National Insurance Law Forum

National Insurance Law Forum

Published By The Attorneys of the National Insurance Law Forum

Unsigned Purchase Order Deemed Written Contract under AI Endorsement

Posted in Additional Insured, Liability Coverage

The written contract requirement in an additional insured endorsement does not require that the contract be signed unless the endorsement so provides, holds New York’s Appellate Division, First Department in Zurich American Insurance Company v. Endurance American Specialty Insurance Company.

The endorsement provided that additional insureds included “[a]ny entity required by written contract … to be named as an insured.” The purchase order, which required the contractor to obtain additional insured coverage for the owner and its property manager, contained no signature lines and was unsigned, but stated: “THIS PURCHASE ORDER AND AGREEMENT IS A LEGAL AGREEMENT BETWEEN [owner and vendor]. BY ACCEPTING THE ORDER, VENDOR HEREBY AGREES TO BECOME BOUND BY THE TERMS OF THIS AGREEMENT.” The purchase order was accepted by performance of the work.

The insurer argued that the parties were not additional insureds, because the unsigned purchase order was not a written contract. The court disagreed, finding that the endorsement required only a “written” contract, not a “signed” one (in contrast with endorsements that also require that the contract be executed), and that, by its terms, the purchase order became binding upon its acceptance, not upon signing the document.

Georgia’s Uninsured Motorist Statute Does Not Supersede Excess Policies’ Vertical Exhaustion Requirements

Posted in Additional Insured, Auto Liability Coverage, Bad Faith/Extra Contractual, Excess and Umbrella Insurance

In Coker v. American Guarantee & Liability Insurance Company, 825 F.3d 1287 (11th Cir. 2016), the Eleventh Circuit held that Georgia’s uninsured motorist (UM) statute did not supersede the vertical exhaustion requirements contained in the defendants’ excess policies.

In this case, plaintiff Gary Coker was driving a truck owned by his employer, Ansco & Associates (Ansco), when he was seriously injured in a head-on collision caused by the other driver. The Cokers obtained a $5.5 million consent judgment against the other driver but could only recover $25,000 from him, as he was underinsured. The Cokers pursued the remainder of the consent judgment under five policies held by Ansco, as Coker had been driving the truck in the course and scope of his employment when he was injured.

Ansco had five policies, which were vertically structured. Ansco held a primary automobile policy with Liberty Mutual Insurance Company (Liberty Mutual) with a $5 million limit. Ansco also had a $10 million policy issued by Westchester Fire Insurance Company (Westchester) that provided second-layer umbrella coverage, a $10 million policy issued by Great American Insurance Company (Great American) that provided third-layer excess coverage, a $25 million excess policy issued by American Guarantee & Liability Insurance Company (American Guarantee) that provided fourth-layer excess coverage, and a $25 million policy issued by Endurance American Specialty Insurance Company (Endurance) that provided fifth-layer excess coverage.

The Cokers made written demands of all five companies. The Cokers entered into confidential settlements with Liberty Mutual and Westchester for substantially less than the respective policy limits. The three other insurers did not tender payment. A portion of the $5.5 million judgment still unsatisfied, the Cokers filed a complaint against Great American, American Guarantee, and Endurance (collectively, Defendants) for breach of contract and bad faith. The district court concluded Defendants were required to provide UM coverage by operation of Georgia’s UM statute, finding “that enforcing the vertical exhaustion requirements in the Defendants’ excess policies ‘would place a limit on the amount [the Cokers] are able to recover under the statute and not be in accordance with the remedial purpose of the [UM] statute.’”

The Eleventh Circuit reversed, holding that Georgia’s UM statute did not supersede the vertical exhaustion requirements contained in Defendants’ excess policies. Georgia’s UM statute requires that, absent a written waiver, all automobile policies, including umbrella and excess policies, must provide UM coverage up to the policies’ overall liability limits. See Ga. Code Ann. § 33-7-11. But although Defendants had a statutory obligation to provide UM coverage, “each of the Defendants’ excess liability policies contain[ed] unambiguous language limiting recovery to only those amounts exceeding the policy limits of an underlying insurance policy or policies.” See also Garmany v. Mission Ins. Co., 785 F.2d 941, 945-46 (11th Cir. 1986) (“[U]nder Georgia law, when an excess policy clearly sets a threshold starting point for payment, the contract is unambiguous and must be enforced.”).

The Court drew a distinction between “other insurance” provisions that may be voided by section 33-7-11. The Court observed that interpreting section 33-7-11 to void vertical exhaustion requirements would in effect “convert all excess policies into primary policies” and would eliminate the market for excess UM coverage in Georgia. The Eleventh Circuit did not believe the Georgia courts would favor such a result, as they had “implicitly recognized the validity of” excess UM coverage in, for example, Progressive Classic Ins. Co. v. Nationwide Mut. Fire Ins. Co., 670 S.E.2d 497 (Ga. Ct. App. 2008). Finally, the court explained that vertical exhaustion requirements do not undermine the purpose of section 33-7-11, noting that “[t]he only way an insured might not recover for the full amount of his injures—and therefore realize the harm section 33-7-11 was designed to prevent—is if, as is the case here, he settles with an underlying insurer for less than the policy limits. But in that case, the insured voluntarily settled for less than the policy limits and, therefore, is undercompensated of his own volition.”

In Oregon, excess and umbrella policies are not considered motor vehicle liability policies for the purpose of statutes mandating the type or amount of coverage motor vehicle policies must contain, such as the uninsured motorist statute. See ORS 742.468(2), (3). Similarly, in Washington, uninsured motorist coverage requirements do not apply to umbrella and excess policies. See WRS 48.22.030(2). In states where the uninsured motorist statute does not so specify, practitioners should be familiar with the recent appellate decision in Coker.

Is It A Flash Or A Trend? “Disparagement” limited to Communications that Assert or Imply the Inferiority of a Competitor’s Products.

Posted in Duty to Defend, Personal and Advertising Injury, Recent Cases

The “personal and advertising injury” coverage applies to injury arising out of “oral or written publication of material that…disparages a person’s or organization’s goods, products or services.”  The term “disparages” is not defined.   Accordingly, it provides fertile ground for creative arguments by policyholders seeking to broaden the meaning to cover trademark infringement,   false advertising and “passing off” claims.     Recently, courts have rejected the invitation to broaden the definition to include any claim that involves merely a competitive injury or reputational harm.   Rather, to qualify as “disparagement,” there must be publication of material to a third party that asserts or implies the inferiority of a competitor’s product or services.

For example, in Vitamin Health, Inc. v. Hartford Casualty Ins. Co., Dist. Court, Case No. 15-10071, (ED Mich., May 9, 2016), the insured was sued for false advertising.   It argued that the allegations fell within the disparagement offense. The court held that disparagement is ordinarily defined as “to discredit or bring reproach upon by comparing with something inferior.” The Court found there can be no disparagement where the policyholder is alleged to have misrepresented the content of its own product, and not its competitor’s, even though such action may have caused consumer confusion or caused the competitor to lose sales.

In E.S.Y., Inc. v. Scottsdale Ins. Co., 139 F.Supp.3d 1341, 1353 (S.D. Fla. 2015), the insured, E.S.Y., was sued by an entity that made, marketed and sold garments and used multiple trademarks and copyrighted designs.   The underlying complaint alleged that E.S.Y. “began using an identical or substantially similar mark (the “Liquid Energy Shield Mark) … in connection with their own competing garments” as well as using labels and hang tags “in such a manner that its use causes and is causing actual confusion in the marketplace, or is likely to cause such customer confusion, whereby consumers mistakenly assume that E.S.Y.’s products offered under the claimant’s Shield Mark are associated with or sponsored or approved by the claimant.

E.S.Y. argued that those allegations triggered the disparagement offense. The Court rejected that argument.  It embraced the holding and rationale of the Seventh Circuit in Acme United Corp. v. St. Paul Fire & Marine Ins. Co., 214 Fed. Appx. 596 (7th Cir. 2007), where the court stated:

Disparage means “to discredit or bring reproach upon by comparing with something inferior.” Webster’s Third New International Dictionary (unabridged) 653 (1981); see also Black’s Law Dictionary 483 (7th ed.1999) (defining disparage as “[t]o dishonor (something or someone) by comparison” or “[t]o unjustly discredit or detract from the reputation of (another’s property, product, or business)”). Further, as we have noted in previous cases, “disparagement [could] result[] from false comparisons” between products in which the comparison dishonors the product being compared. See, e.g., Skylink Techs., Inc. v. Assurance Co. of Am., 400 F.3d 982, 985 (7th Cir.2005).

The E.S.Y. court determined that the crux of disparagement is a comparison suggesting another brand is inferior.    It noted that in the complaint before it, while the Liquid Energy Shield Mark and E.S.Y.’s hang tags allegedly looked like those of the claimant, E.S.Y.’s conduct was not alleged to make any express comparison to the claimant.   To the extent the visual similarity between the marks and tags could be construed as E.S.Y.’s implicit reference to the claimant, the court held that nothing about that reference was alleged to dishonor or denigrate the claimant.  While the claimant may not have liked that E.S.Y. allegedly copied them, “imitation is not disparagement as there was no comparison suggesting [that the claimant’s] brand was inferior to [E.S.Y.s].”

Moreover, while the claimant alleged it suffered harm to its reputation by being associated with E.S.Y., the court found that allegation merely implied that the claimant believed its brand was superior to E.S.Y.’s.  The court again reiterated that for disparagement to be alleged, “[E.S.Y.’s] alleged misconduct must have suggested [its] brand was superior to [the claimant’s].”   Accordingly the court held that the disparagement offense was not implicated.

In Uretek (USA), Inc. v. Continental Cas. Co., 92 F. Supp. 3d 589, 592 (SD Tex. 2015 Civil Action No. 4:13-cv-3746), Uretek, the insured, was in the business of performing roadway repair and maintenance for various state and municipal agencies. Uretek sued a competitor for infringement of a patent on which Uretek held the exclusive license.   That party counterclaimed, alleging that Uretek attempted to mislead competitors and contracting bodies as to the scope of the patent in order to discourage competitors from bidding on pavement-lifting projects and to coerce contracting bodies into believing that Uretek was their sole legal choice for service provider.   The court held that, as alleged, those “false and misleading” statements concerned Uretek’s own services and patent and that deceptive statements regarding the scope of the patent cannot be construed as disparagement of the claimant’s services.  In support, the court cited Nationwide Mut. Ins. Co. v. Gum Tree Prop. Mgmt., L.L.C., 597 Fed.Appx. 241, 246-47, No. 14-60302, 2015 WL 170244, at *5-6 (5th Cir. Jan. 14, 2015) (court refused to infer disparagement from allegation that one party “`induced … third parties not to enter into or continue their’ relationship” with another party because the complaint “never claimed that the inducement resulted from disparagement, as opposed to other strategies such as price cuts, personal service, or any other aspects of the services offered by the inducer”).

Whether the recent rulings demonstrate a trend or a flash in the pan remains to be seen. Several of the cases are up on appeal.

Additional Insured Status

Posted in Additional Insured, Duty to Defend, Recent Cases

In Homeland Insurance Company of New York v. AAM, Inc., 2016 U.S. Dist. LEXIS 633033 (D. Or. May 13, 2016), the District Court for the District of Oregon held that a construction subcontract and accompanying additional insured endorsements were partially enforceable for purposes of the insurer’s duty to defend, despite the subcontract’s noncompliance with Oregon’s anti-indemnity act.

In this case, Del Monte Foods, Inc. (Del Monte) hired CentiMark Corporation (CentiMark) to undertake repairs of its Yakima, Washington warehouse. CentiMark subcontracted part of the project to AAM, Inc. (AAM), an asbestos maintenance and removal company. The subcontract required AAM to add CentiMark and Del Monte to its insurance policy as additional insureds. AAM was insured under a commercial general liability policy issued by Homeland Insurance Company of New York (Homeland), which contained two endorsements that extended coverage to additional insureds. AAM obtained a certificate of insurance verifying that CentiMark and Del Monte were additional insureds under the Policy endorsements.

When an AAM employee was injured while working on the project, he sued CentiMark and Del Monte in Yakima County Superior Court. Homeland agreed to defend CentiMark and Del Monte under a full reservation of rights, and then sought in federal court in Oregon a declaratory judgment that it did not have a duty to defend or indemnify CentiMark or Del Monte in the underlying proceeding.

The liability alleged clearly arose out of AAM’s work for the additional insureds, but Homeland argued the subcontract was nonetheless voided by Oregon’s anti-indemnity statute, thus relieving Homeland of its duty to defend under the additional insured endorsements. Oregon Revised Statute §30.140 prohibits construction agreements from requiring a subcontractor or its insurer to defend or indemnify another party against liability caused by the other party’s own negligence. The statute also applies to additional insured endorsements procured through defense and indemnity agreements.

The Court agreed that the subcontract and resulting endorsements did not comport with the anti-indemnity statute because the subcontract “required AAM to obtain insurance coverage that would protect CentiMark and Del Monte from ‘all risks of injury’ to AAM employees, regardless of any ‘negligence or fault’ on the part of CentiMark or Del Monte.” However, the Court continued, the subcontract and additional insured endorsements were still “enforceable to the extent they require Homeland to defend CentiMark and Del Monte against damages caused by AAM’s negligence.” The court further explained that while AAM was not named in the complaint (due to the exclusivity of Oregon’s workers’ compensation law), “it [wa]s reasonable to infer that AAM provided the instructions that lead to [the employee’s] injury.” See Portland Gen. Elec. Co. v. Liberty Mut. Ins. Co., 112 F. Supp. 3d 1160, 1165-67 (D. Or. 2015).

The Court granted summary judgment in favor of the insureds as to Homeland’s duty to defend, and deferred ruling on Homeland’s duty to indemnify because the facts were not yet sufficiently developed.

Arden v. Forsberg & Umlauf

Posted in Appeals, Recent Cases

Washington’s Supreme Court Grants Review of Court of Appeals’ Decision Finding No Conflict of Interest for Law Firms that Represent Insurers and Defend Insurers’ Policyholders

 

We previously reported here on the Court of Appeals’ decision in Arden v. Forsberg & Umlauf, 193 Wn. App. 731, 373 P.3d (2016) on May 5, 2015. On September 28, 2016, the Washington Supreme Court granted a Petition for Review of the Court of Appeals’ decision in Arden.

In that decision, as a matter of first impression in Washington, the Court of Appeals held as a matter of law that a law firm with an insurer for a client may defend that insurer’s policyholder in an unrelated matter without creating a conflict of interest, or even disclosing that it also regularly represents the insurer in coverage matters.  The Court of Appeals also held that a lawyer defending an insured under reservation of rights does not breach its fiduciary duties to its insured client or commit legal malpractice by (1) not persuading the insurer to accept the claimants’ first demand to the insureds; (2) not engaging in settlement discussions with the claimants until receiving the claimants’ written discovery responses, notwithstanding the insureds’ request for prompt resolution;  or (3) failing to consult with the insureds before rejecting the claimants’ first and second demands when there was no evidence the insureds were harmed by same.

 

Exhausting Policy Limits

Posted in Duty to Indemnify, Excess and Umbrella Insurance, Liability Coverage, Recent Cases

As insurance is depleted for ongoing claims like asbestos bodily injury and long-term environmental pollution, how an insured is to use its layers of insurance is an issue.  The California Supreme Court has been asked to weigh in on the question of whether “horizontal exhaustion” or “vertical exhaustion” principles should apply to excess and umbrella layers of insurance in Montrose Chemical Corporation of California v. Superior Court of the State of California (Case No. S236148). California courts endorse the requirement of horizontal exhaustion of insurance at the primary level before any excess and umbrella policies attach, unless the excess/umbrella policies expressly require otherwise.  Community Redevelopment Agency v. Aetna Casualty & Surety Co., 50 Cal. App. 4th 329 (1996). However, California’s appellate courts have not directly addressed whether to extend this presumption to other levels of insurance.

In Montrose, a case potentially implicating over $100 million in insurance for decades of environmental contamination, Montrose’s upper-level excess insurers argue that horizontal exhaustion principles should apply to all lower-level excess policies because the higher level excess policies are excess to all “other insurance.”  Montrose, in response, argues that such a finding would be inconsistent with an “all sums” requirement, i.e., that once triggered, a policy has to pay all sums for which the insured is liable. The trial court agreed with the excess insurers, finding that horizontal exhaustion principles applied to levels of excess policies. Montrose lodged a Petition for Writ of Mandate in the Second Court of Appeal, which the Court of Appeal summarily denied.

Montrose appealed the denial of its Writ through a Petition for Review in the California Supreme Court. Under the stringent criteria of C.R.C. 8.500(b), the California Supreme Court accepts review in less than 5% of cases, including where it finds review necessary to secure uniformity or to address an important question of law. Montrose claims this case “demands immediate review” because the trial court order created a “momentus” “mandatory horizontal exhaustion” scheme in conflict with prior precedent. Numerous amici also urge the Court to take the opportunity to provide guidance on this issue. Because this trial court ruling only disposed of one of a many legal issues in the case, California’s highest court could well deem the issue premature.

This activity in California follows in the wake of other recent cases confronting the sequencing of coverage issue.  See e.g., John Crane, Inc. v. Admiral Ins. Co., No. 04-CH-8266 (Ill. Cir. Ct. July 21, 2016) (finding insureds facing long-tail exposure must horizontally exhaust all primary policies before triggering umbrella coverage, but application of horizontal exhaustion requirement to umbrella and excess policies depends on the excess policies’ language); In re Viking Pump, Inc., 27 N.Y.3d 244, 265 (2016) (applying “vertical exhaustion” approach in that case in light of primary policies having “anti-stacking” provisions).

FountainCourt

Posted in Liability Coverage, News, Recent Cases

The Oregon Supreme Court held yesterday that an insurer may be liable for a full jury award for property damages against its insured if the insurer fails to refute the insured’s factual position that it was impossible to determine what portion of the damage occurred during the policy period, if some damage took place during the policy period.

FountainCourt Homeowners’ Association v. FountainCourt Development, LLC, et al., 360 Or 341 (2016), arose from a construction defect lawsuit concerning water damage to FountainCourt, a condominium and townhouse development in Beaverton, Oregon.  The FountainCourt homeowners’ associations sued the developers, the contractor, and some of the subcontractors responsible for FountainCourt’s construction.  Sideco, Inc. was alleged to have installed siding and windows that failed to protect against water intrusion.  A jury awarded plaintiffs over $2 million, apportioning $485,877.84 in damages to Sideco.  FountainCourt, standing in the shoes of Sideco, then instituted a garnishment proceeding against Sideco’s insurers, including American Family Mutual Insurance Company (AFM).

AFM answered that it was not required to pay the Sideco judgment because some or all of the damages did not arise from “property damage” or an “occurrence” as defined in the insurance policy, because some or all of the damage fell outside the policy period, or because exclusions applied.  The trial court, concluding FountainCourt had met its burden to prove coverage under the policy and AFM had failed to prove an exclusion applied, entered judgment for FountainCourt.  (The trial court found the other insurer had proven an exclusion applied, so it was not liable.)   The Oregon Court of Appeals affirmed.

The Oregon Supreme Court accepted AFM’s petition for review, and affirmed.  The Court agreed FountainCourt had made a prima facie case that coverage under the policy was triggered and that AFM had failed to offer evidence in rebuttal.  But the Court declined to review the prior rulings concerning exclusions, reasoning that AFM failed to preserve any alleged error for review.  See id. at 352, 361-65.  The Court rejected AFM’s assertion that the damages awarded by the jury in the underlying case were not necessarily for “property damage” as defined by the insurance policy, but also could have included the cost to repair Sideco’s “defective work.”  See id. at 361.  The Court rejected this concern, reasoning that the jury was instructed FountainCourt was required to “prove physical damage to their property,” and “was not instructed that it could award damages for ‘defective work.’”  Id.  The Court explained AFM had failed to persuade “that actual physical damage to property is not covered under an insurance policy merely because it may be associated with defective workmanship by an insured.”  Id. 

The Court decided FountainCourt had proven an “occurrence” within the meaning of the policy because there was no genuine dispute that “at least some property damage occurred when the AFM policies were in effect.”  Id. at 365.  Accordingly, when exactly portions of the damage occurred was not relevant to whether coverage under the AFM policy was triggered in the first place.  See id.  The timing of the damage was relevant, however, to allocation among multiple insurers.  Because AFM had argued on appeal that it was not liable at all, not that liability was allocated incorrectly, the Court affirmed the trial “court[’s] implicit[] conclu[sion] that AFM was responsible for the entire amount and not a prorated amount, although some of the damage necessarily had occurred when the [other insurer’s] policy was in effect, given the court’s conclusion that that policy was triggered.”  Id. at 367.  The Court did not address how the timing of the damage might relate to exclusions, as it did not reach AMF’s exclusion arguments.

In the future, insurers should be mindful of the need to provide evidence of what portion of property damage fell within and outside the policy period in situations where the insurer is liable because at least some damage happened during the policy period.

Client Questions About Settlement

Posted in Client Questions About Settlement

One of the most common mistakes that insurance adjusters, and even some attorney practitioners, make during settlement negotiations is failing to anticipate all of the essential elements of the settlement agreement. Such oversights may result in significant negative consequences for insurers and their insureds. This is particularly true in the context of negotiating casualty claims.

For example, an insurer may agree to settle a bodily injury claim during a telephone call with a claimant’s attorney. Such telephone discussions will almost certainly include agreement on the settlement amount, but it is not uncommon for parties to omit discussion of non-monetary terms, such as the scope of indemnity or hold harmless obligations. When the claimant’s attorney receives the standard release agreement from the insurer, the attorney may then argue that the settlement does not include such terms or may request revisions that significantly weaken the provisions. Such disputes are becoming increasingly common in Oregon, and often lead to costly delays in closing a claim, may require the involvement of coverage counsel to assess the impact of subsequent revisions to the form release, and may even cause a claimant to back out of the settlement and file a lawsuit, thereby requiring the appointment of defense counsel. An insurer can avoid these outcomes by being aware of the way courts view insurance settlements.

Oregon courts view insurance settlement agreements, including verbal agreements to settle, like any other contract. The essential elements are a mutual intent to settle, offer, acceptance and consideration.  Wheeler v. White Rock Bottling Co., 229 Or. 360 (1961) (the established rules of contract law apply to releases); Raymond v. Feldman, 120 Or. App. 452 (1993) rev. den. 318 Or 381 (1994) (verbal insurance settlements are enforceable). The parties must reach agreement on all material terms of the agreement or there is no contract.  See Baldwin v. Baldwin, 215 Or. App. 203 (2007). A term is “material” when it goes to the substance of the agreement and, if breached, would defeat the parties’ purpose in entering the agreement. Id. Oregon subscribes to an objective theory of contracts, which means that whether the parties entered into a contract does not depend on the parties having the same subjective understanding of the agreement. Rather, it depends on whether the parties agreed to the same express terms. Id.

Thus, settlement discussions between an insurer and claimant’s counsel should address all material terms of the settlement. At a minimum, the material terms involved when settling the typical insurance casualty claim are:

  1. Settlement Amount;
  2. Scope of Release;
  3. Scope of indemnity and hold harmless obligations;
  4. How personal injury protection (“PIP”), Medicare/Medicaid, and third-party interests (such as unpaid medical providers) are to be handled, if any.

Each of these terms should be discussed independently at the time the settlement offer is made. If the offer is made over the telephone, we recommend that insurers follow-up with claimant’s counsel immediately with a writing that addresses all material terms and how they are to apply. Taking these simple steps should significantly reduce the ability of a claimant to dispute a settlement or renegotiate settlement terms.

Attorney-Client Privilege

Posted in Attorney-Client Privilege, Recent Cases

The Washington Court of Appeals’ recent decision in Steel v. Philadelphia Indemnity Insurance Co., 2016 WL 4001431 (2016) should be of interest to those seeking (or seeking to preclude) the production of attorney-client privileged and work product documents from the underlying attorneys in the context of settlement reasonableness hearings under RCW 4.22.060 (Effect of Settlement Agreement).

In October 2012, Philadelphia Indemnity Insurance Company (“Philadelphia”) moved to intervene and conduct “focused discovery” related to the reasonableness of a $25 million covenant judgment settlement entered between its insureds and underlying plaintiffs in a child sexual abuse case. The trial court allowed Philadelphia’s intervention and ordered the plaintiff’s to produce all discovery exchanged by the parties and all attorney work product related to the settlement. What followed was a series of motions by Philadelphia trying to expand the scope of discovery and by plaintiffs trying to limit the discovery of their attorney’s work product and privileged communications. The Superior Court concluded that plaintiffs impliedly waived their attorney-client communications and work product privilege when they sought the reasonableness determination under RCW 4.22.060.

On appeal, the insureds argued that the implied waiver doctrine, which generally states that attorney-client privilege is impliedly waived when a party puts privileged communications directly at issue, for instance in the pleading an affirmative defense, was limited to legal malpractice claims. In an apparent first for Washington, the Court of Appeals expressly disagreed, ruling that the implied waiver analysis should be considered on a case by case basis and specifically holding that implied waiver of the attorney-client privilege may occur in the context of settlement reasonableness hearings.

The Court of Appeals then provided a detailed discussion of the implied waiver analysis, reiterating the holding in prior cases that the doctrine requires consideration of the following three factors before privilege is waived: “(1) [A]ssertion of the privilege was the result of some affirmative act, such as filing suit, by the asserting party; (2) through this affirmative act, the asserting party put the protected information at issue by making it relevant to the case; and (3) application of the privilege would have denied the opposing party access to information vital to his defense.” Moreover, as an overarching consideration, privilege is waived only where allowing the privilege to prevent disclosure “would be manifestly unfair to the opposing party.” The party asserting that waiver has occurred bears the burden to prove that the three factors are met.

While the Court agreed with Philadelphia that implied waiver may occur in the covenant judgment settlement reasonableness determination context, it concluded that the factor analysis weighed against waiver of the insured’s claim of privilege in this case. Specifically, the court reasoned that Philadelphia had failed to show that the insured’s argument that the settlement was reasonable or its own defense that the settlement is unreasonable “depends on,” “relies on,” or makes plaintiffs’ attorney-client communications “integral to” resolution of the dispute or that non-disclosure of the communications would result in “manifest unfairness.”

While not recited in detail here for brevity’s sake, the court’s factor by factor analysis makes the case a valuable resource for those looking to compel, or preclude, attorney work product and privileged communications in settlement reasonableness hearings.

 

 

 

 

DRI Schedules Free Seminars For Claims Executives in Atlanta and Hartford

Posted in Uncategorized

As part of its ongoing outreach to the insurance industry, DRI Insurance Law Committee will be presenting two one day seminars in Hartford and Atlanta next month at which senior claims executives and outside coverage counsel will partner to explore emerging legal issues confronting insurers in 2016.   Registration is free for industry people; $495 for outside counsel ($395 if you register by August 21).  Six hours of CLE/CE credits are available.

Northeast Regional Claims Conference:   September 20  

  • Big Data and The Challenge of Technology
  • Attorney-Client Privilege Issues for In-House Counsel
  • Developing Trends in Advertising and Personal Injury Litigation
  • Update on the ALI Restatement of the Law of Liability Insurance
  • Cyber-Threats and Digital Coverage Issues
  • Preparing the Corporate Designee for Deposition
  • CTE and Other Sports-Related Claims
  • Ethics and Confidentiality Issues in Mediation

The following week, DRI will present an entirely different program at the Cobb Energy Performing Arts Center in Atlanta.

Southeast Regional Claims Conference:   September 28  

  • Lessons Learned From Bad Faith Trials
  • Ethical Considerations for Claims Investigations”
  • Navigating Construction Defect Claims
  • Evolution of Catastrophic Injury Modeling
  • Update on Medicare Issues
  • Eight Corners: The Duty to Defend and Beyond
  • Diminution in Value and Auto Claims

 

Both programs include a networking lunch and cocktail reception.

For more information about these seminars, click on www.dri.org or call (312)795-1101.