In a huge win for policyholders, a New York appellate court, in D.K. Property, Inc. v National Union Fire Insurance Company of Pittsburgh, Pa., held that an insured need not provide a detailed factual description or explanation for why consequential damages are recoverable at the pleading stage. Rather, an insured’s complaint must only (i) specify the types of consequential damages claimed; and (ii) allege that those damages reasonably were contemplated by the parties prior to contracting.
Rosen Millennium Inc. (“Millennium”), the cyber security and IT support subsidiary of Rosen Hotels & Resorts, Inc., has appealed to the Eleventh Circuit contending that a Florida federal court ignored Florida insurance law when it ruled that Travelers Insurance Company has no duty to defend it against a multimillion dollar claim arising out of a cybersecurity breach.
Notwithstanding the absence of a congressional war declaration since Japan bombed Pearl Harbor, Zurich American Insurance Company has invoked a “war exclusion” in an attempt to avoid covering Illinois snack food and beverage company Mondelez International Inc.’s expenses stemming from its exposure to the NotPetya virus in 2017. The litigation, Mondelez Intl. Inc. v. Zurich Am. Ins. Co., No. 2018-L-11008, 2018 WL 4941760 (Ill. Cir. Ct., Cook Cty., complaint filed Oct. 10, 2018), remains pending in an Illinois state court. Continue Reading Zurich Invokes War Exclusion in Battle Over Coverage for NotPetya Attack
The doctrine of functus officio typically sets an arbiter’s award in stone: It forbids an arbiter from altering its award after the award has been rendered. But the doctrine has several exceptions. One such exception, known as the clarification exception, allows an arbitration panel to clarify an ambiguous final award. In Gen Re Life Corporation v. Lincoln National Life Insurance, the Second Circuit joined several other circuits in expressly adopting this exception, allowing an arbitration panel to clarify the meaning of its prior interpretation of rescission-clause in a reinsurance agreement. Hunton Andrews Kurth attorneys Syed Ahmad, Patrick McDermott, and David Costello discuss the decision and its implications for policyholders in their recent article, Arbitration of Insurance Disputes: Functus Officio and the Clarification Exception.
The Supreme Court of Virginia’s decision yesterday finding no coverage for fire damage to a building is a cautionary tale for companies acquiring other companies. Erie Ins. Exch. v. EPC MD 15, LLC, 2019 WL 238168 (Va. Jan. 17, 2019). In that case, Erie Insurance issued a property insurance policy to EPC. The policy covered EPC only and did not cover any subsidiaries of EPC. EPC then acquired the sole member interest in Cyrus Square, LLC. Following the acquisition, fire damaged a building that Cyrus Square owned. Continue Reading Don’t Assume Your Insurance Covers A Newly Acquired Company
In Zurich American Insurance Co. v. Don Buchwald & Associates, Inc., 2018 N.Y. Slip. Op. 33325(U) (Sup. Ct. N.Y. County, Dec. 21, 2017), the Supreme Court of New York held that Zurich was obligated to defend a talent and literary agency against claims brought by Hulk Hogan alleging that the agency aided and abetted one of its agents—Tony Burton—in publishing racist and sexual footage of Hulk Hogan online. The decision also gives ammunition to policyholders seeking to recover their fees incurred while litigating against an insurer’s improper denial of coverage. The court found that the insureds had “been cast in a defensive posture” due to the insurer’s claims seeking a declaratory judgment, and that this justified a fee-shifting award.
Policyholders facing any type of products liability scored a win in a recent decision from the District Court for the Northern District of Illinois. The court found that an insurance company must defend its insured against claims arising out of a recall while simultaneously funding the insured’s affirmative claims for recovery.
2018 was a big year for insurance coverage cases, especially those involving social engineering phishing, spoofing and other schemes of trickery and deception.
The insurance recovery lawyers at Hunton Andrews Kurth have compiled their list of the top insurance cases of 2018. A copy of the Review can be found here.
As the new year gets under way, cases that will shape the insurance landscape in 2019 continue to proceed. Among them are First Acceptance Ins. Co. v. Hughes, in which the Georgia Supreme Court will address the prerequisites for a policyholder to sue its insurance carrier for bad faith based on the insurer’s failure to settle the underlying dispute for an amount within the available policy limits. Hunton Andrews Kurth’s insurance practice head, Walter Andrews, was asked by Insurance Law360 to comment on the significance of that case. As Andrews explained, the insurer’s position is inconsistent with Georgia law. “Georgia law does not require some particular form of settlement offer — or even an offer at all — to create an insurer’s duty to settle claims against their insureds.” Rather, as Andrews explained, “that duty arises when the insurer knows or reasonably should know that not settling will create an ‘unreasonable risk’ of the insured suffering a judgment in excess of his or her policy limits, regardless of whether a third-party claimant has first presented a settlement offer. Most often, that should be a jury question and not something that is susceptible to summary judgment.”
Continue Reading Hunton Insurance Head Comments on Insurance Cases to Watch in 2019
The Second Circuit has ruled a claim alleging an “offer for sale” infringed on a patent constitutes an advertising injury sufficient to trigger a defense under commercial general liability insurance. In High Point Design LLC v LM Insurance Corporation, the plaintiff High Point brought a declaratory-judgment action against Buyer’s Direct, Inc. after the latter directed High Point to cease-and-desist in the sale of its Fuzzy Babba slippers. Buyer’s Direct responded with a counterclaim alleging trade dress infringement, claiming that High Point’s offers for sale in retail catalogs infringed on Buyer’s Direct’s own slipper trade dress. Buyer’s Direct sought discovery of all advertising, marketing and promotional materials related to High Point’s fuzzy footwear to substantiate its claims.