New York Appeals Court Reverses Itself in K2 Investment Group Decision; Reaffirms Earlier Ruling in Servidone

In a decision notable for several reasons, the New York State Court of Appeals—the state’s highest court—reversed itself in K2 Investment Group, LLC v. American Guarantee & Liability Insurance Co. [21 NY3d 384 (2014)] and reaffirmed its earlier ruling in Servidone Construction Corp. v. Security Insurance Company of Hartford [64 NY2d 419 (1985)].

In doing so, the court reestablished the rule it pronounced in Servidone when it held that a liability insurer who determines not to provide a defense to its insured may still contest its duty to indemnify on the basis of an exclusion to coverage.

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Claims Made & Reported Policies: Continuous Coverage Does Not Trump the Requirement that Claims Be Made and Reported in the Same Policy Period

In a ruling upholding the concept that “words have meaning”, a United States District Court interpreting South Carolina law denied coverage to an insured which had a claim made against it in one policy period but did not report the claim to its insurer until the next policy period even though the insured was continually insured by the same insurer. Rather, the Court held in essence that a requirement that claims be “made-and-reported in the policy period” actually means that claims that claims must be made and reported in the same policy period and coverage will not be extended merely because the insured renews its policy.

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7th Circuit Upholds Prior Knowledge Provision in Claims-Made Policy

The Seventh Circuit Court of Appeals decided on April 2, 2013 that an Indiana law firm was not entitled to coverage for a claim made and reported in a second policy period where the insured reasonably had knowledge that a claim might be made during the first policy period. Koransky, Bouwer & Poracky v. The Bar Plan Mutual Insurance Co., No. 12-1579, 2013 U.S. App. LEXIS 6558 (7th Cir. Apr. 2, 2013). As the Court noted (in affirming a District Court decision to the same effect), “a reasonable attorney would have recognized that his failure [to deliver a contract during the first policy period] . . .was an omission that could reasonably be expected to be the basis of a malpractice claim.” Continue reading “7th Circuit Upholds Prior Knowledge Provision in Claims-Made Policy”

Exhausting Policy Limits When Settling Less than All Lawsuits

In his latest article, Thomas R. Newman explains his thoughts on handling multiple claims with insufficient limits to cover an insured’s total potential exposure, when not all of the claims are settled.

Mr. Newman practices in the areas of insurance and reinsurance law, including coverage, claims handling, contract drafting and arbitration and litigation. He has served as lead counsel in more than 55 reinsurance arbitrations, representing both cedents and reinsurers. He is often called upon to act as an expert witness in insurance cases in the United States and in London.

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London Market Insurers Prevail Against BP in Insurance Buyback Dispute

The California Court of Appeal has affirmed a judgment that certain Underwriters at Lloyd’s, London and certain London market insurance companies (London Market Insurers) were entitled to consider all subsidiaries as part of an insurance buyback agreement they had with one of the world’s largest oil companies. On September 13, 2012, a three-judge panel of the First District Court of Appeal issued an opinion in Certain Underwriters at Lloyd’s, London v. BP America, Inc., et al., Case No. A132298. At issue was more than $1 billion in liability insurance placed by the Atlantic Richfield Company (ARCO) in the London insurance market.

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State of California v. Continental Insurance

The California Supreme Court issued its decision in the State of California v. Continental Insurance case on August 9. In a unanimous opinion, written by Justice Ming Chin, the Court held that the policy language at issue provides for “all sums” allocation and permits stacking of policy limits.

The Court’s opinion reflects a focus on the particular insurance policy wording at issue. In its first holding, the opinion states: “Under the CGL policies here, the plain ‘all sums’ language of the agreement compels the insurers to pay ‘all sums which the insured shall become obligated to pay. . . for damages . . . because of injury to or destruction of property ….” The Court went on to hold that the policy language before it “does not limit the policies’ promise to pay ‘all sums’ of the policyholder’s liability solely to sums or damage ‘during the policy period.’”

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“Every Breath” of Asbestos Is Not a Substantial Factor in Pennsylvania

The Pennsylvania Supreme Court unanimously found that plaintiffs cannot rely on the theory that “every breath” is a substantial contributing factor in causing an asbestos-related disease in an asbestos case involving friction exposures, i.e., brakes and clutches. The May 23, 2012, ruling in Diana K. Betz v. Pneumo Abex LLC (“Simikian”) overturns the en banc decision of the state Superior Court, which the Pennsylvania Supreme Court found to be based on an “unduly cramped perspective.” This decision changes the face of asbestos litigation in Pennsylvania and may have farther-reaching impact. Plaintiffs can no longer lump together exposures and say all exposures contributed to disease. This brings asbestos litigation in line with the mainstream causation requirements for other substances—plaintiffs must be able to prove that each product was a substantial factor in their disease. (Note: Duane Morris represented defendant Ford in this case.)

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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