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NOTEWORTHY NEW RULINGS
NINTH CIRCUIT Limits of Liability (AZ)
In an Arizona dispute between and excess insurer and a primary insurer concerning the available primary limits for an individual who was seriously injured in the insured’s parking garage, the Ninth Circuit has ruled in Scottsdale Ins. Co. v. Hudson Specialty Ins. Co., No. 17-15875 (9th Cir. June 18, 2018)(unpublished) that Hudson only owed $1 million, rejecting Scottsdale’s argument that the primary policy owed both the $1 million general liability limit and a separate $1 million in coverage pursuant to a “claims made” Parking Errors and Omissions endorsement.
ALABAMA Agents/Failure to Procure/Limitations Periods
The Alabama Supreme Court has ruled that Alabama’s two year statute of limitations for claims against agents and brokers for failing to procure insurance ran from the date that a claim was filed against the insured and the carrier denied coverage in such a manner as to alert them to the shortfall in the coverage that they might otherwise have expected but for the agent’s alleged negligence. In Beddingfield v. Mullins Ins. Co. No. 1170143 (Ala. June 15, 2018), the court rejected the insureds’ argument that the limitations period did not begin to run until such time as a judgment entered against them exceeding the amount of the available limits of coverage. However, the court also ruled that the insureds’ allegation of “wanton” conduct could go forward in light of its ruling in Ex Parte Capstone Building Corporation (Ala. 2011) that litigants who brought claims based on allegedly wanton conduct had an additional two years after June 3, 2011 to do so. The Supreme Court also rejected the agent’s argument that the insureds had not suffered any damages because the defense of the claims were paid for by the Alabama Insurance Guarantee Association and were ultimately settled within the available policy limits. The court found that the insureds had, in fact, provided proof of actual damages including attorney’s fees and business losses due to this problem.
ARIZONA Duty to Defend/Contractual Liability Exclusion
The Arizona Supreme Court has ruled that an exclusion for liability arising “under any contractual agreement” did not relieve an insurer of its obligation to defend a builder against a claim for negligent excavation brought by the home buyer, In Teufel v. American Family Mutual Insurance Co. No. 17-0190 (Ariz. June 14, 2018), the state Supreme Court ruled that the exclusion did not apply because the underlying lawsuit contained an allegation of negligence arising from a common law duty to construct the home as a reasonable builder would and was not based solely upon the contract between the builder and buyer. The court ruled that in such circumstances, the insured’s tort obligations arose independently of any contractual duties and therefore fell outside the scope of this exclusion.
CONNECTICUT First Party/Crumbling Foundation Claims
In an opinion that may have significant consequences for the future of crumbling foundation coverage claims in Connecticut, a federal district court judge announced in Vera v. Liberty Mutual Fire Insurance, No. 16‑72 (D. Conn. June 15, 2018) that he was asking the Connecticut Supreme Court to amplify its analysis of older “collapse” language in Beach to clarify “what constitutes a “substantial impairment of structural integrity” for purposes of applying the “collapse provision” of a homeowner’s insurance policy. However, Judge Chatigny declined to also certify a question with respect to the meaning of “foundation, noting the significant number of Connecticut rulings in which courts have declared this language to be ambiguous.
CONNECTICUT Long-Arm Jurisdiction
The Connecticut Supreme Court has ruled that a Connecticut court had jurisdiction over a local citizen’s §38(a)-321 reach and apply action against the insurer of a New York motorist, Despite the fact that the policy at issue was issued in New York and that Kingstone had no jurisdictional contacts with Connecticut, the Supreme Court ruled in Samelko v. Kingstone Ins. Co., SC 199 64 (Conn. June 12, 2018) that Connecticut’s judiciary had jurisdiction over Kingstone in light of “Territory” provisions in the policy requiring as a pe-condition to coverage that “the accidental loss must occur within the designated coverage territory of the United States of America.” In light of this Territory provision, the Supreme Court ruled that it was foreseeable to Kingstone that it would be called upon to provide a defense to claims arising in the courts of Connecticut.
MINNESOTA CGL/”Your Product” Exclusion/”Real Property”
While leaving open numerous issues concerning the availability of CGL coverage for a settlement arising out of defects in the insured’s “insulated glass units” that failed after being installed in various hotels and commercial buildings, Judge Magnuson has ruled in National Union Fire Ins. Co. of Pittsburgh, PA v. Viracon, Inc., No. 16-482 (D. Minn. June 18, 2018) that the claims sought recovery for “property damage” but that the cost of repairing the IGUs or their component parts were subject to the policy’s “your product” exclusion, rejecting the insured’s argument that the damaged goods were “real property.”
OTHER DEVELOPMENTS OF NOTE
* * * Inside the Insurance Industry * * *
Two of America’s leading insurance trade associations—the American Insurance Association and the Property Casualty Insurers Association of America—have announced plans to merge.
* * * Across the Bar * * *
The FBI arrested a sitting justice of the West Virginia Supreme Court this week. Allen Loughry faces 22 federal charges, including mail fraud, wire fraud, witness tampering and lying to federal agents.
* * * Opioid Update * * *
The Commonwealth of Massachusetts has sued Perdue Pharma and its senior executive for willfully concealing the addictive qualities of OxyContin.
* * * Coverage B IBNR Update * * *
The D.C, Circuit has reinstated soft drink maker Dr. Pepper’s challenge to Coca-Cola Co.’s effort to register trademarks for soft drinks and sports drinks whose names contain the word “zero.”
* * * New Coverage Litigation * * *
Travelers has filed a recoupment action against a general contractor in the federal district court in Denver, alleging in Travelers Indemnity Company of America v. Colorado Structures, Inc., No.:18-01372 D. Colo.) that it is entitled to reimbursement for sums that it spent to defend this insured in construction defect litigation before a court declared that it had no obligation to do so.
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