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MAJOR PENDING INSURANCE COVERAGE APPEALS: SPRING 2024 U.S. SUPREME COURT Truck Ins. Exch. v. Kaiser Gypsum Co., No. 22-1079 (whether a liability insurer has standing to object to confirmation of a bankruptcy plan that would create an asbestos channeling trust where the insurer’s policy proceeds would be a significant asset of the channeling trust. Last year, the Fourth Circuit determined that the insurer had no such standing in Truck Ins. Exch. v. Kaiser Gypsum Co. (In re Kaiser Gypsum Co.), 60 F.4th 73 (4th Cir. 2023). This decision will resolve a split in authority between the Fourth and Seventh Circuits, which deny standing to an insurer in this circumstance, and the Third Circuit, which permits it, The U.S. Supreme Court heard oral argument on March 19, 2024. A decision is expected before the Court’s summer recess.) CALIFORNIA Several COVID cases are presently pending before the California Supreme Court Another Planet Entertainment, LLC v. Vigilant Insurance Company, S277893 (“Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute ‘direct physical loss or damage to property’ for purposes of coverage under a commercial property insurance policy?” The case was argued to the California Supreme Court on March 5, 2024). John’s Grill, Inc. v. Hartford Financial Services Group, Inc., California Supreme Court Case No. S2789481 ((1) Is a grant of coverage for property loss or damage to covered property caused by a virus rendered illusory where it is limited by a condition that makes coverage applicable only if the virus is the result of one or more of a number of listed causes? (2) Is a conditional grant of coverage for property loss or damage to covered property caused by a virus, including the cost of removal of the virus, triggered by cleaning surfaces in the covered property that are contaminated by the virus in the absence of physical alteration of the property?) Also, the Supreme Court has this issue on a grant-and-hold basis until the Court decides John’s Grill: “Is the virus exclusion in [the restaurant’s] insurance policy unenforceable because enforcing it would render illusory a limited virus coverage provision allowing for the possibility of coverage for business losses and extra expenses allegedly caused by the presence and impacts of COVID-19 at an insured’s properties, including the loss of business due to a civil authority closure order?” (French Laundry Partners, LP v. Hartford Fire Insurance Company (9th Cir. 2023) 58 F.4th 1305, 1307, request for certification granted Mar. 29, 2023, S278492.) Additionally, state and federal courts of appeal are considering: Truck Insurance Exch. v. Kaiser Cement & Gypsum Corp., S273179 (Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in a civil action. The court limited review to the following issue: May a primary insurer seek equitable contribution from an excess insurance carrier after the primary policy underlying the excess policy has been exhausted (vertical exhaustion), or is equitable contribution from an excess insurance carrier available only after all primary policies have been exhausted (horizontal exhaustion?) Rosenberg-Wohl v. State Farm Fire and Casualty Company, S281510 (Petition for review after the Court of Appeal affirmed the judgment in a civil action. The court limited review to the following issue: When a plaintiff files an action against the plaintiff’s insurer for injunctive relief under the Unfair Competition Law, which limitations period applies, the one-year limitations period authorized by Insurance Code section 2071 or the four-year statute of limitations in Business and Professions Code section 17208?) DELAWARE Conduent State Health Care v. AIG Specialty Ins. Co., (Del.) (did a state trial court err in finding that instances of alleged misconduct by AIG’s counsel at trial warranted setting aside a jury’s verdict that Conduent sought to defraud its insurers into accept coverage for a $236 million Medicaid fraud-related settlement) FLORIDA Davis v. General Star Ins. Co. (11th Cir.) (whether Florida District Court erred in holding that a Coblentz agreement settling condominium unit owner's suit against property manager for $14.5 million for injuries caused by mold was unreasonable and tainted by bad faith and thus was unenforceable against liability insurers that did not defend manager; settlement was 58 times the pre-trial report settlement range of $150,000 – $250,000, and highest settlement demand was $3.75 million). Gemini Ins. Co. v. Zurich American Ins. Co., No. 22-13495 (11th Cir.) (in this case, the Eleventh Circuit is considering whether Florida's rule of mutual repugnancy respecting "Other Insurance" clauses applies where one of two competing primary policies purports to apply pro rata to other coverage afforded on the same basis, and the other policy purports to apply excess and "not contribute" regardless of the basis of the other coverage. The court is also expected to decide whether Florida recognized the concept of a "super excess" clause, assuming such a clause was even in dispute (a matter to which the parties were also in disagreement). Liberty Surplus Ins. Co. v. Kaufman Lyn Construction, Inc. (11th Cir.) (whether Florida District Court erred in ruling that a “course of construction” exclusion in a CGL policy, providing that policy did not apply to any property damage during the course of construction until project was completed extinguished insurer's duty to defend or indemnify insured in underlying suit alleging damage to office building during tropical storm was result of subcontractor's defective work; while first phase of project to construct multiple buildings was compete, i.e., no longer in the course of construction, second phase of project was not yet completed). Mt. Hawley Ins. Co. v. H&M Builders LLC (11th Cir.) (did federal district court err in ruling that liability insurer had a duty to defend contractor based on extrinsic evidence of the employment status of subcontractor's worker who was fatally electrocuted at construction site where allegations were unclear on this point and, thus, consideration of extrinsic evidence beyond “eight corners” of liability policy and complaint was appropriate to determine whether insurer had duty to defend its insured, a shell contractor, in underlying action; whether worker was subcontractor's employee and contractor's statutory employee under Florida's Worker's Compensation Act). Liberty Surplus Insurance Corporation v. Kaufman Lynn Construction, No. 23-12715 (11th Cir.) (Whether a course of construction exclusion in a CGL policy applies to post-construction loss in one building of a multi-building/phase project?). GEORGIA Home Depot v. Steadfast Ins. Co., No. 23-3720 (6th Cir. (whether an Ohio District Court applying Georgia law ruled that a data breach that resulted in claims against Home Depot for the cost of replacing customer’s credit cards was subject to an “electronic data” exclusion in CGL policies notwithstanding the District Court’s conclusion that the claims were an “occurrence” involving the loss of use of tangible property) HAWAII Aloha Petroleum v. National Union Fire Is. Co. of Pittsburgh, PA, SCCQ-23-0000515 (Hw.)(the Hawaii Supreme Court is considered two certified questions arising out of a climate change suit against an energy company whose emissions are claimed to contribute to global warming, asking whether recklessness can amount to an “accident” and, if so, whether greenhouse gas emissions constitute the escape of pollutants so as to be subject to the policy’s absolute pollution exclusion). Koppers Performance Chemicals, Inc. f/k/a Osmose Wood Preserving Co. of America, Inc. f/k/a Osmose, Inc. v. Argonaut Midwest Ins. Co., No. 23-1732 (4th Cir.) (in a case arising under Hawaii law, did a South Carolina District Court err in ruling that Argonaut had no duty to defend a toxic tort claim involving exposure to the insured’s chemicals where no injury was alleged during Argonaut’s policy period but subsequent deposition testimony ambiguously suggested a possibility of coverage). ILLINOIS Carus Chemical Corporation v. New England Insurance Company, No. 2013 CH 24976 (Cir. Ct. Cook Co.) , Notice of Appeal due in April 2024 (Ill. App. First . Dist.) (addressing split in Appellate Districts re “All Sums” versus “Pro Rata” allocation in environmental case). National Fire Ins. Co., et al. v. Visual Pak Co., Inc. (BIPA coverage case currently pending on petition for leave to appeal before Illinois Supreme Court on whether Recording & Distribution in Violation of Law/Statute exclusion in GL policy applies to preclude a duty to defend. The Appellate Court ruled in 2023 that the exclusion applied and explicitly disagreed with the finding of the Seventh Circuit in Citizens Ins. Co. of Amer. v. Wynndalco Enterprises, LLC, 70 F.4th 987 (7th Cir. 2023) (also interpreting Illinois law) on the same exclusion). Sterigenics U.S., LLC v. National Union Fire Insurance Company of Pittsburgh, PA (7th Cir. 2004) (Seventh Circuit is now considering an insurer’s appeal from a District Court’s ruling that National Union had a duty to defend toxic tort claims arising out of permitted emission from the insured’s manufacturing facility on the basis that pollution exclusions do not apply where emissions were made pursuant to a lawfully valid permit). WestRock v. Lexington and Indian Harbor, No. 1-23-1631 (Ill. App. First Dist.) (whether a USEPA Section 104(e) letter constitutes a “claim” under an environmental legal liability insurance policy). MASSACHUSETTS Admiral Ins. Co. v. Tocci Building Corp., No. 221462 (1st Cir.) (whether Massachusetts District Court erred in ruling that defective construction by a subcontractor was not an “occurrence”). NEW YORK Farage v. Associated Insurance Management Corp., APL-2023-00141 (N.Y.) (New York Court of Appeals has accepted review of a case that presents the issue of whether a property owner’s suit for damage from a fire loss was properly dismissed pursuant to CPLR 3211(a)(1) despite the insurer’s contention court’s earlier ruling in Executive Plaza barred insurers from asserting the policy’s 2 year statute of limitation if the repair work to the property could not be completed in that limited time frame). NORTH CAROLINA J. H. et. al. v. Harford Mutual Insurance Group, Inc. et. al. – 4th Circuit appeal of applicability of an auto exclusion to a commercial liability policy. While the narrow question of the auto exclusion is not altogether significant, the lower Court’s award of interest is. The Court’s award of prejudgment interest on a settlement agreement where no judgment will ever be entered and where the parties previously agreed to the narrow question of coverage before the court has broad reaching implications as to the award of interest in the declaratory judgment setting. Ha v Nationwide General Ins. Co. (N.C.) (the North Carolina Supreme Court has been asked to consider whether a trial court was correct in holding that a homeowner’s insurance policy issued by Nationwide was properly cancelled prior to a fire and, in particular, whether Nationwide properly cancelled the policy by mailing notice of cancellation to Plaintiffs, or whether further proof that notice was actually received by Plaintiffs is required in order to cancel the policy). J. H. . v. Harford Mutual Insurance Group, Inc. (4th Cir. 2024) (in this auto coverage dispute, the U.S. Court of Appeals for the Circuit is considering whether the District Court erred in awarded prejudgment interest on a settlement agreement where no judgment will ever be entered and where the parties previously agreed to the narrow question of coverage before the court). North State Deli v. Cincinnati Ins. Co., No. 225PA-21-2 (N.C.)(whether the state Court of Appeals erred in its 2022 holding that “direct physical loss” requires more than an insured’s inability to use its restaurant). The North Carolina Supreme Court has also been asked to accept review of the Court of Appeals’ ruling in Cato Corporation, et al. v. Zurich American Insurance Company that mere loss of use of property is not a “direct physical loss. OHIO Certain Underwriters at Lloyd’s, London v. Sherwin Williams Co., No. 2023-0255 (Ohio)(in light of the Ohio Supreme Court’s 2022 Acuity ruling precluding any duty to defend opioid claims, did the state’s intermediate appellate court err in ruling that insurers owed coverage for a lead paint manufacturer’s contribution to a $305 million settlement of public nuisance claims by municipalities for costs incurred to address health problems caused by the insured’s manufacture and distribution of leaded paint). PENNSYLVANIA Samsung Fire & Marine Ins. Co. v. UFSV Management Co., LLC, No. 23-1988 (3d Cir.) (did a Pennsylvania District Court err in ruling that considerations of public policy precluded four liability insurers from providing a defense to a hotel that was accused of allowing sex trafficking to occur on its premises). Ungarean v. CNA and Valley Forge Insurance Company, Pennsylvania Supreme Court Case Nos. 11 WAP 2023 & 12 WAP 2023, and MacMiles v. Eris Insurance Exchange, Pennsylvania Supreme Court Case No. 10 WAP 2023 (whether a standard form “open perils” property insurance policies cover losses resulting from business shutdowns due to COVID-19) WASHINGTON Great American Ins. Co. v. Rodger May, No. 23-35024 (9th Cir.) (did a federal judge in Seattle err in ruling that the insured’s deliberate withholding of a treasure map that prevented a former partner from pursuing efforts to salvage a wreck that was thought to have a cargo of gold was not an “occurrence” under Washington law. The Ninth Circuit heard oral argument on March 29, 2024). WISCONSIN Frankenthal Int’l, Ltd. v. West Bend Mut. Ins. Co., No. 2023AP001841 (Wis. Ct. App.) (Whether the property at issue was “vacant,” such that the policy did not cover the loss, and whether the owner of the property was engaged in its “customary operations” at the time of the loss. The “customary operations” issue appears to be one of first impression in Wisconsin). Prunty v. Maple Valley Mut. Ins. Co., No. 2024AP000310 (Wis. Ct. App.) (Whether an insured’s refusal to appear for an examination under oath, but later agreement to undergo a deposition in pending litigation, complies with the policy’s examination under oath clause). Schmidt v. Erie Ins. Exch., No. 2024AP000429 (Wis. Ct. App.) (Whether a UIM carrier can be liable for bad faith when it fails to pay benefits where the underlying insurance carriers decline to pay their full limits prior to trial, but the jury later awards damages in excess of the underlying limits). |