The Third Circuit ruled on Friday that differing “occurrence” definitions can have materially different meanings in the context of whether product defect claims constitute an “occurrence” triggering coverage under general liability insurance policies. The Court held in Sapa Extrusions, Inc. v. Liberty Mutual Insurance Company, that product claims against Sapa may be covered under policies that define an “occurrence” as an accident resulting in bodily injury or property damage “neither expected nor intended from the standpoint of the insured.”  However, the Court affirmed that coverage was not triggered under policies lacking the “expected” or “intended” limitation, reasoning that, under those policies, there was no question that the intentional manufacturing of Sapa’s product was too foreseeable to amount to an “accident.”

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The U.S. District Court of Appeals for the First Circuit recently held that Zurich American Insurance Company was obligated to defend Electricity Maine, LLC in a class action lawsuit brought by its customers.  The case stems from alleged misconduct by Electricity Maine that resulted in customers receiving higher bills than were previously represented.  Plaintiffs Jennifer Chon and Katherine Veilleux sought to represent a class of approximately 200,000 customers seeking damages totaling approximately $35 million.  Specifically, the complaint asserted claims for negligence, negligent misrepresentation, violations under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18. U.S.C. §§ 1962, 1964, and the Maine Unfair Trade Practices Act.

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In a prior post, we discussed a New York trial-court decision that found an insurance policy issued in 1966, to insure the construction of the World Trade Center, continues to cover modern-day asbestos claims, with each claim constituting an individual occurrence.  Last week, in American Home Assurance Co. v. The Port Authority of N.Y. and N.J., 7628-7628A (1st Dep’t Nov. 15, 2018), an intermediate appellate court affirmed that decision, agreeing that coverage is triggered for claims tied to alleged asbestos exposure at the WTC site in the 1960s and ’70s.

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On January 9, 2018, the Northern District of California held that the Nonprofits Insurance Alliance of California owed defense coverage to a pair of Scientology-based drug and alcohol rehabilitation centers for two lawsuits filed in Georgia and Oklahoma alleging that staff members had provided drugs and alcohol to patients, which resulted in injury and death. In Western World Ins. Co. v. Nonprofits Ins. Alliance of California, No. 14-cv-04466-EJD (N.D. Cal. Jan. 9, 2018), the court confirmed the broad scope of an insurer’s duty to defend under California law and rejected the insurer’s attempt to unreasonably expand the application of a “professional services” exclusion to avoid coverage.

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A New York trial court held last week in American Home Assurance Co. v. The Port Authority of N.Y. and N.J., Index No. 651096/2012 (Sup. Ct. N.Y. Nov. 29, 2017) (Bransten, J.) that an insurance policy issued in 1966, to insure the construction of the World Trade Center, continues to provide insurance coverage over modern-day asbestos claims, with each claim constituting an individual occurrence.

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In Centurion Med. Liab. Protective Risk Retention Grp., Inc. v. Gonzalez, No. CV 17-01581 RGK (JCx), 2017 BL 392431 (C.D. Cal. Nov. 1, 2017), Centurion Medical Liability Protective Risk Retention Group sought a declaration that it owed no duty to defend a lawsuit alleging that its insureds—a group of medical practitioners—committed professional negligence during the delivery of a newborn child.  Centurion argued that it had no defense obligation because its insureds did not notify Centurion of the lawsuit within 20 days after it was filed, as required under the policy.


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In the linked Client Alert, my colleagues, Lorie Masters and Brittany Davidson, discuss the recent New Jersey appellate court decision in Haskell Prop., LLC v. Am. Ins. Co., No. A-1452-14T2 (N.J. Super. Ct. App. Div. June 29, 2017), where the court again confirmed that, in “occurrence” policies, an insured can assign its policies

Commercial general liability policies typically provide coverage to insureds for losses resulting from property damage caused by an “occurrence,” usually defined in the policy as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.” In the context of food recalls, however, the exact cause of the food damage, whether contamination, spoilage

In Cypress Point Condo. Ass’n, Inc. v. Adria Towers, L.L.C., 076348, 2016 WL 4131662, at *8 (N.J. Aug. 4, 2016), a condominium association sued its general contractor for rainwater damage to the condominium complex, after the project was completed, which was allegedly the result of defective work performed by subcontractors. The condominium association also sued the developer’s CGL insurers, seeking a declaration that claims against the developer were covered by the policies. The trial court granted summary judgment to the insurers, finding that there was no “property damage” or “occurrence,” as defined and required by the policies, to trigger coverage. The condominium association appealed, and the Appellate Division reversed, concluding that “consequential damages caused by the subcontractors’ defective work constitute[d] ‘property damage’ and an ‘occurrence’ under the polic[ies].”

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On February 11, 2016, New York’s highest court held in Selective Ins. Co. of Am. v. Cnty. of Rensselaer, 2016 N.Y. Slip Op. 01001 (2016) that, in a class action alleging improper strip searches of arrestees over a four-year period, each improper strip search was a separate occurrence under the policies at issue, mandating a separate deductible per strip search. Significantly, although the issue in this case concerned application of per-occurrence deductibles, the same reasoning would apply if the issue had been over the number of applicable policy limits.

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