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

The fate of climate change litigation now rests in the hands of the United States Supreme Court. Electric utilities, having suffered a surprising defeat at the hands of the Second Circuit last year in American Electric Power Co. Inc. et al. vs. State of Connecticut, 582 F.3d 309 (2d Cir. 2009), rehearing denied (2d Cir. March 5, 2010) filed a petition for certiorari with the nation’s highest court on August 2, 2010 seeking reversal of the Second Circuit’s opinion reinstating the plaintiffs’ federal common law nuisance claims against the utilities for allegedly contributing to global warming. In their cert petition, American Electric, Duke Power, Xcel Energy and Southern Company argue that such a cause of action should not be implied under the common law and that these are political issues that are best left to the Congress to decide.

• Email This
• Print
• Comments
• Trackbacks

The Pennsylvania Supreme Court rarely agrees on anything.  Next to the Washington Supreme Court, the Pennsylvania Supreme Court features the largest number of divided decisions and nasty dissents of any court in the country.  It is with some surprise that we note the Supreme Court's unanimous opinion last week in American & Foreign Ins. Co. v. Jerry’s Sports Center, No. J-48-2009 (Pa. August 17, 2010) holding that an insurer cannot recoup costs that it has paid to defense a law suit that it has in the interim been held not to owe coverage for.   The Pennsylvania court's analysis stands in direct contrast to a Colorado opinion issued the day before by the U.S. Court of Appeals for the Tenth Circuit.

For the past ten years, courts around the country have grappled with the issue of whether an insurer that is later declared not to owe coverage may recoup defense costs that it paid in the interim under a reservation of rights. While many courts have rejected such claims outright, others have permitted recoupment, so long as the insurer advised the insured at the outset that it was asserting this right.

• Email This
• Print
• Comments
• Trackbacks

For decades, the American Law Institute has had a seminal influence on the law through its widely-cited Restatements.  Now the ALI is embarking on its first ever foray into the world of insurance coverage.

In May 2010, the ALI Council approved an ambitious proposal for a “Principles of Liability Insurance Law.”  “Principles” differ from the more familiar ALI “Restatements” in that they analyze what the law ought to be as distinguished from setting forth what it presently is.

The insurance Principles project will consist of three chapters: (1) Principles of Contract Law in the Liability Insurance Context; (2) Principles of Liability Insurance Coverage; and (3) Principles of the Management of Insured Liabilities. The reporter for the project is Professor Thomas Baker of the University of Pennsylvania, who will be assisted by several dozen academics, judges and insurance law specialists.

For a complete listing of the advisory group, click on http://www.ali.org/index.cfm?fuseaction=projects.members&projectid=23#RAS
 

• Email This
• Print
• Comments
• Trackbacks

In Metropolitan Casualty Ins. Co. v. Birmingham, Case No., C09-726RAJ, 2010 U.S. Dist. LEXIS 82838 (W.D. Wash., August 13, 2010), the court found that the insurer had no duty to defend the insured because there were no allegations of property damage or personal injury. In the underlying case Birmingham requested a declaration regarding a property boundary. The defendant in that case brought a counterclaim asserting a right to an order to quite title, injunctive relief, breach of contract, trespass and interference with property rights. Birmingham tendered the defense of the counterclaims to its insurer. Metropolitan denied it had a duty to defend because there was no allegation of covered damage.

• Email This
• Print
• Comments
• Trackbacks

For more than a year, plaintiffs’ and insureds’ attorneys in Oregon have been citing MW Builders, Inc. v. Safeco Ins. Co. of Am., 2009 U.S. Dist. LEXIS 31234 (D. Or., Apr. 9, 2009), for the proposition that if a contractor’s negligence results in any covered property damage, then the insurer must pay for all repair costs attributable to the contractor.  Thus, the Ninth Circuit’s recent reversal of MW Builders represents a substantial victory for insurers embroiled in construction defect disputes.

• Email This
• Print
• Comments
• Trackbacks

Many thanks to our readers and the folks at the Insurance Law Center for recognizing the Forum as among the Top 50 Insurance Law Blogs for 2009!

• Email This
• Print
• Comments (1)
• Trackbacks

The issue of whether evidence beyond the “eight corners” of the complaint against an insured and the policy issued to an insured can be considered to determine an insurer’s duty to defend its insured under a claims-made policy has not been addressed by Oregon’s appellate courts. In the recent Oregon District Court opinion, Harris Thermal Transfer Products, Inc. v. James River Insurance Co., 2010 U.S. Dist. LEXIS 72673 (July 19, 2010), Oregon District Court Judge Paul Papak examined the issue and determined that a rigid application of the eight-corners rule would systematically subvert the intentions of the parties to a claims-made insurance contract and result in a distortion of the terms of their agreement. The District Court predicted that, if presented with the issue, the Oregon Supreme Court would not apply the “eight-corners” rule barring consideration of extrinsic evidence of the date a claim was noticed to an insured when analyzing an insurer’s duty to defend under a claims-made policy.

• Email This
• Print
• Comments
• Trackbacks

Since Justice Kennard noted her criticism with the California Supreme Court’s literal approach to policy interpretation in her dissents in Foster-Gardner and Powerine, insurance coverage lawyers have been watching to see whether California’s highest court will limit the impact of those decisions. This line of cases stand for a number of propositions including that for a policy that only defends against suits, there is no duty to defend unless there is a civil action in a court of law that seeks money damages. Foster-Gardner, Inc. v. National Union Fire Ins. Co., 18 Cal.4th 857 (1998) (no duty to defend where there is no civil action prosecuted in a court). See also Certain Underwriters at Lloyd’s, London v. Superior Court (Powerine Oil Company, Inc.), 24 Cal.4th 945 (2001). This differs from most states’ “functional equivalent approach” which results in insurers having to defend against adversarial matters which are not lawsuits.

It will be interesting to see what (if anything) the California Supreme Court does with the recent Clarendon v. Starnet case, albeit that case involves a specific construction statute, which is dissimilar to the environmental context of the Foster-Gardner line of cases.

This inter-insurer dispute, Clarendon America Ins. Co.  v. Starnet Insurance Co., __ Cal.App.4th __ (2010) (2010 WL 2904995), involved the question of whether there was a duty to defend under a primary policy that defined “suit” as a “civil proceeding in which damages . . . are alleged.”  The definition also includes “any other alternative dispute resolution proceeding . . . to which the insured submits with our consent.”  At issue was a pre-suit requirement for construction claims, the “Calderon Act.” Under California’s Calderon Act (Calif. Civil Code § 1375, et seq.), homeowners associations are required to provide the builder, developer, or general contractor with notice of construction or design defects prior to instituting litigation. The association has to provide notice, list defects, and describe the results of the defects. This notice triggers a period, not to exceed 180 days, during which the parties “shall try to resolve the dispute . . .” 

• Email This
• Print
• Comments
• Trackbacks

Restitution awarded pursuant to California’s Business & Professions Code (“BPC”) § 17200, et seq., cannot then be increased pursuant to a trebling provision that specifies it pertains to statutes that impose fines and penalties (which the BPC does not do), according to a unanimous California Supreme Court.  In Clark v. Sup. Ct. (National Western Life Ins. Co.), __ Cal.4th __ (2010), the only monetary award to which a plaintiffs/private citizens are entitled under the BPC is restitution and injunction, not a fine or penalty.

• Email This
• Print
• Comments
• Trackbacks