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

In Vision One, LLC v. Philadelphia Indemnity Ins. Co., 2010 Wash. App. LEXIS 2322 (October 19, 2010), the Washington Court of Appeals affirmed the trial court’s ruling that an insurer who denies coverage is estopped from arguing the insured impaired its subrogation rights, but reversed and remanded on the issued of the efficient proximate cause of damages. 

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In Fred Shearer & Sons, Inc. v. Gemini Insurance Company, 2010 Or. App. LEXIS 1137 (Or. App. Sept. 29, 2010), the Oregon Court of Appeals held that a court may look beyond the policy and the complaint to extrinsic evidence in order to determine who qualifies as an insured. The Court expressly held that “the inquiry as to whether [the party seeking coverage] was an insured under the policy was not limited to the pleadings and the text of the policy. Id. The Court distinguished between looking at the conduct covered by a policy to determine a duty to defend and when the Court is determining who has status as an insured.

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In ZRZ Realty Co. v. Beneficial Fire and Cas. Ins. Co., 2010 Or. LEXIS 791 (October 14, 2010), the Oregon Supreme Court held that the way parties structure an insurance agreement determines whether an insured bears the burden of proving that damages are covered under the grant of coverage or whether the insurer bears the burden of proving that the damages fall within an exclusion of coverage.  The Court also held that the terms of a marine insurance policy providing protection and indemnity coverage applied to damage to sediment in a river.

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This is a bit off-topic for our blog, but worthy of note. The Advisory Group to the New York State-Federal Judicial Council recently issued a report analyzing the extent to which there are differences in the ways in which New York State and federal courts treat pre-litigation conduct regarding the creation, retention, and destruction of electronically stored information.  The report includes a survey of New York State and federal decisional law, and concludes with concrete recommendations, including that New York State and federal courts be made aware of actual and potential inconsistencies in addressing the pre-litigation duty to preserve ESI, and that federal courts consider the potential application of the Erie doctrine when deciding cases. Might the Advisory Group’s efforts bear fruit in other jurisdictions? A copy of the report, Harmonizing the Pre-Litigation Obligation to Preserve Electronically Stored Information in New York State and Federal Courts, is posted on the New York Court of Appeals’ website. Kudos to my colleagues, Sharon Porcellio and James Paulino, for their contributions to this effort.

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In RLI Insurance Company v. Smiedala, 2010 NY Slip Op 06836 (Oct. 1, 2010) a New York appellate court recently applied a familiar rule in holding that a policyholder who prevails in a declaratory judgment action filed against it by its insurer is entitled to recover attorneys’ fees and costs incurred in defending that action. Citing well-established precedent, the court reasoned that “an insurer’s responsibility to defend [or to reimburse defense expenses] reaches the defense of any actions arising out of the occurrence … including those incurred in defending against an insurer seeking to avoid coverage for a particular claim.” In doing so, the court rejected the novel claim that attorneys’ fees incurred in defending the coverage action were not recoverable because the policy afforded excess insurance that had not yet been triggered in the underlying action. Although the insurer’s excess coverage, and, therefore, its duty to defend the underlying action, had not yet been triggered, the court reasoned that attorneys’ fees incurred in defending the coverage action were recoverable because the policyholder was cast in a defensive posture by the insurer’s efforts to free itself from its policy obligations.

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