Hunton Insurance Recovery Blog

Last week, a New York federal court ruled that an insurer’s “exceedingly broad duty to defend the insured” extended to the policyholder’s indemnification of its landlords in an underlying tort claim. ConMed Corporation (“ConMed”), a medical technology company, filed suit against Federal Insurance Company (“Federal”), a division of Chubb, alleging that Federal breached the terms of its insurance contract when it refused to defend ConMed’s landlords in a Georgia lawsuit.

The coverage dispute stemmed from ConMed employees’ claims that they were exposed to unsafe levels of ethylene oxide, a chemical used to sterilize ConMed’s equipment. Initially, the employees sued ConMed and its contractor that conducted the sterilization, but in April of 2021 the employees initiated a separate suit against ConMed’s landlords (“Landlord Action”). In the Landlord Action, plaintiff employees alleged negligence, aiding and abetting tortious conduct, fraud, wrongful death, and vicarious liability/respondeat superior claims, all stemming from their exposure to ethylene oxide. Pursuant to the lease agreement with ConMed, the landlords tendered the defense and indemnity of the Landlord Action to ConMed, which subsequently tendered the defense to Federal. Federal failed to accept defense of the Landlord Action, and ConMed filed suit.

An oft-seen version of the insuring agreement in Commercial General Liability (CGL) policies provides that the insurance company will pay for “any and all sums” the policyholder is “legally obligated to pay” for liabilities “imposed by law” or “assumed under contract.”  In an effort to disclaim coverage for liabilities arising out of or related to contract, insurers have argued that the prong for liabilities “imposed by law” refers to tort-based liabilities only, thus seeking to avoid liability with a relationship to contract.  This argument, however, defies the plain insuring language defining how the CGL policies are triggered.  This post explains why, under a proper reading of the insuring language, contract-based liabilities should qualify under the “imposed by law” prong of a CGL insuring agreement.

Hunton Andrews Kurth LLP partner Syed Ahmad was quoted on July 20 in a Law360 article titled “R&W Insurance Claim Frequency Expected To Normalize.”  The article discussed the recent reduction in R&W claims and industry experts’ expectations that claim frequency will return to normal levels this year.  Mr. Ahmad commented on the challenges policyholders may face when disputing claims in court.  In particular, while there is plenty of case law regarding disputes between buyers and sellers over breaches of representations and warranties, there is very little precedent on how ...

Partners, Larry Bracken, Lorie Masters, and Koorosh Talieh (KT), were each recognized as Super Lawyers, while associates Yaniel Abreu and Rachel Hudgins were selected as Rising Stars for Insurance Coverage in 2022. Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations. Ultimately, no more than 5% of lawyers in a state are selected as ...

Massachusetts’ highest court ruled earlier this month that attorney’s fees awarded under the Commonwealth’s consumer protection statute are not covered damages under a general liability insurance policy. Consequently, the decision in Vermont Mutual Insurance Co. v. Poirier, Slip Op. SJC-13209 (July 6, 2022), means that companies sued for allegedly unfair or deceptive practices may be left to fund awards of attorneys’ fees under Chapter 93A, even where other aspects of their liability may be covered by insurance.

Recently, an Illinois federal judge ruled that where government shutdown orders due to COVID-19 in different states impacted one insured, that insured suffered separate occurrences in each effected state. Dental Experts, LLC v. Massachusetts Bay Ins. Co., No. 20 C 5887, 2022 WL 2528104 (N.D. Ill. July 7, 2022).

Hunton Andrews Kurth LLP recently wrote about the Eleventh Circuit decision in McNamara v. Gov’t Employees Ins. Co., 30 F.4^th 1055 (11th Cir. 2022) (“McNamara”), where the court held that a consensual settlement (such as a consent judgment) serves as an excess judgment for the purposes of a bad faith claim.  In a follow up decision, the Eleventh Circuit extended its McNamara reasoning to a case involving an accepted proposal for settlement.  In Potter v. Progressive American Insurance Company, No. 21-11134 (11th Cir. 2022), Daniel Lee and Jolene Potter brought a third-party bad faith action against the insurer, Progressive.  The Potters were involved in an automobile accident with Progressive’s insured, under an automotive liability policy with bodily injury limits of $10,000 per person.  The Potters sued Progressive’s insured and ultimately served a proposal for settlement, pursuant to Fla. Stat. § 768.79, totaling $125,000.  The insured accepted the proposal, a final judgment was entered, and the Potters sued Progressive for bad faith.

Prior posts in this series have discussed insurance coverage issues that pertain directly to wildfire claims, but we have not yet addressed how one proceeds following a loss.  In this post in the Blog’s Wildfire Insurance Coverage Series, we discuss the preparation, submission and negotiation of the insurance claim.

Partner, Andrea DeField, and counsel, Latosha Ellis, were each recently awarded “On the Rise – Top 40 Young Lawyers” honors by the American Bar Association’s Young Lawyers Division. The award honors 40 of the nation’s most promising lawyers under the age of 40 or who have been licensed for 10 years or less. Recipients demonstrate high achievement, innovation, vision, leadership, and service to the profession and their communities, including extensive knowledge in litigation or transactional work and commitment to pro bono, charitable, or professional ...

The IRS recently filed a petition to enforce summonses issued to investigate tax liability stemming from a business’s involvement in a captive insurance transaction. While captives can have many advantages—ranging from increased control, reduced costs, and favorable tax benefits—the IRS petition underscores the importance of structuring and implementing captives in accordance with all applicable laws.