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

The California Supreme Court had before it the following certified question from the Ninth Circuit:

Where a contract of liability insurance covering multiple insureds contains a severability clause, does an exclusion barring coverage for injuries arising out of the intentional acts of “an insured” bar coverage for claims that one insured negligently failed to prevent the intentional acts of another insured?

Prior to this decision, there was not clarity in California as to how the courts would rule on this issue and, as that court notes in its opinion, there is divergent positions on this issue around the country.

In Minkler v. Safeco Ins. Co., __ F.3d __ (9th Cir. 2010) (10 CDOS 7612), the court found, in the specific context before it, that the intentional acts exclusion was ambiguous in light of the policy’s severability-of-interests clause. This particular severability clause provided that: “This insurance applies separately to each insured. This condition will not increase our limit of liability for any one occurrence.” The court read the clause to pertain to all “insurance” and not just the policy’s limits.

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In Allstate Ins. Co. v. Leong, 2010 U.S. Dist. LEXIS 46277 (D. Haw. May 11, 2010), the court found that a policy’s pollution exclusion does not apply to the release from a sewer line that damages a neighboring retaining wall.  Allstate issued a homeowners’ policy to Leong.  Leong was brought in as a third-party defendant in a suit by the neighbor whose retaining wall was damaged against the City of Honolulu.  Allstate agreed to defend Leong, but filed a declaratory judgment action regarding its duty to defend.  The primary issue was whether the damage caused by the release from the sewer line was excluded by a pollution exclusion for property damage consisting of or caused by “waste materials or other irritants, contaminants, or pollutants.”

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Massachusetts, like several other states, has ruled that the unwanted receipt of junk fax communications from vendors triggers Coverage B as involving the "publication" of “material” that invades a person’s right of privacy. Now a new law suit filed in the federal district court in Boston presents the related question of whether the unauthorized collection of confidential information by a vendor similarly triggers “personal and advertising injury” coverage.

Galaxy Internet Services filed a putative class action in the U.S. District Court in Boston on May 25 claiming that Google, Inc. violated the privacy rights of Massachusetts citizens by using “ethernet sniffers” that collect WiFi data in the course of trawling the streets, developing local information for its Google Maps and Google Earth products. The plaintiff argues that this “payload data”—which included e-mail, video, audio components, documents and other personal and business information--was confidential in nature and that citizens have a reasonable expectation of privacy that was invaded by Google’s decision to decrypt and collect this material.
 

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An article in Tuesday’s New York Times discussed the growing trend of merchants to file defamation actions against aggrieved consumers who post unflattering statements about them on the internet through social media such as Face Book or Yelp.  While such claims may be subject to anti-SLAPP statutes in many states, they nonetheless pose a daunting prospect for the defendants, most of whom are likely to be citizens with little or no experience in the legal system.

So will these end up in the lap of the insurance industry?  While such claims are likely subject to various HO-3 exclusions, depending on the specific circumstances of the claim, they may well trigger at least a duty to defend if the homeowner's policy includes "personal injury" coverage extending to libel, slander or defamation.

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Oregon Rule of Civil Procedure 54 E provides a route whereby litigants can cut off an opponent’s right to recover attorney fees by making an Offer of Judgment for more than what their opponent ultimately recovers. The Rule encourages settlements by providing a way for a defending party to limit its liability and by forcing plaintiffs to take a hard look at the value of their claims when faced with an Offer of Judgment.

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In Stuart v. Pittman, A134858 (Or. Ct. App. May 5, 2010), the insured convinced a jury that it deserved coverage for extensive snow, ice and water damage to a home under construction.  The insured’s policy clearly excluded the loss, but the insured successfully argued that coverage should be provided under an oral binder that preceded the policy.  The insured’s reasoning was that when he had asked for “course of construction” coverage “although he did not know specifically what that was,” the insurer’s agent had told him that the policy would cover “anything that goes through the cracks … anything for which I might be deemed liable … and anything that the contractor’s coverage did not specify or provide benefit for.”  Because the insurer failed to provide a copy of the policy (with its relevant exclusions) until after the damage had occurred, the insured argue that coverage should be provided consistent with the agent’s representations.

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