Michael Glascott

All articles by Michael Glascott

 

Carriers With Mutually Repugnant Other Insurance Clauses Found To Contribute Pro-Rata To Underlying Defense

Certain Underwriters at Lloyds v. Waveblast Watersports, Inc.. 2015 U.S. Dist. LEXIS 4267, (S.D. Fla. Jan. 14, 2015). This declaratory judgment action stems from an underlying parasailing accident.  Plaintiff sought a declaration that it had no duty to defend or indemnify under a policy it issued to defendant Waveblast as the named insured, and defendant Sands Harbor an additional insured. Defendant Scottsdale issued a policy to Sands Harbor as the named insured. Scottsdale and Sands Harbor moved for Final Summary Judgment seeking a
Continue reading...  

Nebraska Courts Continue to Reject Faulty Workmanship as an “Occurrence”

In Cizek Homes, Inc. v. Columbia National Insurance Co., 22 Neb. App. 361 (Sept. 9, 2014), the Nebraska Court of Appeals reaffirmed that faulty workmanship does not constitute an “occurrence,” reversing the trial court’s finding to the contrary. As background, Cizek had purchased a lot, sold the lot to the Riekeses, and constructed a home on the lot.  However, the soil beneath the home began settling and caused damage to the home.  The Riekeses sued Cizek alleging that it negligently
Continue reading...  

Third Circuit Affirms Applicability of ‘Misappropriation’ Limitation Clause in Professional Liability Policy to Class-Action Fraud Scheme

On October 10, 2014, the Third Circuit Court of Appeals affirmed a lower court’s ruling that a professional liability insurance policy’s “misappropriation” sub-limit clause applied to limit the amount of defense costs owed to an insured whose employee plead guilty to mail and wire fraud in Camico Mutual Ins. Co. v. Heffler, Radetich & Saiita, LLP, 2014 U.S. App. LEXIS 19636 (3d Cir. Oct. 10, 2014). Christian Penta was a senior claims analyst for Heffler, Radetich & Saiita, LLP, an
Continue reading...  

TCPA Exclusion Upheld by the Eleventh Circuit

In a lawsuit brought by a distribution and marketing company, the policyholder sought coverage for a lawsuit alleging that it sent “unwanted ‘junk’ faxes in violation of the [Telephone Consumer Protection] Act.”  The insurer denied coverage due to the exclusion concerning violation of statutes in connection with sending, transmitting or communicating any material or information. The Eleventh Circuit affirmed the decision of the Middle District Court of Florida finding that the exclusion was not ambiguous or void as against public
Continue reading...  

Excess Carrier Has Equitable Subrogation Rights Against Primary Carrier For Not Settling Within Policy Limits

On September 19, 2007, claimant William Kelly was injured while descending a stairway in Hawthorne, California. Kelly sued F. H. Paschen, Inc., the general contractor for a construction project on the stairway. In the ensuing declaratory judgment action, Paschen’s excess carrier, Westchester Fire Insurance Company (Westchester), alleged that Paschen’s primary insurer, Zurich American Insurance Company (Zurich), failed to notify Westchester of the litigation and failed to settle the underlying case within the $1 million primary policy limits. Westchester sought to
Continue reading...  

Drug Distributing ‘Pill Mill’ Is Entitled to Defense Coverage

An insurer was required to defend a pharmaceutical drug distributor over charges that it played a role as a “pill mill,” contributing to widespread drug addiction in the state.  The underlying claim was brought against a number of pharmaceutical distributors by the West Virginia attorney general’s office.  The claim alleged both intentional and negligent conduct. The insurer argued that coverage was precluded by virtue of the intentional and criminal conduct exclusion, but the court rejected that argument, noting that the
Continue reading...  

N.Y. Attorney General, EmblemHealth Reach Settlement Over Continuation Coverage

In a press release, Attorney General Eric Schneiderman announced that his office had conducted an investigation into widespread violations of New York’s Age 29 Law, which requires health insurers to offer young adults continuation health coverage on their parents’ policies until they turn 30. Following the investigation, a settlement was reached with the health insurer requiring it to reinstatement health coverage to more than 8,000 young adults whose coverage was wrongly terminated, and to pay approximately $90,000 in denied claims.
Continue reading...  

40-Love. Contractual Liability Exclusion Inapplicable in Tennis Court Construction Defect

On certified questions from the Fifth Circuit, the Texas Supreme Court limited the scope of the contractual liability exclusion to situations where the liability is enlarged beyond its duty to exercise ordinary care in fulfilling its contract. In this matter, the policyholder contracted to construct certain additions to a school, including a tennis court.  The contract required the policyholder to perform the work in a good and workmanlike manner. The tennis court was unusable for its intended purpose and the
Continue reading...  

Written Construction Contract Clarifies Competing Additional Insured Endorsements

The plaintiff, Lamp Incorporated (Lamp), brought a declaratory judgment action against Navigators Insurance Company (Navigators), seeking a declaration that Navigators breached its duty to defend Lamp in an underlying personal injury lawsuit stemming from a construction site accident (underlying lawsuit). Navigators filed a third-party complaint against West Bend Mutual Insurance Company (West Bend) seeking a declaration that West Bend, and not Navigators, provided primary, non-contributory coverage to Lamp and owed the duty to defend Lamp in the underlying lawsuit. Navigators
Continue reading...  

Southern District Finds Coverage Despite Competing “Other Insurance” Clauses

United Parcel Service, Inc. (UPS) brought a declaratory judgment action against Lexington Insurance Company (Lexington) seeking a declaration that Lexington was obligated to defend and indemnify UPS in an underlying personal injury action.

UPS entered into a Guard Services Agreement (GSA) with Adelis for uniformed guards. The GSA required Adelis to carry commercial general liability insurance coverage, naming UPS as an additional insured, and requiring Adelis to defend and indemnify UPS against claims arising from any act or omission by any Adelis employee, or any injury suffered by any employee of Adelis. In the underlying action, an Adelis security guard sued UPS when she was hit and injured by a tow car operated by a UPS employee. UPS’s insurer, Liberty, tendered the defense to Adelis’s insurer, Lexington, requesting complete indemnification. Lexington denied the tender, alleging that the incident was the result of the sole negligence of the UPS employee.
Continue reading...  

Both Parties Agree – Delay NFIP Rate Hikes

In a time when bipartisanship appears to be fleeting, both parties have unveiled legislation designed to delay the National Flood Insurance Program (NFIP) rate hikes mandated under the Biggert-Waters National Flood Insurance Act.

In May 2013, Senator Mary Landrieu, D-LA, introduced a Senate bill delaying the rate hikes. However, the legislation which has been unveiled and will soon be introduced, appears to be a coordinated effort on the part of members of both parties in both chambers. On key sponsor in the House is Congresswoman Maxine Waters, D-CA, of Biggert-Waters fame.
Continue reading...  

No Coverage for $21 Million in Stolen Escrow Funds

A condominium project developer won a $21 million judgment against Coastal Title Services Inc., when Coastal misappropriated escrow deposits of prospective condo tenants. Coastal’s attorney failed to notify its insurer of a case against it, and later ended up in prison in connection with the missing funds. The court found the failure to notify the insurer let the insurer off the hook for providing any coverage.  A developer and Coastal were partners on a condominium project. A prospective tenant sued
Continue reading...  

Old Republic Relies Upon Escape Clause To Partially Avoid Primary Coverage In Auto-Tractor-Trailer Accident

Amerisure Ins. Co. v. Old Republic Ins. Co., M.D. Fla. Sept. 27, 2013 (2013 U.S. Dist. LEXIS 139251) This declaratory judgment action arises from an underlying auto and tractor-trailer accident. At the time of the accident, the tractor was owned by Ryder Truck Rental, and the trailer was owned by an affiliate of Star Transportation Company and Star Distribution Systems, Inc. (collectively Star). The tractor was leased to Star pursuant to a Truck Lease and Service Agreement (TLSA). Ryder was
Continue reading...  

Despite Daily Visits, Home Considered Vacant for Vandalism Exclusion

New London County Mut. Ins. Co. v. Zachem 145 Conn. App. 160 (Conn. App. Ct. 2013) The plaintiff insurance company sought a declaratory judgment to determine whether it had a duty to provide coverage under an insurance policy issued to the defendants for a claimed loss arising from an explosion and fire that destroyed a house they owned on September 8, 2008. No one had resided at the house since July, 2007, and an intruder broke into the house and
Continue reading...  

No Coverage For Nightclub Dancer Set on Fire by Patron

Mount Vernon Fire Ins. Corp. v. Oxnard Hospitality Ent. Inc., Court of Appeal of the State of California, Second Appellate District, Division Three (September 16, 2013) An employee of the insured appealed a California trial court decision which held that Mount Vernon had no duty to cover a $10 million award. The award was granted to the employee after she was set on fire by a third party at the insured’s bar. The employee sued her employer and others for
Continue reading...  

Texas Supreme Court to Rule on BP-Transocean Coverage Dispute

(Tex. Sept. 6, 2013)  The Texas Supreme Court announced Friday that it would enter the fight over $750 million in insurance coverage for the catastrophic BP oil spill that occurred in April 2010. This past March, the Fifth Circuit rule on the scope of BP’s additional insured coverage under excess policies issued to Transocean. The Fifth Circuit ruled that “where an additional insured provision is separate from and additional to an indemnity provision, the scope of the insurance requirement is
Continue reading...  

California Supreme Court Authorizes UCL Lawsuits Against Insurers

Yanting Zhang v. California Capital Insurance Company In a decision by the state’s highest court, the California Supreme Court harmonized years of split opinions among California courts regarding the inability to bring a private action under the Unfair Insurance Practices Act (UIPA).  The inability to do so arose out of a 1988 decision by the same court, which stated that UIPA never intended to create a private cause of action for commission of the unfair practices listed therein. Moradi-Shalal v.
Continue reading...  

Insurer Owes Coverage After Longshoreman Drops Lathe

Amera-Seiki Corp. v. The Cincinnati Ins. Co., United States Court of Appeals for the Eighth Circuit, July 23, 2013 The Eighth Circuit Court of Appeals found that The Cincinnati Insurance Company owed coverage to its insured for equipment that was destroyed at port terminal based on ambiguous policy language. The Cincinnati Insurance Company insured a machine tool supplier, Amera-Seiki Corp., under a commercial property policy. During the policy period, Amera-Seiki purchased a vertical lathe from Taiwan for delivery to a
Continue reading...  

Too Little, Too Late: Malpractice Coverage Evaporates With Law Firm’s Tardy Notice

Minnesota Lawyers Mut. Ins. Co. v. Baylor & Jackson, PLLC (4th Cir. (Md.) June 27, 2013) The Fourth Circuit recently held that a malpractice insurer was not obligated to defend or indemnify a law firm against a multi-million dollar lawsuit arising from the firm’s failure to submit admissible evidence in opposition to a motion for summary judgment. The court held that the firm breached the policy’s notice provision by waiting until an appellate court affirmed the lower court’s ruling granting
Continue reading...  

Locked Out – Excess Insurer Can’t Break Into Underlying Claims

ProBuild Holdings, Inc. et al. v. Granite State Insurance Company et al.   The plaintiff-insured is a supplier of residential and commercial building materials and was sued many times over for providing Chinese-manufactured drywall to a number of builders and homeowners. Extensive discovery was conducting in the underlying litigation which the plaintiff ultimately resolved via two massive settlements. The plaintiff brought this suit against its primary and excess insurers seeking indemnification for a portion of the settlement costs and its
Continue reading...  

Alabama’s Highest Court Settles Ambiguity and Declares Faulty Work is not an Occurrence

Shane Traylor Cabinetmaker, LLC and Michael Shane Traylor v. American Resources Insurance Company, Inc. (Ala.) The highest court in Alabama confirmed and clarified current law addressing whether there could be an occurrence due to faulty work in and of itself, where there was no damage to any surrounding property.  In this case, the insured was hired to perform cabinetry and woodworking work for a homebuilder.  The insured sued the homebuilder and was later countersued for breach of contract, negligence, and
Continue reading...  

Federal Court Maintains No Property Damage, No Occurrence Stance for Intentional Breach of Contract

NWS Corp. v. Hartford Fire Ins. Co. (D. Mass.) (12-30113-KPN) The U.S. District Court for Massachusetts relied on long-standing state law to deny coverage for an insured television programmer who was sued by DirectTV for setting prices below those set forth in its contract with DirectTV, and fraudulently concealing its conduct with numerous material misrepresentations.  In the underlying matter, the arbitrator awarded DirectTV $5 million, finding that the insured “materially breached its contract,” “made intentional, deliberate misrepresentations” and “was also
Continue reading...  

Bad News for Insurers: Groundless Claims Must Be Defended

Illinois Tool Works Inc. et al. v. Travelers Casualty & Surety Co. et al., Circuit Court of Cook County, Illinois In this insurance coverage action from the Circuit Court of Illinois, the plaintiffs, Illinois Tool Works, Inc. and ITW Finishing LLC (ITW) brought action against their insurers Travelers Casualty & Surety Co., the Travelers Indemnity Co. of Connecticut and Century Indemnity Co., (defendants) for insurance coverage in thousands of underlying toxic tort claims allegedly arising from exposure to harmful chemicals
Continue reading...  

Indiana Appeals Court Finds Ambiguity in Umbrella Policy, Results in $2 Million in Coverage

Gary Hammerstone et al. v. Indiana Insurance Co., (06A04-1211-PL-595 Court of Appeals of Indiana) In 2009, plaintiff Gary Hammerstone injured his right hand and arm while trying to clear a clog in a Trac-Vac lawn and leaf vacuum he purchased in 2004. Mr. Hammerstone brought a lawsuit against the vacuum’s manufacturer, Palmor Products Inc. (Palmor), and Palmor’s distributors Northampton Farm Bureau Cooperative Association, and Canns-Bilco Distribution Inc. claiming that they negligently designed, manufactured, marketed, and distributed the vacuum. Palmor provided
Continue reading...  

No Coverage in Auto Accident Where Policy Was Cancelled for Failure to Pay Premiums

Scottsdale Ins. Co. v. Bounds, United States District Court for the District of Maryland, March 8, 2013 The defendant business procured commercial auto and excess policies from the plaintiff insurer through a premium finance company. The policies expressly provided that the insurance would be provided in return for the payment of policy premiums. The insured made the initial premium payments but failed to make subsequent premium payments to the premium financing company. The policies were therefore cancelled and the premium
Continue reading...  

Interstate Fire & Casualty Co. Owes Defense Under Apartment Exception to Residential Construction Endorsement

Ment Bros. Iron Works Co. v. Interstate Fire & Casualty Co. (2012 U.S. App. LEXIS 25310 (2d Cir. N.Y. Dec. 11, 2012) In this declaratory judgment action, The Second Circuit Court of Appeals found that Interstate Fire & Casualty Co. owed its insured, Ment Bros. Iron Works Co., a defense in a New York state court action stemming from property damage allegedly caused by Ment during the construction of a building located at 40 Mercer St., in New York City.
Continue reading...  

Ohio Supreme Court Finds Defective Construction is Not an ‘Occurrence’

Westfield Ins. Co. v. Custom Agri Sys., Inc. (Ohio Oct. 16, 2012) The Ohio Supreme Court finally addressed whether faulty workmanship constitutes an “occurrence” that triggers coverage under a CGL policy, and decided that it does not. Younglove Construction entered into a contract with PSD Developments, wherein it agreed to construct a feed-manufacturing plant in Sandusky, Ohio. Younglove filed suit in federal court against PSD after PSD withheld payment. In its answer, PSD alleged that it sustained damages as a
Continue reading...  

Obama Extends Federal Flood Insurance Program, OK’s Use of Private Reinsurers

On July 6, 2012, President Obama signed the Biggert-Waters Flood Insurance Reform Act of 2012 extending the National Flood Insurance Program’s authority through September 30, 2017. The law extends the National Flood Insurance Program (NFIP) for five years and makes reforms to the program. It also calls for reforms including the phasing out of subsidies for many properties, raising the cap on annual premium increases from 10 to 20 percent, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles
Continue reading...