Eighth Circuit pollution-exclusion opinion a cautionary tale for natural gas industry

The interpretation and application of a pollution exclusion in a commercial general liability (“CGL”) policy is often a fact-specific and jurisdiction-specific exercise. That said, the U.S. Court of Appeals for the Eighth Circuit’s recent decision, applying North Dakota law and interpreting such an exclusion in a CGL policy, should command the attention of the entire natural gas industry.

At issue in Hiland Partners GP Holdings, LLC, et al. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 15-3936 (8th Cir. Jan. 31, 2017), was an explosion at a natural gas processing facility that “receives gas and hydrocarbon products and processes them into byproducts for sale.”  Appellants, who owned and operated the facility, were an additional insured under a third party’s CGL policy. Continue Reading

Reinsurance Deal Raises Red Flags

American International Group, Inc. (“AIG”) recently announced that it entered into a significant reinsurance agreement with a subsidiary of Berkshire Hathaway Inc. (“Berkshire”). Reportedly, that agreement “covers 80% of substantially all of AIG’s U.S. Commercial long-tail exposures for accident years 2015 and prior.”  While AIG states that it “will retain sole authority to handle and resolve claims,” the details of the arrangement, by which the Berkshire subsidiary “has various access, association and consultation rights,” remain far from clear.  The involvement of the Berkshire subsidiary and any other related Berkshire entities, which have routinely put their economic interests ahead of their insureds’, should give policyholders pause.  Policyholders should remain vigilant and cautious.  To read our full alert on this topic, click here.

The Expanded French Class Action System May Impact Liability and Insurance Coverage For Corporations Domiciled and Doing Business in France

Although the French class action system has gotten off to a slow start with only 6 actions initiated to date, the recently and anticipated expanded scope of the French class action system will impact the potential liability and insurance coverage of corporations domiciled and doing business in France. To learn more about the implications of the Expanded Scope of the French Class Action System read our full alert on this topic by clicking here.

Lumbermens Liquidation: Deadline to File Liquidated Claims Extended to 2017

The deadline for submitting documentation to establish “closed” or “liquidated” claims in the Lumbermens Liquidation has been extended to November 10, 2017. To learn more about this important deadline extension, read our full alert on this topic by clicking here.

The Cosby Show: The Insurance Coverage Episode

On November 8, 2016, the District Court in the District of Massachusetts held that AIG has a duty to defend Bill Cosby against pending defamation claims under both Massachusetts and California law. The court rejected AIG’s contention that the defamation claims fall within the exclusion for sexual misconduct since they were “arising out of” claimants’ original allegations of sexual misconduct.  Instead, the court found the exclusion was at least ambiguous in the context of these defamation claims and, therefore, a duty defend is owed.

It is generally well known that William H. Cosby, Jr., (known familiarly in his comedy and acting career as Bill Cosby), has been accused on a number of occasions of sexual misconduct many years ago. Cosby has denied the allegations in public statements issued personally and through representatives.

Based upon these denials, three defamation cases were filed against Cosby and others in the District Court of Massachusetts.  Green v. Cosby, Case No. 14-cv-30211, Ruehli v. Cosby, Case No. 15-cv-13796, and McKee v. Cosby, Case No. 15-cv-30221.  Cosby sought coverage for the defamation claims under a Massachusetts homeowners policy (“Homeowner’s Policy”) and a personal excess liability policy (“Excess Policy”), both purchased from AIG.  The policies cover claims alleging personal injury, which is defined to include “[d]efamation, libel or slander” emotional distress.  While the Homeowner’s Policy includes a duty to pay defense costs, the Excess Policy includes a duty to defend.  Both policies exclude actions “arising out of” sexual misconduct, harassment or abuse. Continue Reading

Massive DDoS Internet Attack Heightens the Focus on Cyberliability and Network Business Interruption Insurance Coverage

The October 21, 2016 DDoS attack on the internet’s domain name system infrastructure underscores the need to consider cyberliability insurance coverage as a critical component of your company’s security and privacy breach response plan, and if your company carries cyberliability insurance, to ensure that your coverage will respond to a network business interruption, security breach or privacy event against or within your company or its vendors. To read more, please click here.

Recent California Ruling Enables Excess Carriers to Put Additional Pressure On a Primary Carrier to Accept a Reasonable Policy Limits Demand

A California appeals court recently sharpened the teeth of insurance companies’ duty to settle [Ace Am. Ins. Co. v. Fireman’s Fund Ins. Co. (2016) 2 Cal. App. 5th 159].  By broadening the situations in which an insurer can be held liable for failing to settle within limits to include cases that never go to verdict or judgment, this ruling protects policyholders from unreasonable insurer decision-making without forcing them into risky trials.  With a clear split among the California Appellate Divisions, this issue is now ripe for Supreme Court review.

On the set of Warner Bros.’ superhero film “Green Lantern,” a stunt gone wrong injured a special effects supervisor, who then sued Warner Bros. Entertainment Inc. and related entities to recover damages for his injuries. Warner Bros. had a $2 million primary policy and $3 million umbrella policy with Fireman’s Fund, and an excess policy of $50 million with Ace American to respond to the accident. Continue Reading

Fair presentation and contracting out under the Insurance Act 2015

Following on from our previous alert on the Insurance Act 2015 and the key advantages it offers to policyholders of commercial insurance, we have prepared a second alert looking at what might constitute the knowledge of the insured for the purpose of complying with the duty to make a fair presentation, and the possibility of contracting out from the provisions of the new Act. The Act is now in force in England and Wales, so it is definitely worthwhile to make sure you’re aware of the major changes introduced in the Act and how they might affect your business.

Please click here to read the full alert.

The advantages of the new English insurance law

The Insurance Act 2015 (the Act) came into force on 12 August 2016, introducing major changes in English law in relation to insurance and all forms of reinsurance.

It applies to all contracts of insurance and reinsurance governed by English law entered into after 12 August 2016. This includes renewals, amendments and endorsements to existing contracts.

Many articles and commentary have been published dealing with the new Act. Here, we wanted to draw the attention of those responsible for the purchase of insurance and reinsurance to the application of this new Act so that the key advantages it offers to policyholders are not overlooked in the course of upcoming insurance placements, amendments and renewals. The three areas discussed below are worthy of particular note: disclosure, warranties, and basis of contract clauses.

Read our full Alert on reedsmith.com.

A Recent California Federal Court Decision Restores Coverage For Some Patent-Related Lawsuits

A California district court pushed back on the restrictive interpretation of a standard intellectual property exclusion and found coverage for a policyholder’s patent related lawsuit. The United States District Court (Northern District of California) recently ruled that claims asserting (1) the breach of a patent license agreement and (2) patent misuse were covered under a commercial insurance policy, and not subject to the policy’s intellectual property exclusion.  Moreover, the court found that the mere fact that claims are related to assertions of infringement does not preclude coverage unless the claims assert injuries as a result of that infringement.

The Underlying Action

Policyholder Tessera initiated an International Trade Commission (ITC) investigation, accusing several companies of infringing its patents by importing and selling semiconductor packages.  Several of these companies were customers of Powertech Technology Inc. (PTI), a company that had obtained a license agreement from Tessera.  In December 2011, PTI sued Tessera on several claims and defenses relating to Tessera’s ITC investigation, including breach of the licensing agreement, fraud and deceit, and patent misuse. In February 2012, Tessera tendered the defense and immunity of these claims under three commercial insurance policies issued by St. Paul Mercury Ins. Co. (St. Paul), which accepted the tender of defense under a full reservation of rights, but disputed coverage.  After initial motion practice, Tessera and PTI resolved the action by settlement.

The Coverage Action

In April 2012, St. Paul initiated an action for declaratory relief against Tessera, claiming that the standard intellectual property exclusion in its policy excluded from coverage the claims asserted against Tessera. The exclusion at issue bars coverage for: “injury or damage or medical expenses that result from any actual or alleged infringement or violation of any of the following rights or laws: […] Patent…Other intellectual property rights or laws….”  The exclusion also bars coverage for “any other injury or damage or medical expenses alleged in a claim or suit that also alleges any such infringement or violation.”  Continue Reading

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