Christian Cavallo

All articles by Christian Cavallo

 

Wildfire Smoke Constitutes “Direct Physical Loss”

An Oregon federal court decision deemed “air” physical property covered by a property insurance policy, in holding that wildfire smoke infiltration of an outdoor theater caused a physical loss of property. The policyholder, an outdoor theater, claimed it suffered a property loss because it had to cancel several shows when smoke from nearby wildfires filled its audience seating and stage areas. Although the wildfires caused ash and soot to accumulate on outdoor seating and flooring, and in ventilation, lighting and
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EPA Inquiries Under CERCLA Trigger the Duty to Defend . . . To The End

The Ninth Circuit Court of Appeals ruled that the unique liability regime of CERCLA qualifies a request for information under the statutory scheme as a “suit” within the meaning of general liability insurance policies, thereby triggering an insurer’s duty to defend its insured. The court also held that this duty to defend continues until the EPA issues its final Record of Decision. The insured cement company ran two of its cement plants on an Oregon Superfund Site. In 2008, the EPA
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Must an Additional Insured Have a Written Contract With the Named Insured to Get Coverage? It Depends Which Court You Ask

There is a growing list of trial court decisions in New York where the courts disagree of whether an additional insured endorsement to an insurance policy requires a written contract between the additional insured and the policy’s named insured for additional insured status to apply. The U.S. District Court for the Southern District of New York recently held in Liberty Mutual Fire Insurance Company v. Zurich American Insurance Company that contractual privity with the named insured was not required. In
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Citizenship of Unincorporated Associations: Insurers Warned to Take Consistent Positions on Diversity Jurisdiction

Certain insurers must now give pause to the common practice of filing in or removing to federal court on the basis of diversity. The U.S. District Court for the District of Oregon recently mirrored the majority of federal jurisdictions in ruling that reciprocal insurance exchanges are unincorporated associations, which are deemed to be a citizen of every state in which it has members, or policyholders, regardless of whether those policyholders are involved in the litigation. In Staggs v. Farmers Insurance
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No Sympathy: Injured Claimant Without Auto Insurance Due to Fraud Barred From Bringing Personal Injury Claim

In Bencosme v. Kannankara, no. A-1672-14T3 (App. Div. Mar. 22, 2016), the New Jersey Appellate Division concluded that the apparent harshness of the decision was not a sufficient basis for it to refuse to affirm a trial court’s ruling that dismissed a personal injury lawsuit against a claimant who failed to carry statutorily required auto insurance, even though the claimant was uninsured as a result of fraud. Federico Bencosme was involved in an auto accident with Joseph Kannankara in which
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Rescission Available to Insurer Whose Insured Lied in Insurance Application About Use of Experimental Weight Loss Techniques

In Essex Insurance Company v. Galilee Medical Center S.C d/b/a MRI Lincoln Imaging Center, the insured, Galilee, represented to its insurer, Essex, that it did not offer any weight loss drugs to its patients. After a former patient brought suit against Galilee based on complications from injections of a weight loss drug, Essex sought to rescind its policy. The Seventh Circuit Court upheld summary judgment granted to Essex, finding that false statements made by Galilee provided a basis for rescission.
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No Showing of Prejudice Remains the Rule for Insurers to Deny Coverage Under a Claims Made Policy Based on Late Notice

Extending the reach of its holding in Zuckerman v. National Union Fire Ins. Co., 100 N.J. 304 (1985), the New Jersey Supreme Court in Templo Fuente De Vida Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. A-18 (N.J. Feb. 11, 2016), ruled an insurer may deny coverage under a “claims made” policy based on late notice without having to show it was prejudiced by the late notice — even if the claim is made during the insurer’s
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In New Jersey, Insurance Fraud Does Indeed Equal Prison

It is no secret that New Jersey courts have a tendency to treat insurance policies different from standard contracts, at least in part because the insurance industry is heavily regulated and affects the public interest. In its ruling in State of New Jersey v. Goodwin, No. A-20 (N.J. Jan. 19, 2016), the New Jersey Supreme Court has drawn a definitive hard line in the sand in the fight against insurance fraud. The New Jersey Supreme Court ruled that a defendant
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Mutually Exclusive Polices Found to Share Defense Obligation

When the use of an auto is involved in an accident, normally a professional liability insurer whose policy excludes claims arising out of the use of an auto will have no obligation to share with the auto insurer in the defense of the policyholder. However, that is exactly what occurred in Knightbrook Ins. Co. v. Northfield Ins. Co., 2016 U.S. Dist. LEXIS 9265 (E.D. Pa. Jan. 26, 2016). In Knightbrook, an underlying plaintiff brought suit against the policyholder, an ambulance
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No Smoking! Pollution Exclusion Bars Coverage For Claims Arising Out of “Smoky” Beverage

While Florida courts have typically refused to limit pollution exclusions within insurance policies to traditional environmental claims, a District Court in Florida has extended the application of such exclusions even further by finding that a pollution exclusion applies to claims against a bar for injuries allegedly caused by an “exotic” cocktail served by the bar. In Evanston Insurance Company v. Haven South Beach, LLC, et al., Case No. 15-20573 (S.D. Fla. Dec. 28, 2015), the insured, a bar, served an
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Alcohol, Caffeine and Stimulants: Unambiguous Liquor Liability Exclusion Bars Coverage for Bodily Injury Claims

Refusing to succumb to pressure by an insured to find an ambiguity in an exclusion to a commercial general liability (CGL) policy where none existed, the Illinois Appellate Court, First District in Phusion Projects, Inc. v. Selective Ins. Co., 2015 IL App (1st) 150172 (Ill. App. Ct. 1st Dist. 2015) confirmed that plainly written policy exclusions will be enforced. In Phusion Projects, the manufacturer of an alcoholic beverage containing high levels of alcohol and other stimulants sought coverage from its
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Wrongful Debt-Collection is Not Wrongful Repossession; Insured is Not Covered

Parties to an insurance contract beware; a Missouri Court of Appeal’s analysis to determine the presence of an ambiguity in an insurance contract is more complex than meets the eye. In, Wolfe Automotive Group, LLC v. Universal Underwriters Insurance Company, the Eighth Circuit Court of Appeals affirmed the District Court for the Western District of Missouri’s decision denying that an insurer had a duty to defend its insured. The insured was a used-car dealership that had an umbrella policy that
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Where Throwing in the Kitchen Sink Doesn’t Help — Orient Overseas Assocs. v. XL Ins. Am., Inc.

In its recent decision, the Appellate Division (1st Dept.) of the New York Supreme Court may have provided insurers with another basis to dismiss arguably duplicative claims arising from Super Storm Sandy. In Orient Overseas Associates v. XL Insurance America, Inc., the Appellate Division considered whether, in a case in which a breach of contract claim was already plead against an insurer based on its alleged failure to pay for damages covered under its policy, this same conduct may provide
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Despite Irrebuttable Presumption Of Prejudice, Insurer Who Failed To Timely Disclaim Coverage For Default Judgment Against Its Insured Must Pay

In Montpelier U.S. Insurance Co., v. 240 MT. Hope Realty Co., et al., 2015 WL 6395949 (S.D.N.Y. Oct. 22, 2015), the United States District Court for the Southern District of New York joined the ever-growing list of courts interpreting N.Y. Insurance Law §3420(d)(2) to hold insurers who issue or deliver policies in New York strictly accountable for failing to timely disclaim coverage for bodily injury claims arising out of accidents occurring within the state. This concept is by no means a
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