Chamberlin & Keaster LLP
Contact Us

Los Angeles
16000 Ventura Blvd
Suite 700
Encino, CA 91436
T: (818) 385-1256
F: (818) 385-1802

Emerging Issues

March 2015 Monthly Review

            “Thought” of the Month:  Seen—Sign in store window:  “Any faulty merchandise will be cheerfully replaced with merchandise of equal quality.”

 

            TEXAS GETS IT RIGHT

 

            In Re Deepwater Horizon, No. 13-0670, Texas Sup.  The Texas Supreme Court finds BP Exploration and Production covered as an additional insured.  In doing so, the Texas Supreme Court applies reason to the “8-Corners” Rule allowing the Court to consider the related underlying contract.  Further, the Court upholds the idea that a party named as an additional insured in connection with performance of a contract is insured only to liability arising out of the insured contract.  We believe this is an important decision because in “8-Corners” jurisdiction, insureds often argue that no other information may be considered.  The counter to that argument is that the Court (and we believe the insurer) can consider “what” is being insured.  Further, the insurer should not be hamstrung by “artful” and/or “over-inclusive” drafting. 

 

            TENNESSEE COMPLAINT SEEKS TO APPLY ABSOLUTE POLLUTION EXCLUSION

 

            Great Lakes Reinsurance the MP & T Hotels, LLC, et al., Case No. 3-14-cv-2018.  This is a case to watch and may fall under the adage, “be careful what you wish for . . .”  In its Complaint, Great Lakes apparently seeks to exclude coverage for injury arising out of a hotel patron that was allegedly injured to noxious fumes in connection with pest extermination.  While at first blush the verbiage in the exclusion “release or escape of soot of smoke, vapors, soot, fumes . . .” may seem to apply,  many Courts have refused to apply the absolute pollution exclusion when those “fumes” are in connection with the spraying of pesticides finding that the vapors do not constitute a pollutant but are integral with pesticides.  See MacKinnon v. Truck Ins. Exchange, 31 Cal. 4th 635.

 

            RHODE ISLAND CASE TO WATCH

 

            Seaton Insurance Company v. Yosemite Insurance Company, No. 15-cv-00040, D. R.I.  In this case Seaton Insurance Company is suing Yosemite Insurance Company for failure to pay under a reinsurance agreement.  As most everyone in the industry knows, reinsurance recoveries can be difficult.  Our experience shows that the best “practice pointer” is to involve the reinsurance company as early as possible in the claims, billing, settlement and/or resolution process. 

 

            MICHIGAN LAW “INITIAL DISCHARGE” RULE NOT APPLY TO LANDFILLS

 

            Decker Manufacturing Corp. v. The Travelers Indemnity Company, Case No. 1:13-cv-820.  In finding coverage not precluded by the Sudden &Accidental Pollution Exclusion, the Federal Judge provides good explanation of Michigan law which holds that the “initial discharge” rule does not apply to landfills.  Rather, in Michigan, the focus is on the discharge from the landfill (which, in our view , has nothing to do with the insured).  We feel Michigan law on this subject appears to be result driven and has not been followed by many other jurisdictions.

 

            NEW MEXICO FEDERAL COURT SAYS NO TO STACKING

 

            Mid-Continent Casualty Company v. I & W, et al., No. CIV-11-0329.  With no clear applicable law in New Mexica, the Federal Court, looking to other jurisdictions, found property damage occurring from 2000-2009 to be a single occurrence.  Further, occurrence is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions” precludes stacking of occurrence limits. 

 

            NEW JERSEY COURT FINDS NO BAD FAITH AS A MATTER OF LAW

 

            Joseph Dooley and Elizabeth Dooley v. Scottsdale Insurance Company, No. 12-1838, D.  N.J.  Applying New Jersey law, stating that “[t]o show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendants knowledge or reckless disregard of the lack of a reasonable basis for denying the claim,” the Court found no bad faith as a matter of law.  Practice Pointer – disputed question of law rarely result in a bad faith finding; disputes over facts run a greater risk of a bad faith finding.


  « Back to Emerging Issues