Wisconsin Rules That Each Claimant's Exposure To A Toxic Tort Is A Separate Occurrence; Adopts "All Sums" And Rejects Pro Rata Allocation
Plastics Engineering Co. v. Liberty Mutual Ins. Co., No. 2008AP333-CQ, 2009 WI 13 (Wis. Jan. 29, 2009)
In "Plastics Engineering Co.", the Wisconsin Supreme Court held that, under the "cause" test, each underlying claimant's repeated exposure to asbestos-containing products constitutes a separate "occurrence" where such exposures were separate in time, space and circumstance. The court also ruled that a Wisconsin statute prohibiting competing "other insurance" clauses from reducing the total indemnification available under the policies applied only to concurrent insurance policies, not to successive policies, and therefore the statute did not prevent enforcement of non-cumulation of limits provisions. Finally, in addressing the insurer's contentions regarding allocation among policies issued from the 1960s through 1989, the court expressly rejected a pro rata allocation and held the insurer must fully defend and pay all sums up to policy limits.
Exposure To Mercury Is Not Environmental Pollution
Baughman v. United States Liability Ins. Co., 08-2901, 2009 U.S. Dist. Lexis 106400 (D.N.J. Nov. 12, 2009)
In Baughman, the District Court of New Jersey considered the question of whether mercury qualified as traditional or non-traditional environmental pollution. The case involved closure of a day care due to mercury contamination, allegedly caused because a thermometer manufacturing company operated in the building twenty years earlier. The court found that such contamination did not constitute "traditional environmental pollution" because such pollution "does not include exposure to toxic materials released indoors...", thereby adopting an indoor-outdoor distinction.
Debate Continues Over Coverage For Fax-Blasting Claims
Auto-Owners Ins. Co. v. Websolv Computing, Inc., No. 07-3286, 2009 WL 2750263 (7th Cir. (Ill.) Sept. 1, 2009); Alea London Ltd. v. American Home Services Inc., No. 1:09-CV-158 (N.D. Ga. Dec. 1, 2009); New Century Mortg. Corp. v. Great Northern Ins. Co., 2009 U.S. Dist. LEXIS 100033 (D. Del. Oct. 26, 2009)
Three federal courts considered CGL coverage for liability for unsolicited facsimile transmissions in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227. In Auto- Owners Ins. Co. v. Websolv Computing, Inc., the Seventh Circuit, applying Iowa law, held that there was no coverage for such claims, because the term "publication" as found in the policy narrowed the scope of privacy rights to secrecy rights and not seclusion rights. In Alea London Ltd. v. American Home Services Inc, and New Century Mortg. Corp. v. Great Northern Ins. Co., the Northern District of Georgia and the District of Delaware, applying Illinois law, held that such claims were covered. These courts reasoned that the right of privacy was extended to the right of seclusion as well as secrecy.
Delaware Court Applies All Sums Allocation Method In Asbestos Coverage Action
Viking Pump, Inc. v. Century Indem. Co., C.A. No. 1465 (VCS) (Del. Ch. October 14, 2009)
In Viking Pump, a Delaware Court of Chancery, applying New York law, applied the "all sums" method of allocation in an asbestos bodily injury case. The court found that the pro rata allocation method was in contravention of the plain language of the policies, and that "[c]ourts more concerned with guaranteeing full compensation to tort plaintiffs and holding insurers accountable up to the full policy limits when a policy is triggered, tend to favor the all sums method." This decision is significant because it rejects the pro rata approach and allows the insureds to designate a single policy year to bear responsibility for a covered loss, leaving it up to those insurers to seek reimbursement from other insurers
Duty To Defend Triggered By Dispute Over Which Policy Forms Constitute The Full Policy
Whittaker Corp. v. American Nuclear Insurers, No. 07-10515- RGA, 2009 WL 4342512 (D. Mass. Sept. 15, 2009)
In American Nuclear Insurers, the United States District Court for the District of Massachusetts held that an insurer's duty to defend may be triggered when there is a dispute between the insurer and the insured regarding which policy forms and endorsements constitute the complete insurance policy at issue. The court concluded that whether or not the policy contained an exclusion rendered it "at least plausible" that the policy did not exclude coverage. Further, the court reasoned that the possibility that the policy was issued without an exclusion was all that was necessary to trigger the duty to defend. This case is significant because it modified the well-established "potential for coverage" duty to defend standard applied by most courts.
Indiana Court Applies Montrose Endorsement To Find No Coverage
Quanta Indemnity Co. v. Davis Homes, LLC, 2009 U.S. Dist. LEXIS 25392 (S.D. Ind. 2009)
In Davis Homes, the United States District Court for the Southern District of Indiana held that a "bodily injury" that took place prior to the CGL policy period, and was known to the insured prior to the policy period, was excluded from coverage. The personal injury at issue in Davis Homes was an apparent suicide that was determined by the court to be proximately caused by a previous electrical injury that occurred prior to the policy period. The court in this case enforced the insurer's Montrose Endorsement by examining the complaint and determining that the allegations directly connected the suicide to an electrical shock and resulting injuries that were sustained before the policy period. Further, the court found that the insured was aware of the injuries prior to the policy period.
Ninth Circuit Finds Anti-Assignment Clause Ambiguous
Alexander Mfg., Inc. Employee Stock Ownership Plan and Trust v. Illinois Union Ins. Co., 560 F.3d 984 (9th Cir. 2009)
In Alexander Mfg., the Ninth Circuit Court of Appeals held that an anti-assignment clause prohibiting assignment of "interest under this Policy" was ambiguous. Ultimately, the court allowed an assignee of an insurance policy to pursue claims for a breach of contract and bad faith against the insurer. The court based its decision on the ambiguity of the term "interest." Specifically, the court held that "interest" could plausibly refer to a purely financial stake in the policy or to causes of action arising under the policy.
Coverage Is Pro-Rated Where Policy Periods Overlap
Boston Gas Co. v. Century Indemnity Co., 454 Mass. 337, 910 N.E.2d 290 (July 24, 2009)
In Boston Gas Co., the Massachusetts Supreme Judicial Court held that the liability of each insurer under standard CGL policies should be prorated rather than joint and several. The prorated rule will apply where an insured has covered costs as a result of ongoing environmental contamination occurring over more than one year, and the insurer provided coverage for less than the full period of years in which the contamination occurred. The court found that the method of allocation must be "time-on-the-risk", unless there is actual evidence relevant to the distribution of property damage.
No Obligation To Pay Attorney Fee Award
State Farm General Ins. Co. v. Mintarsih, 175 Cal. App. 4th 274 (Cal. App. 2d Dist. 2009)
In Mintarsih, the Court of Appeal of California, Second Appellate District, Division Three affirmed a trial court holding that an insurer had no obligation to pay an attorney fee award. A domestic servant sued the insured for false imprisonment and employment-related claims and was awarded over $700,000 in attorney fees for wage and hour claims. The insurer filed a complaint for declaratory relief, arguing that the attorney fee award was based on claims for which there was no coverage under the policies. The Court of Appeals affirmed the trial court's holding that the insurer's obligation under the policies' supplemental payments provisions, which promised to pay costs awarded against insureds, extended only to costs arising from claims that were at least potentially covered under the policy. Because there was no potential for coverage for the wage and hour claim, the fee award on that claim was not covered.
Alleged Strong Odor May Be "Property Damage"
Essex Insurance Co. v. Bloomsouth Flooring Corp., 562 F.3d 399 (1st Cir. 2009)
In Bloomsouth, the First Circuit Court of Appeals considered whether a permeating odor qualifies as "property damage" within the meaning of a CGL policy. The underlying suit alleged, in part, that the insured was responsible for negligently and defectively installing carpet, resulting in an alleged unwanted odor throughout the building. The insured argued that it should be defended and indemnified in the underlying action, because two of the underlying allegations were reasonably susceptible to the interpretation that they asserted claims of "physical injury." Those allegations were: (1) that an unwanted odor permeated the building, and (2) that the concrete floor in the building required "bead-blasting" (a type of abrasion). The First Circuit agreed with the insured, holding that these allegations could be interpreted as alleging "physical injury." Therefore, the First Circuit held that the insurer had wrongfully denied a defense to its insured.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.