Hunton Insurance Recovery Blog

In responding to a certified question from the Fifth Circuit in Richards v. State Farm Lloyds, the Texas Supreme Court held that the “policy-language exception” to the eight-corners rule articulated by the federal district court is not a permissible exception under Texas law.  See Richards v. State Farm Lloyds, 19-0802, 2020 WL 1313782, at *1 (Tex. Mar. 20, 2020).  The eight-corners rule generally provides that Texas courts may only consider the four corners of the petition and the four corners of the applicable insurance policy when determining whether a duty to defend exists.  State Farm argued that a “policy-language exception” prevents application of the eight-corners rule unless the insurance policy explicitly requires the insurer to defend “all actions against its insured no matter if the allegations of the suit are groundless, false or fraudulent,” relying on B. Hall Contracting Inc. v. Evanston Ins. Co., 447 F. Supp. 2d 634, 645 (N.D. Tex. 2006).  The Texas Supreme Court rejected the insurer’s argument, citing Texas’ long history of applying the eight-corners rule without regard for the presence or absence of a “groundless-claims” clause.

On November 12, 2019, a federal court in Kentucky held that a vendor service agreement (VSA) between Live Nation Worldwide Inc. and its security vendor, ESG Security, extended coverage under an insurance policy issued by Secura Insurance to ESG, for Live Nation’s liability arising from a concert at a Live Nation facility.

The Fall 2019 Edition of The ALI Reporter recognizes Hunton partner Lorelie S. Masters for her significant contributions to the new Restatement of the Law, Liability Insurance (RLLI). The RLLI was approved by the American Law Institute (ALI) at its 2018 Annual Meeting and published in late September 2019. In 2010, Lorie was one of 40 attorneys invited to serve as an Adviser to the Restatement, and she was heavily involved throughout the life of the eight-year project.

A New York district court has held that an insurer must provide coverage under three excess insurance policies issued in 1970 for defense and cleanup costs incurred by Olin Corporation in remediating environmental contamination at seven sites in Connecticut, Washington, Maryland, Illinois, New York, and Washington. Seven of the remaining sites at issue presented questions of fact for trial, with only one site being dismissed due to lack of coverage.

In 2015 and 2016, we discussed certain provisions of the then drafts of the Restatement of the Law, Liability insurance, including the Duty to Cooperate, here, and Duty to Defend, here and here. In late May 2017, the American Law Institute met to approve the Proposed Final Draft—the culmination of over seven years of work on this project. Not surprisingly, many of the issues discussed in the Restatement have been hotly contested by insurers. While in many instances, the reporters simply opted for the majority rule, in a few instances, the Restatement may seek to move the law on key ...

A US District Court has ruled that a Professional Services Exclusion in a D&O policy does not bar coverage for suits alleging that a network of for-profit career colleges engaged in false marketing regarding the quality of education and job prospects that enrollees would receive. The decision in Education Affiliates Inc., et al. v. Federal Insurance Company, et al., stems from a series of lawsuits filed against the owner of the career colleges by former students and a subpoena and draft complaint served by the Florida Attorney General alleging that the colleges were deceptive in marketing their services to prospective students.

A federal appeals court ruled on Wednesday that the absence of a duty to defend does not foreclose the potential for indemnity coverage under primary and umbrella liability policies. The decision in Hartford Casualty Insurance Co. et al. v. DP Engineering LLC, stems from a March 31, 2013, incident where an industrial crane collapsed at a nuclear generating facility near Russellville, Arkansas, causing significant damage and injuries, including one death.

In a June 1, 2016 decision, the Second Circuit Court of Appeals in National Fire Insurance Co. of Hartford et al. v. E. Mishan & Sons Inc. required CNA Financial Corporation to defend E. Mishan & Sons, Inc.("Emson") – best known for its "As Seen on TV" products –in two class actions alleging a conspiracy to trap customers into recurring credit card charges and that Emson sold private consumer information that it obtained through its product sales.

Hunton & Williams' insurance practice head, Walter Andrews, was quoted in a Law360 article yesterday regarding the confusion that is likely to result from a federal bankruptcy judge's decision in Rapid-American Corp. v. Travelers Casualty and Surety Co., where the court concluded that a majority of excess insurers owe no coverage to Rapid-American Corp. for underlying asbestos claims until the company exhausts the limits of its underlying primary and excess coverage through actual payment, not just accrued liability. According the Andrews, "the public policy clearly ...

Two of three of Rapid-American Corp.'s excess liability insurers do not have to respond to underlying asbestos claims unless and until all underlying coverage is exhausted by the payment of claims, says Judge Bernstein of the United States Bankruptcy Court for the Southern District of New York in a June 7, 2016 decision. Rapid-American has been involved in asbestos litigation since 1974 and settled disputes with many of its underlying insurers, but an amount sufficient to reach its excess coverage policies has not yet been paid. Rapid-American argued that it was not necessary for the primary policies' underlying limits to be exhausted by actual payment before insurers' excess liability coverage attaches.

As a follow-up to my post yesterday concerning the New York Court of Appeals' decision in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, where the New York high court confirmed that policyholders may allocate all amounts of loss to a single policy and a single policy year, Syed Ahmad, a partner in our Insurance Coverage Counseling and Litigation team, was interviewed by Law360 about the decision's broad-ranging implications. As Mr. Ahmad explained in an article appearing today in Law360, titled NY Allocation Ruling Speeds Policyholders' Road To ...

On Tuesday, May 3, 2016, the New York Court of Appeals held that each of several excess liability insurers can be wholly responsible for the entire extent of their policyholders' asbestos liabilities.  The Court further held that "vertical" exhaustion would apply; rejecting the insurers' attempt to apply "horizontal" exhaustion before upper-layer policies must respond.  The decision, in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, comes in response to two questions certified from the Delaware Supreme Court:

The Eleventh Circuit confirmed in First Mercury Insurance Company v. Excellent Computing Distributors, Inc., No. 15-10120 (11th Cir. Apr. 20, 2016), that policyholders need not await adjudication of underlying liability litigation before obtaining a confirmation of coverage. The decision arose from a declaratory judgment action concerning the availability of insurance coverage for an underlying negligence suit against the policyholder. The district court dismissed the declaratory judgment action, finding it "inappropriate to exercise jurisdiction over an action seeking a declaration of the plaintiff's indemnity obligations absent a determination of the insureds' liability.” The court also noted that "significant factual questions necessary for a resolution of [the] declaratory judgment action are at issue in the state [court] action, and have yet to be resolved.” But the court did not identify the factual questions.