On December 18, 2018, the United States District Court for the Middle District of Florida held that the “property damage” requirement and the “Damage to Your Work” and “Exterior Finishing System and Stucco” exclusions were insufficient to relieve an insurer of its duty to defend its insured in a construction-defect action. Continue Reading Middle District of Florida reaffirms broad duty to defend contractors in construction-defect litigation

For the second time in two months, a federal court in Washington state has rejected an insurer’s attempt to avoid the consequences of its wrongful failure to defend its insured by effectively changing its mind and later—in this case much later—offering a defense. Continue Reading In Washington, insurers can’t “unring the bell” after wrongful denial of coverage

A recent decision from the U.S. District Court for the Western District of Washington again demonstrates the decidedly pro-policyholder nature of insurance-coverage law in the state of Washington. Like so many coverage cases, 2FL Enterprises, LLC v. Houston Specialty Insurance Co., arose from underlying construction-defect litigation. Continue Reading In Washington, an insurer cannot refuse to defend, change its mind, and still expect to control the defense or avoid bad faith

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

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

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

One of the most misunderstood provisions in a Commercial General Liability policy is the first sentence, which provides that the insurance company promises to provide coverage for damages “because of” bodily injury or property damage. Many people, including seasoned insurance professionals, believe CGL policies merely provide coverage “for” bodily injury or property damage. We see this every day, including in motions filed by insurance companies. Continue Reading Court finds plaintiff’s attorney fees covered by liability policy

Following a significant victory for policyholders earlier this year for cyber security losses under CGL (Commercial General Liability) policies, in PF Chang’s China Bistro, Inv. v. Federal Ins. Co. a federal judge in Arizona recently found no coverage for PF Chang’s credit card fraud assessments under a specialty cyber insurance policy. After a 2014 breach, hackers posted PF Chang’s customers’ credit card numbers online. It then incurred almost $1.7 million in claims from its customers and associated mitigation and other expenses. Federal Insurance Company reimbursed PF Chang’s for those expenses. But what it failed to do—and which was the subject of coverage litigation—was pay for the additional $1.9 million in fraud recovery charges from various credit card companies. Continue Reading Courts continue to struggle with specialty cyber-insurance products

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

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