United States: Insurance Law - Week Of July 29, 2022

PANDEMIC UPDATE

The Fourth Circuit has issued a short unpublished affirmance in Skillets LLC v. Colony Ins. Co., No. 21-1268 (4th Cir. July 25, 2022) that it did not need oral argument to determine that a Virginia District Court did not err in dismissing a restaurant's suit to obtain coverage for pandemic BI losses.

Consolidated Restaurants has sought leave from the New York Court of Appeals to hear an appeal of the First Department's April 7 ruling in favor of Westport Insurance.

NEW CASES OF CONSEQUENCE

EIGHTH CIRCUIT Property Insurance/Business Use Exclusion (MN)

The Eighth Circuit has ruled that a Minnesota District Court did not err in ruling that a business use exclusion applied to a structure on the insured's property even though the insured only used it occasionally for his construction business. In Wobig v. Safeco Ins. Co. of Illinois, No.21-2757 (8th Cir. July 19, 2022), the court held that Safeco's homeowner's insurance policy unambiguously excluded coverage for loss occurring to an "other structure" used in whole or in part for a business that generates more than $3,000 in annual compensation during the prior year, regardless of whether the business is engaged in on a full-time, part-time, or occasional basis. The court took note of the fact that Wobig Construction stored tools in the barn and that the business had taken depreciation deductions for the property in the past. Further, the court refused to sustain the insured's bad faith claims against Safeco or its contention that his agent had failed to buy him the right insurance coverage.

CALIFORNIA Excess/Exhaustion Notice

Judge Wright has dismissed Vizio's Fourth Amended Complaint with prejudice and without leave for further amendments, ruling that an excess insurer was not obliged to reimburse the electronics manufacturer for millions of dollars that it paid to settle the "Smart TV" class action litigation. In dismissing Vizio's suit, the District Court declared in Vizio, Inc. v. Arch Ins. Co., No. 20-6864 (C.D. Cal. July 19, 2022) that excess insurers have no duty to defend or indemnity until all underlying insurance is exhausted and that in this case Vizio had failed to plead that it provided proper notice or tender of a claim to Arch after exhaustion of the underlying Navigators primary limit.

FLORIDA Procedure/Failure to Comply

The Florida District Court of Appeals ruled last week in The Water Guys v. Citizens Property Ins. Corp., No. 3D21-0653 (Fla. DCA3 July 20,. 2022) that a lower court erred in dismissing an insurer's suit for failing to comply with a document request from its property insurer. The Third District ruled that the suit was not premature and that the insured's failure to comply was not a bar to pursuing a claim as the documents in question were unrelated to the basis on which Citizens had already denied coverage.

ILLINOIS UM/Motor Vehicle/ATV

The Appellate Court has ruled in Endicott v. Utica Mut. Ins. Co., 2022 IL App (5th) 210090 (Ill App. July 19, 2022) that a trial court erred in granting summary judgment to an auto insurer on the question of whether an uninsured all-terrain vehicle that collided with its insured's motorcycle was a motor vehicle for purposes of UM coverage. In remaining the case for further findings, the Fifth District declared that genuine questions of material fact precluded judgment on the pleadings for either party where the record did not reveal whether the all-terrain vehicle was driving on the road lawfully, driving on the road unlawfully, or merely crossing at an intersection.

IOWA Additional Insured/Real Estate Manager

The Iowa Court of Appeals has ruled in North Star Mut. Ins. Co. v. Schley, No. 21-0198 (Iowa App. July 20, 2022) that the named insured's son was not entitled to coverage as an additional insured under his parent's policy. The court ruled that the son's status was limited under the policy to work on an unrelated property and that he was not acting as a "real estate manager" for his parents when he telephoned the local Sheriff to claim that his ex-wife had violated a restraining order.

NEW JERSEY Insurance Fraud

The Appellate Division has ruled that Allstate cannot claw back over $1 million in fees that it paid to a New Jersey lawyer pursuant to hundreds of PIP arbitration awards. Despite evidence at trial that counsel Despite evidence at trial that the bills in question contained charges for work that had not been done or for fees (e.g. Certified Mail) that had not been, the court held in Allstate New Jersey Ins. Co. v. Harris C. Legome, Esq., et al., A-1886-20 (App. Div. July 26, 2022) that the evidence at trial was insufficient to establish liability under the New Jersey Insurance Fraud Prevention Act because the fees were not a "claim for payment or other benefit pursuant to an insurance policy." As had the Superior Court, the Appellate Division declared that "the payments were not made as a benefit pursuant to an insurance policy as contemplated by IFPA, but as a penalty against Allstate pursuant to N.J.A.C. 11:3-5.6(e)" due to Allstate's mis-handling of PIP claims.

NORTH CAROLINA CGL/Privacy

Judge Dever has ruled in Amco Ins. Co. v. Van Laningham & Associates, No. 20-553 (N.D.N.C. July 18, 2022) that allegations that plaintiffs' personal injury lawyers violated the North Carolina Driver's Privacy Protection Act by collecting the personal information of drivers that police record on auto accident reports wit the intent of using the information to sent out targeted mailing solicitations failed to trigger either Coverage A or B in the law firm's CGL policy. As to Coverage B, the court ruled that the alleged violations of the DPPA were for "collecting" private information and did not seek damages for publishing it. Further, the court ruled that any coverage that might apply was excluded as involving criminal acts or the omnibus statutory exclusion for violations of TCPA/CAN-SPAM, etc.

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

Chubb reported this week that its second quarter net income was $1.22 billion, 46% less than the $2.27 billion that was its net income for this period in 2021.

Opioid Claims

The State of New Hampshire has become the latest state to sue drug stores to recover increased costs resulting from the opioid epidemic. In its law suit, the Granite State describes CVS, Rite Aid, Walgreens and their subsidiaries as "the last link in the opioid supply chain and the critical gatekeeper between dangerous opioid narcotics in the public."

IBNR Dept.

The Morgan & Morgan law firm, self-professed champions "for the people," have taken on their toughest case yet: the representation of Boston commuters who were stuck aboard an Orange line subway train when it caught fire, causing some passengers to dive into the Mystic River (site of some large Superfund claims and a bad Ben Affleck movie). Morgan & Morgan has denied rumors that they have been contacted by boaters who were nearly upended by two juvenile humpback whales last week off the coast of our summer place in Plymouth, MA or whether want to be "for the whales" too.

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