If Pacific Gas and Electric Company is found liable for the devastating California fires now burning, the company’s customers could be on the hook to pay the bill, or even lead to a PG&E bankruptcy, according to The New York Times.

“Many fires in recent years have been caused by downed power lines serving California’s utilities. State officials have determined that electrical equipment owned by PG&E, including power lines and poles, was responsible for at least 17 of 21 major fires in Northern California last fall. In eight of those cases, they referred the findings to prosecutors over possible violations of state law,” write Times reporters Ivan Penn and Peter Eavis.

Some victims of the latest fires have sued PG&E, alleging negligence and health and safety code violations by the utility company.

Read the NY Times article.

The International Association of Defense Counsel (IADC), an invitation-only global legal organization for attorneys who represent corporate and insurance interests, has published its fourth quarter 2018 Defense Counsel Journal (DCJ) with articles on current trends in the practice of law.

The current DCJ issue’s articles explore asbestos tort reform on the state level, the growth of punitive damages in Anglo-Canadian contract law, and legal hurdles that manufacturers face when launching products in the United States.

In a release, the organization, said the DCJ is a quarterly forum for topical and scholarly writings on the law, including its development and reform, as well as on the practice of law in general. DCJ articles are written by members of the IADC, which is a 2,500-member, invitation-only, worldwide organization that serves its members and their clients, as well as the civil justice system and the legal profession.

The DCJ is available for free and without a subscription via the IADC’s website.

The current DCJ issue is the first to be overseen by new editor and former IADC board member Kenneth R. Meyer, a partner in the products liability practice group at McCarter & English, LLP, in Newark, N.J. The issue also is the first under the leadership of new IADC president Craig A. Thompson, a partner at Venable LLP.

Following are brief summaries of key articles included in the fourth quarter 2018 issue of the DCJ:

— “The More Things Change: Bankruptcy Trust Reform and the Status Quo in Asbestos Litigation” – The article debunks plaintiffs’ lawyers’ arguments that trust transparency reforms would delay litigation, deny compensation to the most sympathetic of plaintiffs, and divest plaintiffs of their traditional control over the trust and tort systems. The authors explain how trust transparency reforms have not delayed litigation and have, in fact, accelerated compensation from the asbestos trusts. The article also describes that, where reforms have been enacted, they have achieved their purpose of fostering communication within the two-tiered system of asbestos compensation so that juries can properly account for all of a plaintiff’s exposures to asbestos.

— “Moving Beyond Uberrima Fides? The General Duty of Honesty in Contractual Performance and Punitive Damage Awards in Anglo-Canadian Contract Law” – The article’s authors suggest that the characterization of punitive damages as “the bane of corporate defendants” has perhaps never been more true under Anglo-Canadian contract law. This article demonstrates that while punitive damages for pure breach of contract are undoubtedly exceptional remedies at common law, they are generally larger and more common than ever before, which marks an extraordinary development in Anglo-Canadian contract law considering that only 30 years ago punitive damages were barred for pure breach of contract.

— “Entering the U.S. Market: Legal Hurdles That Manufacturers Must Overcome” – Investigates the life cycle of a product’s development and marketing and provides insight into some of the most common legal hurdles – especially consumer protection lawsuits – faced by manufacturers entering the U.S. market.

Over the past 15 years, Key Risk Insurance Co. has made multiple trips to courts and before the North Carolina Industrial Commission to argue that Mario Seguro-Suarez has been faking his symptoms from an on-the-job injury and that his benefits should be cut off.

The Charlotte Observer reports documents show that the company disregarded years of medical opinions — including several from its own doctors — that Seguro-Suarez was indeed left disabled from his fall at a Southern Fiber factory. The 2003 head-first fall from 18 feet onto a concrete floor left him disabled.

After years of failing to cut off payments to Seguro-Suarez, the insurance company’s private detective “took what a detective would describe as misleading information to Lincolnton police to accuse Seguro-Suarez of insurance fraud. He was arrested, jailed and later indicted,” reporter Michael Gordon writes.

That attempt drew a withering rebuke from a judge, and now Seguro-Suarez is suing for malicious prosecution.

Read the Charlotte Observer article.

When a storm is headed in your direction, it’s critical to prepare for an emergency by making sure you have medical supplies and enough food and water to sustain your family. The aftermath of a storm can be devastating. You should be equally prepared on the insurance front to protect your home and get back on your feet as soon as possible.

Dallas insurance litigator Meloney Perry of Perry Law P.C. offers some storm insurance tips to keep in mind before and after a storm hits.

1. Ensure You Have Adequate Amounts of Insurance and Correct Coverage

Unfortunately, insurance is not a “one size fits all” solution. Simply having insurance coverage sometimes isn’t enough. Educate yourself and understand the adequate types and amounts of insurance that fit your needs.

Extra Credit: Research and compare multiple insurance plans while revisiting your coverage often.

2. Talk with Your Insurance Agent

Do this at least twice a year to revisit coverages—this needs to be done before a storm hits or you may find yourself without coverage you thought you had. Tap into your agent’s knowledge and don’t be shy about asking questions.

Extra Credit: Keep agent information in your telephone and in the cloud for easy access in case of an emergency.

3. Don’t Just Take Out ID Cards, Read Your Insurance Policies

Knowledge is power. If you know what your policy does and doesn’t cover, you’ll be in a better position to work with your insurance carrier. If you don’t understand what is included in our policy, call your agent. (See tip No. 2.)

Extra Credit: Research the Texas Department of Insurance Website for easy Q&A and forms. They’re a great resource.

4. In the Event of Damage or Loss, Take Pictures and Keep All Receipts Handy

Insurance carriers want all the supporting evidence for your claim they can get their hands on. This will allow them to assess the situation and process your claim faster than others.

Extra Credit: Make and keep multiple copies. Upload everything to the cloud for easy access and keep hard copies with a relative or in a fire-proof box.

5. Have A Proof of Loss Form Available for Easy Filing

A proof of loss form will identify the value of the items damaged or lost in the storm. Completing this form quickly and accurately can help with the claims process and avoid possible headaches, such as underpayment, delay or denial of your claim.

Extra Credit: Keep a printout of your insurance policy to determine what to include in the form.

In a case stemming from a fatal car accident a dozen years ago, the Florida Supreme Court has backed a jury’s conclusion that GEICO General Insurance Co. acted in “bad faith” in the way it handled a customer’s claim, reports The Daytona Beach News-Journal.

The 4-3 ruling came in a multimillion-dollar case that has been watched by the insurance industry and trial attorneys,” writes reporter Jim Saunders. “The ruling reinstated a bad-faith verdict against GEICO after the 4th District Court of Appeal had overturned the jury’s decision.”

The court’s opinion disputed the appeals court’s conclusion that there was “insufficient” evidence that GEICO had acted in bad faith. It said that the appeals court had not properly applied legal precedents in its decision.

Read the News-Journal article.

In a victory for policyholders, a recent decision from the Western District of Texas narrowly construed a common breach-of-contract exclusion and held that the insurer had a duty to defend its insured against an underlying lawsuit over construction defects, according to the Hunton Insurance Recovery Blog.

“The allegations potentially supported a covered claim, as the conduct of the insured’s subcontractor could have been an independent, ‘but for cause of the property damage at issue, thereby triggering the insurer’s duty to defend’,” explain Lorelie S. Masters and Tae Andrews.

“Many CGL policies have similar or identical breach-of-contract exclusions,” they write. “Longstanding principles of law regarding the duty-to-defend analysis hold that exclusions should be narrowly construed against the insurer and in the insured’s favor, and that when making a duty-to-defend analysis, any doubts or ambiguities should be resolved in the insured’s favor.”

Read the article.

Authorities say car owners with vehicles inside the collapsed parking garage in Irving, Texas, won’t get to them for several days. No one was hurt, but more than 20 cars have been damaged.

When it comes to repairing their cars, Dallas attorney Micah Dortch of the Potts Law Firm says owners should consider going through their car insurance carriers first, according to a post on the website of Androvett Legal Media & Marketing.

“Individuals should turn in a claim to their own carrier, which should be faster than dealing with the building’s insurer,” says Dortch. “A finger-pointing match is very likely, which is why personal carriers are the best places for the individuals to turn. Then those insurance carriers can go after the general contractor or others responsible for the facility.

“The facility’s general liability insurance should cover any claims and then I expect they would subrogate to the builders of the garage, similar to what has happened with the Allen [Texas] and McKinney football stadiums.”

It is easy to skim over contracts’ insurance provisions or simply defer to risk experts, but there are a few questions that should be considered during the next review of the insurance section of a contract, advises Morgan, Lewis & Bockius LLP.

The article by Michael L. Pillion and Jessica M. Pelliciotta discusses four such questions:

How do your indemnification and other risk allocation provisions interact with your insurance provisions?

What types of insurances and how much coverage should you require?

Will you know if there are changes to the insurance coverages?

Does your contract require the other side’s insurer to provide a waiver of subrogation?

Read the article.

Berkshire Hathaway Inc.’s National Indemnity Co. has to pay more than $43 million of Montana’s asbestos-related settlement costs, a state judge has ruled. according to a MarketWatch report.

Reporter Nicole Friedman explains: “Montana had reached a $43 million settlement in 2009 with people injured by asbestos at a vermiculite mining operation in Libby, Mont. The victims claimed the state had knowledge of unsafe conditions at the mine for decades and failed to protect workers.”

National Indemnity  provided general liability insurance to the state at the time of the alleged exposure, but it had argued those insurance policies didn’t cover the asbestos-related claims.

Read the MarketWatch report.

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A Steptoe & Johnson article takes a look at the way additional insured coverage under an insurance policy is analyzed when there is an underlying drilling contract limiting the additional insured coverage to the scope of the liability assumed in the service contract.

The article in The National Law Review discusses In re Deepwater Horizon, a Texas Supreme Court case that governs allocation of risk, assumed liabilities, and the granting of additional insured status in underlying service contracts, and the precedent the case established.

The article also considers some other cases that were litigated after the Deepwater Horizon case.

Read the article.

The U.S. Court of Appeals for the Eighth Circuit issued an order dealing with indemnification for prior settlements, and it could have a hugely beneficial impact on potential indemnitors, including sellers of mortgage loans as well as insurers, reports Bilzin Sumberg in its Mortgage Crisis & Financial Services Watch.

The appellate court affirmed a lower court’s ruling that, when an insured seeks indemnification for settlements that encompassed both covered and non-covered claims, the insured must present sufficient evidence to establish with reasonable certainty the value that the settling parties attributed to the covered claims, explain Philip R. Stein and Shalia M. Sakona.

They discuss the background of the case, the limitations on using expert testimony to establish allocation, and the application of the holding to the mortgage industry.

Read the article.

A recent Indiana Court of Appeals decision illustrates the importance of having an overall risk allocation strategy in contracts where appropriate, and paying close attention to the language used to express that strategy, writes Christian Jones of Barnes & Thornburg.

In the post on the firm BT Policyholder Protection Blog, Jones writes that this is particularly when multiple contracts and parties are involved.

“This case illustrates the difficulty of coordinating risk allocation language across multiple contracts. [The insurer] might have attempted to pursue subrogation claims under any circumstances, but it seems possible that litigation might have been avoided if all of the contracts at issue had contained their own express waiver of subrogation clauses” Jones explains.

Read the article.

In an article in the Pillsbury Policyholder Pulse blog, Kimberly Buffington and Cara Adams discuss the question: Will insurance policies become the laboratory to test the thesis behind smart contracts?

“Whether there is room for smart contracts in the insurance context remains to be seen. Generally, the ‘if this occurs, then that’ nature of insurance policies lends itself to the conditional nature of smart contracts,” they write.

There are drawbacks, they explain, writing that it would be unrealistic to expect smart contracts to eliminate ambiguities and resulting disputes any more than such disputes are currently eliminated by traditionally written contracts.

Read the article.

The International Association of Defense Counsel (IADC) has dedicated the October 2017 edition of its Defense Counsel Journal (DCJ) to the exploration of privacy issues.

The October issue is available for free and without a subscription via the IADC’s website. This current issue is the second part of the IADC’s “Privacy Project V” publication. The first part was published as the July 2017 issue of the DCJ. All past DCJ articles are accessible online.

“In a world where we seem to be moving away from an expectation of privacy because of security concerns arising from worldwide terrorism and rapid advances in technology, it is up to the courts, legislatures, and regulatory bodies to balance these realities with everyone’s prized civil liberty of privacy,” said Andrew Kopon Jr., IADC President and a founding member of Kopon Airdo, LLC in Chicago. “The rule of law requires that these entities safeguard and thoughtfully examine this balance in real time or we may completely lose the expectation of privacy.”

The October DCJ features articles by IADC members that address diverse privacy topics from a global perspective. Frequently and favorably cited by courts and other legal scholarship, the DCJ is a quarterly forum for topical and scholarly writings on the law, including its development and reform, as well as on the practice of law in general. The IADC is a 2,500-member, invitation-only, worldwide organization that serves its members and their clients, as well as the civil justice system and the legal profession.

“The pace of technology is amazing and overwhelming at the same time,” said Michael Franklin Smith, editor and chair of the DCJ Board of Editors and a shareholder at McAfee & Taft in Tulsa, Okla. “Hopefully this issue of the Defense Counsel Journal provides practitioners with added insights to help them navigate their clients’ privacy in today’s rapidly changing world.”

The IADC’s Privacy Project is dedicated to the memory of Joan Fullam Irick, the IADC’s first female president, who made the issue of corporate and personal privacy a key theme for her administration. The project was spearheaded by IADC Privacy Project V Editorial Board co-chairs Eve B. Masinter, a partner with Breazeale, Sachse & Wilson, L.L.P., in New Orleans, and S. Gordon McKee, a partner with Blake, Cassels & Graydon, LLP, in Toronto.

The October 2017 “Privacy Project V” issue of the DCJ includes the following articles:

–“A Look at Canadian Privacy and Anti-Spam Laws” – Promotes compliance with Canada’s comprehensive federal and provincial privacy laws – and specifically the obligations imposed by Canada’s anti-spam legislation – that outline the framework and rules for the collection, use and disclosure of personal information by federally regulated, private-sector organizations operating across Canada.

–“Discovery of the Insurer’s Claims File: Exploring the Limits of Plaintiff’s Fishing License” – Analyzes the objections to a plaintiff’s broad request for the insurer’s claims file and the majority rules governing successful objections by defense counsel to discovery of the materials in that file.

–“Drones: A New Front in the Fight Between Government Interests and Privacy Concerns” – Addresses expansion of the warrant requirement to regulate when drones may be used, as well as legislation on how they may be used, which would allow for incorporating this new technology while also separating the benefits from the dangers it presents.

–“Data Privacy Protection of Personal Information Versus Usage of Big Data: Introduction of the Recent Amendment to the Act on the Protection of Personal Information (Japan)” – Provides practitioners with an understanding of three important changes made by Japan’s recently amended Act on the Protection of Personal Information (PPIA) and how these changes are likely to play out in practice.

–“Global Positioning Systems and Social Media – Anathemas to Privacy” – Focuses on the recent surge in the use of global positioning systems in the automotive industry and the unique set of related privacy and liability concerns.

The Walt Disney Company is going to battle with its insurer, AIG, as it seeks coverage for a massive settlement in the “pink slime” defamation case, Variety is reporting.

Disney is trying to force AIG to submit to arbitration on the coverage dispute. While the underlying litigation is not identified, the dates line up with Disney’s court battle with Beef Products Inc. in South Dakota, according to reporter Gene Maddaus.

BPI sued Disney, alleging that ABC News had damaged its business with a series of reports on “pink slime.” Disney settled the case partway through trial in June.

“In August, Disney disclosed that it had incurred legal costs of $177 million, the bulk of which was believed to be due to the BPI settlement,” Maddaus writes. “The total settlement was believed to be significantly larger, once insurance claims were factored in.”

Read the Variety article.

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The 11th Circuit ruled in Liberty Surplus Ins. Corp. v. Norfolk Southern Railway Co. that the unambiguous language of Liberty’s “Completed Work” exclusion did not bar coverage for injuries sustained by a motorist injured at a railroad crossing who later sued Norfolk Southern, reports Hunton Williams.

“Before the Court is, once again, the classic case of the insurer requesting relief from the consequences of the inartfully drafted, yet plain, terms of its insurance policy,” the opinion reads.

Andrew A. Stulce writes in the firm’s Insurance Recovery Blog that the decision makes some important points:

First, courts continue to construe exclusionary provisions narrowly and against the insurer, even where the provision utilizes plain and unambiguous wording.  Second, in the context of contracts and agreements to supply services, work or operations over time, exclusions designed to bar coverage for completed work or operations must be explicit as to when the services, work or operations are deemed to be “complete.”

Read the article.

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A small Rhode Island law firm has filed a lawsuit against its insurance company after the insurer refused to pay $700,000 in lost billings following a ransomware attack on the firm that locked down the firm’s computer files for three months, reports CloudNine’s eDiscovery Daily Blog.

Doug Austin‘s report, based on a story in the Providence Journal, explains that Moses Afonso Ryan Ltd. is suing its insurer, Sentinel Insurance Co., for breach of contract and bad faith. The insurer denied the plaintiff’s claim for lost billings over a three-month period when the documents were frozen by a hacker’s ransomware attack. The hacker encrypted the law firm’s computer files, offering to unlock them if a ransom were paid.

The suit says the infection disabled the firm’s computer network, meaning lawyers and staffers “were rendered essentially unproductive.”

Read the eDiscovery Daily Blog article.

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By Stephen F. Pinson
Scott & Scott LLP

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One of the most overlooked sections in a technology-related contract is the insurance section. Whether that contract involves IT services, development, Software as a Service or Cloud Services, the insurance section is just as important as the other risk-allocating provisions contained in the contract. Yet, in most of the contracts in the industry, the original contract is silent on insurance and there is no insurance provision drafted. This leaves a business customer vulnerable to risks that are not covered by insurance. This discussion will help identify what provisions are actually needed in a contract to properly allocate the risks.

The following is a brief list of insurance provisions that parties should include in technology contracts for the different types of claims scenarios between contracting parties. This list describes how each provision works within the contract and what should be negotiated (this is not an exhaustive list). Parties should negotiate individual and aggregate limits for the types of risks involved.

1. Commercial General Liability – This type of insurance, commonly known as GL, is the most basic form of business liability insurance. This type of insurance protects a business against claims due to injuries, accidents, and negligence. It can protect a business from costs related to bodily injury, property damage, medical expenses, legal costs, judgments, and personal injury claims such as libel and slander. GL is a staple requirement for both the service provider and the business customer, but it will not protect against all risks or threats. To protect a service provider or business customer from more specific types of emerging threats, each party may need to purchase additional liability policies.

2. Professional Liability Insurance, Errors and Omissions – This is also known as E&O insurance and will cover a service provider if it fails to perform according to the requirements in the contract. This coverage will help offset the costs associated with customer claims when the provider’s mistake causes a customer loss. Customers may want to insist on E&O coverage to help bridge the gap between coverage offered by GL or other policies.

3. Automobile Liability – If a service provider will use an automobile in any phase of the work performed for the business, the business should require evidence of automobile insurance. In some cases, the service provider will own no automobiles and therefore may not purchase automobile liability coverage; however, the business customer should require evidence of coverage for exposure related to non-owned and hired automobiles. This coverage protects the service provider and business customer in claims arising from the use of personal or rented vehicles by the service provider’s employees or principals. If dealing with a sole proprietor, proof of personal auto coverage should be required.

4. Workers’ Compensation – If an employee experiences a job-related illness or injury, this policy can help pay for medical expenses and lost income. If a service provider plans to do work onsite at the business customer’s location, the business customer should require evidence of worker’s compensation insurance. In some states, worker’s compensations can be waived by following certain statutory protocols. The agreement should contain a provision that ensures the business customer will have no liability for the service provider’s employees or independent contractors, even if the service provider opted out of workers’ compensation. Additionally, if a service provider has no employees, then Workers’ Compensation is not generally required by the State.

5. Employer’s Liability Insurance – Employer’s liability coverage, known as EPLI, is designed to cover claims like harassment, wrongful termination, and other claims that that are not covered by workers compensation or by a GL insurance policy. The primary goal for requiring this type of insurance is that a business customer will want likely claims the services provider may incur to be covered by insurance. Having uncovered risks may make the service provider less able to continuously provide services in the event of a claim by an employee.

6. Cyber Liability – Cyber liability includes numerous subsets of insurance coverage, and customers should carefully examine the particular coverage because it varies greatly among providers. Cyber Liability coverage should include both first-party liability coverage and third-party liability coverage.

• First-party liability coverage applies to direct costs for responding to a claim incident, such as: (1) notifying clients that their information was compromised or exposed, (2) purchasing credit monitoring services for customers affected by the breach or hacking incident, (3) launching a public relations campaign to restore the reputation of the company affected by the breach, (4) compensating the business for income that it isn’t able to earn while it deals with the fallout of the data breach, and (5) paying a cyber-extortionist who holds data hostage or threatens an attack.
• Third-party liability insurance covers the people and service provider responsible for the systems that allowed a data breach to occur. It offers protection for the service provider and independent contractors who were responsible for the safe storage of the data. The following is a list of coverage types that should be included in some form or another as coverage for a service provider or business customer when they are seeking coverage for the different types of claims scenarios.

Regardless of whether the coverage is first-party or third-party, the contracting parties should examine whether they require the following categories of coverage:

• Network Security and Privacy Liability – This coverage protects the service provider against losses for the failure to protect a customer’s personally identifiable information (SSN, credit card numbers, medical information, passwords, etc.) via theft, unauthorized access, viruses, or denial of service attack.
• Media Communications Liability / Reputation or Brand Protection – This coverage protects against allegations of defamation/libel/slander, invasion or violation of privacy, plagiarism/piracy, copyright/trademark infringement, and other wrongful media communication acts that can hurt a service provider or business customer that is associated with media communications in electronic, print, digital, or broadcast form.
• Data Breach – Data breaches come in many shapes and sizes, but many kinds of cyber incidents, including: malware attacks, malfunctions, insider data breaches, data theft by employees, ransomware, or employee mistakes. Data Breach Insurance may cover these breaches as well as when a hacker targets your service provider or a business customer.
• Data Loss / Interruption of Computer Operations – This type of insurance covers incidents where there is data loss or interruption of computer operations from an inadequate backup or an insured loss, e.g., a disaster that destroys the computer system or virus. This type of coverage can also reimburse losses related to lost income that a service provider or business customer incurs ancillary to a data loss.
• Regulatory Response – Regulatory response insurance protects against fines and defense costs arising from proceedings brought by any regulatory body against either the service provider or those individuals performing regulatory functions within the business customer’s firm when an incident occurs.
• Regulator Defense/Penalties – This insurance covers defense expenses and regulatory fines and penalties imposed by a regulatory agency in connection with a data breach.
• Systems Damage – This insurance covers computer systems that are damaged in retrieving, restoring or replacing any computer programs or other data media.
• Threats or Extortion – This insurance covers incidents where threats or extortion from a hacking attack or virus on a computer system.

7. Umbrella Liability Insurance – Umbrella coverage provides extra liability protection to help protect a service provider or business customer in the event that a loss exceeds the limits of the other policies. There are three basic reasons to maintain an umbrella policy: (1) professional liability insurance can be quickly exhausted by legal defense fees, (2) there are significant business assets to protect, and (3) there are risks of legal claims due to the nature of the products or services provided. This type of insurance is used in situations where “excess liability” kicks in after your commercial general liability coverage has been exhausted. Without this policy in place, a service provider or business customer would be responsible for the additional out of pocket amounts (which can reach into the millions of dollars). Unless that money has been stashed away for such an incident, a lawsuit would have major financial repercussions, without the extra protection of a business umbrella policy.

8. Self-Insured – Some service providers are so well established that they elect to provide self-insurance against many of the risks identified above and to the extent they have third-party insurance, they do not make the third-party coverage available to the customers. In a situation where a service provider will not include insurance language because it is self-insured, the business customer should include language adjusting the limitations of liability sections and indemnification provisions to adequately provide protection in the event of a loss.

Parties to a technology contract should include a provision requiring the other party to provide evidence of the insurance contained in the contract.

Given the regulatory and privacy risks, it is increasingly important to seek advice from experienced counsel when negotiating a technology contract to make sure the risks are adequately assessed and each party’s interests are protected.

The U.S. Justice Department has accused UnitedHealth Group Inc. of obtaining inflated payments from the government based on inaccurate information about the health status of patients enrolled in its largest Medicare Advantage Plan, Reuters is reporting.

The accusation against the company is the latest, following separate lawsuits in two separate whistleblower lawsuits against the country’s largest health insurer.

“Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government healthcare, with enrollment of 18 million people last year,” writes reporter Nate Raymond.

A UnitedHealth spokesman said the company rejects the claims and will contest them vigorously.

Read the Reuters article.

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The purpose of a settlement and release agreement is to fully and finally dispose of a disputed matter, explains Stacy L. La Scala, a neutral writing for JAMS.

“However, more and more often, a dispute cannot be fully resolved where non­parties to the dispute have contributed defense and indemnity amounts on behalf of one or more of the parties and have reserved the right to seek recovery of those amounts in subsequent litigation,” he cautions.

In the article, published on JDSupra.com, he writes:

In particular, where insurance carriers have actually provided a defense and/or indemnity in an action, those carriers in a number of jurisdictions have potential rights against their insureds, pursuant to reservation of rights for uncovered claims; potential rights against those entities who are principally responsible for the loss; and potential rights against contractually obligated indemnitors of their insureds. The carriers are typically not part of the action and are not signatories to the settlement agreement.

Read the article.

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