National Insurance Law Forum : Insurance Litigation Lawyer & Attorney : National Insurance Law Forum : Insurance Coverage, Bad Faith Litigation

Tully Construction Co., Inc. v. TIG Ins. Co. (NY App. 2^nd Dept. Sept. 27, 1007)

Court holds that excess carrier’s delay in disclaiming coverage for late notice was not unreasonable under NY Ins. Law §3420(d), where insurer was presented with circumstances, including representations form its insured, that notice had previously been provided by the insured’s broker. Thus, timeliness of notice was not immediately apparent to the insurer upon receipt of the claim, but warranted further investigation.

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State Farm Mut. Auto. Ins. Co. v. Estep (Ind. Sept. 25, 2007)

Insurer repeatedly offered settlement of auto accident claim for full policy limits, but plaintiff refused. When jury returned verdict in excess of limits, trial court ordered assignment of insured’s bad faith claim over insured’s objection. Bad faith claim was premised on perceived conflict in defense counsel’s representation of insured. Court held that involuntary assignment of claims against carriers whose insureds do not believe they have been wronged by their insurers was inconsistent with direct action rule. Permitting forced assignments would result in multiple litigation, would adversely impact settlement negotiations, and would increase costs to insureds who never make a claim and find their insurance service satisfactory.

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The Insurance Fair Conduct Act (IFCA) was passed by the Washington State Legislature in May 2007 after much legislative debate as to the need for the unprecedented remedy of un-capped treble damages awarded at the discretion of the trial court for a violation of the IFCA. Violations of the IFCA can result from (1) an unreasonable denial of a claim for coverage or payment of benefits or (2) violations of the Washington Administrative Code regulations concerning improper claims handling. In addition to the possibility of discretionary uncapped treble damages, mandatory awards of reasonable attorney’s fees, actual litigation costs and statutory costs for violations are required under the IFCA.

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In a decision filed on July 26, 2007, the Washington State Supreme Court, in Woo v. Fireman’s Fund Ins. Co., confirmed the expansive nature of Washington law on the duty to defend. Woo involved a practical joke that an oral surgeon, Dr. Woo, played on one of his employees, Tina Alberts. Ms. Alberts’ family raised potbellied pigs, and Dr. Woo often poked fun at this in what he called an attempt to create a friendly atmosphere in the office. Ms. Alberts needed to have two of her teeth replaced with implants, and Dr. Woo consented to perform the procedure. While Ms. Alberts was unconscious under general anesthesia, Dr. Woo inserted fake boar tusks and allowed photos to be taken before removing the tusks and completing the procedure with the proper implants. Ms. Alberts was humiliated when the photos were later shown to her at her birthday party. After the party, she left the office. 

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Del Monte Fresh Produce v. Transportation Insurance Co. (7th Cir. 2007)

The Seventh Circuit affirmed the district court's grant of summary judgment to Transportation on the duty to defend on the basis that coverage was excluded as the underlying class action complaints alleged Del Monte had knowledge of falsity regarding its claim to the USPTO and in industry publications that its Fresh Del Monte Gold pineapples were "extra sweet." 

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Scottsdale Ins. Co. v. Mason Park Partners LP (5th Cir. 2007)

After a fire at the Taste of Katy restaurant caused property damage, the insured owner of the restaurant and its landlord made claims under the insured's Commercial Property Coverage and Commercial General Liability policies.  Affirming the district court, the Fifth Circuit found that under Texas contract law there were no ambiguities in the policy and that the landlord was not covered under either the property or commercial general liability parts.   Additionally, because the landlord did not have coverage under the policy, the Fifth Circuit found it could not maintain its statutory claims including violations of the Texas Deceptive Trade Practices-Consumer Protection Act.

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Aerojet-General Corp. v. Commercial Union Ins. Co. (Cal. App., 3^rd Dist., Sept. 13, 2007)

Court holds that excess carriers were not obligated to indemnify insured for sums insured agreed to pay as settlement of CERCLA claims, as sums were paid as part of settlement, and not court-adjudicated award of damages. Court relied on Certain Underwriters at Lloyd’s of London v. Superior Court, 24 Cal.4th 945 (2001), reasoning that term “damages” means only money ordered by a court to be paid.

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Guishard v. General Security Ins. Co. (NY Sept. 11, 2007)

Court holds that CGL policy’s auto exclusion bars coverage for injuries sustained while riveting metal on a van for the purpose of converting it to an ice cream truck. The activity was not "maintenance" within the meaning of a CGL policy's auto exclusion, as the work did not involve "an intrinsic part of the mechanism of the car and its overall function."

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Cali v. Merrimack Mut. Fire Ins. Co. (NY App. 2d Dept. Aug. 14, 2007)

Court holds that anti-concurrent causation language in property policy precludes coverage for damage caused by excluded earth movement despite that collapse was caused in part by covered decay.

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