A Georgia Court of Appeals judge recently ruled that Scapa Dryer Fabrics was entitled to $17.4 million worth of primary coverage from National Union Fire Insurance Company of Pittsburgh, PA for claims of injurious exposure to Scapa’s asbestos-containing dryer felts. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Scapa Dryer Fabrics, Inc., No. A18A1173, 2018 WL 5306693, at *1 (Ga. Ct. App. Oct. 26, 2018). Scapa sought coverage under five National Union policies issued from 1983–1987. The 1983, 1984 and 1985 National Union policies had limits of $1 million per occurrence and $1 million in the aggregate. The liability limits for the 1986 and 1987 renewal policies were amended by endorsement to $7.2 million. Scapa sought to recover the full $17.4 million from all five policies. National Union argued that a “Non-Cumulative Limits of Liability Endorsement” in the 1986 and 1987 policies limited Scapa’s recovery to only $7.2 million. Scapa sued National Union and its sister company, New Hampshire Insurance Company (from which Scapa purchased excess liability coverage), in Georgia state court.
The Northern District of Illinois in Astellas US Holding, Inc. v. Starr Indemnity and Liability Co., 2018 WL 2431969, at *1 (N.D. Ill. May 30, 2018) held that a U.S. Department of Justice subpoena demanding documents relating to a government investigation constitutes a “Claim.”
Corporate policyholders should carefully consider insurance coverage implications when structuring mergers, acquisitions, or other transactions that may impact available insurance assets. A New Jersey federal court recently granted summary judgment for a surviving bank asserting coverage rights under a D&O policy issued to an entity that dissolved in a statutory merger, based in part on the wording of the parties’ merger agreement structuring the transaction in accordance with the New Jersey Business Corporation Act (“NJBCA”).
Does the term “wrongful act” always require that the conduct at issue be “wrongful”? In at least one D&O insurance policy, the answer may not be as clear as it seems. A federal district court in Texas recently denied an insurer’s motion to dismiss a company’s coverage claim for nearly $5 million in costs the company incurred defending a statutory appraisal lawsuit filed by disgruntled shareholders, citing the D&O policy’s “terribly” written definition of “wrongful act,” which may have been written so broadly that it provides coverage for “acts” that are not actually “wrongful.”
The frequency and magnitude of Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq.) investigations and claims continue to grow. Last month, the U.S. Securities and Exchange Commission announced that Halliburton Co. had agreed to pay $29.2 million in fines and penalties to settle allegations that its operations in Angola and Iraq violated the FCPA’s books and records and internal accounting controls provisions. In its press release, Halliburton vowed that it had “continuously enhanced its global ethics and compliance program” since first receiving an anonymous tip in December 2010, but the recent settlement serves as a reminder that even the most robust compliance program cannot guarantee that FCPA violations will not occur.
A Georgia district court recently denied an insurer’s attempt to recoup defense costs, holding that even where the court previously determined that coverage was barred under the policy’s pollution exclusion, the insurer could not “rewrite the record” or clarify its “defective” reservation of rights letters to show that it fairly informed the policyholder of its coverage position, which is a prerequisite to recoupment of defense costs.
My partner, Walter Andrews, recently commented in a Law360 article concerning the top insurance cases to watch in 2017. The Law360 article, titled Insurance Cases to Watch in the 2nd Half of 2017, features Andrews commenting on the impact of Global Reinsurance Corp. of America v. Century Indemnity Co., case number CTQ-2016-00005, in the Court of Appeals of the State of New York, where he points out how a win for Global Re could result in a huge windfall for the reinsurer by saving on its defense costs, since reinsurers typically must pay both indemnity and defense costs. Andrews also commented on Continental Insurance Co. et al. v. Honeywell International Inc. et al., case number 078152, in the Supreme Court of the State of New Jersey, noting the significant impact that choice of law could play on the outcome of that dispute.
A panel of the California Court of Appeals, in an unpublished opinion (Stein v. Axis Ins. Co., (Cal. Ct. App., Mar. 8, 2017, No. B265069) 2017 WL 914623), issued March 8, 2017, held that a policy exclusion requiring “final adjudication” did not support a refusal to pay the policyholder’s defense costs by Houston Casualty Company (HCC) following a trial court’s entry of judgment where the policyholder still could pursue appeal.
A California appellate court held on Tuesday in Navigators Specialty Ins. Co. v. Moorefield Constr., Inc., 2016 WL 7439032, __ Cal.Rptr.3d __ (Dec. 27, 2016), that a general liability insurer must cover amounts paid as attorneys’ fees in an underlying settlement even where no duty to indemnify was owed under the policies. The coverage was required under the policies’ Supplementary Payments provision – an often overlooked and underutilized section of the CGL policy that can be of significant value to policyholders.
The Delaware Supreme Court ruled on Monday in a long-running dispute involving Viking Pump’s and Warren Pumps’ claims for recovery under primary, umbrella, and excess insurance. The Delaware high court had certified two questions to the New York Court of Appeals. The Delaware decision follows the New York high court’s ruling in May that the policies required “all sums” allocation and “vertical” exhaustion” (click here and here for prior posts).