Hunton Insurance Recovery Blog

Texas is among the minority of states that permit few, if any, deviations from the “eight-corners rule,” which provides that an insurer’s duty to defend must be determined from the complaint and the policy, without regard to extrinsic evidence or facts. In Bitco Gen. Ins. Corp. v. Monroe Guar. Ins. Co., No. 19-51012, 2022 WL 1090800 (5th Cir. Apr. 12, 2022) (“Bitco”), the Fifth Circuit Court of Appeals declined to consider extrinsic evidence in determining Bitco’s duty to defend and outlined when a court applying Texas law can deviate from the state’s strict eight-corners rule under the Monroe exception.

Hunton insurance attorneys Geoffrey Fehling and Kevin Small provide several updates on recent recall insurance disputes in the latest edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.

One of the most valuable aspects of liability insurance is defense coverage, which protects policyholders from significant costs to defend against and litigate claims that may never result in a judgment or settlement. Companies and their directors and officers can incur thousands or even millions of dollars in defending against claims that are resolved long before trial. Even after purchasing robust defense coverage and getting an insurer to defend a claim, however, companies may be surprised when months or even years later the insurer reverses its position and not only withdraws from the defense but also demands repayment of all defense costs paid to date. A recent case, Evanston Insurance Co. v. Winstar Properties, Inc. No. 218CV07740RGKKES, 2022 WL 1309843 (C.D. Cal. Apr. 14, 2022), shows the perils of insurer “recoupment” and underscores the importance of assessing insurer recoupment rights, if any, throughout the claims process.

NL Industries recently prevailed against its commercial general liability insurers in the New York Appellate Division in a noteworthy case regarding the meaning of “expected or intended” injury and the meaning of “damages” in a liability insurance policy. In Certain Underwriters at Lloyd’s, London v. NL Industries, Inc., No. 2021-00241, 2022 WL 867910 (N.Y. App. Div. Mar. 24, 2022) (“NL Indus. II”), the Appellate Division held that exclusions for expected or intended injury required a finding that NL actually expected or intended the resulting harm; not merely have knowledge of an increased risk of harm. In addition, the court held that the funding of an abatement fund designed to prevent future harm amounted to “damages” in the context of a liability policy because the fund has a compensatory effect. NL Industries II is a reminder to insurers and policyholders alike that coverage is construed liberally and exclusions are construed narrowly towards maximizing coverage. 

Hunton commercial litigators and insurance recovery lawyers teamed up to address the intricacies of snap removal – a strategy being employed by insurers and other litigants with increasing frequency.  The technique is designed to defeat the forum-defendant rule that permits a plaintiff to bring its case in state court when suing a defendant in the defendant’s own home state.  However, some courts to confront this maneuver have rejected its use, disallowing a savvy defendant to effect an end-run on the forum-defendant rule by promptly removing a state court lawsuit before an ...

As businesses continue to increase their reliance on technology, they are bound to face the inevitable risks associated with online transactions and other cyber exposures. This, in turn, emphasizes the importance of having the proper insurance policies and compliance methods in place to prevent or, at least, mitigate losses that ensue from these risks. In this context, many insurance policies require that there be a “direct” loss for there to be coverage, which has spawned numerous lawsuits about what the word “direct” means. The latest court to weigh in has sided with the insured and interpreted that term broadly to essentially mean proximate causation.

Law360 recently published a roundup of the biggest general liability rulings in the first quarter of 2022. As part of that roundup, it discussed Omega Protein, Inc. v. Evanston Insurance Company, which the Mississippi Supreme Court decided in January 2021. And it quoted Hunton Partner and practice group leader Syed Ahmad’s analysis of the opinion.

Boston-based partner Geoffrey Fehling has been recognized for his extensive experience and insights into emerging issues affecting directors and officers liability and other specialty lines insurance coverage by being selected to Law360’s 2022 Editorial Advisory Board for Insurance Authority Specialty Lines. As a member of the board, he will provide counsel to the legal newswire on insurance coverage issues facing companies and their officers and directors to help shape Law360’s future coverage.

To read more about Law360’s Insurance Authority Specialty Lines ...

In T.D. Williamson, Inc. v. Federal Ins. Co., the Tenth Circuit recently affirmed a lower court’s decision that an insurer did not have a duty to defend or indemnify its insured, a pipeline company, against a former director’s lawsuit. 21-5043, 2022 WL 1112530, at *1 (10th Cir. Apr. 14, 2022). According to the appellate court, the policy’s “insured vs. insured” exclusion barred coverage. This exclusion is common in D&O policies. The exclusion generally eliminates coverage for claims by or on behalf of one insured against another insured. For instance, the exclusion may bar coverage for claims by a company against one of its executives or by former or current executives against other executives of the same company. There are various versions of the exclusion, but they usually contain exceptions, which provide for coverage in specific situations. These exceptions are frequently the subject of coverage disputes.

In a recently published opinion, the Eleventh Circuit revisited – and departed from – its prior, unpublished decision in Cawthorn v. Auto-Owners Insurance Co., 791 F. App’x 60 (11th Cir. 2019). The Court held that a final judgment that exceeds all available liability policy limits, whether such judgment results from a jury verdict or a consensual settlement, constitutes an “excess judgment” that can be used to satisfy the causation requirement of an insurer bad faith claim in Florida.