Businesses buy liability insurance to protect themselves from lawsuits brought by people injured by the business’s employees. But after the injury, and after the plaintiff has sued, the main concern is often between the injured plaintiff and the insurer for the business that doesn’t want to pay.

In this context, the defendant often settles the lawsuit and then gets out of the way to let the plaintiff get what it can from the insurer, which is often the only party with enough money to pay a judgment. But structuring this resolution must be undertaken with great care in recognizing legal niceties that, missing a crossed “t” or dotted “i” in the process, can give the insurer a free get-out-of-jail card, as a recent case arising out of a tragic accident in Boston shows. Continue Reading Pitfalls abound in settling around an insurer acting in bad faith

Insurers control the defense of claims against their insureds, but this control comes with the risk that failing to settle a case could result in a verdict much greater than the available limits under the policy. And if it was reasonable and possible to settle before this calamitous end, the insurer could be on the hook for the entire judgment, which is just what happened to an auto insurer in a recent case. Continue Reading Insurer learns hard lesson in failing to settle

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

Coverage litigation stemming from continuous or progressive property damage or bodily injury claims typically involves multiple insurers that issued liability policies over a number of years. One or more of those insurers may want to settle early, and the policyholder may very well want to take that insurer’s money. Settlement may be complicated, however, by the potential equitable contribution rights of the other, non-settling insurers. The settling insurer wants to close its file without the risk of being dragged back into the litigation through a contribution claim. But the sophisticated policyholder is rightfully reluctant to agree to defend and indemnify the settling insurer, taking on the risk that a court could later conclude that the settlement was too low. Continue Reading Federal court applies Oregon statute to approve “good faith” settlement in environmental insurance litigation

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

Rather than litigating the amount of coverage, an insured may — and often does — settle the claim. The insured may do this for a variety of reasons, including wanting to avoid the time and expense of protracted litigation, avoiding the burden and disruption of discovery during that litigation, or the real and unfortunate need to have cash in his or her pocket to make needed repairs. But as a recent case from U.S. District Court for the District of New Jersey illustrates, an insured should carefully review the insurer’s proposed settlement agreement to ensure that he or she is releasing the insurer only from liability for the claim submitted. Continue Reading Insureds should be careful not to release an entire policy

You’ve been litigating against your insurer for over a year when, finally, it agrees to pay every penny of what you have long demanded — plus interest. What’s not to like? Plenty, if you still have to pay your coverage counsel for getting you this far.

In an opinion filed today by the Oregon Court of Appeals, Triangle Holdings, II v. Stewart Title Guaranty Co., the insured, Triangle Holdings, sued its title-insurance company, Stewart Title, after Triangle Holdings had paid several construction liens that had not been found in Stewart’s title search. After nearly a year of litigation — and a year of incurring attorneys’ fees — the insurer sent a check for the full amount for two of the five liens at issue (the other three were dismissed and not at issue in the appeal), plus interest. Triangle Holdings accepted the payment, after which Stewart successfully moved for summary judgment as to the paid liens, arguing that they were now “moot.” The trial court granted the motion. Continue Reading Oregon Court of Appeals warns insureds to look a gift horse in the mouth.

Judge King of the federal district court in Oregon recently ruled on two insurers’ dueling arguments about counting the number of “occurrences” based on the same set of facts, a dispute that can have profound consequences for both insurers and their insureds.

Chartis Specialty Ins. Co. v. Am. Contractors Ins. Co. (Aug. 12, 2014) arose from a dispute between two liability insurers who had already paid to settle a construction-defect lawsuit. The first insurer, ACIG, had written a primary-layer liability policy with limits of $2 million per occurrence, and a $4 million aggregate (that is, for a total of two or more occurrences). The second insurer, Chartis, had written an umbrella policy with a “Retained Limit” that triggered coverage beginning at $2 million per occurrence, or $4 million aggregate. Continue Reading Counting “Occurrences” Can Cut Both Ways, Even Between Insurers