In a June 18, 2019 article published in Law360, Hunton insurance team partner Syed Ahmad analyzed some of the most important insurance cases from 2019 so far.
Mr. Ahmad first touched on a pair of rulings from the Montana Supreme Court. In each, that court refused to find coverage for consent judgments negotiated by policyholders. The court in Abbey/Land v. Glacier Construction Partners rejected an underlying consent judgment because it was unreasonable and flowed from collusion between the underlying parties. Then, in Draggin’ Y Cattle Co. v. JCCS, the court reversed a trial court’s holding that an underlying consent judgment was presumptively reasonable, holding that the judgment did not deserve a “presumption of reasonableness,” because the insurer had not breached its duty to defend.
As Mr. Ahmad explains, these two rulings highlight the shortcomings of stipulated settlements. These judgments can raise “thorny issues about procedure, burdens and eventual resolution of disputes with insurers.” And so they are tools of “last resort” for policyholders.
Mr. Ahmad then discussed W. Bend Mut. Insurance Co. v. Ixthus Med. Supply. There, the Wisconsin Supreme Court held that a medical supplier’s carrier must defend the company in an advertising-injury suit. Though the insurer argued that a “knowing violations” exclusion barred coverage, some counts alleged in the underlying complaint did not require a finding of intentional conduct. The complaint thus alleged “at least one potentially covered advertising-injury claim.” As a result, Wisconsin’s high court held that the insurer had to defend.
The opinion, as Mr. Ahmad notes, is important because the court looked to the elements of the counts alleged, not the accusations of intentional conduct spattered throughout the complaint. According to Mr. Ahmad, courts could apply this rationale to many types of insurance cases, requiring a defense if the policy “potentially” covers part of a claim, despite the claim’s overarching factual allegations. Our March 8, 2019 blog post analyzes the case in more detail and expounds on the logic behind the court’s decision.