The scope of the pollution exclusion in liability policies continues to be a highly-contested insurance coverage issue. One of the more recent debates in this area is whether the pollution exclusion’s application is limited to “traditional environmental pollution” or whether the exclusion should be afforded its plain and ordinary meaning, similar to other policy exclusions. The Vermont Supreme Court recently sided with insurers on this issue, holding that a policy’s pollution exclusion should be treated with the same analysis as any other policy exclusion. …
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A Sporting Retailer’s Bid for Coverage Gets Punted by the Ninth Circuit
The Ninth Circuit recently handed down a decision holding that insurers did not have a duty to defend their policyholder, a sporting goods retailer, in several ZIP code class action lawsuits. The class action lawsuit all arose out of alleged violations of the Song-Beverly Act, a California statute which prohibits retailers from collecting customer ZIP code information as a purported requirement of credit card transactions. The court held that policy exclusions negated coverage.
In Big 5 Sporting Goods Corp. v. Zurich American Insurance Co., …
Continue ReadingNon-Party’s Claim of Employment Relationship with Plaintiff Creates Question of Fact in DJ Action
A complaint clearly and repeatedly alleges the plaintiff was the employee of the defendant, but for purposes of the employment practices exclusion, was she really? At this point, it’s unclear after her “real” employer claims her as its own in the declaratory judgment action.
Bikram Choudhury founded the popular Bikram (or hot yoga) in the 1970s. A former student accused Bikram of raping her in 2010. As Bikram’s legal counsel was looking into that rape accusation, she alleges that Bikram harassed her into halting the …
Continue ReadingNo 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 U.S. App. LEXIS 16399 …
Continue ReadingKeeping 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. Eventually, amidst a hail …
Continue ReadingInquiry 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 paramount interest and expressed …
Continue ReadingNo 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 policyholder failed to properly vet …
Continue ReadingTRIA – 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 large real estate transactions …
Continue ReadingNinth 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, and history of prompt …
Continue ReadingCourt 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 through March 1, …
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