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Vol. 11 - Issue 5

October 15, 2022


Two Policyholder Hail Mary’s For Coverage


I get it.  Sometimes policyholders [or underlying plaintiffs] must make arguments in support of coverage that have no real chance of winning. But, if the only way to secure compensation, for injury or damage, is liability insurance coverage, they have no choice but to try.  Here are two recent cases in the hail Mary category that predictably ended in favor of the insurer:

Based on Texas law, and the interpretation of the absolute pollution exclusion, a win for the insurer in Peleus Ins. Co. v. Ron Sparks, Inc., No. 21-251 (N.D. Tex. Sept. 8, 2022) was far from a shocker on these facts: 

On account of demolishing a building next door to O’Reilly Auto Parts, “the restroom in the O’Reilly store experienced a highly pressurized reverse sewage flow incident that ultimately forcibly projected raw sewage out of the toilet [and] an O’Reilly employee who was inside the restroom at the time, was covered by and directly exposed to the raw sewage, which ultimately led to bacterial infection, sepsis, massive organ failure, resultant neurologic injuries, and other ongoing debilitating injuries and damages.”


In B.E. v. Blood, No. 2021AP1377 (Wis. Ct. App. Sept. 15, 2022), the policyholder had a tall task to avoid application of an intentional act exclusion, even with the insurer needing to prove intent to harm: “Erie argues that we can infer intent to injure or harm as a matter of law because harm was substantially certain to result from Blood’s conduct. For the following reasons, we agree. It is manifest that placement of a camera in a person’s bedroom is nearly certain to record that person in various stages of undress and is likely, in some circumstances, to record that person engaging in intimate acts with another. Indeed, Blood was aware of this likelihood because he stated that the point of installing the camera was to monitor E.K.’s sexual activity with B.E. This is recognized in B.E.’s complaint, which alleges that Blood’s conduct was done for Blood’s sexual gratification. As well, E.K.’s complaint alleges that Blood acted ‘with an intentional disregard for the rights of’ E.K. Reasonable persons are aware that the surreptitious recording of a person’s bedroom activity is substantially certain to cause harm by violating that person’s reasonable expectations of privacy.”




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