Keeping your fingers crossed, with perhaps a little truculence thrown in for good measure, should not guide an insured’s answers in filling out an insurance application. Rather, as the decision in a recent case from federal district court in Florida shows, insureds filling out renewal applications should view the world through a pessimistic eye. Continue Reading Forget the rose-colored glasses when filling out insurance applications

Yesterday, the Oregon Court of Appeals dealt a hefty blow to insurance companies seeking to exclude coverage for property damage to multi-family dwellings and for awards of attorney fees. In Hunters Ridge Condominium Ass’n v. Sherwood Crossing, LLC, the Oregon Court of Appeals held that an insurance company’s “Multi-Unit New Residential Construction” exclusion was unclear as to whether it excluded coverage for property damage to both residential-only and mixed-use condominiums. Given there were two plausible ways to read the exclusion, the Oregon Court of Appeals held the exclusion must be construed against the insurance company. Continue Reading Not so fast insurance company, that judgment against your insured may in fact be covered

You’re sued. You tender the defense of the lawsuit to your insurer, but it refuses to defend you. You settle the case and then file a lawsuit against your insurer for what it should have paid to defend you while sitting out of the fight. You win in the trial court, in the Court of Appeals, and the Oregon Supreme Court. Under Oregon law, you get your attorney fees for this fight with the insurer about attorney fees, right?

Not if, despite all appearances, you were not the insured, but really a “self insurer” all this time, fighting with your insurer about paying for a fair share of your own defense costs. That’s what one Oregon insurer recently argued, and what the Oregon Court of Appeals soundly rejected in a decision issued today. Continue Reading Oregon Court of Appeals rejects insurer’s attempt to cast its own insured as just another insurer

Back in August 2015, I wrote this post about the Oregon Court of Appeals opinion in West Hills Development Co. v. Chartis Claims, Inc., where the court confirmed that Oregon’s broad duty to defend extended to parties claiming rights as “additional insureds.” Last week, the Oregon Supreme Court affirmed that decision, broadly holding that “regardless of ambiguity or lack of clarity, the duty to defend is triggered if the complaint’s allegations, reasonable interpreted, could result in the insured being held liable for damages covered by the policy.” Continue Reading Oregon Supreme Court reaffirms broad nature of the duty to defend, even in the face of ambiguous or unclear allegations

Yesterday the Supreme Court of Oregon overruled Stubblefield v. St. Paul Fire & Marine (1973) and paved the way for a more commonsense approach to negotiating stipulated judgments. Stipulated judgments have been a well-worn, though somewhat perilous, mechanism for insureds to resolve liability claims against them when their insurers defend in bad faith. In doing so, however, the parties to the stipulated judgment were tasked with navigating needlessly technical steps along the way. In Brownstone Homes Condo. Ass’n. v. Capital Specialty Ins. Co., the court removed one of the insurer’s “gotcha” defenses to an otherwise valid stipulated judgment. Continue Reading Oregon Supreme Court eases the path to hold insurers accountable for bad-faith practices

Nevada recently became the latest jurisdiction to protect the interests of policyholders by adopting the so-called Cumis counsel rule. In State Farm Mut. Auto. Ins. Co. v. Hansen (Sept. 24, 2015), the Nevada Supreme Court held that insurers are required to pay for independent counsel for insureds facing liability claims when there is a conflict of interest between the insured and insurer. In so holding, Nevada joined the list of states to ensure that policyholders have the benefit of being represented by counsel that has only the policyholders’ interests in mind—and not those of the insurer. Continue Reading Nevada Joins States Protecting Insureds from Lawyers Serving Two Masters

A recent opinion out of the Fourth District Court of Appeal in Florida highlights the importance of properly pleading claims so that insurance coverage is triggered.

In Mid-Continent Cas. Co. v. Royal Crane, LLC, Cloutier Brothers, Inc. leased a crane and crane operator from Royal Crane, LLC. During construction, a truss fell from the crane and injured a construction worker. The worker sued Royal Crane, asserting claims for negligence, strict liability, and gross negligence. Royal Crane tendered its defense of the lawsuit to Cloutier under an indemnity clause in the parties’ rental agreement. Cloutier declined the tender “at the behest” of its insurer, Mid-Continent.

So Royal Crane sued, bringing a third-party action against Cloutier for contractual indemnification and breach of the rental agreement. Cloutier tendered the defense of these claims to Mid-Continent, which denied the duty to defend under the exclusion for Cloutier’s potential obligation to pay “by reason of the assumption of liability in a contract or agreement.” The poison pill for coverage turned on Royal Crane’s failure to plead around this exclusion. Continue Reading Florida Court of Appeal case serves as a reminder to be mindful of how claims are pleaded

On August 19, 2015, the Oregon Court of Appeals issued its opinion in West Hills Development Co. v. Chartis Claims, Inc., reaffirming the broad nature of an insurer’s duty to defend, even when that duty is owed to an “additional insured.”

Contracting parties rely on indemnity agreements and additional insured status to protect against liability arising from the other party’s negligence. Insurers, however, frequently ignore or summarily deny tenders from parties who qualify as additional insureds under the policies they issued. That is exactly what happened in West Hills. Continue Reading Oregon’s broad duty to defend extends to “additional insureds”

When threatened with a lawsuit, an insured’s first call is often to his or her insurer, asking the insurer to hire lawyers to defend the lawsuit. All too often the insurer’s initial response is that the claim is not covered for one reason or another. At this stage, it is critically important that the policyholder not simply give up, but consult with coverage counsel who can analyze the policy, or multiple policies, and negotiate with the insurer or insurers. Often, coverage counsel can persuade (or force) the insurers to pay for the insured’s defense, even if it is unclear or even doubtful whether the policy will ultimately cover the loss. This is because the insurer has a duty to defend its insured against even a potentially covered loss. Continue Reading California court confirms that any “potentially covered” loss triggers the duty to defend

In a traditional attorney-client relationship, the attorney acts as the client’s zealous advocate, protects the client’s confidences, and at all times acts in the client’s best interests. But what duty, if any, is owed to an insurer by defense counsel appointed by the insurer? Does the payment of defense costs and the attorney’s reporting requirement to the insurer create any duty owed by the attorney to the insurer? The answers to these questions have implications not only for defense counsel, the insured, and the insurer, but also for the injured party and its counsel. In a recent decision, the Washington Court of Appeals reiterated that defense counsel owes a duty of care only to the client (the insured) and not the insurer.

In The Doctors Co. v. Bennett, Bigelow & Leedom, P.S. (Wash.  Ct. App. May 26, 2015), the insureds, two physicians and their employer, were sued for medical malpractice after a baby delivered by the physicians suffered severe disability due to oxygen deficiency during delivery. The insurer then undertook the defense of the physicians and the employer without a reservation of rights and retained defense counsel. Following some alleged legal missteps, the insurer settled with plaintiffs for over $7 million in excess of the insureds’ policy limits and then brought suit for legal malpractice against defense counsel. Continue Reading In Washington, appointed defense counsel owes a duty of care only to its client, the insured, and not to the insurer paying the bills