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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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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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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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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