On July 10, 2013, the Superior Court of Pennsylvania issued a ruling that examined law from across the country regarding whether the insured or insurer controls settlement after the insurer defends under a reservation of rights. The Court ruled that Pennsylvania will join the states that give the insured the option of whether to accept the insurer’s defense under a reservation of rights. If the insured accepts such a defense, then the insurer can control settlement decisions. If the insured rejects a qualified defense, then the insured must be granted independent counsel who can then enter any reasonable settlement without the insurer’s consent.

Bituminous Cas. Corp. v. Iles, et al. (Ill. App. (5th) 2013)

The Illinois Appellate Court for the Fifth District agreed with BatesCarey LLP's client in applying the "Each Occurrence Limit" instead of the "General Aggregate Limit." In Bituminous Cas. Corp. v. Iles, et al., the appellate court reversed a lower court's opinion that applied the "General Aggregate Limits" in the applicable insurance policies rather than the "Each Occurrence Limits." Applying the General Aggregate Limits had the effect of maximizing the policyholder's recovery. However, based on the unambiguous provisions of the contract, the "Each Occurrence Limits" should have applied to the bodily injury and property damage claims caused by an oil well explosion. The appellate court agreed and ruled in favor of BatesCarey LLP's client. John E. Rodewald and John A. Husmann handled all aspects of the litigation the trial court and appellate levels.

Chambers has praised BatesCarey LLP for its representation of international and domestic insurers and reinsurers. Chambers described the firm as follows:

This specialist insurance firm is known and respected for its longstanding representation of the insurance industry on both a domestic and international basis. The team offers expertise across a range of insurance areas including direct insurance, reinsurance and professional liability. The group also has a prominent presence in construction and transport insurance claims.

Adam Fleischer and Jason Minkin have published a comprehensive article titled The 2013 Captive Quandary and Duty of Utmost Good Faith.  This article addresses challenges for reinsurers when reinsuring captives, as well as the captive’s obligation to act at arm’s length from its parent.  For a complete copy of the article, please click here.

Rice v. Union Pacific Railroad Co. (E.D. Ark.) (June 2012), aff’d (8th Cir. 2013)

In Rice v. Union Pacific Railroad Co., the U.S. Court of Appeals for the Eighth Circuit affirmed a trial verdict in favor of Gunderson Rail Services, our client. Union Pacific had filed an indemnity action against Gunderson seeking to shift responsibility for the settlement and defense of an incident arising out of a railroad accident. The underlying accident involved a back injury to a Union Pacific employee who slipped in the mud in Gunderson’s yard. Ultimately, the case settled for $1.15M. Union Pacific and Gunderson each paid one half of the settlement and proceeded to trial on Union Pacific’s claim that it was entitled to complete indemnity, making Gunderson pay the entire settlement. After trial, the court held that both Union Pacific and Gunderson shared equally in responsibility for the costs of defense and settlement. Union Pacific appealed, claiming that the trial court erred in ignoring evidence that supported specific sections of the indemnity agreement that would shift all liability to Gunderson. The appellate court disagreed, holding that Union Pacific had failed to prove that those sections applied and affirming the verdict in the trial court. Joe P. Pozen co-chaired the trial and briefed the appeal.

WASCO v. Bituminous (Ill. App. (1st) 2013)

In WASCO v. Bituminous, WASCO sought coverage under Bituminous policies issued to Palm Oil and PORI International, arguing that the policies were transferred to WASCO or “assigned” to WASCO, or that WASCO was the corporate successor of the named insureds, and therefore entitled to the coverage afforded by the policies. When Bituminous declined to defend WASCO for an underlying environmental claim, WASCO sued Bituminous in Illinois state court, alleging breach of the duty to defend and bad faith claims handling practices.

Village of Crestwood v. Hartford Fire Ins. Co. (Ill. Cir. Ct. 2012) (September 2012), aff’d (Ill. App. 1st)) 

A municipality and its former mayors knowingly mixed contaminated well water with clean water resulting in numerous wrongful death and bodily injury lawsuits. The client insurer had issued multiple policies to the municipality. BatesCarey LLP moved for summary judgment, contending that the pollution exclusion in the client's policies precluded any duty to defend or indemnify. The municipality filed a competing motion. After extensive briefing, an Illinois state court agreed with BatesCarey LLP's position and granted summary judgment to BatesCarey LLP's client.

Mt. Hawley Ins. Co. v. Creek Side at Parker Homeowners Ass'n, Inc., 2013 WL 104795 (D. Colo. Jan. 8, 2013)

On January 8, 2013, the U.S. District Court for the District of Colorado held that, when a subcontractor’s faulty workmanship causes damage to other, non-faulty, parts of a construction project, there may be an “occurrence” under a general liability policy. (This case reaches the opposite conclusion of a Sixth Circuit case that came down the day before, which we have summarized here).  In this Colorado decision, the district court found that, although there may have been an “occurrence,” the policy nevertheless excluded coverage for both construction defects that take place during and after a construction project.

McBride v. Acuity, --- F.3d ---, 2013 WL 69358 (6th Cir. Jan. 7, 2013) (applying Kentucky law)

On January 7, 2013, the U.S. Court of Appeals for the 6th Circuit applied Kentucky law to find that faulty workmanship of a subcontractor did not qualify as an “occurrence” even though the subcontractor’s faulty workmanship had caused damage to other, non-faulty, parts of the project.  (This case reaches the opposite conclusion of a Colorado decision that came down the day after, which we have summarized here) The Sixth Circuit refused to follow case law from other jurisdictions holding that an “occurrence” takes place when allegedly defective work on one part of a construction project causes defects to another part of the same project.

Confidential

BatesCarey LLP represented a reinsurer that commutated numerous claims with one of its cedents. Its valuation was based on its assessment of its cedent's reserves. After agreement on a total commutation value, BatesCarey LLP's client allocated its total payment to individual claims based on its reserves for each claim, and in turn billed its reinsurers on that basis. BatesCarey LLP pursued arbitration on behalf of its client and recovered the full amount of its client's billing plus interest.