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August 17, 2011 Emerging Issues

ELEVENTH CIRCUIT DECLARES REQUIREMENT THAT ALL AMERICANS PURCHASE HEALTH INSURANCE UNCONSTITUTIONAL

State of Florida, et al. v. United States Department of Health and Human Services (11^th Cir. August 12, 2011)

In a 304-page decision, the Eleventh Circuit Court of Appeals has held that the 2010 law requiring all Americans to purchase health insurance, strongly favored by President Obama, was unconstitutional.

The plaintiffs consisted of 26 states, two private individuals and the National Federal of Independent Businesses (NFIB). The defendants consisted of the HHS, the Departments of Labor and Treasury. The plaintiffs challenged the constitutionality of …

June 16, 2011 Reinsurance

Second Circuit Determines Reinsurer Did Not Breach Broker Services Agreement

Royal Palm Ins. Co. v. Guy Carpenter & Co. Inc. (2^nd Cir., May 27, 2011)

This reinsurance litigation arose from the alleged breach of Broker Services Agreement (“BSA”) executed by the parties. Defendant-appellant, Guy Carpenter, appealed from the district court's judgment in favor of plaintiff-appellee Royal Palm Insurance Company ("Royal Palm") in the amount of $4,243,581. Specifically, in April 2006, Royal Palm started its insurance business in Florida, and engaged Guy Carpenter to act as its broker pursuant to a "Reinsurance Intermediary Authorization" (the …

May 10, 2011 Emerging Issues

Insurers Required To Continue Coverage Of Insolvent Company In Investor Actions Alleging Negligent Misrepresentations

Philadelphia Indemnity Ins. Co. v. Allied Mortgage and Financial Corp. S.D. Florida, May 9, 2011

U.S. District Judge Adalberto Jordan refused to toss a lawsuit filed by plaintiff insurer against defendant policyholder to free insurer from providing coverage to the insolvent company in investor actions. The underlying action involved a state claim by investors seeking damage over defendant’s mishandling of investments and loans. Specifically, the investors alleged negligent misrepresentations.

Plaintiff issued an insurance policy to defendant providing professional liability coverage in connection with the company’s …

January 3, 2011 Reinsurance

Amendment to New York’s Credit for Reinsurance from Unauthorized Insurers Regulation issued.

Today, amendments to New York’s Regulation No. 20 (11 NYCRR 125), Credit for Reinsurance, took effect. The amended regulation includes numerous changes, including repeal and renumbering of sections as well as major modification to credits insurers may take as to recoverable reinsurance available from unauthorized reinsures.

Section 125.1 was repealed and a new Section 125.1 was promulgated which permits ceding insurers “act with financial prudence” when entering into reinsurance arrangements. The new Section 125.1 provides 8 risk criteria that ceding insurers should consider. Section 125.1 …

December 1, 2010 Emerging Issues

Federal Court Dismisses Insurer’s Suit In Chinese Drywall Suit

National Union Fire Ins. Co. v. Vicino Drywall (S.D. Florida, November 29, 2010)

On Monday, November 29, 2010, Judge Alan Gold of the U.S. District Court for the Southern District of Florida, issued an order dismissing a suit brought by an insurer that asked the court to declare the insurer has no duty to defend or indemnify defendant policyholder and two other companies in 17 lawsuits over allegedly defective Chinese drywall.

Plaintiff insurer issued three umbrella insurance policies, which provided excess coverage, to the defendants. …

October 13, 2010 Arbitration

Petition to compel arbitration in federal court dismissed after state court had already made determination on the issue

Kaplan v. Divosta Homes, L.P., 2010 U.S. Dist. LEXIS 107454 (M.D. FL Oct. 7, 2010)

In a suit for rescission of a contract for the purchase of a house, fraud, discrimination in the enforcement of covenants and restrictions, and a claim of personal injury, a Florida state court issued an order compelling arbitration of the rescission and fraud claims, but denying arbitration on the discrimination and the personal injury claims. This decision was affirmed by a Florida state appellate court.

The discrimination and personal …

October 11, 2010 Uncategorized

District Court Holds Pollution Exclusion Precluded Insurer’s Duty To Defend And Indemnify Insured In Golf Course Herbicide Contamination Suit

Nationwide Mutual Ins. Co. v. Lang Management, Inc. (United States District Court, Southern District of Florida, October 6, 2010)

Plaintiff insurer moved for a declaration in this environmental coverage matter that it had no duty to defend or indemnify its insured under its policy for an underlying lawsuit involving the use of herbicides on a golf course. Specifically, Legacy Golf and Tennis Club sued the insured, which was hired by the PGA to maintain the lakes within the golf course. The underlying suit alleged that …

August 17, 2010 Arbitration

Dismissal of Lloyd’s Suit for Lack of Subject Matter Jurisdiction Reversed

Underwriters at Lloyd’s, London v. Carol Osting-Schwinn

(11^th Cir. (Fla.) August 5, 2010)

Carol Osting-Schwinn’s son was riding a dirt bike when it collided with an all-terrain vehicle driven by Michael Rockhill, who was insured by a policy underwritten at Lloyd’s. Osting-Schwinn and the underwriting syndicates at Lloyd’s agreed to settle the case and the syndicates sent settlement checks, affidavits and a copy of the policy. Osting-Schwinn rejected the settlement, claiming the syndicates failed to properly disclose information about other known …

July 1, 2010 Environmental

Eleventh Circuit Upholds Denial of Coverage in $75M Toxic Tort Suit

Continental Cas. Co. v. City of Jacksonville

(11^th Cir. (Fla.) June 24, 2010)

The Eleventh Circuit upheld a district court’s ruling that Century Indemnity Company is not obligated to defend or indemnify the Duval County School Board in a toxic tort suit filed by thousands of Jacksonville, Florida residents for property damage and emotional distress arising from the construction of a school on a contaminated site in 1957.

The School Board purchased land once used as a landfill, built a school …

June 23, 2010 Emerging Issues

Additional Insured Obtains Dismissal from Coverage Action on Jurisdictional Grounds

Liberty Mutual Fire Insurance Co. v. Southeastern Mechanical Services Inc. and San Miguel Electric Cooperative Inc. (M.D. Fla. June 18, 2010)

Liberty Mutual Fire Insurance Co. ("Liberty Mutual") insured Southeastern Mechanical Services Inc. ("Southeastern"). San Miguel Electric Cooperative Inc. ("San Miguel") contracted with Southeastern to perform maintenance work in 2007 during a scheduled service outage at its facility. As part of the agreement, San Miguel required that Southeastern name it as an additional insured party on its Liberty Mutual policy. San Miguel claimed that Southeastern’s …