Life can be tough for an insurer, particularly in Wisconsin. In a July 1, 2008 decision, the Supreme Court of Wisconsin refused to enforce an intentional ACTS exclusion where the insured intentionally built a home in violation of a setback restriction. Liebovich v. Minnesota Insurance Co., 2008 WI 75. What could be a more intentional act?
Interesting to see a criminal suit being brought against people named in subprime civil suits. http://www.nytimes.com/2008/06/20/business/20bear.html?_r=1&hp&oref=slogin
Dishonest conduct exclusions will surely be asserted in some of these subprime cases.
Settling without the insurer's consent really can forfeit coverage. See the recent case from New York's highest court, Vigilant Ins. Co. v. Bear Stearns Cos., 10 NY3d 170 NY Mar. 13, 2008).
My father the chemist taught me that "natural doesn't always mean good." The Minnesota Court of Appeals took a similar view to hold that the pollution exclusion applied to composting, even though composting is natural. It's an interesting decision. Larson v. Composting Concepts, Inc., 2008 Minn. App. Unpub. LEXIS 551 (May 13, 2008).
Add Kansas to the list of states recognizing that distances in time and space distinguish circumstances into multiple occurrences. American Family Mutual Ins. Co. v. Wilkins, No. 98, 2008 Kan. Sup. LEXIS 73 (Mar. 28, 2008).
A very short class action complaint was filed in New York State Court, Kurtz v. Cayne. Defendants, Bear Stearns and a group of its directors, are alleged to have violated duties of "Candor" and "loyalty." See para. 34. It will be interesting to see how the coverage questions are resolved.
If you predicted that Bear Stearns officers and directors would be sued within “days” of the announced sale to J.P. Morgan you wildly underestimated this conflict. A suit was filed on March 17, 2008, the same day that the J.P. Morgan deal was announced. See Eastside Holdings Inc. v. Bear Stearns Cos., SDNY. Plaintiffs allege that “defendants disseminated or approved … false statements… which they knew … were misleading in that they contained misrepresentations and failed to disclose material facts…. Defendants … employed devices, schemes and artifices to defraud …[and] engaged in acts, practices and a course of business that operated as a fraud or deceit…. See paras. 61-62. You can surely expect the defendants to make D&O claims, and insurers will need to consider their fraud exclusions.
Late notice lives as a significant coverage defense in New York. On March 11, 2008, the Appellate Division entered summary judgment on late notice grounds, reversing the trial court, and rejecting the policyholder’s position that the delay should be excused because the policyholder thought that it was not liable. Donovan v. Empire Ins. Group, 2008 N.Y. Slip Op 2100 (App. Div. 2d Dep’t Mar. 11, 2008).
Policyholders often seek discovery of carriers’ representations to reinsurers. The thinking is that if the carrier took a certain position with its reinsurers it must also take that position with its policyholders. Not so, says the United States District Court for the Southern District of Indiana. Irving Materials, Inc. v. Ohio Cas. Ins. Co., 2008 U.S. Dist. LEXIS 18692 (D. Ind. Mar. 10, 2008). There, the policyholder challenged a multiple-occurrence ruling on the grounds that the carrier had made a single-occurrence argument to its reinsurer. The court, however, ruled that the representations to the reinsurer were not material.
On January 25, 2008, a Southern District of Ohio magistrate found that a reservation of rights letter established an expectation of litigation that supported a work product claim. St. Paul Fire and Marine Insurance Co. v. ConAgra Foods, Inc., 2008 U.S. Dist. LEXIS 8945 (S.D. Ohio Jan. 25, 2008). This decision will be welcomed by Insurers seeking work product protection. But, insurers should also expect that this shield will be the policyholders' sword. Policyholders will surely be arguing that reservation of rights letters trigger an expectation of litigation that requires a litigation hold. The developments in this area will be interesting to watch.
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