breach of contract Archives - The Insurance & Reinsurance Report

October 18, 2019 General / Uncategorized

Federal Judge Finds Mischievous Raccoons Incapable of Engaging in Vandalism or Malicious Mischief

A federal judge in the Western District of Pennsylvania dismissed a breach of contract and bad faith suit against an insurer by finding that a group of mischievous raccoons was incapable of committing vandalism or malicious mischief.[1]

At issue was substantial interior property damage to a Pittsburgh-area home owned by the plaintiff-insured caused by raccoons. The plaintiff submitted a claim under its named-peril policy for the damage. The insurer denied coverage because the named-peril policy only provided coverage for damage caused by specific causes. …

April 17, 2019 Reinsurance

Reinsurance Trial Resolved after 10 Days and 15 Witnesses: “Follow the Fortunes” Cannot be Read into Reinsurance Contracts! Reinsurers Can Voluntarily Pay!

An insurer and reinsurer litigated their breach of contract actions against each other under two facultative reinsurance certificates in a New York federal court culminating in a 10-day bench trial presenting 10 fact witnesses and five experts. Utica Mutual Insurance Company v. Munich Reinsurance America, Inc. (N.D.N.Y., March 29, 2019). The heart of their dispute was the reinsurer’s liability for additional loss expenses; that is, whether it must pay for expenses the ceding insurer incurred to investigate, adjust and litigate claims supplemental to the …

January 23, 2019 Bad Faith and Extra-Contractual Liability / Other Insurance

NY Court Clarifies Pleading Standard for “Consequential Damages” in Coverage Litigation

The Appellate Division of New York’s Supreme Court, First Department, recently overturned a trial court’s dismissal of an insured’s claim for consequential damages on a pre-answer motion to dismiss. While the decision sheds light on the degree of specificity required at the pleading stage to sustain an insured’s claim for consequential damages, it does little to clarify the level of proof required to prevail on such claim at trial.

The coverage dispute among the parties in D.K. Property, Inc. v. National Union Fire Insurance …

April 27, 2017 Bad Faith and Extra-Contractual Liability

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 and permanent nerve damage …

May 14, 2015 Reinsurance

Breach of Reinsurance Contract and Bad Faith Claims Survive Dismissal, District Court Rules

In Old Republic National Title Insurance Co. v. First American Title Insurance Co., 2015 U.S. Dist. LEXIS 44693, the U.S. District Court for the Middle District of Florida refused to dismiss portions of a cedent’s breach of contract claim, bad faith claim, and demand for declaratory judgment against a reinsurer. The reinsurance dispute arose when a cedent negotiated a $41 million settlement with the underlying insured, and the reinsurer paid its portion of the claim under a reservation of rights. After making its payment, …