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Does Buss Stop Here? California’s Insurer Right to Recoup Rejected by Other State Courts

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Written by David O’Neill, JD

Director of Investigations, PolicyFind

 

The California Supreme Court recognized an insurer’s right to recoup defense costs for claims proven to be non-covered in its 1997 holding in Buss v. Superior Court.1  Finding precedent in state law for the rule that an insurer’s duty to defend in a commercial general liability (“CGL”) insurance policy is indeed broader than its duty to indemnify, the Supreme Court singled out an issue before it as one of first impression. The issue to be determined was whether the insurer’s costs in exercising its duty to defend could be passed to the policyholder should claims defended later be determined to include those for which coverage did not apply.

Basing its decision on contractual principles, the Buss court opined that because the insurer had defended potentially uncovered claims, the policyholder had received a benefit for which it had not bargained.  It found that the insurer’s right to recoup these defense dollars was implied in law even if not expressly stated in the insurance contract.   Continue reading “Does Buss Stop Here? California’s Insurer Right to Recoup Rejected by Other State Courts”

Mesothelioma Victims Resurrect Bankrupt Employer’s Policies Can File as Direct Claimants Against Insurers

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Written by David O’Neill, JD, Director of Investigations, PolicyFind

 

EnviroForensics and PolicyFind typically work on behalf of businesses required to respond to demands made by governmental entities, or property owners claiming damage to the environment occasioned by their business practices. We assist these businesses by locating historical insurance policies purchased by the companies identified or named as responsible parties.

This June, a Louisiana law firm representing mesothelioma victim employees of a bankrupt company sought PolicyFind’s help in locating their employer’s historical insurance coverage. If the insurers and their policies could be identified, the employees wished to make bodily injury claims against their former employer’s insurers under Louisiana’s direct action statute. To do so they needed to find the policies and prove the terms, conditions and exclusions of these policies Continue reading “Mesothelioma Victims Resurrect Bankrupt Employer’s Policies Can File as Direct Claimants Against Insurers”

LIBERTY MUTUAL SHEDS ENVIRONMENTAL, ASBESTOS AND WORKERS COMP CLAIMS IN RETROACTIVE REINSURANCE AGREEMENT WITH NATIONAL INDEMNITY COMPANY

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Written by David A. O’Neill, JD, Director of Investigations, PolicyFind

 

Liberty Mutual, the third largest property/casualty insurer in the United States has announced that it has entered into a retroactive reinsurance agreement with National Indemnity Company (“NICO”), a Berkshire Hathaway Inc. subsidiary.  Under what is known in the industry as an aggregate adverse cover agreement, Liberty Mutual will transfer $3.2 billion of its existing environmental, asbestos and workers compensation liabilities to NICO in exchange for approximately $3 billion.

The agreement is retroactive to January 1, 2014 and covers substantially all of Liberty Mutual’s domestic environmental and asbestos related liabilities arising under insurance and reinsurance policies with effective dates before January 1, 2005.  Also covered are its U.S. workers compensation liabilities for injuries or accidents occurring prior to January 1, 2014.  NICO will assume responsibility for claims handling relating to Liberty’s asbestos and environmental claims while Liberty continues to handle its workers compensation claims. Continue reading “LIBERTY MUTUAL SHEDS ENVIRONMENTAL, ASBESTOS AND WORKERS COMP CLAIMS IN RETROACTIVE REINSURANCE AGREEMENT WITH NATIONAL INDEMNITY COMPANY”

Supreme Court Ruling Expected on North Carolina Statute May Bar Camp Lejeune Marines Contamination Lawsuit

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Written by David A. O’Neill, JD, Director of Investigations, PolicyFind

 

The U.S. Supreme Court heard oral argument in the case styled CTS Corp. v. Waldburger on April 23, 2014.  At issue was whether the Fourth Circuit Court of Appeals had rightly concluded that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) preempted a North Carolina statute setting a date after which a law suit against a polluter could be brought following the detection of damage from environmental contamination.  The Court’s decision is expected in June.

The case involves the recent discovery of dangerous levels of carcinogenic solvents in drinking water wells in Asheville, North Carolina.  From 1959 to 1985, CTS Corp. had manufactured electronic parts in a nearby factory and stored these solvents on-site.  When soil and groundwater contamination was discovered in 2009, the present landowner sought a ruling from the U.S. District Court that CTS was responsible for property damage and for removing the contaminants. The District Court, however, ruled for CTS, citing a state statute imposing a date certain for when such suits could no longer be brought.  It stated that this “statute of repose” barred suits brought more than ten years after CTS’s “last act or omission” at the site. Continue reading “Supreme Court Ruling Expected on North Carolina Statute May Bar Camp Lejeune Marines Contamination Lawsuit”

First N.Y. Ruling on Horizontal Exhaustion of Excess Policies Allows Policyholder to Vertically Exhaust Second Tier Coverage

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Written by David A. O’Neill, JD, Director of Investigations, PolicyFind

 

The Delaware Superior Court for Newcastle County recently addressed the issue of whether horizontal exhaustion should apply in determining when successive excess liability insurance policies may be triggered.  Attempting to apply New York law in Viking Pump, Inc. v. Century Indemnity, the Delaware court found that New York courts had yet to decide the issue. It found that New York policy considerations and California case law were compatible in making its ruling.

The Delaware court was presented with this issue following its employment of horizontal exhaustion to determine when the New York manufacturer’s primary and umbrella policies would respond to asbestos related personal injury claims.  While the insurers urged that horizontal exhaustion should apply to the second layer of coverage, the policyholder sought a ruling that vertical exhaustion would be the correct decision. Continue reading “First N.Y. Ruling on Horizontal Exhaustion of Excess Policies Allows Policyholder to Vertically Exhaust Second Tier Coverage”

Indiana House Examines Insurance – Lobby Backed Bill to Exclude Pollution Coverage

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Written by Justin Gifford, General Counsel, PolicyFind

 

Out of the blue on January 16, 2014, Representative Martin Carbaugh (R – Ft. Wayne) introduced a bill sponsored by the Indiana Insurance Institute that attempts to do what a decade and a half of insurance company litigation couldn’t accomplish in Indiana courts: give the word ‘pollutant’ an unambiguous definition in Commercial General Liability (CGL) policies. In other words, allow insurers to unilaterally disclaim one of the biggest risks many businesses seek insurance for.

Every other year (including 2014) in Indiana is a short session, meaning that the House and Senate have a short window to get legislation through, which also means that bills like HB 1241 can rocket through the Statehouse without much discussion. In this case, serious discussion is what’s needed, particularly considering the impressive financial impact this bill would have on Indiana’s residents and businesses.

Continue reading “Indiana House Examines Insurance – Lobby Backed Bill to Exclude Pollution Coverage”

Court Finds Exception to Maryland’s Horizontal Allocation Rule In Porter Hayden v. National Union Fire Insurance Co. Decision

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Written by David A. O’Neill, JD, Director of Investigations, PolicyFind

 

An opinion qualifying Maryland’s approach to applying what is known as the horizontal allocation rule in long-tail liability insurance claims cases was issued by U.S. District Court Judge Catherine C. Blake on January 2, 2014.  The U.S. District Court for the District of Maryland ruled in Porter Hayden et al. v. National Union Fire Insurance Co. et al. (as yet unreported) that bankrupt insulation producer Porter Hayden Co. may tap certain excess insurance policy limits for indemnity in asbestos injury suits without first exhausting all primary policy limits.

Excess insurers National Union Fire Insurance Co. of Pittsburgh Pa. and American Home Assurance had supported an interpretation of the rule that would require all available primary insurance policies to be exhausted before any excess carrier could be required to pay for the loss.  These insurers had each issued three excess insurance policies above their own primary policies in the 1970’s. They argued that Porter Hayden could not reach for limits from its upper tier policies until underlying policy limits from all insurers had been exhausted. Continue reading “Court Finds Exception to Maryland’s Horizontal Allocation Rule In Porter Hayden v. National Union Fire Insurance Co. Decision”

OREGON ENVIRONMENTAL INSURANCE LAW CREATES BAD FAITH CLAIM; LIMITS OWNED PROPERTY EXCLUSION, MAKES POLICY RIGHTS ASSIGNABLE

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By David A. O’Neill, JD, Director of Investigations, PolicyFind

A new law passed by the Oregon Legislature and signed into law by Governor Kitzhaber sets out a new statutory scheme relating to various insurance issues regarding environmental claims. Senate Bill 814, as enacted amends ORS 465.479 and ORS 465.480 to create new provisions regarding several important issues pertaining to the identification of lost general liability insurance policies, the rights of policyholders and insurers under these policies and the tendering of environmental damage claims. SB 814 applies not only to new environmental claims, but to existing and even past claims, as long as no final judgment was entered on the claim before June 10, 2013

Treble Damages

Senate Bill 814 gives policyholders the right to sue insurers for bad faith and collect triple the actual damages when insurers fail to quickly investigate or pay claims, wrongfully deny a claim or delay payments to policyholder attorneys or consultants.

Choice of Laws

The new Oregon statute clearly states that if the site of environmental damage is in Oregon state, Oregon insurance law pertains. Continue reading “OREGON ENVIRONMENTAL INSURANCE LAW CREATES BAD FAITH CLAIM; LIMITS OWNED PROPERTY EXCLUSION, MAKES POLICY RIGHTS ASSIGNABLE”

Fed Courts Differ on Absolute Pollution Exclusion in Missouri; Which Definition of “Pollutants” To Follow Remains Unclear

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Written by David O’Neill, JD, Director of Investigations

Unlike the Supreme Court of Indiana, which took a clear position on the ambiguity of the absolute pollution exclusion in its 2012 State Automobile Mutual Insurance Company v. Flexdar, Inc. decision, the Missouri Supreme Court has yet to make a ruling on the meaning of the exclusion.  However, the Federal Courts have been unusually active in predicting how the Missouri high court might apply or not apply the exclusion in varying scenarios.

Most recently, the Eighth Circuit U.S. Court of Appeals filed a June 13, 2013 opinion in the case styled  Doe Run Resources Corporation v. Lexington Insurance Company in which it reviewed a District Court’s denial of insurance defense to a lead mine and mill operator  under a general liability insurance policy.  The lead producer cited to the 1999 Missouri Court of Appeals opinion in Hocker Oil Co. v. Barker-Phillips-Jackson.  There, Missouri court had decided that the pollution exclusion was ambiguous as it applied to gasoline as a product in the operation of a gasoline station.  In both cases, the CGL policies did not define “pollutant.”  The Hocker court was unwilling to enforce a policy that provided no coverage for a large segment of the insured’s business operations.   Making the analogy to lead concentrate and tailings as being products in a lead mining and milling scenario, the Doe Run court then set out to distinguish product from pollutant based on the way the substance is stored. The Eighth Circuit’s decision not to follow Hocker may leave that case’s precedential value in question. Continue reading “Fed Courts Differ on Absolute Pollution Exclusion in Missouri; Which Definition of “Pollutants” To Follow Remains Unclear”

New Mexico Supreme Court Finds Coverage in Pre-1986 Policy Language; Meaning of “Sudden” in Pollution Exclusion is “Unexpected” not “Abrupt”

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Written By David O’Neill, Director of Investigations, PolicyFind

 

The New Mexico Supreme Court has ruled that the term “sudden” in the “sudden and accidental” exception to general liability policy pollution exclusion is ambiguous and as such does not limit covered occurrences only to abrupt releases of pollutants.

In United Nuclear Corp. v. Allstate Ins. Co., No. 32, 939 (N.M. August 23, 2012), New Mexico’s high court determined that general liability insurance policies issued to an uranium mining company in the 1970’s and early 1980’s could be applied to address claims for the cost of cleaning pollution at several uranium mines it operated in that state during those years.  One of the claims involved a 1979 spill of 94 million gallons of tailings pond liquids into a nearby river, a record release of radioactive pollutants.  Continue reading “New Mexico Supreme Court Finds Coverage in Pre-1986 Policy Language; Meaning of “Sudden” in Pollution Exclusion is “Unexpected” not “Abrupt””