Sixth Circuit Interprets ‘Direct Action’ Provision of 28 U.S.C. 1332 in the Context of Michigan’s No-Fault Insurance Law

In Ljuljdjuraj v. State Farm Mutual Automobile Ins. Co., 2014 U.S. App. LEXIS 24108 (6th Cir. Dec. 19, 2014), the U.S. Court of Appeals for the Sixth Circuit held that the ‘direct action’ provision of 28 U.S.C. § 1332(c)(1) does not destroy diversity jurisdiction in an action brought against an insurer pursuant to Michigan’s No-Fault Insurance Law where a “contract of liability insurance” was not implicated. Elvira Ljuljdjuraj (EL) was driving a car owned by her friend, Bardhyl Mullalli, when
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PA High Court Gives Green Light to Assignment of Bad Faith Claims

In Allstate Prop. & Casualty Insurance Co. v. Wolfe, No. 39 MAP 2014, 2014 Pa. LEXIS 3309 (Pa. Dec. 15, 2014), the Pennsylvania Supreme Court, in deciding a certified question from the Third Circuit, ruled that statutory bad faith claims under 42 Pa. C.S.A. § 8371 are assignable. The underlying dispute arose from a motor vehicle collision involving an intoxicated driver, Zierle, who was insured by Allstate.  After settlement attempts failed, Wolfe, the tort claimant, sued Zierle for compensatory and
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Insurance and ISIS, Inc.

In recent weeks, the U.S. and British governments have unveiled new measures for fighting the Islamic State of Iraq and Syria (ISIS).  These measures are designed to counter the terrorist group’s financial structure. On the U.S. side, in an effort to starve ISIS of oil revenue, the U.S. Government in cooperation with others, have threatened sanctions against individuals and entities that purchase this black market oil or otherwise support ISIS.  Insurance companies need to be vigilant in this environment about
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Drafting History or Purpose Does Not Undermine Plain Language: Illinois Federal Court Enforces Insured-Versus-Insured Exclusion

In Travelers Casualty & Surety Co. of America v. Bernhardt, 2014 U.S. Dist. LEXIS 152416 (N.D. Ill. Oct. 28, 2014), the Northern District of Illinois granted summary judgment in favor of Travelers Casualty and Surety Company of America (Travelers), finding it had no duty to defend or indemnify Andrew Bernhardt in a breach of fiduciary duty and negligence lawsuit brought by Town Center Bank (TCB).  The underlying complaint involved several claims by TCB against Bernhardt originating from Bernhardt’s issuance of
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Accidental Death Benefits are Payable Drowning, Even if Seizure Involved, was Cause of Death

In Chanthavong v. Union Security Ins. Co., (11/04/2014), the deceased, Corey Carter, was found in April of 2012, having accidentally drowned in his bathtub. Carter held a group life insurance policy established by his employer through defendant insurer that was subject to the provisions off the Employment Retirement Income Security Act. Carter named his son D.D.C., minor-plaintiff, the beneficiary on the policy. The defendant paid the general life insurance policy in full, but denied the claim under the accidental death policy,
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Californians – “Insurance on My Mind”

California voters had insurance on their minds during the mid-term elections with at least two insurance-related questions on the ballot. The first was Proposition 45, entitled the “Healthcare Insurance. Rate Changes. Initiative Statute.”  If approved, this initiative would have required the state’s Insurance Commissioner to approve any rate increases for individual and small group health insurance plans before those rate hikes took effect.  If the state’s Insurance Commissioner determined that a rate hike was unreasonable or excessive, the commissioner could
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Illinois Federal Court Finds Advertising Injury Coverage Not Implicated by Business Competition and Intellectual Property Claims

In Lemko Corp. v. Federal Insurance Co., No. 12 C 03283, 2014 U.S. Dist. LEXIS 138667 (N.D. Ill. Sept. 30, 2014), the Northern District of Illinois granted summary judgment in favor of Federal Insurance Company (Federal) and Cincinnati Insurance Company (Cincinnati), finding that they had no duty to defend Lemko Corporation in a business competition and intellectual property infringement lawsuit brought by Motorola. The underlying complaint involved several claims by Motorola against Lemko originating from Lemko accessing “Motorola computers without
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Pennsylvania District Court Finds No Coverage for Faulty Workmanship

In State Farm Fire & Casualty Co. v. McDermott (E.D. Pa. Oct. 14, 2014), a Pennsylvania federal district court recognized the well-established rule in Pennsylvania that faulty workmanship resulting in construction defects is not caused by an “occurrence.”  This coverage dispute arose out of work performed by McDermott at a residential housing development.  After McDermott completed its work on windows and doors, the homeowners discovered water intrusion.  They sued the developer, which, in turn, sued McDermott for negligence and breach
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Second Circuit Holds Insurer Need Not Show Prejudice to Assert Late Notice Where Policy Issued Outside of New York

In Indian Harbor Insurance Co. v. City of San Diego (2d Cir., No. 13-4244-cv, Oct. 2, 2014), the Second Circuit affirmed summary judgment in favor of Indian Harbor, finding based on a late notice defense that Indian Harbor had no duty to indemnify the City for three pollution claims.  The main issue was whether New York Insurance Law § 3420(a)(5) applied and required Indian Harbor to prove prejudice as a result of the City’s untimely notice. The policy in question,
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Excess Insurer May Recoup Settlement Payments from the Primary Insurer

In RSUI Indemnity Co. v. American States Insurance Co., No. 14-30033, 2014 U.S. App. LEXIS 18407 (5th Cir. Sept. 25, 2014), the Fifth Circuit Court of Appeals held no adjudicated excess judgment is required for an excess insurer to recoup settlement payments from the primary insurer whose alleged bad faith failure to defend the common insured caused the excess settlement. In the underlying action arising from an automobile collision, counsel retained by the primary carrier, American States Insurance Co. (ASIC),
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