The construction industry is no stranger to insuring its projects against the risks of physical and natural disasters. Policies purchased to cover these risks, however, often are not broad enough to reach cyber threats, which can be just as damaging and costly as a physical disaster. During the past decade, hacks have targeted the data held by several high profile companies, including Target Corp., Sony Corp., Equifax Inc. and Yahoo Inc. So far, the construction industry has not yet been at the center of one of these attacks. Still, builders are no less susceptible to these risks than any other industry, especially given that these companies often possess sensitive data related to buildings and projects.
Hunton insurance recovery partner, Syed Ahmad, was recently asked to comment by Law360 on a Delaware Superior Court decision finding that state law does not preclude D&O insurance coverage for fraud-based claims against two Dole Food Co. executives, who are seeking to force several excess insurers to help pay for $222 million in settlements they reached to resolve stockholder suits accusing them of driving down Dole’s price before a 2013 take-private deal. According the Ahmad, the ruling is likely to carry strong precedential effect due to the solid reasoning of the court’s decision, which is premised on the Delaware Supreme Court’s 1986 decision in Whalen v. On-Deck Inc., which upheld the availability of coverage for punitive damages under Delaware law.
Hunton & Williams Insurance Recovery partner, Lorelie (Lorie) S. Masters, has been selected to Law360’s 2018 Insurance Editorial Advisory Board, whose purpose is to analyze Law360’s coverage of significant developments in the practice of insurance coverage law, and gain insight from experts in the field on how best to shape future coverage. An article in Law360 discussing the Editorial Advisory Board and each of its members can be found here.
In an article published in Law360, Hunton & Williams LLP partners Walter Andrews, Malcolm Weiss, and I discuss two recent decisions in Tree Top Inc. v. Starr Indem. & Liab. Co., No. 1:15-CV-03155-SMJ, 2017 WL 5664718 (E.D. Wash. Nov. 21, 2017). There, the Eastern District of Washington rejected an insurer’s attempt to escape insurance coverage for a Proposition 65 lawsuit filed against juice-maker Tree Top Inc.
Continue Reading “3 Takeaways Squeezed Out of Juicer’s Insurance Battle” – Hunton Attorneys Discuss Insurance Coverage for Prop. 65 Claims and Key Takeaways from Recent Set of Washington District Court Rulings.
In an article appearing in Law360, Hunton & Williams insurance partner, Michael Levine, weighs in on Office Depot’s pending Ninth Circuit appeal of a district court ruling that Office Depot is not entitled to coverage for a California False Claims Act case alleging that the office supply chain overbilled public agency customers. The decision is premised on a finding that California Insurance Code Section 533 — which precludes coverage for a policyholder’s willful acts — applies to the entire underlying CFCA action, including allegations of reckless and negligent conduct. But as Levine points out, the district court made the “fundamental error” of presuming that Office Depot had actually been found liable for a violation of the CFCA, when it had not. Section 533 requires “more than the mere allegation” of a willful act by a policyholder, he said. Levine goes on to explain the danger in affirming such an erroneous ruling is that “it creates a dilemma for policyholders, because even the mere allegation of a CFCA violation would be barred from coverage [even though n]othing in Section 533 suggests it was intended to have such a broad preclusive effect.”
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.
Hunton & Williams insurance partner Syed Ahmad was recently quoted in Law360 regarding a recent trend in judicial decisions favoring policyholders. Ahmad addresses an apparent trend by courts to refuse to allow technical violations to void coverage under complex insurance policies. A link to the Law360 article containing Ahmad’s comments can be found at 5 Insurance Rulings You May Have Missed In The 1st Quarter.
Law360 sought the perspective of Walter Andrews, head of Hunton & Williams LLP’s insurance coverage practice, when collecting its list of cases to watch in 2017. Andrews identified a case pending with the Texas Supreme Court – USAA Texas Lloyds Co. v. Menchaca, which we reported on in October. As Andrews explained to Law360, “If the Texas Supreme Court comes down in the policyholder’s favor here, it would provide a substantial weapon for policyholders’ arsenals, as far as what they have to [use against] insurers that don’t reasonably investigate claims. That would create a real incentive for insurance companies to timely and reasonably investigate claims.”
As a reminder about the case, Gail Menchaca filed a claim with her homeowners insurer USAA for damage sustained in Hurricane Ike. USAA determined that the claim was covered, but did not exceed her deductible and, thus, refused to make payment under the policy. Ms. Menchaca, whose loss estimates exceeded the deductible, sued for breach of contract and violation of the Texas Insurance Code. The jury found that USAA had not breached the policy, but, nevertheless, was liable for failure to conduct a reasonable investigation of her claim – a decision affirmed by the Texas Court of Appeals. The case was argued to the Texas Supreme Court in October, and awaits a decision.
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Hunton partner, Syed Ahmad , was quoted yesterday in a Law360 feature discussing how corporate policyholders can maximize their D&O insurance coverage. As Ahmad explains, “[g]iven the ever-changing regulatory landscape, directors and officers are getting involved in matters earlier and earlier and in a wider range of situations than before.” As a consequence, directors and officers should be looking for insurance that affords the broadest possible protection against the most diverse range of claims that the company is likely to face. One way to achieve this is use of a broad definition of “claim.” As Ahmad explains, “[t]he definition of ‘claim’ should cover as many of these potential scenarios as possible.” Another strategy is to narrow the scope of potentially applicable exclusions. In this instance, Ahmad explains in the context of the often-applied “insured v. insured” exclusion, policyholders should “[s]eek to carve out from the exclusion employment claims, bankruptcy proceedings and whistleblower claims,” as these claims do not suggest the sort of collusiveness that the exclusion was originally intended to dissuade.
Syed Ahmad, a partner in the Hunton & Williams LLP insurance recovery practice, was quoted in an article by Law360 concerning the Fourth Circuit’s April 11, 2016 decision in Travelers Indemnity Company v. Portal Healthcare Solutions, No. 14-1944. In the decision, a panel of the Fourth Circuit affirmed the decision of a Virginia district court, which held in August 2014 that Travelers must defend Portal Healthcare Solutions LLC against a proposed class action alleging that the policyholder’s failure to secure its server made medical records accessible by unauthorized users online. The decision confirms that legacy CGL policies do, indeed, afford coverage for cyber-related liabilities. In the Portal decision, the issue was whether the mere online availability of sensitive information constitutes “publication” for purposes of triggering a CGL policy’s personal or advertising injury coverage and its corresponding duty to defend. The appellate court said it does, and adopted the district court’s reasoning that “[p]ublication occurs when information is ‘placed before the public,’ not when a member of the public reads the information placed before it.” That the information may not have actually been accessed does not factor into whether the information was “published” for purposes of triggering coverage. Rather, the immediate accessibility to on-line information and the broad reach of that material is itself sufficient to amount to the requisite publication. The decision makes perfect sense in the context of web-based content and the ease by which it can be accessed. The decision also provides a sound answer to Mr. Ahmad’s rendition of the age-old question “If a tree falls in a forest and no one is around, does it make a sound?” According to the district court and Fourth Circuit, yes, apparently it does make a sound.