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Vol. 7, Iss. 4
May 9, 2018

One Of These Things Just Doesn’t Belong
In Ibrahim Sabbah v. Nationwide Mut. Ins. Co., No. 15-1772 (N.D. Ala. Apr. 18, 2017) the court noted that “[i]t is settled that the law in [Alabama] does not permit recovery for personal injury, inconvenience, annoyance or mental anguish and suffering in an action for breach of a contract of insurance.” But Alabama law does allow recovery of mental anguish damages, for breach of contract, under certain circumstances: “those concerning the plaintiff’s home [repair or construction], the burial of loved ones, a physician’s promises to deliver a child, or a new car warranty.”

Photocopies And “No Occurrence”
Are you tired of hearing if faulty workmanship is an occurrence? If so, here’s a different occurrence question: “In the Underlying Lawsuit, Caven alleges that Associa [condo management company] charged him and other owners an excessive fee in exchange for copies of condominium documents. The expected and reasonably foreseeable result of Associa’s act is that Caven and other owners would incur this fee. Thus, pursuant to Hawai’i law, the Court finds that Associa’s alleged act of charging Caven and other owners fees for copies of condominium documents was intentional, and not an accident. Accordingly, pursuant to Hawai’i law, Associa’s alleged act of charging excessive fees does not constitute an ‘occurrence’ under the Policy. The Court makes this finding regardless of whether Associa believed that its fees were excessive or in violation of Hawai’i law.” State Farm Fire & Casualty Co. v. Certified Management, No. 17-00056 (D. Haw. Apr. 27, 2018).

1973 ISO Filing: Notice-Prejudice Rule Applies To Claims Made Scenario
In Petrosantander United States v. HDI Global, No. 16-1320 (D. Kan. Apr. 9, 2018) a Kansas District Court predicted how the Texas Supreme Court would address a late notice issue under a Pollution Extension Endorsement with a claims made quality. [“Toto, I’ve a feeling we’re not in Kansas anymore.”] At issue was coverage under a Pollution Extension Endorsement contained in a commercial general liability policy. Putting aside several policy requirements, and another notice issue, and paraphrasing, the policy required that a “pollution incident” be reported to the insurer within 120 days after it first became known to the insured. The insured spilled salt water over rural land on August 10, 2014. The insurer did not receive notice until 141 days after the insured discovered it. Despite the claims made aspect to the Pollution Extension Endorsement, the court held that the insurer must prove prejudice, based on a 1973 Order of the Texas State Board of Insurance (following approval of an ISO filing), requiring that all general liability policies issued or delivered in Texas contain an endorsement stating: “As respects bodily injury liability coverage and property damage liability coverage, unless the company is prejudiced by the insured’s failure to comply with the requirement, any provision of this policy requiring the insured to give notice of action, occurrence or loss, or requiring the insured to forward demands, notices, summons or other legal process, shall not bar liability under this policy."

Mississippi High Court To Address Voluntary Payment and Right To Recovery
The 5th Circuit, in Colony Ins. Co. v. First Specialty Ins. Corp., No. 17-60094 (5th Cir. Apr. 16, 2018) certified the following questions to the Supreme Court of Mississippi: “Mississippi's voluntary payment doctrine does not bar an insurer from recovering a settlement payment made under ‘compulsion’ or as the result of a settlement-related ‘legal duty.’ 1. Does an insurer act under ‘compulsion’ if it takes the legal position that an entity purporting to be its insured is not covered by its policy, but nonetheless pays a settlement demand in good faith to avoid potentially greater liability that could arise from a future coverage determination? 2. Does an insurer satisfy the ‘legal duty’ standard if it makes a settlement payment on behalf of a purported insured whose defense it has assumed in good faith, but whose coverage under the policy has not been definitively resolved, even if the insurer maintains that the purported insured is not actually insured under the policy?”


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