Tag Archives: insurance coverage

Excess Insurer’s Obligations Regarding Settlement Offers of Underlying Claims

Does an excess insurer have an absolute right to veto a settlement under a policy’s “no action” and “no voluntary payments” clauses?  The Ninth Circuit has predicted that, under California law, the answer is no.  In a March 21, 2017 decision, the Ninth Circuit affirmed a district court’s $6,080,568 judgment in favor of an insured in a breach of contract and bad faith lawsuit against its excess general liability insurer arising from an underlying patent infringement dispute.   (Teleflex Med. Inc., v. National Union Fire Ins. Co. of Pittsburgh, PA., No 14-563666, 9th Cir., 2017 U.S. App. LEXIS 4996.)

In reaching its decision, the Ninth Circuit confirmed the California rule set forth in Diamond Heights Homeowners Ass’n v. Nat’l Am. Ins. Co. (1991) 227 Cal. App. 3d 563, which provides that an excess insurer has three options when presented with a proposed settlement of a covered claim that has met the approval of the insured and the primary insurer: (1) approve the proposed settlement, (2) reject it and take over the defense, or (3) reject it, decline to take over the defense, and face a potential lawsuit by the insured seeking contribution toward the settlement

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Talc Litigation and Insurance Implications

Is talc the elusive “next big thing” long sought by the plaintiffs’ bar? Recent verdicts against cosmetic talc defendants, including Johnson & Johnson (“J & J”), suggest that talc litigation, at a minimum, is a material threat to talc defendants and the insurance industry. In 2016, J & J and other defendants suffered three large verdicts for exposure to its baby powder in St. Louis, Mo.: $72M, $70M and $55M. All three verdicts, in a jurisdiction considered favorable to asbestos plaintiffs, included substantial punitive damages. The plaintiffs in each of these cases alleged that exposure to talc contained in J&J’s baby powder caused them to contract ovarian cancer. Also in 2016, a Los Angeles jury awarded $18M to a plaintiff who sued a cosmetic talc defendant alleging exposure to cosmetic talc cause the plaintiff to contract mesothelioma.

Assuming talc litigation is not going away any time soon, several questions are raised. Are all talc claims the same? What is the relationship between talc and asbestos, if any? What defendants are at risk in the talc litigation? What are the insurance implications of talc claims, and are they alike or different from asbestos and other long-tail coverage claims?  Continue reading Talc Litigation and Insurance Implications

Duane Morris Attorneys at the ABA’s Insurance Coverage Litigation Committee CLE Seminar

Duane Morris is pleased to announce that several of the firm’s attorneys will be presenting at the American Bar Association (ABA) Section of Litigation’s Insurance Coverage Litigation Committee CLE Seminar, to be held on March 2–5, 2016, in Tucson, Arizona. Duane Morris is a sponsor of the program and partner Terrance J. Evans is serving as a seminar co-chair. In addition, partners Philip R. Matthews, Ray L. Wong, Lida Rodriguez-Taseff and Jessica E. La Londe and associate Audra L. Thompson will all be presenters at the seminar.

For more information about the seminar, please visit the Duane Morris website.

California Supreme Court Issues Fluor Decision, Reverses Henkel Anti-Assignment Rule

Today the California Supreme Court issued its decision in Fluor Corporation v. Superior Court. In a unanimous decision, authored by the Chief Justice, the Court rejected the enforceability of “consent to assignment” clauses as a bar to coverage when the loss pre-dates the assignment, based on California Insurance Code section 520, and overruled its prior decision in Henkel Corp. v. Hartford Acc. & Indem. Co. (2003) 29 Cal.4th 934.

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Application Exclusion Bars Coverage for Claims Arising from Known, Undisclosed Circumstance

A California Court of Appeal has affirmed a summary judgment in favor of the insurer on defense and indemnity with respect to claims that arose from circumstances known to the policyholder when it applied for professional liability insurance but that were not disclosed to the insurer in the application.  Crown Capital Securities, L.P. v. Endurance American Specialty Ins. Co. (Cal.Ct.App, 2d Dist., Div. 5, 4/10/15).  Because the application stated that a claim is excluded from coverage if arising from any undisclosed circumstance that was required to be disclosed in response to a question asked, and the application requested disclosure of circumstances that may result in a claim, the policyholder was not entitled to coverage for claims arising from the known but undisclosed circumstance.

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The Illinois Duty to Defend: Litigation Insurance against Groundless Suits Even When Extrinsic Facts Known to Both Insurer and Insured Would Otherwise Abrogate Coverage

On January 13, 2015, the Illinois Appellate Court issued its opinion in Illinois Tool Works, Inc. v. Travelers Casualty and Surety Co., 2015 IL App. (1st) 132350 (1st Dist. 2015), wherein the court held the insurer had a duty to defend its insured against numerous vaguely pleaded toxic tort complaints. The central issue in Illinois Tool Works was whether facts extrinsic to the underlying complaint, known to both the insurer and insured, can abrogate the duty to defend. The Illinois Appellate Court held that undisputed extrinsic facts not pleaded in the underlying complaint cannot relieve an insurer of its duty to defend unless and until proven in the underlying action. Continue reading The Illinois Duty to Defend: Litigation Insurance against Groundless Suits Even When Extrinsic Facts Known to Both Insurer and Insured Would Otherwise Abrogate Coverage

Was The Wallace & Gale Holding Rejected In The API Case?

Some policyholders cite the Minnesota trial court decision in St. Paul Fire and Marine vs. A.P.I. Inc. (Minn. Dist. Court, Ramsey County, No. C9-02-8084, J. Finley Order dated May 13, 2004) as rejecting the Fourth Circuit’s holding in In re Wallace & Gale Co., 385 F.3d 820 (4th Cir. 2004). The argument is incorrect for several reasons.

First, Judge Finley’s May 2004 decision in API did not even address the core holding in Wallace & Gale but rather simply ruled on the burden of proof issue, concluding that it was insurers’ burden to prove that the claims fell within the completed operations hazard. Continue reading Was The Wallace & Gale Holding Rejected In The API Case?

Do Asbestos Rip-Out Claims And The “Abandoned Materials” Policy Exception Neutralize The Impact of the Completed Operations Aggregate?

In an effort to avoid the impact of the completed operations aggregate limit, policyholder counsel sometimes attempt to characterize claims as (1) rip-out exposures, or (2) as relating to “abandoned or unused materials,” so as to come within a common insurance policy carve-out from the Completed Operations Hazard. Both arguments are a stretch.

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Court Considers Equitable Allocation Among Multiple Insurers, and Precludes Allocation to Insurer Absent From Coverage Action

It is becoming more common for courts to consider the nuts and bolts of an equitable allocation among insurers that cover the same risk. Along comes another such decision in the very heavily litigated coverage dispute that already has many lengthy trial court decisions. The latest decision in MGA Entertainment v. The Hartford, 2012 U.S. Dist. LEXIS 55281 (C.D. Ca., April 18, 2012) involves the equitable sharing of many tens of millions of dollars in defense costs incurred by Bratz doll manufacturer, MGA, in an acrimonious lawsuit with Mattel involving copyright infringement and trade secret theft, among other issues.

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Are All Liability Insurance Policies Exposed To Unlimited Operations Coverage From Asbestos Claims?

All policies are not exposed to unlimited operations coverage from asbestos claims. First, not all asbestos claims present operations coverage issues. The “operations issue” arises from the fact that many CGL policies provide aggregate limits only for claims arising from certain types of hazards—typically Products and Completed Operations. Injuries arising from an insured’s ongoing operations are arguably not subject to an aggregate limit. Therefore, to the extent an asbestos claimant’s injury is the result of exposure during the insured’s operations, the claim arguably is not subject to an aggregate cap. But not all insureds that are subject to asbestos claims conducted operations. Continue reading Are All Liability Insurance Policies Exposed To Unlimited Operations Coverage From Asbestos Claims?