No Coverage for Consumer Privacy Claims Say Third Circuit and Seventh Circuit

In two recent cases, the Third Circuit and Seventh Circuit each found an absence of coverage under general liability policies resulting from consumer privacy claims, one for alleged violations of a state ZIP code statute and another for alleged violations of a state unauthorized recording statute. Since both cases involved coverage for class action lawsuits seeking statutory damages, these are big wins for insurers. First, the Third Circuit in OneBeacon America Insurance Co. v. Urban Outfitters, Inc., No 14-2976, 2015
Continue reading...

Keeping Up with the Times: Nevada Supreme Court Declares Under What Circumstances Insurers Must Provide Independent Counsel

In an opinion issued on September 24, 2015, the Nevada Supreme Court addressed the issue of under what circumstances an insurer is obligated to provide its insured with independent counsel. The case, State Farm Mut. Auto. Ins. Co. v. Hansen, arises out of injuries sustained by Hansen while attempting to leave a house party. A number of guests at the party were crowding around and sitting on Hansen and his companions’ vehicle in an attempt to prevent them from leaving.
Continue reading...

Inquiry Signals Further Federal Regulation of Annuity Product Sales Likely

Late last week, Senator Elizabeth Warren, Ranking Member of the U.S. Senate Subcommittee on Economic Policy, sent a letter to 15 of the top writers of annuity products, including AIG Companies, Allianz Life Insurance Company of North America, AXA, Lincoln Financial Group, New York Life Insurance Company, and MetLife, seeking information about the manner in which these companies compensate their insurance agents for the sale of these products. Warren emphasized that sales made to those close to retirement were of
Continue reading...

No Coverage for Financial Firm that Invested Clients’ Money in Ponzi Scheme

A securities firm sought coverage under a professional liability policy for claims by customers that suffered losses on real estate investment vehicles. The Panel for the Second Appellate District in California found that the policyholder was not entitled to coverage because the “application exclusion” in the firm’s policy bars coverage for the claims asserted, as the policyholder did not disclose the facts of the claims against it to the insurer in its application. The claimants brought suit, asserting that the
Continue reading...

TRIA – When the Ball Drops, No Need to Panic But…

At exactly 12:00 a.m. on January 1, 2015, the New Year will be celebrated amidst ball drops and renditions of “Auld Lang Syne.”  However, amidst the celebrations, the Terrorism Risk Insurance Act (TRIA) will expire.  While there is a very real possibility that Congress will pass legislation renewing it in some form when the 114th Congress convenes in January 2015, insurance companies and their insureds are already feeling the anticipated effects of the non-renewal and planning for the future. Most
Continue reading...

Ninth Circuit Finds No Implied Disparagement Coverage in First Case Decided After Swift Distribution

The Ninth Circuit affirmed the dismissal of Bullpen Distribution’s (Bullpen) suit against Sentinel Insurance Company (Sentinel) for breach of insurance contract, bad faith failure to defend, and declaratory relief.  Bullpen Distribution, Inc. v. Sentinel Ins. Co., No. 12-16369, 2014 U.S. App. LEXIS 17497 (9th Cir. Sept. 10, 2014).  The coverage dispute derives from allegations by A.Y. International, Inc (AYI) that Bullpen sought to take credit for AYI’s business practices and achievements and pass of AYI’s achievements, business relationships and practices,
Continue reading...

Court Finds TCPA Violations Do Not Relate to Other Lawsuits Involving Non-TCPA Claims

The Superior Court of Delaware, New Castle County, ruled that RSUI Indemnity Company owed its insured, Sempris, LLC, a duty to defend and indemnify against an underlying TCPA lawsuit pending in the United States District Court for the Northern District of Illinois. RSUI Indem. Co. v. Sempris, LLC, C.A. No. N13C-10-096, 2014 Del. Super. LEXIS 449 (Sept. 3, 2014). The coverage dispute arose out of the following circumstances.  RSUI issued a D&O liability policy to Sempris effective from March 1, 2013
Continue reading...

Another Victory for Insurers in Litigating the Scope of Coverage B: District Court Rejects Duty to Defend Against Alleged Violations of Data Privacy Laws

In National Union Fire Insurance Company of Pittsburgh, PA v. Coinstar, Inc. (W.D. Wash., No. C13-1014-JCC, Aug. 7, 2014), the U.S. District Court for the Western District of Washington ruled that National Union Fire Insurance Company of Pittsburgh, PA had no duty to defend Redbox Automated Retail, LLC (Redbox), a Coinstar, Inc. subsidiary, in two separate class action suits alleging that Redbox violated its customers’ privacy.  Notably, the first class action suit, Cain v. Redbox, alleged that Redbox violated Michigan’s
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...

Force-Placed Meets the Feds – The Insurance Regulatory Field Grows

Recent news regarding lender-placed insurance (more colloquially known as “force-placed” insurance) has focused on state efforts to regulate the industry. Now the Feds are getting involved, specifically the Federal Housing Finance Agency (FHFA).  FHFA is now prohibiting servicers of mortgages issued by Fannie Mae and Freddie Mac from receiving any compensation from those insurers providing the force-placed coverage. Fannie Mae and Freddie Mac write over 60 percent of all mortgages in the U.S. As such, this action is going to
Continue reading...