Jul 1 2020

Insurance Law – 7/1/2020


SEVENTH CIRCUIT     Pollution/Known Loss/Estoppel (IN)

The Seventh Circuit has affirmed an Indiana District Court's ruling that the neighbors of a wood recycling facility could not obtain coverage for a $50 million dollar judgment that they had obtained against the insured. In Greene v. Westfield Ins. Co., 19-2260 (7th Cir. June 25, 2020), the court gave effect to an exclusion for the continuation of bodily injuries or property damage of which the insured was aware prior to the issuance of this policy. The Seventh Circuit was unpersuaded by an affidavit provided by the insured that although he was aware of complaints about fugitive dust, he did not realize that this constituted "property damage" for purposes of insurance coverage. The court also observed that if the claimants were correct that their claims were not for "property damage", they would have argued themselves out of coverage. . Finally, the court ruled Westfield was not estopped to assert this exclusion both by reason of the fact that the insured had not given a timely notice or tendered the defense of this action to it as well as the fact that Westfield had done what is provided for under Indiana law by filing an action for declaratory judgment.


The California Court of Appeal has ruled in Trilogy Plumbing Inc. v. Navigators Specialty Ins. Co., G057796 (Cal. App. 827, 2020) that a trial court did not err in denying Navigators' anti-SLAPP motion to dismiss a suit in which the insured alleged that Navigators had instructed appointed defense counsel to settle without the insured’s consent. Notwithstanding Navigators' contention that this conduct constituted protected activity under Section 425.17, subdivision (e)(2), the Fourth District declared that although the conduct in question was "generally connected to litigation", it did not include any written or oral statement or writing made in connection with an issue under consideration or review by the court, and therefore it did not constitute protected activity under the California anti-SLAPP statute.

NEW JERSEY     Property Insurance/Named Storms

The New Jersey Supreme Court announced last week that it would accept review of the Appellate Division's November 2019 ruling that the New Jersey Transit Authority was entitled to coverage from Certain Underwriters at Lloyd's up to the full $400 million limit of the policies notwithstanding Lloyd's contention that coverage was subject to a named windstorm sublimit. The Appellate Division had ruled that "if the parties had intended the damage from a 'storm surge' would be subject to the flood sublimit, the policies would have stated so in plain language …"

OHIO     Opioid Claims/Damages/”Loss in Progress”

The Ohio Court of Appeals has ruled in Acuity v. Masters Pharmaceutical, Inc., 2020–Ohio–3440 (Ohio App. Ct. June 24, 2020) that a liability insurer was obliged to provide a defense to claims that a pharmaceutical distributor improperly prescribed opioids. Whereas the trial court had ruled that Acuity had no duty to defend because this suit was for economic loss and not did not seek "damages" on account of bodily injury. Instead, the Ohio Court of Appeals adopted the Seventh Circuit's recent analysis in H.D. Smith, finding that coverage extended to losses to organizations and were not limited to bodily injury suffered by the original victim. The Ohio Court of Appeals also set aside the trial court's conclusion that these claims were subject to a "loss of progress" exclusion in light of the fact that MPI was aware of the opioid epidemic before it purchased insurance from Acuity. While agreeing with Acuity that this language in the insurance agreement was part of the insured's burden of proof, the Court of Appeals nonetheless ruled that although MPI was clearly on notice of illegal prescriptions and had even received demand letters from the DEA, mere knowledge that injuries might be occurring was not enough to bar coverage under the "loss in progress" provision. The Ohio Court of Appeals declined to issue a ruling with respect to indemnity, however, declaring that this question was premature.

RHODE ISLAND     Statute of Limitations/Savings Statutes

The Rhode Island Supreme Court has ruled in Frazier v. Liberty Mutual Ins. Co., No. 2018-288 (R.I. June 12, 2020) that a trial court erred in holding that Rhode Island's 3-year statute of limitations for tort claims barred the re-filing of a law suit against Liberty Mutual suit for personal injuries after a falling on an insured’s property. Liberty Mutual, which had been substituted for the policyholder that had gone out of business in the interim, argued that the saving statute did not preserve the plaintiff's claim because it had not been a party to the original action that Frazier had filed. Nevertheless, the court ruled that this was the “same claim” under the savings statute (Section 9-1-22) of Liberty Mutual was not a "stranger" to the original action in light of its relationship to the policyholder and the fact that it had appeared on behalf of the defendant to dispute the claim on the basis of the statute of limitations.


Inside the Insurance Industry

A new A.M. Best report entitled “U.S. Commercial Auto Writers: Profitability Remains Elusive” finds that the trend of negative underwriting ratios worsened for auto insurers in 2019, resulting in a $4 billion loss. The report noted that U.S. commercial automobile insurance lines had not generated a combined ratio under 100 since 2010.

Aon has rescinded its earlier decision to cut salaries during this pandemic and will reimburse employees for cuts during the interim.

Pandemic Update

On July 16, the American College of Coverage Counsel will be presenting a free 90 minute webinar that I have organized with legal experts from around the country analyzing the legal, strategic and political implications of the pandemic litigation. The program is being presented through the auspices of the Boston College Law School. Here is a link to register for the conference.

Tired of trying to keep track of all the new COVID-19 suits? Professor Tom Baker of UPenn, who was the lead reporter on the ALI Restatement of Law, Liability Insurance from 2010 to 2018, has released the beta version of a curated database of 540 cases that has been filed since March.

Over two dozen minor league baseball teams and their concessionaires have filed suit against property insurers in the U.S. District Court in Philadelphia alleging that they are entitled to business interruption coverage for COVID-19-related losses. The suit is singular in several respects. Unlike most other pending actions, which either involve individual or class action claims against a single insurer this is an action brought by several different policyholders against several different insurers. Additionally, it sets forth claims for “anctipatory breach of contract” against several insuers who have ot yet denied but will likely do so in light of their positions in similar cases around the country. Finally, unlike nearly every other case so far, this action was a fim (McKool Smith) with a national reputation for representing insureds in complex commercial coverage disputes.

Shipman & Goodwin, with support from Boston’s Anderson Kreiger, have filed suit in the U.S. District Court in Manhattan seeking a declaration that Gartner, Inc. is entitled to coverage from U.S. Specialty and HCC Specialty Underwriters for millions of dollars that it has lost as the result of the cancellation of numerous elite conferences and events that it would have presented this year but for the pandemic..

Certain Underwriters at Lloyd's, London continue to be aggressive in their response to efforts to compel COVID-19 business interruption coverage claims, arguing in a motion to dismiss in El Novillo Restaurant v. Certain Underwriters at Lloyd's, No. 20-21525 (S.D. Fla.) that the insured's restaurant losses were not caused by any "direct physical loss" to the insured premises and are, in any event, the result of a "microorganism" for which coverage is excluded under the policy.

Climate Change

The State of Minnesota last week joined Massachusetts, New York and Rhode Island in filing suit against the American Petroleum Institute, ExxonMobil and Koch Industries, alleging that they had engaged in a decades’ long effort to deceive the American public about the dangers of climate change.

IBNR Dept.

The Rolling Stones’ publishing company BMI sent a cease and desist letter last week to Donald Trump’s re-election campaign, demanding that it stop using Stones songs at Trump rallies. The letter singles out Trump’s unauthorized use of “You Can’t Always Get What You Want.” 

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