The Sixth Circuit recently upheld dismissal of KVG Properties, Inc.’s claims under a first-party property policy arising from damage to KVG’s office spaces due to tenants’ use of cannabis growing operations. We have been tracking the KVG case closely and previously reported on KVG’s initial appeal and Westfield’s retort on why the district court correctly dismissed the claims. Although there was no coverage for KVG under the particular facts of this case, the Sixth Circuit’s decision raises several important insurance issues for policyholders to consider and previews likely battlegrounds for future cannabis coverage disputes, many of which are precipitated by the variances in federal and state cannabis law.
A New York district court has held that an insurer must provide coverage under three excess insurance policies issued in 1970 for defense and cleanup costs incurred by Olin Corporation in remediating environmental contamination at seven sites in Connecticut, Washington, Maryland, Illinois, New York, and Washington. Seven of the remaining sites at issue presented questions of fact for trial, with only one site being dismissed due to lack of coverage.
The California Department of Insurance recently approved three new insurance carriers to provide coverage for the emerging cannabis industry. Insurance Commissioner Dave Jones announced last week that The North River Insurance Company, United States Fire Insurance Company, and White Pine Insurance Company will all begin offering surety bonds for cannabis businesses by the end of the month.
A Connecticut court recently denied a motion to compel appraisal of a claim for coverage of a commercial property damage claim, holding that, where the insurance policy at issue provides for appraisal of disputes related to the value or quantum or a loss suffered—not the rights and liabilities of the parties under the policy—appraisal is premature. The decision relied on law that equates insurance appraisal to arbitration and follows a number of decisions holding that parties cannot expand the scope of appraisal clauses to resolve questions of coverage or liability where, as in this case, those issues are not supported by the applicable policy language. Continue Reading Connecticut Court Holds Unresolved Coverage Issues Makes Appraisal Premature
Drug-maker Pfizer and one of its excess insurers, North River, are in the middle of a contentious dispute regarding the proper forum for their coverage dispute over directors and officers liability insurance following both parties’ race to the courthouse to file competing lawsuits in 2015. Pfizer argues that its own preferred forum of Delaware (where Pfizer is incorporated) is correct, while North River counters that New York (where Pfizer’s headquarters and its broker are located) is the proper forum. The dispute, which involves competing motions in Delaware and New York courts, highlights the importance of both the timing and location of forum selection in litigating insurance coverage disputes.
Last month, we reported on the ongoing insurance coverage dispute between commercial landlord KVP Properties, Inc. and its property insurer, Westfield Insurance Company. The dispute arises from an October 2015 DEA raid on KVG-owned rental units in Novi, Michigan, which uncovered damage to the units related to the tenants’ marijuana growing operations. The arguments raised by KVG on appeal highlight a number of important marijuana-related coverage issues, which Westfield has now addressed in opposition.
Commercial landlord KVG Properties Inc. has appealed a district court summary judgment ruling dismissing its claims under a first-party property policy issued by Westfield Insurance Company, arguing that the district court improperly rejected its claim because KVG’s tenants’ use of the property for marijuana growing operations was illegal under federal law. The appeal underscores the growing divide between state and federal marijuana laws and raises several important insurance coverage issues that will likely continue in the future.
The calendar may have started anew in 2018, but federal regulators have affirmed that they are still firmly focused on one of 2017’s emerging issues—cryptocurrencies and, more specifically, initial coin offerings (ICO).
With 2017 now in the rearview mirror, my colleagues Michael Levine, Lorie Masters, and I take the opportunity in this year’s annual review to reflect on the cases and other insurance developments that made the year memorable and will influence coverage decisions and disputes in 2018 and beyond.
Thank you and Happy New Year to all of our readers!