All Aboard! COVID-19 Securities Suit Sets Sail, Implicates D&O Insurance
April 27, 2020 —
Lorelie S. Masters, Michael S. Levine & Geoffrey B. Fehling - Hunton Insurance Recovery BlogIn a prior post, we predicted that novel coronavirus (COVID-19) risks could implicate D&O and similar management liability coverage arising from so-called “event-driven” litigation, a new kind of securities class action that relies on specific adverse events, rather than fraudulent financial disclosures or accounting issues, as the catalyst for targeting both companies and their directors and officers for the resulting drop in stock price. It appears that ship has sailed, so to speak, as Kevin LaCroix at D&O Diary reported over the weekend that a plaintiff shareholder had filed a securities class action lawsuit against Norwegian Cruise Line Holdings, Ltd. alleging that the company employed misleading sales tactics related to the outbreak.
The lawsuit alleges that the cruise line made false and misleading statements or failed to disclose in its securities filings sales tactics by the company that purported to provide customers with unproven or blatantly false statements about COVID-19 to entice customers to purchase cruises. Those allegations rely on two news articles reporting on the company sales practices in the wake of COVID-19: a March 11, 2020 Miami New Times article quoting leaked emails in which a cruise employee reportedly asked sales staff to lie to customers about COVID-19 to protect the company’s bookings; and a March 12, 2020 Washington Post article entitled, “Norwegian Cruise Line Managers Urged Salespeople to Spread Falsehoods about Coronavirus.” The lawsuit alleges that the company’s share price was cut nearly in half following these disclosures.
Reprinted courtesy of Hunton Andrews Kurth attorneys
Lorelie S. Masters,
Michael S. Levine and
Geoffrey B. Fehling
Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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Eighth Circuit Rejects Retroactive Application of Construction Defect Legislation
September 17, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe Eighth Circuit refused to retroactively apply an Arkansas statute establishing coverage for faulty workmanship. J-McDaniel Const. Co., Inc. v. Mid-Continent Cas. Co., 2014 U.S. App. LEXIS 14911 (8th Cir. Aug. 4, 2014).
The homeowners sued J-McDaniel for faulty workmanship in constructing their home. The defective construction work was performed by subcontractors. Mid-Continent refused to defend or indemnify J-McDaniel.
The insured sued Mid-Continent. The district court dismissed the claim pursuant to Essex Ins. Co. v. Holder, 261 S.W. 3d 456, 460 (Ark. 2008). In Essex, the Arkansas Supreme Court held that defective workmanship resulting in damages only to the work product itself was not an occurrence. Although The Arkansas legislature overruled Essex by statute, the district court found that the Arkansas case law barred retroactive application of the statute.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Are Defense Costs In Addition to Policy Limits?
December 02, 2015 —
Craig Martin – Construction Contractor AdvisorI recently had a discussion with an insurer about whether defense costs were included within the policy limits of a client’s coverage or in addition to policy limits. This was an important discussion because if costs of defense were included in the policy limits, my client was going to exceed those policy limits in a hurry. How would this situation play out with your insurance?
Fortunately, the majority of insurance policies, such as Commercial General Liability (CGL) policies, provide that defense costs are “in addition” to the policy limits. But some policies, often times referred to as “burning limits” policies, provide that cost of defense is included in the policy limits. This means that if you have $1,000,000.00 policy limits, your costs of defense will reduce that limit throughout the course of litigation.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Difficulty in Defending Rental Supplier’s Claim Under Credit Application
October 11, 2021 —
David Adelstein - Florida Construction Legal UpdatesIn construction, one of the easiest claims to prove from a burden of proof standpoint is that of a supplier, particularly a rental equipment supplier. Oftentimes, these claims are more in the realm of a collection claim because a rental supplier will generally be able to establish that a party opened an account with them, signed a credit application and personal guaranty, and equipment was rented and even delivered to a specific jobsite during set dates. Defending these claims is not so easy. And even if there is a defense as it relates to some amounts, there needs to be an upside challenging those amounts when factoring in the attorney’s fees, costs, and interest on the other amounts and on continuing the dispute.
An example of the difficulty in defending these claims from rental suppliers can be found in the recent case of Custom Design Expo, Inc. v. Synergy Rents, Inc., 2021 WL 4125806 (Fla. 2d DCA 2021). Here, a contractor rented equipment (e.g, forklifts) from a supplier. The equipment was rented on an open account and the contractor signed a personal guaranty. The supplier sued the contractor for about $81,000 that remained unpaid. The supplier appeared to waste no time and moved for summary judgment with an affidavit from its credit manager. The credit manager affirmed that the contractor executed a credit application for purposes of renting equipment on an open account, the application contained a personal guaranty, and the credit application formed the basis of a contract. The credit manager authenticated the credit application and affirmed that the contractor owed it about $81,000 in unpaid amounts for rental equipment that was furnished under the credit application.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Premises Liability: Everything You Need to Know
September 09, 2019 —
Bremer Whyte Brown & O'Meara LLPPremises liability is a relatively simple concept: landowners, lessors, and occupiers of land must keep their property safe and avoid causing harm to others. Premises liability lawsuits can arise from an array of circumstances including a slip and fall by an individual, a construction site accident, or an accident at occurs on a residential or commercial property. Under California law, everyone is responsible, not only for the result of his or her willful acts, but also for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property. California Civil Code 1714 (a). When an individual is injured on a property, the person harmed generally brings a lawsuit based upon a theory of negligence. Under this theory, an injured Plaintiff must prove the following:
- The defendant owned, leased, occupied, or controlled the property;
- The defendant was negligent in the use or maintenance of the property;
- The plaintiff was harmed; and
- The defendant’s negligence was a substantial factor in causing the plaintiff’s harm.
California Civil Jury Instructions 1000.
When evaluating a negligence claim under the theory of premises liability, there are several key elements for both a Plaintiff and a Defendant to consider. First, the landowner, occupier, or lessor of a premises is under a duty to exercise ordinary care in the use or maintenance of the premises to avoid exposing persons to an unreasonable risk of harm. Rowland v. Christian, 69 Cal. 2d 108 (1968). Essentially, a landowner or occupier is required to take steps to keep individuals on the property free from harm.
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Bremer Whyte Brown & O'Meara LLP
M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic
April 06, 2020 —
Lori Smith & Patrick Devine - White and Williams Taking Care of Business BlogIncreasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents.
Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date.
Reprinted courtesy of
Lori Smith, White and Williams and
Patrick Devine, White and Williams
Ms. Smith may be contacted at smithl@whiteandwilliams.com
Mr. Devine may be contacted at devinep@whiteandwilliams.com
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Insurer Prevails on Summary Judgment for Bad Faith Claim
July 16, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe court granted summary judgment to the insurer on the insured's claim for bad faith due to denial of the claim. Treigle v. State Farm Fire and Cas. Ins. Co., 2023 U.S. Dist. LEXIS 87786 (E.D. La. May 19, 2023).
The insured's home sustained serious water damage due to Hurricane in August 2021. Her policy with State Farm excluded losses related to surface water and mold.
The insured reported the loss from Hurricane Ida after she returned to her home and found two inches of standing water in the house. State Farm advised the insured to hire a water mitigation company to help with the water. The insured contacted 7 Brothers Company to start mitigation, including tearing out the disposing of wet building materials.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Forget Backyard Pools, Build a Swimming Pond Instead
June 17, 2015 —
Mark Ellwood – BloombergNo self-respecting Californian can let the summer pass without a dip in the backyard—pools are as much a part of culture as the 49ers, Schwarzenegger, and dire earthquake warnings.
Now, though, there’s something unseemly about pooling so much water for the occasional swim—enough, in fact, to generate its own hashstag, #droughtshaming. There’s one surefire way to mitigate opprobrium: Build a natural swimming pond that’s specifically designed to minimize environmental impacts (or the cash premiums required to keep it up).
Typical is one example in Sonoma County, where the the water seems to leak down from the rock perched on the ridge. Like a natural spring, it trickles and tumbles, pooling into water features as it falls; one feature is full of aquatic plants and flowers, while another is a swimming hole—clear, cool and inviting. It was built by Dave Whitney, chief executive officer of Eco Solutions, a pioneer in engineering such eco swimming ponds. These dipping pools use natural filtration instead of chlorine pellets to keep the water clean.
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Mark Ellwood, Bloomberg
