An Arkansas Insurer's In House Defense Counsel is Disqualified From Representing The Insured and Found To Be Engaged in the Unauthorized Practice of Law.
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New Insurance Law Treatise Stands Apart
There’s no shortage of insurance law treatises on the market today, but Randy Maniloff’s and Jeff Stempel’s recent work, General Liability Insurance Coverage—Key Issues in Every State, stands apart. This 495-page paperback (yes, paperback!) is a practical mix of fundamentals (duty to defend, right to counsel, attorneys fees, punitive damages) and more advanced issues(recoupment, faulty workmanship, latent injury, bad faith). The comprehensive, issue-by-issue analyses offered by these very knowledgeable and accomplished authors is balanced and thoughtful, and refreshingly easy to read. A 50-state survey of nearly every issue provides immediate access to case law in all jurisdictions. This is a worthy (and very portable) reference for anyone in the insurance law field. And it's affordable--A 20% discount is available by using promo code 29471 in the box in the upper right corner (expires 12/31/11)!
The Case of The Vanishing Additional Insured
I've been involved lately in a case that frankly has me stumped.
Here's the problem:
1. The policy contains an "Additional Insured Required By Written Contract" endorsement.
2. Prior to the issuance of the policy was issued, the Named Insured had contracted with ACE Corporation that had various subsidiaries.
3. After the policy was issued (but before the accident occurred), ACE Corporation sold the former subsidiary.
4. Suit has now been filed against the former subsidiary, which is seeking as an additonal insured, claiming the loss arose out of the work performed on its behalf by the named insured.
Under these circumstances, has the subsidiary lost the right that it possessed as of the date the policy was issued? In other words, where a party gains AI status through a blanket endorsement of this sort, do the rights vests for the entire policy period or can the claimant lose its coverage rights through events that, had they existed at the outset of coverage, would have eliminated any right to coverage.
This is one of those legal issues where the answer seems clear but I'm darned if I can find a case on one side or the other. If you have case law or thoughts on the issue, please contact me at maylward@morrisonmahoney.com
Thanks all.
Looking For Friends in Massachusetts
The Supreme Judicial Court of Massachusetts is seeking amicus briefs in an important appeal construing the scope of "intentional and criminal acts" exclusion in a homeowners policy. If you belong to an organization that might be interested in having a say on this issue, contact us.
At issue in Metropolitan Prop. & Cas. Ins. Co. v. Morrison, SJC-10858 is a 2010 Superior Court ruling that an exclusion for intentional and criminal acts in a homeowner's policy precluded coverage for a law suit that a police officer brought against the insured's teen age son for injuries that the teenager inflicted in the course of resisting arrest. The Superior Court ruled that the exclusion whether or not the insured had a subjective intent to cause injury (as is generally required under Massachusetts law for "expected or intended" injury exclusions).
The insured has appeal, arguing that the "Intentional and Criminal Acts" exclusion should be interpreted in the same manner as the earlier "intentional acts" exclusion, which the Court ruled in Preferred Mutual Ins. Co. v. Gamache, 426 Mass. 93, 686 N.E.2d 989 (1997) only applied if both the act and the resulting injuries were intentional.
The Supreme Judicial Court has accepted direct appellate review of the case and is expected to hear oral argument in May. In the interim, the Court has requested amicus briefing on two issues: (1) whether the intentional and criminal acts exclusion in a homeowner’s policy barred coverage for an insured’s action that caused injury to a police officer while resisting arrest. The Court has also requested briefing with respect to whether the harm from the criminal act must have been intended for the exclusion to apply. The briefs will be due some time in late April.
Although one can read too much into the willingness of high courts to accept direct appellate review, the fact that the SJC took this case away from the Appeals Court does give one concern. At the same time, the appeal presents an opportunity to fix some of the problems that the Court's earlier Gamache opinion created or, at a minimum, to contain the damage.
Please contact me if you'd like a copy of the trial court's decision of the briefs that have been filed so far in the SJC.
The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?
The Court of Appeals of Indiana recently addressed the “Montrose“ language added to the CGL ISO form in 2001 in the context of a construction defect claim where a fractured storm drain caused significant flooding a year after the drain was damaged. The insuring agreement requires that “bodily injury” or “property damage” be caused by an “occurrence” and that the “bodily injury” or “property damage” occur during the policy period. The Montrose language adds that the insurance applies only if, prior to the policy period, no insured knew that the “bodily injury” or “property damage” had occurred in whole or in part. Significantly, it also states that any “bodily injury“ or “property damage” which occurs during the policy period and was not, prior to the policy period known to have occurred, includes a continuation, change or resumption of that “bodily injury” or “property damage” after the end of the policy period.
In Grange Mutual Cas. Co. v. West Bend Mut. Ins. Co., No. 29D04-0706-PL-1112 (Ct. App. IN March 15, 2011), http://www.ai.org/judiciary/opinions/pdf/03151109ehf.pdf, Sullivan was the General Contractor for a school construction project. Its subcontractor, McCurdy, installed the storm drain pipes. One of the storm pipes was fractured in 2005 while McCurdy was doing its installation work. More than a year later, the school experienced significant water damage due to flooding. It was later discovered that the flooding was due to the fractured storm drain. Sullivan’s insurer paid $146,403 for the water damage. That insurer brought a subrogation claim against McCurdy and its two insurers: West Bend and Grange. West Bend had issued CGL coverage to McCurdy while the construction was ongoing , including the date in which the storm pipe was fractured. Grange issued CGL coverage to McCurdy at the time of the flooding. Those two carriers jointly settled the subrogation claim and then litigated which insurer actually owed coverage for the loss. Significantly, the loss that was paid included only damages from the flooding, not any damages for the cost of repairing the pipe.
Continue Reading...Monthly Practice Tip: Is There Hope for Recoupment Claims?
Today, we continue a new feature on our blog: the Monthly Practice Tip, which considers a practical problem faced by claims professionals and outside coverage counsel, presenting a dialogue created by our five editors. This month we look at the ever-challenging problem of recoupment claims.
March is the season of hope. After a long, dreary winter, March is a time of rebirth and possibilities. Even die-hard Chicago Cubs fans have hope (for a while). So this month we’ve chosen to tackle a topic that has always held out hope and promise to insurers yet, while Lucy and Charlie Brown’s football, has often been snatched away. We refer, of course, to recoupment and, more specifically, to whether insurers can recoup costs of defense or settlement payments if they are later found not to have owed coverage.
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Zip Code Ruling Spawns class action lawsuits - but do they trigger Coverage?
A rash of class action suits have been filed following a recent ruling by California Supreme Court in Pineda v. Williams-Sonoma Stores, Inc., S178241 (Cal. Sup. Ct. Feb. 10, 2011), which found that Williams-Sonoma violated the state’s credit card law by asking a customer to provide her zip code when making a purchase with a credit card. The customer sued the retailer, contending that it used her name and the zip code to determine her home address, which is now contained in the company’s data base. The Supreme Court found a zip code is part of one’s address and, therefore, the request and recording of same violates “the Song-Beverly Credit Card Act of 1971 (“the Credit Card Act”),Cal. Civ. Code, Section 1747.08, subd. (a)(2). Companies that violate the Act face fines of $250 for the first violation and as much as $1000 for each subsequent violation.
Do “zip code” suits trigger coverage under the “personal and advertising injury” coverage?
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