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Vol. 8 - Issue 3
March 20, 2019

Ohio Supreme Court To Address Allocation
Ohio’s top court has agreed to answer the following question: “Whether an insured is permitted to seek full and complete indemnity, under a single policy providing coverage for ‘those sums’ the insured becomes legally obligated to pay because of’property damage that takes place during the policy period, when the property damage occurred over multiple policy periods.”  Lubrizol Advanced Materials, Inc. v. Natl. Union Fire Ins. Co., No. 2018-1815 (Ohio Mar. 6, 2019).

South Carolina High Court Allows Insurer To Sue Defense Counsel For Malpractice 
In what may be the longest decision I’ve ever seen addressing this issue, the Supreme Court of South Carolina held in Sentry Select Ins. Co. v. Maybank Law Firm, LLC, No. 27865 (S.C. Mar. 6, 2019) that an insurer may maintain a malpractice action against counsel hired to represent its insured.  The court elaborated: “However, we will not place an attorney in a conflict between his client’s interests and the interests of the insurer.  Thus, the insurer may recover only for the attorney’s breach of his duty to his client, when the insurer proves the breach is the proximate cause of damages to the insurer.  If the interests of the client are the slightest bit inconsistent with the insurer’s interests, there can be no liability of the attorney to the insurer, for we will not permit the attorney’s duty to the client to be affected by the interests of the insurance company.  Whether there is any inconsistency between the client’s and the insurer's interests in the circumstances of an individual case is a question of law to be answered by the trial court.”  

PA Construction Defect: Indalex Controls Over Kvaerner (Product-Based Claim)
This is inside baseball except for those who follow Pennsylvania law concerning coverage for construction defects.  For those who do, this will make sense.  In Brayman Constr. Corp. v. Westfield Ins. Co., No. 18-00457 (W.D. Pa. Mar. 6, 2019), the court held that Kvaerner did not apply, and, instead, Indalex dictated an “occurrence:” “Here, in its original demand, Brayman alleged that Gavco breached the subcontract and its warranties by delivering defective and nonconforming concrete to the project, particularly with respect to the drilled shafts of Piers 1, 3, 5 and 6 of the bridge structure.  Further, Brayman alleged that Gavco’s defective concrete negatively impacted the project and caused Brayman damages in the drilled shafts of the bridge structure.  These allegations support that Gavco’s defective concrete caused damage to something other than the concrete itself, namely the drilled shafts. Thus, the original and amended demand alleged a product-based tort claim, different from the holding in Kvaerner and the other cases cited by Westfield, which involved claims for faulty workmanship and/or were decided before Indalex. . . . Brayman has sufficiently alleged that Brayman claimed against Gavco for coverage for an ‘occurrence sufficient to support a duty to defend and to indemnify under the holding in Indalex.”

Peach Clobber For Policyholder: Pollution Exclusion Applies To Welding Fumes 
In a decision about as surprising as the Globetrotters beating the Washington Generals, the Eleventh Circuit, applying Georgia law, held that a pollution exclusion precluded coverage for bodily injury caused by occupational exposure to welding fumes containing iron.  Based on existing Georgia law, the court’s decision in Evanston Ins. Co. v. Sandersville R.R. Co., No. 17-14487 (11th Cir. Feb. 8, 2019), that welding fumes, for purposes of the pollution exclusion, unambiguously qualify as an irritant or contaminant, should not leave anyone flabbergasted. 

WSJ: California Market For Homeowner’s Policies Challenging 
This lead from the front page of the February 11, 2019 Wall Street Journal: “Californians who want to insure their homes against the next wildfire are paying a price for two years of record-breaking blazes.  Home-insurance companies in the Golden State are canceling some policies, refusing to sell new ones in certain areas and applying for rate increases as they look to reduce wildfire risk.”  [Nicole Friedman; “After Fires, Insurance Holders Struggle”]    

Need For Insurer To Reserve Rights For Each Insured
In Auto-Owners Ins. Co. v. Cribb, No. 17-106 (N.D. Ga. Feb. 5, 2019), the Northern District of Georgia made clear that an insurer’s rights must be reserved for each insured individually.  And, of significance, doing something I’ve never seen before in an ROR case, the court pointed to policy language to support this point: “Here, the policy was issued to ‘Insured: Brian Thurman & Richard Davis DBA BR Mountain Homes, LLC’.  Each insured is treated separately for purposes of coverage, by way of the ‘separation of insureds’ provision in the policy:  [text of provision].”


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