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

In Shilo Inn, Seaside Oceanfront, LLC v. Grant, et al., 2009 U.S. Dist. LEXIS 75255 (D. Or. Aug. 24, 2009), the District Court of Oregon granted summary judgment to an insurer, ruling that an exclusion for property damage to “[t]hat particular part of any property that must be restored, repaired, or replaced because ‘your work’ was incorrectly performed on it” barred all coverage for the costs of replacing the insured contractor’s defective work.

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In an opinion issued on September 17, 2009, the Washington Supreme Court struck down RCW 7.70.150, a law that requires plaintiffs to file a certificate of merit with regard to all medical malpractice lawsuits. In Putnam v. Wenatchee Valley Medical Center, ___ Wn. 2d ___, (2009), the Washington Supreme Court reversed the trial court and held that the law is unconstitutional “because it unduly burdens the right of access to courts and violates the separation of powers.”

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In AXIS Surplus Ins. Co., et. al v. Intracorp Real Estate, LLC, et. al., the Washington District Court, Judge Coughenour, recently ruled in favor of the Insurers on the application of Mold Exclusions irrespective of the fact that efficient proximate cause was potentially a covered peril. This coverage dispute arises out of a claim made by the insured under two “all-risk” Builders Risk insurance policies for alleged moisture, mold, and related damages to a mixed-use condominium project that resulted primarily from faulty and defective construction. The Claimants argued that because the efficient proximate cause was a covered peril, the Mold Exclusions have no application under Washington’s “efficient proximate cause” doctrine. The Insurers argued that the Mold Exclusions should apply regardless of the rule.

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California appellate court opinions on insurance coverage matters are very often lengthy, but rarely entertaining.  Here is a long but well-written one that it is not only intellectually well-done, but humorous in the delivery. And, the result was for the insurer.

In Griffin Dewatering Corp. v. Northern Ins. Co. of N.Y. (2009) 176 Cal.App.4th 172 (2009 WL 2344762), the California Court of Appeal, Fourth Appellate District, reversed the trial court’s $10 million judgment of attorneys fees and punitive damages against the insurer. The court concluded the insurer breached its duty to defend; however, the insurer acted reasonably in, after denying any duty, defending and paying the claim, all while the law was in flux as to application of the policy’s “Total Pollution Exclusion.”  The court found the insurer’s conduct was objectively reasonable under the circumstances. The decision demonstrates an insurer can reconsider and, in doing so, avoid being found in bad faith. 

Procedurally the case is also interesting, not only in its convoluted and extensive history, but in that the Court in denying a petition for rehearing issued a supplemental (unpublished) opinion directly addressing the additional “facts” and arguments raised by the insured. See 2009 WL 2659463. There is much that could be discussed about the case, but only a short synopsis is provided here.

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