Whether a mixed insurance contract (i.e., an insurance contract with maritime and non-maritime elements) permits the exercise of admiralty jurisdiction is a complicated question for parties and for the courts, writes Eric Chang in an alert for Montgomery McCracken Walker & Rhoads LLP.

He writes that admiralty jurisdiction can be the basis for subject matter jurisdiction for the federal courts.

“Historically, admiralty jurisdiction was limited to contracts that were purely maritime – involving rights and duties pertaining to ships, vessels, and the navigation thereof on the ocean or elsewhere,” he explains.

That changed, however, when the U.S. Supreme Court exercised admiralty jurisdiction in a “maritime case about a train wreck.”

Read the article.

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A federal judge blocked the $54 billion merger between health insurance giants Anthem and Cigna, saying the deal would increase prices and reduce competition, according to a report by The Washington Post.

Carolyn Y. Johnson reports that this ruling is the second recent court decision to uphold the Justice Department’s opposition to deals that would have consolidated the five largest insurers in the United States into three companies.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order.

In the merger agreement, Anthem had agreed to pay Cigna a $1.85 billion termination fee if the deal is blocked because of regulatory interference.

Read the Washington Post article.

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A federal judge has dismissed claims brought by a South Carolina insurance company against Texas-based insurance agency Highpoint Risk Services and its owner, Charles David Wood, Jr.

In 2014, Highpoint filed a lawsuit against Companion Property and Casualty Insurance Co. in Texas seeking reimbursement for more than $30 million in workers’ compensation claims payments, according to an article published by Androvett Legal Media and Marketing. Companion filed a countersuit in South Carolina against Highpoint and other companies owned by Wood. That lawsuit sought more than $40 million in damages for an alleged shortfall in reinsurance collateral and claims relating to the issuance of various workers’ compensation policies. Companion, purchased by Enstar Group Ltd. (NASDAQ: ESGR) in 2015, now operates as Sussex Insurance Company and remains headquartered in Columbia, S.C.

On Jan. 10, Senior U.S. District Judge Cameron McGowan Currie ruled that Companion was contractually barred from recovering any alleged shortfall from Wood. In dismissing other claims against Highpoint and Wood for alleged breach of fiduciary duty and alleged violations of the South Carolina Unfair Trade Practices Act, the court found that “there is no evidence Highpoint (or Wood) owed or breached” a fiduciary duty to Companion in connection with the issuance of Companion’s workers’ compensation policies.   

“The court has dismissed the core of the case brought by Companion,” said Eric Haas, name partner at Dallas-based law firm Gardner Haas and counsel for Wood and the defendant companies. “An insurer cannot avoid the terms of its own policies and can’t complain when its agreements are given their clear and natural effect. We look forward to successfully pursuing Highpoint’s claims against Companion at trial in the Texas action.”

The case is Companion Property and Casualty Insurance Company v. Charles David Wood Jr. et al., Case No. 3:14-cv-03719, in the U.S. District Court for the District of South Carolina.

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eSignLive by VASCO and Insurance Networking News will present a complimentary webinar on how updated regulatory laws are allowing companies to improve the process of buying insurance for consumers, while ensuring security, compliance and enforceability, on Dec. 13, beginning at 2 p.m. Eastern time.

Intended to improve the process of buying insurance for consumers, there have been recent updates to laws that allow insurance companies to post policies, forms, and endorsements on a website rather than printing these documents on paper.

As you look to take advantage of this new regulatory environment, questions related to how this can be done in a compliant way will arise.

Webcast highlights:

• E-Posting and E-Delivery defined
• Update from PCIAA on the progress of legislative adoption of e-posting laws
• The intersection between ESIGN, UETA and state insurance laws on e-signatures and records
• How to demonstrate insured consent to do business electronically
• Best practices for ensuring security, compliance and enforceability
• A live demonstration of insurance policy electronic posting

Register for the webinar.

Lack of precision in reinsurance contract wording has been known to engender anomalous results, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes Blog.

“Often a single word or phrase can cause a court or arbitrator to construe an agreement in ways unintended. In reinsurance arbitrations, when the panel majority decides how a contract operates based on its construction of a word or phrase, the losing party is likely stuck with that result even if a court might have construed the contract differently,” he writes.

He describes a recent case that illustrates his point that legalese and unnecessary words can cause a trier of fact to interpret a clause in a way that is unexpected.

Read the article.

The International Association of Defense Counsel (IADC) has elected Andrew Kopon, Jr. president-elect for the 2016-2017 term. Beginning in July 2017, he will serve as president of the IADC, which is the preeminent, invitation-only, global legal organization for attorneys who represent corporate and insurance interests.

Kopon is a founding member of Kopon Airdo, LLC in Chicago. His practice focuses on complex civil litigation matters, including class actions, mass tort litigation and employment litigation. He has worked as national and regional counsel for major consumer and commercial product manufacturers and has successfully tried and argued cases before the Illinois Supreme Court.

In addition to his service to the IADC and its Foundation, Kopon is an active member of the Defense Research Institute, Illinois Association of Defense Trial Counsel, and National Foundation for Judicial Excellence. He is Martindale-Hubbell® AV Preeminent™ rated and has been recognized by Illinois Super Lawyers and Leading Lawyers Network for multiple years. He received his J.D. from The John Marshall Law School and B.A. from Providence College.

Founded in 1920, the IADC has approximately 2,500 members from six continents, more than 45 countries and all 50 U.S. states and includes corporate and insurance defense attorneys and insurance executives. The core purposes of the IADC are to enhance the development of skills, promote professionalism and facilitate camaraderie among its members and their clients, as well as the broader civil justice community. The IADC also takes a leadership role in many areas of legal reform and professional development.

Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes blog.

“These moving parts generally result in a web of interrelated insurance policies covering the project. Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” Schiffer writes.

In his post, he discusses what a New York appellate court recently called an “additional insured by written contract” clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.

Read the article.

Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors. Larry P. Schiffer of Squire Patton Boggs writes that these moving parts generally result in a web of interrelated insurance policies covering the project.

“Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” he explains. “But not all additional insured clauses are the same. In this post, we discuss what a New York appellate court recently called an ‘additional insured by written contract’ clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.”

He concludes that the case demonstrates that New York courts will interpret insurance policies based on the plain meaning of the words used by the parties and will not alter the contracts for equitable reasons if the language is clear and unambiguous.

Read the article.

An insurer’s duty of good faith is pervasive and its application to claim handling has matured into a formidable body of law, write Douglas L. Christian and Nathan D. Meyer for Jaburg Wilk.

But when a bad faith lawsuit converts the quasi-fiduciary relationship with the policyholder into an adversarial one, how does a policyholder lawsuit affect the insurer’s duty of good faith? And, how does the insurer’s duty of good faith affect the lawsuit?

“Policyholders argue that if a lawsuit obviates the insurer’s duty it will encourage insurers to engage in conduct that will precipitate a lawsuit. Insurers respond by arguing that if the fiduciary duty continues unabated, it will encourage premature lawsuits by policyholders, deprive insurers of their ability to adjust losses, and eviscerate their rights as litigants,” according to the article.

The authors discuss   the development of the continuing duty of good faith, whether insurer litigation and post-filing conduct is admissible under current rules of evidence, and whether continuing bad faith is actionable as a separate theory of liability.

Read the article.

All contractors dread receiving the seemingly inescapable call that a preventable, yet too common, workplace accident occurred such as a crane collapse, the fall of an ironworker, or a delivery vehicle accident, writes James J. Buldas of Pietragallo Gordon Alfano Bosick & Raspanti LLP.

“Besides the human and project costs these accidents bring, claims and lawsuits nearly always follow,” he warns in his article. “While defending claims and lawsuits may cause even the most seasoned contractors to suffer from sleepless nights, responsible parties may take solace in knowing that their counsel negotiated defense and indemnity agreements in their contracts. Why then do such parties sometimes learn that because of the language in an insurance policy, the indemnity clause in the construction contract provides little or no protection?”

Because of unforeseen risk, additional insured endorsements have been revised to link contractual indemnity obligations to additional insured coverage. These new endorsements explicitly limit additional insured status to the indemnity clause of the underlying contract, regardless of whether the endorsement incorporates the “arising out of” or “caused, in whole or in part” language.

Read the article.

A.M. Best and Best’s Directories of Insurance Professionals will host a webinar to explore the legal and insurance issues surrounding lead injuries.

The one-hour complimentary event will begin at 2 p.m. EDT on Wednesday, August 3.

Lead was once used in a variety of construction materials, especially paint. Lead poisoning can be disastrous, if not deadly, the company says on its website. A panel of legal and insurance professionals will discuss the sources of lead injury claims, developing liability issues and the industry impact of lead-based claims.

Panelists include:

• Phil Pizzuto, partner; Lindabury, McCormick, Estabrook & Cooper, P.C.;
• Eileen Buholtz, attorney/firm member; Connors, Corcoran & Buholtz, PLLC;
• Brian Hinton, attorney; Anderson Crawley & Burke, pllc; and
• Ken Gillespie, litigation specialist; Builders Mutual Insurance Company.

Best’s Directories’ Managing Editor John Czuba will moderate the discussion.

Register for the webinar.

A New Hampshire court has issued a decision on the duty to defend arising from an indemnity obligation in a design contract, distinguishing between the duty to defend often invoked for insurance coverage, from a duty to defend expressed in a contractual indemnity, writes Stan Martin of Commonsense Construction Law LLC.

The court found that an engineering firm owed a duty to defend the New Hampshire town that had hired the firm to design a wastewater treatment plant, from claims arising from the design against the town made by the contractor.

Martin describes the case and the arguments made by the parties. He concludes: “An explicit contractual duty to defend against allegations of negligence or breach by the indemnitor may well be construed to require such a defense from the outset, even when parties are still arguing over ultimate liability. And an indemnitor who has not been in breach of its contract up to that point may yet breach its contract by refusing to defend when required.:

Read the article.

National law firm Wilson Elser announced that a national insurance coverage team of 11 attorneys has joined Wilson Elser in three offices – Chicago, Los Angeles and New Jersey.

“Like Wilson Elser, this team’s insurance coverage practice is truly national in scope and reputation,” said Daniel J. McMahon, Wilson Elser chairman. “Their addition to the practice further deepens our already strong bench of attorneys in one of the firm’s core practice areas and will provide our clients with a wealth of experience in all facets of insurance coverage and bad faith matters.”

The team – led by partners Michael Duffy, Chicago; Paul White and David Simantob, Los Angeles; and Mark Vespole, New Jersey – primarily represents insurers in coverage matters, extra-contractual liability, bad faith and reinsurance matters. They previously were with Chicago-based law firm Tressler LLP.

They work on insurance coverage issues, draft insurance policy language, and litigate coverage and bad faith cases for general and specialty lines insurance and reinsurance companies.

The 11 are:

Chicago
Michael Duffy, Partner
Ashley Conaghan, Associate
Abigail Rocap, Associate

Los Angeles
Paul White, Partner
David Simantob, Partner
Linda Tai Hoshide, Partner

New Jersey
Mark Vespole, Partner
Joanna Crosby, Partner
Kathleen Williams, Partner
Katherine Tammaro, Partner
Matthew Major, Associate

Narrowly interpreting a policy’s breach of contract exclusion, a federal court judge in California ruled that the exclusion applied only to actual breaches of contract and that an alleged breach in the underlying complaint against the policyholder was insufficient to eliminate coverage, according to an article written by Amy B. Briggs, Christine Spinella Davis, Stephen T. Raptis,Robert H. Shulman and Susan P. White of Manatt, Phelps & Phillips, LLP.

Their article described the case:

A competitor filed suit against the insured, charging the policyholder with making disparaging comments so that its offer of employment would appear more attractive and “to solicit [the competitor’s] employees in breach of a written and implied contract.” The insurer rejected the policyholder’s request for defense, relying on a breach of contract provision in its commercial liability policy. But the court said the allegation was just that—an allegation—and not an actual breach of contract. Other policy exclusions used the term “actual or alleged,” the court noted, implying that the insurer knew how to include and elected not to use such language for the breach of contract provision.

Read the article.

The 5th U.S. Circuit Court of Appeals has affirmed a lower-court decision declining to broaden additional insured coverage afforded under a commercial general liability policy to energy operator Apache Corporation to contractual liabilities assumed by energy service provider Linear Controls, Inc., writes David J. Saltaformaggio of Phelps Dunbar.

The 5th Circuit “found that Apache was specifically named as an additional insured, not a named insured, and only named insureds are entitled to contractual liability coverage under a commercial general liability policy,” according to the article. “In so doing, the Fifth Circuit dismissed Apache’s arguments that the scope of its additional insured coverage should be expanded to include its named insured’s contractual obligations.”

Read the article.

A recent decision from the Northern District of Illinois illustrates the pitfalls that could arise from current insurance industry practices involving the issuance of privacy statements and insurance policies if done without the appropriate precautions, according to a report by Carol J. Gerner and Cinthia Granados Motley for Claims Journal.

“The process of issuing an insurance policy, either directly or through an employer group, requires care and deliberate action when it comes to issues of proper integration, documentation and transmittal,” they write.

“In Dolmage v. Combined Ins. Co. of Am., (No. 1:14-cv-3089, N.D. Ill. Feb. 23, 2016), the court denied the defense motion to dismiss a breach of contract claim based on a ‘Privacy Pledge’ document that was included in insurance policy documents provided to employees of Dillard’s department store (Dillard’s). The decision raises a novel theory by plaintiffs and warrants attention given the number of ‘privacy statements’ consumers receive in the mail every day from banks and credit card issuers and the use of third-party vendors in the management of personal data.”

Read the article.

An article by Stephen J. Bagge in the Carlton Fields PropertyCasualtyFocus blog describes an Eleventh Circuit’s ruling that provides persuasive language for applying contractual liability exclusions under D&O policies to alleged business torts that are related to or dependent on the existence of contractual liability.

“This is significant, in that plaintiffs are increasingly seeking insurance coverage for contractual disputes,” Bagge writes. “As the court’s opinion demonstrates, D&O policies are not intended to insure contracts entered into by insureds: that is why D&O policies routinely contain contractual liability exclusions.”

The case was Bond Safeguard Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. 14-15233 (11th Cir. Oct. 5, 2015), in which the plaintiff sought to recover payments it had made under certain surety bonds.

Read the article.