Supreme Court of Texas Puts a Dent in Policyholders’ Demand for Discovery of Other Claims in Hail Storm MDL

On October 28, 2016, the Supreme Court of Texas squelched a trial court order granting a policyholders’ motion to compel that reached its bench by mandamus petition. The dispute arose out of multidistrict litigation (MDL) involving claims for property damage caused by the 2012 hail storms that tormented Hidalgo County, Texas. The policyholders sought compensatory and extra-contractual damages against several insurers for underpayment of insurance claims. A pretrial court appointed by the MDL panel granted the policyholders’ motion to compel
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Court Finds Ambiguity Over When Property Damage Commenced

Ambiguity surrounding the term “commencing” led a court to deny an insurer’s motion seeking to dismiss an insured’s property damage claim, despite the insured’s inability to state when the property damage at issue first occurred. In a question of first impression, a federal district court in Illinois denied an insurer’s motion for summary judgment earlier this month, ruling that the term “commencing” during the policy period was ambiguous when applied to the circumstances of the case. Temperature Serv. Co. v.
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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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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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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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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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Supreme Court of Texas Declines to Adopt Incorporation Theory: But Destructive Repairs are Covered

Ruling on certified questions from the Fifth Circuit Court of Appeals, the Supreme Court of Texas has positioned the state as another jurisdiction to refuse to characterize mere incorporation of a defective component into a product or system as “physical injury” to property that would trigger coverage under a standard form CGL policy. The court also refused to narrowly apply the “impaired property” exclusion by rejecting the insured’s argument that the exclusion should be limited to those situations where the
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Rental Property Fire Presents a Review of Residential Insurance Policies in Michigan

On September 29, 2015, the Michigan Court of Appeals  affirmed a directed verdict granted to an insurance agent, Jervis-Fehtke (Jervis), on a professional negligence claim brought by a property owner, Williams, as a result of damage to Williams’ rental property caused by fire. After a gas explosion destroyed Williams rental property, Williams submitted a claim to her insurer, Auto-Owners Insurance Company (Auto Owner). Auto-Owners denied the claim because Williams’ policy did not cover losses caused by  explosions originating from outside
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No Sanctions for Policyholder Discovery Abuses

An insurer brought a claim for sanctions in dismissing a property owner’s lawsuit over coverage for damage from Hurricane Ike over discovery abuses. The insurer sought what is commonly known in Texas as “death-penalty” sanctions over the discovery abuses. The lower court had granted the sanctions, but this court found that the trial court had imposed excessive sanctions when it dismissed the plaintiff’s pleadings against the insurer and claims adjuster. This court determined that, while the purported discovery sanctions may
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No Business Loss Coverage for Sandy Flooding

A Southern District Court judge ruled that an insurer was not required to pay lost business coverage after Superstorm Sandy due to a flood provision contained in the policy. In this case, a law firm sought coverage from its insurer when its lower Manhattan office was evacuated due to flooding from the Sandy Storm. The insured law firm sought coverage under the policy’s civil authority provision and moved for summary judgment while the insurer cross moved for summary judgment because
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