The News
IMPORTANT CASES
B&T’s clients prevailed in the following cases that established important rules of law and resulted in significant victories.
2018
When E&O carrier for insurance broker, who settled professional negligence claim, sought recovery of amounts paid from property insurer that had allegedly wrongfully denied coverage, the US district court for the Eastern District of California granted property insurer’s motion to dismiss on the basis that plaintiff’s allegation that defendant breached the covenant of good faith and fair dealing was insufficient to make the insurer a joint tortfeasor with the broker for the purposes of an equitable indemnity claim.
[Certain Underwriters at Lloyds of London Subscribing to Policy No E And O 14 10]
2014
US district court has removal jurisdiction over claims by an employer that is self-insured for workers’ compensation against its excess insurer. The anti-removal statute, 28 U.S.C.1445(c), did not apply because such claims arise under state contract and tort law, not workers’ compensation law. The court held that the words “arising under” in the anti-removal statute must be interpreted in accordance with recent US Supreme Court cases interpreting “arising under” in similar federal jurisdiction statutes.
[San Francisco BART v. General Reinsurance Corp., 2014 U.S. Dist. LEXIS 89403]
The Workers’ Compensation Appeal Board lacks jurisdiction over dispute between a self-insured employer and its excess insurer. The claims arose out of an excess insurance policy for workers’ compensation losses issued to the self-insured employer. The WCAB acknowledged the statutory and regulatory distinction between workers’ compensation insurance and excess insurance for self-insured employers. It affirmed the WCAB’s lack of jurisdiction and rejected the insured’s contention that such disputes were subject to mandatory arbitration under Labor Code §5275.
[Millman v. Contra Costa County, 2013 Cal. Wrk. Comp. P.D. LEXIS 615 and 79 Cal. Comp. Cases 439; 2014 Cal. Wrk. Comp. LEXIS 32]
Appraisal award was binding, and objections to the award were time-barred and lacked merit. Insurer had no obligation to pay portions of award excluded by asbestos exclusion.
[Nijjar v. General Star Indem. Co. (C.D. Cal., Feb. 28, 2014, CV 12-08148 DDP JCGX) 2014 WL 810899]
Obtained appraisal award establishing that actual cash value of 37,000 square foot commercial building was zero dollars due to its poor condition.
[9339 Alondra Blvd., LLC v. General Star Indem. Co., Los Angeles Superior Court]
2013
A policy’s no-voluntary-payments provision bars claims by a public adjuster under a professional liability policy. The insurer had no obligation under the policy to indemnify the insured for payments made to settle claims arising out of a former employee’s embezzlement where the payments were made before the insurer was notified of the claims.
[Dietz Int’l Pub. Adjusters of Cal., Inc. v. Evanston Ins. Co.,796 F. Supp. 2d 1197, 2011 U.S. Dist. LEXIS 75080 (C.D. Cal. 2011), affirmed, 515 Fed. Appx. 680 (9th Cir. 2013).]
The owned-property and alienated-property exclusions bar coverage for a multi-million dollar property damage liability claim. Property exclusions j(1) and j(2) in a commercial general liability policy barred claims.
[Genesis Ins. Co. v. BRE Props., 916 F. Supp. 2d 1058 (N.D.Cal. 2013)]
2012
The prior-acts date and the interrelated acts provision bar coverage for claims against a property appraiser. The alleged acts, errors and omissions of an insured appraiser took place before the prior acts date in an errors and omissions liability policy. Even if the some of the acts, errors and omissions did not take place before that date, they were interrelated with prior acts, errors and omissions and therefore deemed under the policy to take place before the prior acts date. The policy provided no coverage for a negligent misrepresentation claim.
[FDIC v. General Star National Insurance Company, 2012 WL 398352]
2011
Claims arising out of defective products delivered under a sales contract were not covered under a commercial general liability policy or professional liability endorsement.
2009
The insolvency exclusion bars coverage for a professional liability claim under a professional liability policy by the accountants for a medical malpractice self-insurance fund against the fund’s actuaries. The exclusion applied to claims that the fund’s insolvency was caused by actuarial reports provided to set reserves and rates. The doctrine of concurrent causation did not apply, and the insurer was entitled to reimbursement of defense expenses paid under a reservation of rights because it never had a duty to defend.
[Zurich Global Corporate U.K. v. Bickerstaff, Whatley, Ryan & Burkhalter, Inc.,650 F. Supp. 2d 1064 (C.D. Cal. 2009), affirmed 425 Fed. Appx. 554 (9th. Cir. 2011]
2007
A New York insurance broker is not the alter ego of a related New Mexico insurance broker. A judgment creditor of the New Mexico broker sought to collect on the judgment under a professional liability policy issued to the New York broker. After a three-day trial on the alter ego issue, B&T’s client prevailed. Earlier in the case, the court granted partial summary judgment in favor the insurer on the ground that the alter ego doctrine cannot be used to reform an insurance policy to create coverage for the purported alter ego as the insured.
[Certain Underwriters at Lloyd’s v. Nance, Findings of Fact; Certain Underwriters at Lloyd’s v. Nance, Declaratory Judgment; and Certain Underwriters at Lloyd’s v. Nance, 506 F. Supp. 2d 700 (D.N.M 2007)]
Some additional highlights of BT’s notable wins:
2/16/2007 – The U.S. Court of Appeals for the Third Circuit holds that BT’s client, General Star, suffered actual prejudice because the primary carrier, National Union, failed to provide timely written notice of a judgment against the insured in excess of the primary policy limits. National Union satisfied the entire judgment and sought indemnification from General Star for the portion of the judgment that exceeded the primary policy limits. The Third Circuit held that because of the late notice, General Star had no obligation to indemnify National Union BT represented General Star in the district court and on appeal. National Union Fire Insurance Company of Pittsburgh, PA, v. General Star Indemnity Company, 2007 WL 495018 (C.A.3 [Pa.] 2007).
1/12/07 – The Los Angeles County Superior Court entered summary judgment for BT’s client, the former president of a linen retailer, against claims by a trade creditor. After the retailer declared bankruptcy, the trade creditor sued the president of the company personally in an attempt to get payment for goods delivered to the defendant’s former employer. The court entered summary judgment for the defendant, concluding that there was no merit as a matter of law to the plaintiff’s claims of fraud and negligent misrepresentation. Enmark Trading, Inc., v. Robert Valone, Los Angeles Superior Court, Case No. BC333773.
6/30/05 – The Los Angeles County Superior Court entered summary adjudication for BT’s client, an excess insurer, in a lawsuit against a primary insurer, on the excess insurer’s cause of action for equitable indemnity. The Court agreed that the excess insurer was entitled to be indemnified by the primary insurer because it had failed to exhaust the primary coverage available to an insured prior to the settlement of a claim against that same insured. A settlement as to the remaining claims was subsequently reached by the parties. General Star v. TIG Insurance Co., Los Angeles Superior Court, Case Number BC 314310.
6/9/05 – The United States District Court for the Eastern District of Pennsylvania entered summary judgment in favor of BT’s client, an excess carrier, who had been sued by a primary carrier for $1,000,000 that it had paid above its policy limits to satisfy a judgment entered against the carriers’ mutual insured. The District Court held that the excess insurer had no obligation to pay under its policy because it had not been provided with timely written notification of the underlying lawsuit. The first written notification was provided three years late — one month before all direct appeals of the underlying lawsuit were exhausted. The Court concluded that excess insurer had suffered actual prejudice because it was effectively denied any opportunity to participate in the insured’s defense or to settle the case. National Union Fire Ins. Co. of Pittsburgh, PA, v. General Star Indemnity Company, 2005 WL 1389252 (U.S.D.C. E.D. Pa. June 9, 2005).
4/26/05 – The federal district court entered summary judgment for BT’s client and held that it had not breached the insurance contract when it denied coverage to the insured doctor for an alleged medical malpractice claim. The Court agreed that in the absence of a notice of potential claim provision in the policy, the insured’s attempt to notify the insurer of a potential malpractice claim days before the end of the policy period did not constitute a claim or potential claim and did not implicate coverage under the policy notwithstanding a later filed lawsuit brought against the insured by the claimant. Kamrava v. General Star Indemnity Company, United States District Court for the Central District of California, Case Number CV 0407048 CAS.
12/12/04 – The Los Angeles Superior Court entered summary judgment for BT’s client and held that it had not breached the insurance contract or acted in bad faith when it denied coverage for an environmental claim by retail cleaner based on chemical spills and rescinded the insured’s policy. The Court agreed that the insured had made material misrepresentations in its policy application regarding the insured’s knowledge of past chemical spills and pending environmental assessments. The Court awarded costs and sanctions against opposing counsel. Loryan Group, et al. v. General Star Indemnity Company, Los Angeles Superior Court, Case Number BC 289422.
7/26/04 – The US District Court granted summary judgment that BT’s client had no obligation under a balloon policy for losses sustained when an insured balloon tore open during testing operations. The District Court agreed with BT’s client that the policy’s exclusion for tears was not ambiguous and applied to the loss. Sky Media Airships, Inc. v. General Star Indemnity Company, Inc., United States District Court, Southern District of California, Case Number 03CV1355-L (BLM).
7/22/03 – The California Court of Appeal holds that a dentist professional liability insurer has no obligation to satisfy a judgment entered against a dentist for molesting a patient. In a published decision that reversed a $1.4 million judgment, the court holds that section 533 of the Insurance Code bars any duty to indemnify and that a finding of the Dental Board regarding the dentist’s misconduct was binding on him and his assignee. Marie Y. v. General Star Indemnity Company. 2 Cal. App.4th 928 (2003).
3/26/03 – The California Court of Appeal holds that an excess indemnity policy issued to self-insured employer for workers’ compensation losses excludes penalties under section 5814 of the Labor Code. In a published opinion, the court holds that an exclusion for payments “in excess of benefits regularly required by the Workers Compensation Law” if the benefits were required because “the Insured violated or failed to comply with any Workers Compensation Law” was unambiguous and applied to section 5814 penalties. General Reinsurance Corp. v. St. Jude Hospital, 107 Cal.App.4th 1097 (2003).
3/4/03 – The Ninth Circuit Court of Appeals affirms summary judgment that an employment practices liability policy did not apply to a $13.2 million arbitration award for breach of employment contract, including damages for wages, bonuses, and stock options. The court also held that stock options valued at $12 million were not “Loss” under the policy. TVN Entertainment Corp. v. General Star Indemnity Company, United States Court of Appeals for the Ninth Circuit, Case No. 02-55256 (Mar. 4, 2003).
7/18/02 – Los Angeles County Superior Court grants summary judgment to BT’s client, who was sued for wrongful termination in violation of public policy. The Court held that a common law wrongful termination claim cannot be predicated on the “prompt payment” provisions of the Social Security Act or the California Health & Safety Code because those laws do not purport to govern (1) a crime, (2) a personal right, or (3) any prohibited employment conduct. Pimentel v. Hispanic Physician IPA, Los Angeles County Superior Court Case Number BC 257610.
3/18/02 – Los Angeles County Superior Court sustains a demurrer without leave to amend and dismisses BT’s client, who was sued for employment discrimination, on the grounds that the plaintiff could not establish facts sufficient to support an action for retaliation, could not establish that the plaintiff was engaged in a protected activity and could not identify any adverse employment-related action by BT’s client as a result of a protected activity. Lopez v. Physician Office Support Services, et al., Los Angeles County Superior Court Case Number BC 248576.
2/6/02 – The US District Court granted summary judgment that BT’s client had no duty to defend or indemnify a sexual harassment claim against an insured because the claim was “first made” before the employment practices liability insurance policy was issued. 5/14/02 – The US District Court again grants summary judgment that BT’s client had no duty to defend or indemnify a second sexual harassment claim against the same insured. The court ruled also that the insured is required to reimburse reasonable defense and settlement amounts paid by BT’s client. Merchants Building Maintenance, et al. v. Certain Underwriters at Lloyd’s of London, United States District Court, Central District of California, Case Number CV 01-05363 GAF(Ex).
11/29/01 – The Los Angeles County Superior Court grants judgment and agrees with BT’s interpretation of the insurance policy language at issue. General Star National Insurance Company v. Brenda Baker-Warner, Los Angeles County Superior Court Case Number BC 238483.
11/6/01 – The Ninth Circuit Court of Appeals affirms summary judgment and finds that an insolvency exclusion in a professional liability insurance policy excludes coverage for an insurance broker who placed coverage with an insolvent insurer. James W. Hawes and J.W. Hawes Insurance Services v. General Star Indemnity Company, United States Court of Appeals, Ninth Circuit, Case Number 99-56432.
6/5/01 – The Connecticut Supreme Court holds that an antitrust action brought by customers of an insured based on allegations that the insured had engaged in anticompetitive conduct, including defamatory statements about the competitors, did not allege any “advertising injury” or “personal injury” offenses covered under a commercial general liability policy. QSP, Inc. v. The Aetna Casualty & Surety Company, et al., 256 Conn. 343 (2001).
5/31/01 – The California Court of Appeal affirms the trial court’s ruling sustaining a demurrer without leave to amend and dismissing BT’s client on the ground that the plaintiff’s claim was barred by the statute of limitations. Roger Hess v. Douglas Lambert, et al., Court of Appeal of California, Second Appellate District, Division One, Case Number B133978.
12/27/00 – The Superior Court grants judgment finding that no potential for coverage existed under commercial liability insurance policies when there were no facts pled that could establish claims for “personal injury,” “advertising injury” or “property damage.” U.K. Abba Products v. Northbrook National Insurance Company, et al., Orange County Superior Court Case Number 818029.
6/12/00 – The Federal Court granted summary judgment in favor of BT’s client holding as a matter of law that trademark infringement was not “advertising injury” under Nevada law and that trademark infringement claims against a Las Vegas casino based on the name “New York New York” were excluded by the first publication exclusion because of publicity generated before the inception of the insurance policy. New York New York Hotel & Casino, LLC v. General Star Indemnity Company, et al., United States District Court, Clark County, Nevada, Case Number A381092.
