The Georgia Supreme Court ruled this week that First Acceptance Insurance Co. need not pay a $5.3 million excess judgment against its insured, Ronald Jackson.  First Acceptance Ins. Co. of Georgia, Inc. v. Hughes, No. S18G0517, 2019 WL 1103831 (Ga. Mar. 11, 2019), even though Jackson’s insurer could have settled the claim for Jackson’s $50,000 policy limits.

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Insurance partner Michael Levine is teaming up with Hunton’s Michael Perry and Adam Solomon and Jones Day’s Lisa Ropple to discuss cybersecurity litigation and insurance coverage presentation for the Massachusetts Bar Association. The presentation, sponsored by the MBA’s Complex Commercial Litigation Section, will take place on Wednesday, March 20th at 4:30 pm at the MBA’s office in Boston. Topics will include:

  • General litigation claims arising from cybersecurity incidents and defenses available to companies facing these claims.
  • Safeguards to prevent cyberattacks from outside sources.
  • Insurance coverage issues arising out of cybersecurity incidents.


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In an Expert Analysis recently published in Law360, Hunton insurance recovery attorneys Sergio Oehninger and Latosha Ellis discuss the many ways that event cancellation insurance can help mitigate loss caused by government shutdowns and other disruptive events.  A copy of the Expert Analysis can be found here.

The Wisconsin Supreme Court held last week in West Bend Mut. Ins. Co. v. Ixthus Med. Supply, Inc., that West Bend Mutual Insurance Co. (“West Bend”) could not escape its duty to defend by relying on the knowing violation and criminal acts exclusions in a commercial general liability policy issued to Ixthus Medical Supply, Inc. (“Ixthus”).  The court required the insurer to defend notwithstanding underlying allegations that Ixthus acted wrongfully and knowingly in defrauding Abbott Laboratories (“Abbott”).

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In an article appearing in CyberInsecurity News, Hunton insurance recovery partner, Michael Levine, comments on Zurich American Insurance Company’s attempt to invoke a so-called “war exclusion” as a basis for not paying business income losses suffered by snack food giant Mondelez International.  As Levine expains, so-called “war exclusions” have rarely been invoked and

The Texas Supreme Court has reversed a lower appellate court decision and found that insurers of Anadarko Petroleum Corp. cannot use their own policy wording to avoid coverage for more than $100 million of Anadarko’s defense costs stemming from the 2010 Deepwater Horizon disaster.  Law360 interviewed Hunton’s Sergio F. Oehninger about the substantial impact the decision will have for policyholders in Texas and elsewhere.  Oehninger explained how the decision corrects fundamental errors by the lower court in the construction of insurance policies and how it illustrates the proper way to construe words chosen by the insurer that operate to limit or preclude coverage.  In the Anadarko matter, the London market policy contained a “joint venture” provision that capped joint venture liabilities at $37.5 million.  The insures applied the cap after paying that amount to Anadarko.  The Texas Supreme Court rejected the insurers’ argument and the decision of the court below, finding that the joint venture provision applies only to “liabilities” – that is, amounts Anadarko becomes legally obligated to pay to a third party.  Defense costs, in contrast, are not amounts paid to a third party and, thus, are not “liabilities” within the context of the joint venture provision.  The Court also drew on other policy provisions to support the distinction, including provisions that specifically refer separately to “liabilities” and “defense expenses.”  “The Texas Supreme Court’s reversal of the appellate panel’s ruling serves as a clear pronouncement of both insurance policy construction rules and proper appellate review in Texas,” Oehninger said.  “In this regard, the Supreme Court’s opinion serves to ‘right the ship’ and bring Texas case law back in line with precedent.”

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Summary

Reversing a Texas Court of Appeals decision that allowed Anadarko’s Lloyd’s of London excess insurers to escape coverage for more than $100 million in defense costs incurred in connection with claims from the Deepwater Horizon well blowout, the Supreme Court of Texas held that the insurers’ obligations to pay defense costs under an “energy package” liability policy are not capped by a joint venture coverage limit for “liability” insured.  Anadarko Petroleum Corp. et al. v. Houston Casualty Co. et al., No. 16-1013 (Tex. Jan. 25, 2019).


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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.

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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.

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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.
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