's other intentional conduct for purposes of insurance coverage …" Furthermore, the court rejected Erie's argument that it would be against public policy to provide coverage for losses that were not fortuitous, declaring that "denying a duty to defend under such circumstances would not serve as a crime deterrent, and would unnecessarily withhold compensation to tort victims." Three of the seven justices dissented. Whereas the majority had focused on the fact that the discharge of the insured's firearm was an accident and that Carly was not suing for injuries suffered in the fist fight itself, the dissenters concluded that "the discharge of a weapon during a physical altercation initiated by the insured, while the insured is holding a firearm, is the type of harm specifically excluded under the policy."


Inside the Insurance Industry

Arkansas Governor Asa Hutchinson has appointed Alan McClain as the state’s new Insurance Commissioner.

COVID-19 Pandemic

There are now 58 DJs pending around the country, including more than a dozen putative class on actions.

Following on the heels of an April 20 petition to consolidate all federal pandemic litigation before Judge Timothy Savage in Philadelphia, four firms that have filed ten different cases around the country filed a competing petition on April 21 arguing that consolidation was appropriate but seeking a Chicago venue before Judge Matthew Kennelly. On April 21, the Joint Panel on Multi-District Litigation issued an order directing the petitioners to file briefs by May 12 explaining “what steps they have taken to pursue alternatives to centralization,” such as “engaging in informal coordination of discovery and scheduling” or seeking venue transfers in one or more of the cases.

Aon PLC has announced that it is imposing a 20% across the board pay cut on most of its employees but is continuing to abide by its prior commitment not to lay off staff.

The Illinois Workers Compensation Commission voted this week to rescind its April 13 emergency order requiring worker’s compensation benefits for workers that contract the Covid-19 virus.

EPL insurers may expect to see a growing number of pandemic-related liability claims, such as the new suit filed by Smithfield Food workers who claim that they were recklessly exposed to the coronavirus at their meatpacking facility in Milan, Missouri.

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