Articles Posted in States

Published on:

by

In Verizon Communications v. Illinois National Insurance Company, a group of D&O insurers essentially asked, “When is a securities claim not a ‘Securities Claim’” (as defined in their policies)? And a Delaware Superior Court judge effectively answered, “Never.” Judge William Carpenter Jr. rejected the insurers’ crabbed reading of the term “securities claim” under their D&O policies, awarding Verizon some $48 million in defense costs the insurers had withheld.

iStock-172704204-moon-272x300

The case arose from Verizon’s decision in 2006 to spin off its print directory subsidiary, Idearc. After Idearc filed for bankruptcy protection US Bank, as Idearc’s bankruptcy litigation trustee, sued Verizon and a Verizon executive who was Idearc’s sole director at the time of the spin-off, asserting claims of promoter liability and breach of fiduciary duty, payment of an unlawful dividend under Delaware corporation law, and fraudulent transfer under U.S. bankruptcy law and Texas statute.

Continue Reading ›

Published on:

by and

A panda is sitting in a bar, polishing off his dinner. He pulls out a gun, fires a shot in the air, and heads toward the exit. A stunned waiter demands an explanation. The panda pauses at the door and tosses the waiter a badly punctuated wildlife manual. “I’m a panda—look it up.” The waiter turns to the appropriate entry: “Panda. Large black-and-white bear-like mammal, native to China. Eats, shoots and leaves.” [1]

iStock-184987985-panda-300x198

Beware the missing Oxford comma!

That was the lesson of a recent decision by the First Circuit Court of Appeals, which held that the omission of an Oxford comma in a Maine employment statute created an ambiguity that must be resolved in favor of dairy delivery drivers. For want of a comma, the dairy is out $10 million.

Continue Reading ›

Published on:

by

Is damage resulting from faulty workmanship covered under your CGL policy? In the past, insurers have had success in certain jurisdictions arguing that construction defect cases did not constitute iStock-117230091-300x236a covered “occurrence” because the damage was purportedly not unintended or unexpected. In recent years, however, courts have shifted course; the majority of courts have found that property damage arising out of faulty workmanship constitutes an “occurrence” under standard-form CGL policies. Additionally, some states enacted legislation requiring CGL policies to define occurrence to include property damage or bodily injury resulting from faulty workmanship, or have made it easier for insureds to obtain coverage for damages as a result of work the insureds performed.

Continue Reading ›

Published on:

by

iStock-590156792-data-vault-300x225

The vaults of the world’s financial capital are getting stronger locks. On March 1, 2017, new “first-in-the-nation” cybersecurity regulations of the New York Department of Financial Services (DFS) went into effect to protect consumers and the financial system from cyber attacks. While the regulations apply to covered finance and insurance companies, their influence is likely to be felt beyond the companies targeted initially. For this reason, it’s important that all companies with cybersecurity risks understand how the new DFS regulations work, and the insurance coverage issues they may raise.

Continue Reading ›

Published on:

by

A few weeks back, we told you how South Carolina May No Longer Hold Insurers’ Reservations. In that post we left you with a teaser: “There’s more to this case.”iStock-537435705-burden-200x300

In fact, Harleysville Group Insurance v. Heritage Communities, Inc. does more than just take insurers to task with regard to their vague reservations of rights. Reaffirming that, in a case involving both covered and excluded losses, the insurer bears the burden of proving which damages are excluded from coverage, Harleysville shows how easily an insurer can find itself in a bind when trying to prove “no coverage” at the same time and in the same proceedings that it is providing a defense for its insured.

Continue Reading ›

Published on:

by

Say you want to make a reservation for a nice dinner. Do you call the restaurant and simply say you plan to come sometime in the next two weeks? Of course not. If you want your reservation to doiStock-516720550-reservations-200x300 any good, you give the restaurant a date, time, and number of people. So why should insurers be able to issue reservations of rights where they quote half the policy and say they may deny coverage at some time, based on some unspecified provision? The South Carolina Supreme Court was presented with that question and decided that insurers need to provide greater specificity or risk losing their reservations completely.

 

Continue Reading ›

Published on:

by

Texas is not a place known for surrendering. (Remember the Alamo!). But like their compatriots in other states, Texas policyholders sometimes see the advantage of surrendering their liability iStock-522384399-alamo-300x200insurance policy rights to their litigation adversaries in order to retreat from the dispute. Whether they may have to stand and fight first is a question that the Texas Supreme Court may finally answer in Great American Ins. Co. v. Hamel. In that case, the Texas Supreme Court has agreed to review whether an insurer may be responsible for a judgment entered against its insured that is the result of a non-adversarial trial. This will be an important decision that will have significant repercussions for insureds and insurers alike.

Continue Reading ›

Published on:

by

iStock-157557967-florida-300x225

The Florida Supreme Court recently issued a widely reported decision, Sebo v. American Home Assurance Co., which applied the concurrent cause doctrine in ruling that an all-risk homeowner’s insurance policy provides coverage when damage is the result of multiple events—so long as at least one of them is a covered peril. Plaintiff John Sebo purchased a home, which he insured under an all-risk homeowner’s policy written by American Home. As an “all-risk” policy, it provided coverage for damage to property caused by all perils, except those it explicitly excluded. Design defects and faulty construction were among the excluded perils. Within less than two months of buying the house, Mr. Sebo discovered major leaks during rainstorms, which were later found to be the result of design defects and faulty construction. Hurricane Wilma then caused even more damage. When Mr. Sebo sought coverage for damage from the water intrusion, American Home denied most of the claim on the grounds that it was caused by design defects and faulty construction—which were excluded perils. But the Florida Supreme Court found coverage.

Continue Reading ›

Published on:

by

Pennsylvania policyholders need to keep their eyes on the details when it comes to defending faulty workmanship claims. What you see—or think you see—is not always what you get. In Bealer v Nationwide Mutual Insurance Company, the U.S. District Court for the Eastern District of Pennsylvania held on November 16, 2016 that an insurance company did not have a duty to defend its policyholder after determining that the claims assertedMonochrome portrait of senior man peering through magnifying glass, grimacing in the underlying litigation were for faulty workmanship and did not constitute an “occurrence.” But other Pennsylvania decisions provide opportunities to find coverage for policyholders who might be in similar situations.

William Tierney entered into a contract with Robert Bealer for the purchase of a lot and construction of a residence. About six months after Tierney moved in, a rainstorm flooded the basement of his home—after which he noticed cracks on several foundation walls, and then brought suit against Bealer.

Continue Reading ›

Published on:

by

New York is a tricky forum for policyholders pursuing insurance coverage claims. In particular, New York jurisprudence has long failed to recognize and address causes of action for bad faith. Historically, insureds seeking to impose extracontractual liability have been required to meet the high bar of showing “egregious tortious conduct” and “a pattern of similar conduct directed at the public generally.” Contract-based claims invoking good faith and fair dealing often fared no better, with courts routinely dismissing insureds’ bad faith claims because they viewed them as “duplicative” of the policyholders’ underlying claims for breach of the insurance contract.

In 2008, a glimmer of hope emerged from New York’s highest court. In Bi-Economy Market, Inc. v. Harleysville Insurance Co., the court recognized a policyholder’s right to recover consequential damages in excess of policy limits where (1) the damages were the direct result of improper claims handling, and (2) the damages were foreseeable by the parties at the time of contracting. Although this decision did not create a bad faith cause of action, it did provide policyholders with a potential avenue to recoup consequential damages where the insurer violated its implicit contract-based covenant of good faith and fair dealing.

Continue Reading ›