Duane Morris Insurance Law

By: Daniel B. Heidtke

Earlier this month, the United States Court of Appeals for the Ninth Circuit certified the following questions to the Montana Supreme Court: “Whether an anti-concurrent cause (‘ACC’) clause in an insurance policy applies to defeat insurance coverage despite Montana’s recognition of the efficient proximate cause (‘EPC’) doctrine” and, if so, whether the relevant language in the policy at issue was an ACC clause that effectively circumvented the EPC doctrine.

In Ward v. Safeco Insurance Co. of America, Case No. 21-35757, the Court first analyzed Montana’s EPC doctrine, which provides: “where covered and noncovered perils contribute to a loss, the peril that set in motion the chain of events leading to the loss or the predominating cause is deemed the efficient proximate cause or legal cause of loss.”

Continue reading “ACCs and EPC: Ninth Circuit Certifies Question of Whether Policy Provision Can Circumvent Efficient Proximate Cause Doctrine”

Duane Morris is pleased to announce that Bill Baron has been admitted to practice law in the State of Washington. The firm has a team of coverage lawyers representing clients in insurance matters in Washington State.

The Team

• • William J. Baron
  • Daniel B. Heidtke
  • Jessica E. La Londe
  • Lauren M. Case
  • Hari Kumar

About Duane Morris

Duane Morris is a recognized leader in the insurance and reinsurance industry, nationwide and internationally. The firm handles the full range of insurance matters, from the routine to the most complex, and our attorneys have a depth of experience in the field that is unsurpassed in the United States. Led by a core team representing commercial liability insurers in general, excess and professional lines, we also vigorously represent clients operating in all lines of the insurance and reinsurance business, including property and casualty, life, accident and health, management and professional liability, financial lines, surety and financial guaranty. Continue reading “Duane Morris Insurance Team Expands Services in Washington State”

By: William J. Baron

The Ninth Circuit has held that the California rule permitting insurers to intervene to defend suspended corporate insureds also applies under federal procedural rules.  (See California Dept. of Toxic Substances Control v. Jim Dobbas, Inc. (9th Cir. 2022) 54 F.4th 1078, 1082.)

In Jim Dobbas, the Department of Toxic Substances Control (DTSC) sought a default judgment against a bankrupt limited liability company (Collins), which formerly owned contaminated land in Elmira, California.  The DTSC had obtained an order in Bankruptcy Court permitting it to sue Collins, but only to seek recovery from Collins’ insurers.

Upon receiving notice of the suit and the request for a default judgment, Collins’ insurers filed a motion to intervene as of right under Federal Rule of Civil Procedure 24(a)(2) to defend the claims against Collins, and also moved to set aside the default that had been entered.  (Id. at 1083-1084.)  The District Court denied the insurers’ motions to intervene and declined to set aside the default.  (Id. at 1084-1085.)

The Ninth Circuit reversed the first ruling, holding that the insurers were entitled to intervene as of right.  (Id. at 1082, 1090-1092.)  The Court found that California law applied and that the insurers had a legally protectable interest in intervening to defend the action, based on California’s direct action statute, Insurance Code section 11580.  (Id. at 1089-1093.)  The opinion noted that California courts have “repeatedly held that insurers have a protectable interest under § 11580 in preventing defaults by their insureds that are incapable of defending themselves or otherwise unwilling to do so,” because this statute permits plaintiffs to seek recovery on judgments from the defendants’ insurers.  (Id. at 1090 and 1090 fn. 14.)

Continue reading “Jim Dobbas to the Rescue”

By: Gina Foran, Bill Baron, and Phil Matthews

Duane Morris lawyers helped secure a victory at the California Court of Appeal when the court held Tuesday that ConAgra’s insurers have no duty to indemnify ConAgra against a public nuisance action in which ConAgra was ordered to contribute to an abatement fund due to its predecessor’s promotion of the use of lead paint in pre-1950 homes.  (See Certain Underwriters at Lloyd’s London, et al. v. ConAgra Grocery Products Company, et al., Case No. A160548, April 19, 2022, certified for publication (“ConAgra”).)

The underlying case (the “Santa Clara Action”) began in 2000 when Santa Clara County, later joined by other California government agencies filed a class action complaint against certain lead paint manufacturers, including ConAgra, NL Industries, Inc., and Sherwin-Williams Company. The focus of the underlying case was narrowed, and that case ultimately went to trial on one cause of action for representative public nuisance.  In pursuing that causes of action, the underlying plaintiffs alleged that the presence of lead in paint and coatings in and around homes and buildings in California created a public health crisis created and/or assisted by the defendants.  In a pre-trial appeal in the Santa Clara County action, the court held that the representative public nuisance cause of action required as an essential element that the paint manufacturers had acted intentionally with actual knowledge that their marketing of lead paint for interior residential use would cause harm.  (See County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 299 (“Santa Clara I”).)  The underlying case went to trial under that standard, and the court found the manufacturers jointly and severally liable for representative public nuisance.

Continue reading “Lead Paint Coverage Claim Bites the Dust”

By Max H. Stern and Holden Benon

Yesterday, the United States Court of Appeals for the Ninth Circuit issued a succinct but well-reasoned decision that there was no coverage for a Las Vegas Hotel & Casino’s COVID-19-related business interruption loss under the coverage provided by an “all risks” insurance policy. See Circus Circus LV, LP v. AIG Specialty Ins. Co., No. 21-15367 (9th Cir. Apr. 15, 2022).

Even though Nevada law governed the analysis, the court’s written opinion leaned heavily on appellate authorities that applied California law (in particular, the California Court of Appeal’s Inns-by-the-Sea decision and the Ninth Circuit’s Mudpie decision).  The Circus Circus court followed the Inns-by-the-Sea causation analysis in holding that, despite Circus Circus’ allegation that the coronavirus was present on its premises, it failed to identify any direct physical damage to its property caused by the virus which led to the Casino’s closure. “Rather,” the court observed, “the allegations surrounding Circus Circus’s closure are based on the local Stay at Home Orders.”  Citing Mudpie, the court also held that Circus Circus failed to allege it suffered a direct physical loss of its property, reasoning the loss must be due to a “distinct demonstrable, physical alteration of the property.”

The  Circus Circus decision adds to the line of appellate authorities that have adhered to the same reasoning articulated in the initial COVID-19 appellate decisions that came down last year.  In the cases that are still currently pending, the odds certainly seem to favor the carriers.

By Max H. Stern and Holden Benon

Late last week, the United States Court of Appeals for the Ninth Circuit ruled there was no coverage for the policyholder’s COVID-19-related business interruption loss under the coverage provided by a commercial property policy.  See Levy Ad Group, Inc. v. Federal Ins. Co. et al., No. 21-15413 (9th Cir. Mar. 17 2022, applying Nevada law).  In reaching its decision that the insured’s economic losses did not constitute “direct physical loss or damage,” the Levy court simply stated it agreed with “the numerous published decisions interpreting nearly identical policy language . . . and unanimously concluding coverage does not exist.”

Levy represents the first appellate authority applying Nevada law ruling to these issues in the COVID-19 context, and we are confident it will not be the last to come down in favor of the insurers.  Earlier this month, the Ninth Circuit heard oral arguments in Circus Circus LV, LP v. AIG Specialty Insurance Co., another COVID-19 business interruption case that originates in the Silver State.  With Levy now decided, it seems unlikely that Circus Circus will break ranks for the “numerous published decisions” in the insurers’ favor.

If you have any questions regarding the Levy decision, or questions regarding business interruption insurance issues generally, please feel free to contact us.  Duane Morris has an extensive insurance coverage practice within the Ninth Circuit states and beyond.