Jonathan Schwartz

All articles by Jonathan Schwartz

 

Landers and Restoring Time for Appraisals

Troy Beecher, an experienced insurance coverage attorney in Goldberg Segalla’s Orlando office, scrutinizes a recent decision from a Florida District Court of Appeal, Landers v. State Farm Florida Insurance Company, which liberalizes and encourages insurance bad faith litigation in Florida.  Troy delves into the decision and why it undermines the purpose behind civil remedy notices.  Troy otherwise discusses how the court neutered safeguards to a flood of bad faith action litigation stemming from property coverage disputes.  Troy also shares his predictions
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Introducing Timely Notice: What’s New and Exciting in Insurance Law

Timely Notice is your on-the-go source for sharp takes and expert analysis of the latest trends, breaking news, and sea-changes in global insurance law and the insurance marketplace. With episodes hosted by Goldberg Segalla partners, including Jonathan Schwartz and Sharon Angelino, Timely Notice offers intelligent insights, frequently delivered, and in easy-to-digest episodes you can access any time. The podcast will feature discussions with outside and in-house counsel, claims professionals, underwriters, brokers, and other insurance industry professionals. Whether you listen on your
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Illinois Supreme Court Puts the Brakes on Named Driver Exclusion

The Illinois Supreme Court held in Thounsavath v. State Farm Mutual Automobile Insurance Co., 2018 IL 122558, that an insurer cannot rely on a named driver exclusion to deny underinsured motorist coverage to its insured because the exclusion is unenforceable under Illinois’ mandatory automobile insurance statutory scheme and the state’s public policy. State Farm provided automobile liability and uninsured motorist (UM)/underinsured motorist (UIM)coverage to Thounsavath, which contained a named driver exclusion stating no liability shall attach “while any motor vehicle
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The Modern Fraudster: How Courts Are Responding to Social Engineering Fraud

In an article for Insurance Journal, Goldberg Segalla partner Jonathan L. Schwartz and associate Colin B. Willmott, members of the Global Insurance Services Practice Group in the firm’s Chicago office, write about social engineering fraud (SEF) and questions over availability of insurance coverage for SEF under commercial crime policies — an issue the Second and Sixth Circuit Courts of Appeals are set to clarify in 2018. SEF includes now-common types of fraud involving digital communications: phishing/whaling, spoofing, and impersonating or pretexting. “A common example [of SEF]
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The Road Less Traveled: In a Case of First Impression, Indiana Court of Appeals Holds SIR Applicable to Additional Insureds

In Walsh Construction Co. v. Zurich American Insurance Co., 2017 Ind. App. LEXIS 137 (Mar. 28, 2017), the Indiana Court of Appeals affirmed the trial court’s grant of summary judgment in favor of Zurich American Insurance Company and against Walsh Construction Company. In a case of first impression, the Court of Appeals held that a self-insured retention (SIR) applied not only to the insurer’s relationship with the named insured, but also, to any additional insureds. Thus, because the named insured
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Intoxication Not a Defense to Expected or Intended Injury Exclusion, Massachusetts Appellate Court Says

In Liberty Mutual Fire Insurance Co. v. Casey, 91 Mass. App. Ct. 243 (Mar. 29, 2017), the Massachusetts Appeals Court held in essence, that the insured (Casey)’s impairment due to alcohol and drugs at the time of the underlying assault did not render the insurance policy’s expected or intended exclusion inapplicable. The undisputed facts established that Casey had the capacity to form the requisite intent to injure the underlying plaintiff. Seventeen-year-old Casey “sucker punched” Williams, the underlying plaintiff, in the
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Minnesota Supreme Court Limits Insurers’ Extracontractual Liability: An Insured’s Recovery of “Proceeds Awarded” for Insurer’s Unreasonable Denial of Benefits Must Consider Policy Limit

In Wilbur v. State Farm Mutual Automobile Insurance Co., No. A15-1438 (Minn. April 5, 2017), the Minnesota Supreme Court greatly limited the insured’s recovery under the First-Party Bad Faith Statute, Section (Minn. Stat. § 604.18). Although State Farm was found to have unreasonably denied John Wilbur benefits under his underinsured-motorist policy, the calculation of his recovery for “proceeds awarded” had to take into account the policy’s limit of liability. As background, on January 10, 2009, Wilbur suffered serious neck injuries
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Plain Language, Surplus, and Reasonable Expectations: Utah Supreme Court Uses Entire Contract Construction Toolbox in Concluding Policy Inapplicable to Botched Real Estate Deal

In Compton v. Houston Casualty Co., 2017 UT 17 (Mar. 23, 2017), the Utah Supreme Court affirmed the district court’s grant of summary judgment in favor of Houston Casualty Company , holding that Houston Casualty had no duty to defend or indemnify its insured in an underlying real estate transaction gone bad. Essentially, Utah’s high court held that because the insured did not provide services “for a fee” in the underlying transaction, the underlying plaintiffs were barred from coverage under
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Frankly, My Dear, I Don’t Give a “Dam”: Seventh Circuit Holds Professional Liability Insurer Off the Hook in Neighborhood Dispute Tangentially Related to Unobtained Dam Permit

In Madison Mutual Insurance Co. v. Diamond State Insurance Co., No. 15-3292 (7th Cir. Mar. 21, 2017), the Seventh Circuit handed down a decision delineating the obligations between a professional liability insurer and a homeowner’s insurer. At bottom, the court refused to hold a professional liability insurer responsible for the defense of a suit that only tangentially referencing the insured’s professional services. As background, Dr. William and Wendy Dribben purchased a house in 1999 at Heartland Oaks, an exclusive development.
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Insurers Beware: Wisconsin Court of Appeals Hold Expected/Intended Injury Exclusion Inapplicable to Injuries Arising from an Insured’s Negligent Supervision of its Employee

In Talley v. Mustafa (Wisc. App., Apr. 5, 2017), the Wisconsin Court of Appeals found coverage available in an underlying negligence suit against a store owner and reversed the circuit court’s grant of summary judgment in favor of Auto Owners Insurance Company. The court’s holding, in essence, was that a reasonable person in the insured’s position would have expected that his insurance policy would cover a customer’s negligence suit, including negligence in training/supervising an employee who contributed to the customer’s
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Enough is Enough: Fifth Circuit Holds Duty to Defend Does Not Include Costs of Prosecuting Insured’s Fee-Dispute Counterclaim

Aldous v. Darwin National Assurance Co., No. 16-10537 (5th Cir. Mar. 16, 2017), presents a thicket of coverage issues. However, the clearest and most significant one for the insurance industry is that the duty to defend, under Texas law, does not extend to the cost of prosecuting an insured’s counterclaim. This coverage litigation started as an attorney-client dispute over the non-payment fees and then morphed into a legal malpractice action. Darwin National Assurance Co. insured Aldous under a professional liability
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Professional Services Exclusions Found to Bar Coverage for Insureds’ Administration of Medications Leading to Meningitis Outbreak

In Westfield Insurance Co. v. Orthopedic and Sports Medicine Center of Northern Indiana, Inc. (N.D. Ind. Mar. 28, 2017), an Indiana federal court held an insurer had no duty to defend or indemnify its insured against over scores of malpractice and negligence claims that allegedly caused a meningitis outbreak. The district court concluded that, under the subject CGL and umbrella policies, the underlying claims did not involve an “occurrence” and, further, professional services exclusions precluded coverage entirely. As background, NECC
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Insured Stuck Defending Itself Against Claims of False Advertising an Elastic Tape Product

In Cincinnati Insurance Company v. KT Health Holdings, LLC et al. (D. Mass. Mar. 27, 2017), a Massachusetts federal district court held that an insurer had no duty to defend or indemnify its insureds, finding that allegations by a putative class that the insureds falsely advertised their product did not trigger bodily injury coverage under a CGL policy. As background, the defendants, KT Health Holdings and KT Health (collectively “KT”), manufacture and sell KT Tape for sports and fitness activities.
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Do Not Pass Go, Do Not Collect Hundreds of Thousands of Dollars: Seventh Circuit Parses Through Insured’s Gamesmanship to Find No CGL Coverage for Settlement of Faulty Workmanship Claim

In Allied Property & Casualty Insurance Co. v. Metro North Condominium Ass’n, No. 16-1868, 2017 U.S. App. LEXIS 4107 (March 8, 2017), the Seventh Circuit found coverage unavailable for a settlement of a lawsuit against a subcontractor alleged to have improperly installed windows at a condominium building. The court’s holding, in essence, was that the bases for the settlement were inconsistent with the claims against the subcontractor, and the only such viable claims could not possibly have been covered under
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Illinois Coverage Litigations Beware! Attorney’s Failure to Properly Investigate Results in Severe Sanctions

In American Access Casually Co. v. Alcauter, 2017 IL App (1st) 160775, the Illinois Appellate Court, First District, affirmed the district court’s imposition of sanctions against the plaintiffs, American Access Casually Company (AACC) and its coverage counsel, James Newman, pursuant to Illinois Supreme Court Rule 137. Specifically, the Appellate Court held that there were sufficient grounds to uphold the sanctions because of the plaintiffs’ failure to properly investigate the continuing validity of their lawsuit, their failure to turn over pertinent
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Massachusetts Ruling Costs Plaintiff More Than $4 Million in Bad-Faith Litigation Lawsuit: Post-Judgment Interest Not a Factor in Punitive Damages Calculations

In Anderson et al. v. National Union Fire Insurance Company of Pittsburgh PA & Others, the Massachusetts Supreme Judicial Court held that post-judgment interest should not be factored into a punitive damages calculation against an insurer when it was found to have acted willfully and egregiously by engaging in unfair trade practices and refusing to settle the underlying tort suit. In reversing the lower court’s grant of trebled post-judgment interest, the court left other parts of the verdicts undisturbed, ending
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Gotta Keep Em Separated: District Court Rejects Theory of Coverage that Trademark Infringement Suit Constitutes Trade Dress or Slogan Infringement under Coverage B

In H5G, LLC v. Selective Insurance Company, 2017 U.S. Dist. LEXIS 23937 (S.D. Oh. Feb. 21, 2017), an Ohio federal district court granted an insurer’s motion for summary judgment with respect to its obligations to defend or indemnify its insured against an underlying trademark infringement suit. In the underlying suit, High 5 Sportswear (High Five) alleged H5G infringed its trademarks and committed cybersquatting. H5G’s CGL policy issued by Selective Insurance Company afforded coverage for the infringement of another’s copyright, trade
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Engineering Firm Gets Soaked By Professional Services Exclusions in Water Treatment Plant Claim

In an unpublished decision, the Sixth Circuit affirmed a lower court’s decision judgment in favor of two insurers. Specifically, the Sixth Circuit broadly construed professional services exclusions to preclude coverage. As background, the Village of Dexter in Michigan hired an engineering and architecture firm, Orchard, Hiltz, & McCliment, Inc. (OHM), to oversee the upgrade of a wastewater treatment plant. The project included both the design and construction phases. Notably, Dexter approved three OHM proposals for professional engineering services. In addition,
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A Bad Faith Cautionary Tale: Ninth Circuit Affirms $8.7 Million Award for Bad Faith Coverage Denial

In Millennium Laboratories, Inc. v. Darwin Select Insurance Co., No. 15-55227, 2017 U.S. App. LEXIS 1533 (9th Cir. Jan. 27, 2017), the Ninth Circuit held that Darwin Select Insurance Company breached its duty to defend its insured, Millennium Laboratories, Inc., against two third-party lawsuits (Ameritox and Calloway). The court further held that Darwin’s failure to defend Millennium was in bad faith. As background, Millennium filed a complaint seeking coverage regarding two underlying lawsuits alleging Millennium told its customers that its
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No Duty, No Problem: Seventh Circuit Finds Absence of Duty for Insurance Broker to Non-Client in Connection with Fraudulent Insurance Scheme

The Seventh Circuit recently handed down a decision in which it refused to recognize a negligence claim against an insurance broker which would have expanded the duties of brokers and agents beyond those articulated in the Illinois Insurance Placement Liability Act (IIPLA), 735 ILCS 5/2 2201. In M.G. Skinner & Associates Insurance Agency v. Norman-Spencer Agency, Inc., No. 15-2290, 2017 U.S. App. LEXIS 63 (7th Cir. Jan. 4, 2017), the Seventh Circuit affirmed the district court’s grant of summary judgment
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What’s Yours is Mine and What’s Mine Isn’t Covered: Illinois Federal Court Rejects Coverage for Suit Seeking Restitution

In Westport Insurance Corp. v. M.L. Sullivan Insurance Agency, Inc., No. 15 C 7294, 2017 U.S. Dist. LEXIS 1527 (N.D. Ill. Jan. 5, 2017), an Illinois federal district court underscored the importance of a policy’s damages requirement when it granted judgment on the pleadings in favor of Westport Insurance Corporation and against its insured M.L. Sullivan Insurance Agency. In the underlying suit, American Inter-Fidelity Exchange (AIFE) alleged Sullivan and one of its employees provided false information about insurance premiums due
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A Contract by Any Other Name Would … Still Be a Contract: Wisconsin Court of Appeals Enforces Breach of Contract Exclusions to Preclude Coverage for Business Competition Claim

In Great Lakes Beverages, LLC v. Wochinski (Jan. 18, 2017), the Wisconsin Court of Appeals held that AMCO had no duty to defend or indemnify its insured against the underlying third-party tortious interference with contract claim because the breach of contract exclusions applicable to personal and advertising injury squarely applied. As background, K-Way Systems contracted with Wochinski to purchase his company. The purchase agreement contained an asset purchase agreement, a covenant not to compete, and a supply agreement. Relations between
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Five Yards for Encroachment: Prematurity Doctrines Found to Preclude Insurer’s Use of Extrinsic Evidence to Evade Coverage

In Pekin Insurance Co. v. St. Paul Lutheran Church, 2016 IL App (4th) 150966, the Illinois Appellate Court refused, based on the Prematurity Doctrine, to consider extrinsic evidence in an insurer’s declaratory judgment action in connection with an underlying wrongful death suit. As background, Hope Farney, as administrator of the estate of Kitty Mullins, sued St. Paul Lutheran Church (Church) for wrongful death. She alleged that a Church employee, Matthew Geerdes, used his personal vehicle for Church business and negligently
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Disparage Me Not: Maryland Federal District Court Finds No Coverage for Phone Unlocking Suit

In Wireless Buybacks, LLC v. Hanover American Insurance Co. (D. Md. Dec. 8, 2016), the U.S. District Court for the District of Maryland held that an insurer had no duty to defend its insured against claims stemming from the company’s unauthorized acquisition and resale of Sprint phones. As background, Sprint accused Wireless of illegally acquiring Sprint phones, unlocking them so they could function on non-Sprint wireless networks, and reselling the phones overseas. Sprint filed a sixteen-count suit against Wireless, alleging
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Don’t Let The Door Hit You on the Way Out: Insurer Loses Coverage Suit Involving Injuries Sustained By Fitting Room Door

In Selective Insurance Co. of South Carolina v. Target Corporation, No. 16-1669, 2016 U.S. App. LEXIS 23370 (7th Cir. Dec. 29, 2016), the Seventh Circuit affirmed an Illinois district court’s decision finding coverage for an additional insured after parsing through the language of two contractual agreements. The coverage dispute arose when a customer shopping at a Target store was injured after a fitting room door came off and fell on her in December 2011. The customer filed suit against Target,
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Heartbreak in the First Circuit: Court Dismisses Suit Against Insurer Over Coverage for Claims Related to Attorney’s Rocky Affair with Client

In Sanders v. The Phoenix Insurance Co. (1st Cir. Dec. 7, 2016), the First Circuit held that a homeowner’s insurance company had no duty to defend or indemnify its insured, a divorce attorney, against claims stemming from his “on-again/off-again intimate relationship” with his client. The First Circuit affirmed the lower court’s dismissal of a complaint filed by the assignee of the insured attorney against his insurer, Phoenix Insurance Company , for its failure to provide coverage. As background, Phoenix issued
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No Magic Words Needed To Trigger Application of the Construction Contract Anti-Indemnification Statute Says Illinois Appellate Court

In Pekin Insurance Co. v. Designed Equipment Acquisition Corp., 2016 IL App (1st) 151689, the Illinois Appellate Court examined a common issue for insurance carriers in disputes involving construction site injuries. In particular, the Appellate Court provided helpful clarification with respect to the application of the Construction Contract Indemnification for Negligence Act (Act), also known as the anti-indemnification statute. The circumstances at issue involved a rental agreement between Abel Building & Restoration and Designed Equipment Acquisition Corporation, whereby Designed leased
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Hold the Sauce: Insurer Must Indemnify Insured for Trade Disparagement and Defamation Claims Arising Out of Indian Sauce Recipe Dispute

Rass Corporation v. The Travelers Companies, Inc., No. 15-P-358, 2016 Mass. App. LEXIS 163 (Nov. 10, 2016), represents a continuation of Massachusetts law in the context of an insurer’s duty to defend, indemnify, and settle in good faith. Since the underlying settlement included covered and non-covered claims, the court concluded The Travelers Companies, Inc. and Travelers Property Casualty Companies of America were obligated to indemnify Rass Corporation for the amount the trial court allocated to covered claims. As background, Ranbir
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No Complaint, No Duty to Defend: An Insurer’s Duty To Defend Does Not Arise from Unfiled Draft Complaints

In Philadelphia Indemnity Insurance Co. v. Pace Suburban Bus Service, 2016 IL App (1st) 151659, the Illinois Appellate Court provided keen insights into when the duty to defend is triggered and when an action for equitable contribution can be maintained. As background, Pace Suburban Bus Services and Countryside Association for People with Disabilities entered into a leasing agreement whereby Pace would provide Countryside with a van, which would be driven by a Countryside employee, for the purposes of transporting disabled
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Seventh Circuit Recognizes Illinois Law to Allow Extrinsic Evidence in Evaluating an Insurer’s Duty to Defend

The Seventh Circuit recently handed down a decision encouraging Illinois courts to consider evidence beyond the complaint and the insurance policy when evaluating an insurer’s duty to defend. In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016), the Seventh Circuit reviewed a district court’s judgment on the pleadings favor of a purported insured in a declaratory judgment suit filed by Landmark American Insurance Company. At issue was whether Peter Hilger was covered as an insured in
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Proof’s in the Pudding: Sexual Misconduct Exclusions Do Not Preclude Coverage for Defamation Claims, Massachusetts Federal District Court Says

A federal district court in Massachusetts determined that Bill Cosby’s insurer has a duty to defend the former entertainment icon in three defamation suits despite potentially applicable policy exclusions because the defamation claims did not necessarily “aris[e] out of” sexual misconduct. In AIG Property Casualty Co. v. Green, Civil Action No. 15-30111-MGM, 2016 U.S. Dist. LEXIS 154881 (D. Mass. Nov. 8, 2016), the court dismissed an insurer’s attempt to obtain a determination that it had no duty to defend Cosby,
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Don’t Skip Steps When Analyzing the Foundation for a Covered Claim: No Publication and No Use of Advertising Ideas Means No Duty to Defend Beauty School Dispute

Desabato v. Assurance Co. of America et al., No. 2:15-cv-484, 2016 U.S. Dist. LEXIS 135389 (W.D. Pa. Sept. 30, 2016) represents a continuation of Pennsylvania law in the context of an insurer’s duty to defend personal and advertising injury claims. As articulated in Desabato, Pennsylvania adheres to a strict four-corners analysis of an insurer’s duty to defend. Since the underlying complaint failed to allege the elements of defamation or misappropriation of advertising ideas, the court held Assurance Company of America,
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Fax Blast From the Past: Third Circuit Denies Coverage in TCPA Action

The Third Circuit denied coverage for alleged violations of the Telephone Consumer Protection Act (TCPA), while also ruling on a jurisdictional question regarding the amount in controversy applicable to declaratory judgment actions when they emanate from a class action lawsuit. This case reminds that even without a TCPA exclusion, blast fax suits may not present covered property damage or advertising injury claims. In Auto-Owners Insurance Co. v. Stevens & Ricci, Inc., No. 15-2080, 2016 U.S. App. LEXIS 16182, (3d Cir.
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Insurers Beware: The Illinois Department of Insurance Issued a Notice of Proposed Rule Regarding Knowledge of Misrepresentations and False Warranties

In August, the Illinois Department of Insurance (DOI) proposed its second rule on misrepresentations and false warranties in less than two years. Citing various concerns, the DOI withdrew its December 2014 proposed rule nearly a year ago, in October 2015. The impetus for the new proposed rule appears to be the DOI’s perception that insurers are not considering “readily available information” before seeking to rescind insurance policies. The new proposed rule on misrepresentations would be promulgated as Ill. Admin. Code
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Two Illinois Federal Decisions Highlight the Dangers of Consent Judgments for Insurers

Two related decisions handed down this year by an Illinois federal district court involve thorny issues emanating from a multi-million dollar consent judgment. In the first decision, the district court denied cross-motions for summary judgment brought by the insurer and the underlying claimant in relation to a $14 million consent judgment. Specifically, the district court held the reasonableness of the settlement could not be resolved by summary judgment. In order for a consent judgment to be reasonable, Illinois uses the
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No, No, No: No Accident, No Property Damage, No Duty to Defend Under Illinois Law

Westfield Insurance Co. v. West Van Buren, LLC, et al., 2016 IL App (1st) 140862 represents a continuation of Illinois law in the context of an insurer’s duty to defend construction defect claims. As articulated in Westfield, accidental events are required to trigger a duty to defend and shoddy workmanship does not constitute property damage. In addition, since the underlying complaint did not seek damages for any personal property damage, the Illinois Appellate Court held Westfield Insurance Company had no
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Seventh Circuit Dispatches Insurer’s Coverage Defenses Against Ambulance Company

The Seventh Circuit affirmed a district court’s summary judgment in favor of an insured, finding that the insured may qualify as being in a “joint venture” with the named insured. In American Alternative Insurance Corp. v. Metro Paramedic Services, Inc. (Jul. 12, 2016), the issue confronting the court was whether allegations in the underlying complaint that the named insured and putative insured were engaged in a joint venture also satisfied the policy’s use of the term “joint venture,” at least
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The Irony of Not Fixing What Isn’t Broken: Wisconsin Supreme Court Refuses to Consider Extrinsic Evidence of Subcontractors’ Involvement in Replacement of Damaged Well Pump

Bootstrapping upon its decision in Marks v. Houston Casualty Co., 2016 WI 53, the Wisconsin Supreme Court in Water Well Solutions Service Group Inc. v. Consolidated Insurance Co., 2016 WI 54, affirmed summary judgment in favor of the insurer. The Supreme Court concluded, based upon a four-corners analysis, that the policy’s “your product” exclusion barred coverage entirely for the underlying lawsuit. The Supreme Court further rejected the insured’s invitation to recognize an exception to the four-corners rule to allow courts
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Insurer Accused of Having Ace Up its Sleeve: Insurer Estopped from Relying on Sublimit Due to Defense Counsel’s Failure to Supplement Discovery Responses in Tort Lawsuit

In Harwell v. Fireman’s Fund Insurance Co. of Ohio, 2016 IL App (1st) 152036, the Illinois Appellate Court refused to allow Fireman’s Fund Insurance Company to assert a policy sublimit because defense counsel retained by Fireman’s Fund to represent its insured in the underlying tort lawsuit failed to inform the tort claimant that the sublimit, and not the full limit, applied. As background, Brian Harwell was injured while working at a construction project supervised by Kipling Development Corporation as a
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Impactful Wisconsin Supreme Court Decision Overturns “Unsound” Precedent

In Marks v. Houston Casualty Company, the Wisconsin Supreme Court reached a decision upholding the application of a business enterprise exclusion in a professional liability policy. Importantly, the decision clarifies Wisconsin law such that an insurer may rely upon policy exclusions in denying coverage outright. The coverage dispute arose out of six lawsuits filed against David Marks for his involvement in various enterprises across different industries. The lawsuits generally alleged Marks, as an officer or director of numerous entities (including
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Illinois Appellate Court Rejects Coverage for Junk Fax Class Action Settlement and Calls TCPA Class Action Attorneys to Task

The Illinois Appellate Court recently offered greater protection to insurance companies from liability emanating from the Telephone Consumer Protection Act of 1991 (TCPA) and fervently condemned the reality of class action settlements rewarding only class counsel. In First Mercury Insurance Co. v. Nationwide Security Services., 2016 IL App (1st) 143924 (May 18, 2016), the Appellate Court affirmed the trial court’s judgment that First Mercury had no duty to indemnify the class (as assignees) with respect to a settlement reached in
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Credit Card Payment Coverage Declined: Cyberinsurer Not Obligated to Reimburse P.F. Chang’s for PCI Liability

In the most significant cyberinsurance coverage decision to date, an Arizona federal district court in P.F. Chang’s China Bistro v. Federal Insurance Co., No. CV-15-01322-PHX-SMM (D. Ari. May 31, 2016), granted summary judgment to Federal Insurance Company, acknowledging it had no duty to reimburse P.F. Chang’s China Bistro for payment card industry liability assessments under the CyberSecurity policy issued by Federal to P.F. Chang’s corporate parent. This decision represents a significant victory for cyberinsurers insofar as it upholds insurers’ marketing
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Third-Party Complaints and the Duty to Defend – Another Decision Cementing Existing Precedent

In Pekin Insurance Company v. Illinois Cement Company, LLC, the Illinois Appellate Court again addressed the important issue of when third-party complaints can be used in evaluating an insurer’s duty to defend. Due to the circumstances surrounding the third-party complaint in question, the Appellate Court held that it was self-serving and could not be used to show that a putative additional insured was vicariously liable for the acts of the insured. The facts underlying the coverage dispute involve an action
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Up in Smoke: An Insurer Could Not Mount a Successful Coverage Defense Due to Vague Allegations in an E-Cigarette Lawsuit

An Illinois federal district court determined in Diamond State Insurance Company v. Duke that an insurer had a duty to defend its insured in a case involving alleged disparagement. This decision reminds insurers that courts have the ability to the allegations of the underlying complaint even more broadly than ever expected. The underlying lawsuit was brought by, in pertinent part, DR Distributors, LLC against 21 Century Smoking, Inc. alleging, causes of action for counterfeiting and trademark infringement under the Lanham
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It’s Not a Blob, It’s a Probiotic: Wisconsin Supreme Court Applies the “Integrated Systems” Rule in Coverage Dispute

In Wisconsin Pharmacal Company, LLC v. Nebraska Cultures of California, Inc., 2016 WI 14, the Wisconsin Supreme Court applied the “integrated systems” rule to a coverage dispute. In a narrow decision, it reversed the Court of Appeals decision and determined that the incorporation of a defective ingredient into a tablet did not constitute “property damage” caused by an “occurrence.” Further, the Wisconsin Supreme Court concluded that even if “property damage” was alleged, exclusions would apply to bar coverage. The coverage
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Say What You Mean and Mean What You Say, Says California Federal District Court

A California federal district court determined a standard Breach of Contract Exclusion under Coverage B of a CGL policy did not preclude the duty to defend for alleged disparagement. In MedeAnalytics, Inc. v. Federal Insurance Co., the United States District Court for the Northern District of California interpreted the exclusion very narrowly, finding it applied only to actual — and not alleged — breaches of contract and found a duty to defend. As background, the claimant alleged the policyholder made
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Don’t Believe the Hype: Over-Touting One’s Own Products Triggers Non-Conformity Exclusion

A Virginia federal court rendered an important decision on product disparagement coverage, holding that a policy’s Non-Conformity Exclusion barred coverage for the underlying false advertising claim. In Selective Way Insurance Co. v. Crawl Space Door System, Inc., the United States District Court for the Eastern District of Virginia was confronted with the question of whether there was coverage for a suit between two competing vent vendors, Crawl Space Door System, Inc. (CSD) and Smart Vent Products. Smart Vent had sued
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Not Better Late Than Never: Illinois Appellate Court Finds in Favor of Insurer on Late Notice Defense

The Illinois Appellate Court, in AMCO Insurance Co. v. Erie Insurance Co., ruled in favor of a CGL insurer based on an additional insured’s violation of the policy’s notice condition. This case represents a significant victory for insurers, which are constantly searching for the enforcement of conditions precedent to coverage. The Appellate Court held in favor of Erie Insurance Co. based on a late notice defense. As background, on March 15, 2007, Smith filed a negligence action against Hartz Construction
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Wisconsin’s Strict Exhaustion Requirement Burns Insurer

In Burgraff v. Menard, Inc., 2016 WI 11 (Wis. 2016), the Wisconsin Supreme Court affirmed a Court of Appeals decision that determined Millers First Insurance Company breached its continuing duty to defend Menard, Inc. Specifically, the issue was whether Millers First should have continued its defense of Menard even after it reached a settlement with the plaintiff, Kenneth Burgraff, for its proportionate share of the claim. This is an important decision which reiterates the strict requirements of complete exhaustion in
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Another Nail in the Junk Fax Coffin: Wisconsin Joins Illinois, California, Michigan, and Oklahoma in Finding No Coverage for TCPA Suits

The Wisconsin Court of Appeals held in a recent decision that a standard TCPA exclusion precludes coverage for all causes of action brought by the plaintiff that emanated from the unauthorized sending of faxes. This includes a common law conversion cause of action, as well as a cause of action for violations of the Telephone Consumer Protection Act (TCPA). As background, in State Farm Fire & Casualty Co. v. Easy PC Solutions, LLC, No. 2014AP2657, 2015 Wisc. App. LEXIS 855
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