Ewing’s Undoing?: 5th Circuit Holds That Contractual Liability Exclusion Precludes Coverage For Garden Variety Construction Defect Claim

In January, the Supreme Court of Texas, in easily one of the most important coverage cases of 2014, held in Ewing Construction Co. v. Amerisure Insurance Co. that the “contractual liability” exclusion, contained in a CGL policy, did not preclude coverage for a construction defect claim involving not out of the ordinary facts. The Texas Supreme Court’s decision came following the case’s earlier time spent in the 5th Circuit. Not since the Alamo has there been a fight in Texas this big.

The day Ewing was decided it seemed like it was case closed on the issue. Not so fast. With Davey Crocket-like determination, Mid-Continent Casualty Company convinced the 5th Circuit in Crownover v. Mid-Continent, No. 11-10166 (5th Cir. June 27, 2014) that, despite Ewing, the contractual liability exclusion still precluded coverage for a garden variety construction defect claim.

I could say lots more about the case, but instead I’ll leave that to Lee Shidlofsky and Doug Skelley, who represented Ewing Construction. Their blog post about the case at Shidlofsky Law Firm provides extensive commentary. Notwithstanding the 5th Circuit’s decision in Crownover, I still see policyholders, and their frequent amicus supporters on construction defect issues, coming out as Santa Ana on this one.

Latest Entry In The Moronic Class Action Category

The Wall Street Journal Law Blog recently reported that a putative class action has been filed in New York federal court against Chobani, Inc., alleging that the company tricks consumers into believing that its Greek yogurt is actually Greek.

The Law Blog reported that the complaint states: “Defendants purposefully market their Products as ‘Greek’ yogurt when there is nothing ‘Greek’ about the Products.” Further, “[n]one of the Products sold in the U.S. are made in Greece or made by Greek nationals even though Defendants market themselves as ‘America’s Top Greek Yogurt.’”

According to the Law Blog, Chobani officials say the suit is without merit and that its central claim is the equivalent of complaining that Canadian bacon isn’t from Canada. In a statement the company said: “Our fans also understand that, like English muffins and French fries, Greek yogurt is a product description about how we authentically make our yogurt and not about where we make our yogurt in Upstate New York and Idaho.”

It is remarkable that Kraft has gotten away all these years with selling Philadelphia cream cheese that is not made in Philadelphia.

Pennsylvania Supreme Court To Revisit PMA v. Aetna After Nearly 60 Years

If you practice coverage law in Pennsylvania then you are familiar with the “PMA issue.” You have to be. And even if you are not regularly in Pennsylvania you may also have come across it. In very general terms, insurers have long-cited to the Pennsylvania Supreme Court’s 1967 decision in PMA v. Aetna to maintain that the Employer’s Liability exclusion (even when it says employee of “the” insured and not “any” insured; and there is a separation of insureds clause) precludes coverage for all insureds, even if the injured plaintiff is not an employee of the insured seeking coverage.

PMA v. Aetna has been a controversial decision. Nonetheless, because it is a Pennsylvania Supreme Court decision, courts have been required to follow it, notwithstanding rumblings that they would have ruled differently if writing on a clean slate. Despite all of the debate surrounding PMA, this near-60 year old decision has never been revisited by the Pennsylvania Supreme Court. Until now.

On June 20, the Pennsylvania Supreme Court agreed to hear an appeal in Mutual Benefit Ins. Co. v. Politopoulos, where the Superior Court, constrained to follow PMA, dealt with its displeasure with the decision by distinguishing it. The Pennsylvania Supreme Court granted the insurer’s Petition for Allowance of Appeal and agreed to answer the following question: “Whether the Superior Court properly ruled that Pennsylvania Manufacturers’ Association Insurance Co. v. Aetna Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) (“PMA”) did not control in the instant case because of the divergence in wording between the ‘severability clause’ in PMA and the language in the Umbrella Policy here, finding that the plain unambiguous language in the case at hand provides coverage for the liability in question.”

Montana Supreme Court To Address Late Notice—Prejudice Issue

In Atlantic Casualty Ins. Co. v. Greytak, No. 13–35133 (9th Cir. June 25, 2014), the 9th Circuit Court of Appeals sent this text to the Montana Supreme Court: “We have found no Montana court decisions that resolve the question of whether an insurer must demonstrate prejudice due to lack of timely notice to avoid defense and indemnification of its insured pursuant to a claim by a third party. A declaration by your Court on this question would guide us in resolving the parties’ dispute. Your acceptance of the request for certification of this question will also be of great assistance in correctly applying Montana law.”