Case Summaries

Insurance Law

[03/17] Chandler v. State Farm Mut. Auto. Ins. Co.
In an action seeking car rental costs from an insurer arising out of an auto accident, dismissal of the complaint is affirmed where, under California law, an insurer is permitted to recoup a payout from a third-party tortfeasor's insurance company before the insured has sued the third-party tortfeasor, and without first making the insured whole.

[03/16] Pendergest-Holt v. Certain Underwriters at Lloyd's
In an action by various insureds, including R. Allen Stanford, each faced with civil and criminal allegations that they engaged in a massive Ponzi scheme, seeking reimbursement of defense costs under a directors' and officers' liability policy from the policy's underwriters, an injunction prohibiting defendant-insurers from withholding defense funds is affirmed with modifications and remanded, and the underwriters are enjoined from refusing to advance defense costs as provided for in the D&O Policy unless and until a court "determine[s] in fact" by clear and convincing evidence "that the alleged act or alleged acts [of Money Laundering] did in fact occur."

[03/15] Catlin Syndicate Ltd. v. Imperial Palace of Miss., Inc.
In a declaratory judgment action by an insurer seeking a declaration that the policy did not cover certain Hurricane Katrina-related losses, summary judgment for plaintiff is affirmed where the proper method for determining loss under the business-interruption provision was to look at sales before the interruption rather than sales after the interruption.

[03/15] N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc.
In an action by a barge operator against an insurer for defense costs associated with Hurricane Katrina-related damages, the district court's order (1) dismissing all causes of action brought against defendant, (2) granting plaintiff the fees and expenses of two of the three law firms it retained to defend Katrina-related actions, and (3) denying plaintiff's motion to transfer and its application for attorneys' fees, is affirmed in part where: 1) the locus of operative facts as well as the interests of efficiency and fairness favored a New York forum; 2) the term "otherwise" in the insurance policy did not include the kind of relationship associated with a shipowner's bailment to a terminal operator, which was at issue in this case; 3) plaintiff did not have a right to pursue independent counsel to defend the Katrina actions whose legal fees would be covered by the primary policy; 4) because summary judgment in favor of defendant was warranted based on the simple non-coverage of the barge under the policy, and because there was no dispute that the primary policy had been exhausted, the excess policy applied to cover expenses in excess of the primary policy's limits. However, the order is vacated in part where coverage for fees earned by both counsel, either as excess to defendant's primary policy or as initial coverage for plaintiff's independent counsel, was intended pursuant to the umbrella coverage provided by the excess policy.

[03/12] Travelers Prop. Cas. Co. of America v. Hillerich & Bradsby Co., Inc.
In plaintiff-insurers' action seeking reimbursement for their settlement contribution against its insured arising from an underlying lawsuit for antitrust violation and tortious interference with contract and with other business relations, district court's judgment is affirmed in its entirety where: 1) Kentucky will allow reimbursement for an insurer after a unilateral reservation of rights by the insurer over the objection of the insured in at least the narrow circumstances posed in this case and in cases such as Blue Ridge; 2) the district court did not err in finding that disparagement was not part of the underlying litigation at the time of the settlement, and thus, plaintiff is entitled to reimbursement of the settlement funds paid on behalf of the defendant; 3) the district court was correct in determining that plaintiff's duty to defend was triggered on November 8, 1999, the date the First Amended Complaint was docketed; and 4) the district court did not abuse its discretion in determining the damages and pre-judgment interest awarded.

[03/10] Darvell v. Life Ins. Co. of N. Am.
In an ERISA action regarding defendant-insurer's denial of long-term disability benefits to plaintiff, summary judgment for defendant is affirmed where: 1) it was not an abuse of an ERISA plan administrator's discretion to ignore an opinion when the physician did not provide reliable objective evidence of testing or other proof to support a finding of long term disability; and 2) the plan administrator did not abuse its discretion by using the DOT description of plaintiff's occupation, rather than a description of his actual job duties.

[03/10] Abdelhamid v. Fire Ins. Exch.
In homeowner's action against her insurance company after it denied coverage to her for the fire that burned her house down, summary judgment in favor of the insurance company is affirmed as the trial court did not err in granting summary judgment on the breach of contract claim as plaintiff's failure to comply constituted material breach of her contractual duties.

[03/10] Scottsdale Ins. Co. v. Century Surety Co.
In an action against defendant-insurance company seeking equitable contribution based on defendant's failure to participate in the defense of 17 common insureds in hundreds of actions in which plaintiff and another insurer shared the costs of the defense, judgment of the trial court determining the equitable contribution is reversed as it was in conflict with the general rule (now to be applicable in insurance cases) that, in order to be entitled to equitable contribution, a party must have first paid more than its share of the loss and it bears the burden of proving such circumstance.

[03/10] Milwaukee Metro. Sewerage Dist. v. American Int'l Specilaty Lines Ins. Co.
In a sewerage district's suit for damages against an environmental liability insurer for denying coverage for costs incurred by the district in removing significant pollution on land it recently purchased, district court's judgment is reversed and remanded as the district court's finding that there was clear and convincing proof that a prior agreement existed between the insurance company and the sewerage district that the parcel would be covered property was clearly erroneous. Therefore, defendant is entitled to judgment on the sewerage district's reformation claim and, as a consequence, judgment in favor of defendant on its indemnity claim is vacated.

[03/10] Fortis Corp. Ins. SA. v. Viken Ship Mgmt. AS
In a maritime shipping case involving a claim for rust damage to steel coils caused by exposure to seawater during a journey from Poland to Ohio, judgment of the district court is affirmed where: 1) a ship manager charged with providing a Master, officers and crew, and performing various other ship-management tasks for the shipping vessel does not qualify as a "carrier" under the Carriage of Goods by Sea Act (COGSA), and thus the COGSA's one year-statute of limitations does not bar the underlying suit; and 2) defendant's claim that the district court's finding of negligence was based on clearly erroneous factual findings is rejected.

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