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Top Developments – November 2022

SPOTLIGHT: Third Circuit Court of Appeals Affirms No Coverage for Sex Trafficking Claims - In Nautilus Insurance Co. v. Motel Management Services Inc., the Court of Appeals granted a motion for judgment on the pleadings...more

Federal Courts Reject Insurers’ Attempts to Recoup Defense Costs Expended Under Reservation of Rights

In situations where there is a dispute over a duty to defend, an insurer may provide a defense to its insured, subject to a reservation of rights, to not only deny coverage for a defense, but also to file a declaratory...more

Florida Court Holds Ignorance Is No Defense in Case of Late Notice to Insurer

It’s common knowledge that a lawsuit must be timely reported to an insurer. But what exactly constitutes timely notice? The United States Court for the Middle District of Florida recently examined this question in National...more

Fifth Circuit -- Damage to Property Beyond Insured’s Product/Work Not Precluded By ‘Your Product/Your Work Exclusion’

On January 11, 2022, the United States Court of Appeals for the Fifth Circuit issued its decision in Siplast, Incorporated v. Employers Mutual Casualty Company, 2022 U.S. App. LEXIS 795 (5th Cir. Jan. 11, 2022), finding that...more

Alabama Federal Magistrate Recommends Dismissal of Construction Defect Declaratory Judgment Action Due to Expanded Duty to Defend...

While the starting point for assessing an insurer’s duty to defend requires comparing the allegations contained within a complaint to the language contained within the insured’s policy, the majority of states require an...more

Eastern District of Pennsylvania Confirms Carrier Owes No Duty to Defend Against Claims for Faulty Workmanship

On March 17, 2021, the Eastern District of Pennsylvania issued its decision in Estate Chimney & Fireplace v. IFG Companies & Burlington Insurance Company, 2021 U.S. Dist. LEXIS 50360 (E.D. Pa. March 17, 2021), finding that an...more

Court Addresses When Duty to Defend Ends

There are certain generally held principles regarding an insurer’s duty to defend. One of these principles is that an insurer has a duty to defend its insured if the complaint states a claim that potentially falls within the...more

Insurer Owes Defense Despite "Extrinsic Evidence," New York Court Holds

An insurer’s duty to defend generally is based on a comparison of the complaint against the insured and the insurance policy language. However, in some jurisdictions, an insurer may consider "extrinsic" evidence — information...more

Pennsylvania Federal Court Holds Insurer Can’t Use Insured’s Admission to Withdraw Defense

It has long been the rule, under Pennsylvania law, that an insurer's duty to defend is determined "solely" by the allegations in the "four corners" of the complaint against the insured. Kvaerner Metals Div. of Kvaerner U.S.,...more

Illinois Appellate Court Clarifies What Is and Is Not an “Occurrence” in the Construction Defect Context

On December 31, 2019, the First District Illinois Appellate Court issued its decision in Owners Insurance Company v. Precision Painting & Decorating Corporation, clarifying what does and does not constitute “property damage”...more

Applying Mighty Midgets, NY Court Awards Legal Expenses to Insureds Which Defeated Insurer’s Coverage Claims

Is an insured (or putative insured) entitled to recover its legal expenses if it is successful in coverage litigation? In some states, no. In many other states, yes – based on either a statute or common law. In New York...more

Indiana Federal Court Holds No Coverage for $50M Default Judgment for Lack of Timely Notice of Class Action

In Greene v. Kenneth R. Will, a CGL insurer recently prevailed in a declaratory judgment action arising from an underlying class action alleging pollution and nuisance claims against the insured, VIM Recycling LLC, an...more

Federal Court Asks South Dakota Supreme Court to Decide Whether Injunction Costs Are “Damages,” Adopts Restatement’s Position on...

Do costs associated with complying with an injunction constitute covered “damages?” The U.S. District Court for the District of South Dakota recently certified that question to the South Dakota Supreme Court, in Sapienza v....more

New York Appellate Court Holds Insurer’s Failure to Defend Does Not Constitute a “Reasonable Excuse” Required to Overturn Judgment

A recent opinion by the New York Supreme Court, Appellate Division (Second Department) highlights the potential risks for an insurer leaving an insured unrepresented while the insurer pursues other parties or insurers who may...more

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