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

August 26, 2019 — Anthony L. Miscioscia and Timothy A. Carroll - White and Williams LLP
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 Indiana-based waste-recycling facility.[1] “[T]his case has some whiskers on it,” the Indiana federal district court recounted in its exhaustive decision granting the insurer relief. The court relieved the insurer of indemnifying a $50 million default judgment against the insured, which, the court observed, “proved to be a bad neighbor” and “nuisance in both the legal and colloquial sense.” The court held that the insured failed to provide timely notice of the class action. “The judgment against the [insured] came about when a group of nearby homeowners decided that they had had enough of VIM’s polluting behavior and brought this class action to recover damages for environmental violations, nuisance and negligence based on the impact of the waste facility on their homes and property,” the court explained. Eventually, the court entered a default judgment against the insured for $50,568,750, plus an award of $273,339.85 in attorney’s fees. Because the insured was “judgment-proof,” the class action plaintiffs “aligned” with the insured “hoping to collect on their monumental judgment” from the insured’s CGL insurer. Within a few weeks’ time, the class action plaintiffs sued the insurer seeking a declaration of coverage for the default judgment against the insured. Reprinted courtesy of Anthony L. Miscioscia, White and Williams LLP and Timothy A. Carroll, White and Williams LLP Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com Mr. Carroll may be contacted at carrollt@whiteandwilliams.com Read the court decision
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Nader Eghtesad v. State Farm General Insurance Company

September 28, 2020 — Michael Velladao - Lewis Brisbois
In Eghtesad v. State Farm Gen. Ins. Co., 51 Cal.App.5th 406 (June 29, 2020), the California Court of Appeal reversed the trial court’s entry of judgment in favor of State Farm General Insurance Company (“State Farm”) based on an order sustaining a demurrer without leave to amend regarding a complaint filed by Nader Eghtesad. Mr. Eghtesad, representing himself, filed a form complaint checking a box for breach of contract. The complaint alleged two paragraphs contending that State Farm had acted in bad faith and concealed benefits due under a policy issued to a former tenant who rented space in a building owned by Eghtesad. Eghtesad was an additional insured under the tenant’s policy. In that regard, the building was damaged during the time that the building was rented and Eghtesad tendered a claim under the State Farm policy contending that he was an additional insured pursuant to the terms of the lease with the tenant. According to Eghtesad, State Farm advised him that he could only make a claim for slander against the former tenant and that coverage was not afforded for his property damage claim. After Eghtesad filed his form complaint, State Farm demurred to the complaint and argued that it did not state facts supporting a cause of action for breach of contract. Ultimately, the trial court agreed with State Farm and entered an order sustaining the demurrer without leave to amend, such that a judgment was entered in State Farm’s favor. Due to health reasons, Eghtesad was never able to file an opposition to the demurrer, despite two extensions of time provided by the trial court intended to allow Eghtesad time to retain counsel and to recover from injuries sustained as a result of an automobile accident. Read the court decision
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Reprinted courtesy of Michael Velladao, Lewis Brisbois
Mr. Velladao may be contacted at Michael.Velladao@lewisbrisbois.com

No Coverage Under Property Policy With Other Insurance and Loss Payment Provisions

September 17, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The court determined that the other insurance and loss payment provisions relieved the insurer of coverage obligations. Moroney Body Works, Inc. v. Central Ins. Co., 2015 Mass. App. LEXIS 97 (Aug. 6, 2015). A fire destroyed Moroney's custom-built bookmobile that had just been completed. Moroney had two policies: a commercial property policy issued by Central, and a garage insurance policy issued by Pilgrim Insurance Company. Central denied liability for the bookmobile. Pilgrim covered the cost of repairing the bookmobile. It paid $12,449.82 based on the appraiser's estimate of the repair costs. Moroney thought this amount was inadequate given its own estimate of the repair costs. Moroney sued both insurers. Pilgrim settled by paying Moroney an additional amount which, when added to Pilgrim's earlier payment, resulted in Moroney receiving more than the repair cost. Moroney and Central both moved for summary judgment. The trial court granted Moroney's motion. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

Valerie A. Moore and Christopher Kendrick are JD Supra’s 2020 Readers’ Choice Award Recipients

July 13, 2020 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
Haight is thrilled to announce that Valerie A. Moore and Christopher Kendrick are receiving JD Supra’s 2020 Readers’ Choice Awards. The award acknowledges top authors and firms for their thought leadership in key topics during 2019. This is Valerie’s third JD Supra Readers’ Choice Award and Christopher’s second. Specifically, Valerie and Chris receive the following recognition for the level of visibility and engagement our firm and authors attained in 2019, from among thousands of others, with readers of these topics: Valerie Moore – a top author in Insurance Christopher Kendrick – a top author in Insurance JD Supra’s Readers Choice Awards The Readers’ Choice Awards recognize top authors and firms who were read by C-suite executives, in-house counsel, media and other professionals across the JD Supra platform during 2019. Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP Mr. Kendrick may be contacted at ckendrick@hbblaw.com Ms. Moore may be contacted at vmoore@hbblaw.com Read the court decision
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Fourth Circuit Finds Insurer Reservation of Rights Letters Inadequate to Preserve Coverage Defenses Under South Carolina Law

January 17, 2023 — Jason Taylor - Traub Lieberman Insurance Law Blog
In Stoneledge at Lake Keowee Owners Ass'n v. Cincinnati Ins. Co., 2022 U.S. App. LEXIS 34292 (D.S.C. Dec. 13, 2022), the Fourth Circuit Court of Appeals addressed the adequacy of reservation of rights letters issued by Builders Mutual Insurance Company (“Builders Mutual”) and Cincinnati Insurance Company (“Cincinnati”) to their insureds, Marick Home Builders, LLC (“Marick”) and Rick Thoennes (“Thoennes”), Marick’s managing member, for an underlying construction defect lawsuit. In short, the Fourth Circuit found that the reservation letters were inadequate to preserve the insurers’ coverage defenses because they did not sufficiently explain the basis of the carriers’ position. Stoneledge, a homeowners association, managed a community of 80 townhomes on South Carolina’s Lake Keowee. In 2009, Stoneledge brought suit against Marick and Thoennes, among other defendants, alleging construction defects in the townhomes that resulted in water intrusion and other physical damage. Marick and Thoennes held commercial general-liability policies through Cincinnati and Builders Mutual covering, in relevant part, “property damage” as defined by the policies. Builders Mutual issued policies covering the period from January 2004 to October 2007, and Cincinnati issued policies covering the period from April 2008 to April 2012. After Marick notified the insurers of the underlying action, Builders Mutual sent Marick two reservation of rights letters, one in May 2009 and one in July 2009. Cincinnati sent Marick one reservation of rights letter in March 2010. In March 2014, Stoneledge brought a declaratory-judgment action against Cincinnati seeking coverage for a judgment entered in the underlying action. The insurers removed the case to federal court, and in September 2016, Stoneledge amended its complaint, adding Builders Mutual as a defendant and seeking coverage for additional damages pursuant to a settlement agreement entered into by Stoneledge, Marick, Thoennes. The district court granted Stoneledge's motion for summary judgment, primarily on the ground that the insurers failed to reserve the right to contest coverage. The insurers appealed to the Fourth Circuit, which affirmed. Read the court decision
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Reprinted courtesy of Jason Taylor, Traub Lieberman
Mr. Taylor may be contacted at jtaylor@tlsslaw.com

Hunton Andrews Kurth’s Insurance Recovery Practice, Partners Larry Bracken and Mike Levine Receive Band 1 Honors from Chambers USA in Georgia

June 14, 2021 — Walter J. Andrews - Hunton Insurance Recovery Blog
The 2021 Chambers and Partners rankings for Georgia insurance recovery practices and lawyers are out and Hunton Andrews Kurth has received top honors. The rankings include Hunton Andrews Kurth’s Insurance Recovery practice and partners Lawrence J. Bracken II and Michael S. Levine, with all receiving Band 1 honors – the organization’s top-tier ranking. “The top-level ranking of our practice in Georgia, and the work that Larry and Mike bring to our clients in Georgia, specifically, is emblematic of the work our team is doing nationwide,” said Insurance Recovery Practice Head, Walter J. Andrews. “The Firm and I could not be more proud,” he added. Chambers and Partners is an independent research company operating across more than 200 jurisdictions delivering detailed rankings and insight into the world’s leading lawyers. Its rankings are viewed as one of the most credible and reliable industry benchmarks. Read the court decision
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Reprinted courtesy of Walter J. Andrews, Hunton Andrews Kurth
Mr. Andrews may be contacted at wandrews@HuntonAK.com

New York Labor Laws and Action Over Exclusions

February 01, 2021 — Theresa A. Guertin & Ashley McWilliams - Saxe Doernberger & Vita, P.C.
One of the most important methods for shifting risk in the construction context is insurance coverage. Upstream parties such as owner/developers and general contractors typically require that their downstream subcontractors who perform work on their properties or projects bring specific insurance to the table. These insurance requirements have a twofold purpose: protect the upstream parties, through additional insured coverage, from liabilities caused by the subcontractor; and protect the downstream parties by ensuring that they have adequate insurance for their own potential liabilities. In New York, subcontractor insurance coverage can have some surprising terms which frustrate risk transfer. Numerous policies contain “Action Over” exclusions, which bar coverage for one of the most significant exposures faced by owner-developers and general contractors: bodily injury lawsuits brought by subcontractor employees. It is critical that upstream parties understand the unique impact of New York’s labor laws on the insurance market and be prepared to identify and request removal of Action Over exclusions on subcontractor insurance policies. Reprinted courtesy of Theresa A. Guertin, Saxe Doernberger & Vita, P.C. and Ashley McWilliams, Saxe Doernberger & Vita, P.C. Ms. Guertin may be contacted at TGuertin@sdvlaw.com Ms. McWilliams may be contacted at AMcWilliams@sdvlaw.com Read the court decision
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Build Back Better Includes Historic Expansion of the Low-Income Housing Tax Credit Program

December 20, 2021 — James M. Grosser & David W. Wright - Gravel2Gavel Construction & Real Estate Law Blog
On November 19, 2021, the U.S. House of Representatives passed the Build Back Better Act (H.R. 5376), a bill that represents a large portion of the Biden-Harris Administration’s agenda. Among other spending and tax measures, the bill includes an unprecedented expansion of the Low-Income Housing Tax Credit (LIHTC) program. Four proposals are headlining this expansion:

Increasing the 9% LIHTC allocation cap by 10% plus inflation annually from 2022 to 2024. With this increase, the 2024 LIHTC allocation cap will rise to $3.97 per capita and a small state minimum of around $4.58 million, constituting a 41 percent increase in allocable LIHTC over current levels. The allocation cap would then decrease to $2.65 per capita and a small state minimum of $3.12 million in 2025 and would thereafter be indexed to inflation from the 2025 baseline.
Reducing the 50% threshold for 4% tax-exempt bond-financed projects to 25% for five years, beginning in 2022.

Reprinted courtesy of James M. Grosser, Pillsbury and David W. Wright, Pillsbury Mr. Grosser may be contacted at james.grosser@pillsburylaw.com Read the court decision
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