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North Carolina Supreme Court Addresses “Trigger of Coverage,” Allocation and Exhaustion-Related Issues Arising Out of Benzene-Related Claims

January 04, 2023 — White and Williams LLP
On December 16, 2022, the North Carolina Supreme Court decided Radiator Specialty Co. v. Arrowood Indem. Co., 2022 N.C. LEXIS 1122 (Dec. 16, 2022), in which it addressed coverage issues arising out of claims by individuals alleging injury from exposure to benzene contained in the insured’s products. Affirming in part and reversing in part the intermediate appellate court’s decision, the court held: (1) an “exposure trigger” applied; (2) defense and indemnity costs were subject to pro-rata allocation; and (3) vertical exhaustion applied to the duty to defend under certain umbrella policies. Two justices concurred in part and dissented in part. I. Background In Radiator Specialty, the insured (RSC) was named in hundreds of underlying suits arising from individual plaintiffs’ alleged exposure to benzene contained in its products. Between 1971 and 2012, RSC was insured under primary, umbrella and excess liability policies issued by various insurers. In 2013, RSC sued the insurers in North Carolina state court, seeking coverage for approximately $45 million in defense and indemnity costs incurred for the underlying claims. In 2016, the trial court decided motions for summary judgment on a number of coverage issues. Following a bench trial in 2018, the trial court entered final judgment, which required the insurers to reimburse $1.8 million of RSC’s past costs. The rulings were appealed to the North Carolina Court of Appeals, which issued a decision in 2020. In 2021, the North Carolina Supreme Court granted RSC’s and certain insurers’ petitions for discretionary review of the Court of Appeals’ decision. Read the court decision
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Reprinted courtesy of White and Williams LLP

BP Is Not an Additional Insured Under Transocean's Policy

April 01, 2015 — Tred R. Eyerly – Insurance Law Hawaii
Responding to a certified question from the Fifth Circuit, the Texas Supreme Court determined that BP was not an additional insured under Transocean's liability policy and had no coverage under the policy for the deaths caused by the explosion of the Deepwater Horizon. In re Horizon, 2015 Tex. LEXIS 141 (Tex. Feb. 13, 2015). We have previously posted on this case in the federal courts here and here. Transocean owned the Deepwater Horizon, a mobile offshore drilling unit operating in the Gulf of Mexico pursuant to a contract with BP. After an explosion in April 2010, the rig caught fire, killing eleven crew members. Both Transocean and BP sought coverage under Transocean's primary and excess policies. Although they did not dispute that BP was an additional insured, Transocean and its insurers argued that BP was not entitled to coverage for pollution-related liabilities arising from subsurface oil releases in connection with the Deepwater Horizon accident. 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

Top 10 Insurance Cases of 2020

January 11, 2021 — Grace V. Hebbel, Andrew G. Heckler & Jeffrey J. Vita - Saxe Doernberger & Vita P.C.
COVID-19 business interruption coverage litigation may have stolen the show in 2020, but those cases should not eclipse other important insurance coverage cases decided throughout this past year. As the courts nationwide struggled with the insurance coverage implications of COVID-19 related business loss, other significant coverage decisions were overshadowed. Read on to learn about how computer glitches, biometric privacy, and a falling wheelbarrow have all played a role in\ shaping some of the most interesting and influential insurance coverage decisions of 2020, as well as get a sneak peek at the key coverage decisions looming in 2021. Enjoy! 1. Nash Street, LLC v. Main Street America Assurance Company, No. 20389, 2020 WL 5415325 (Conn. 2020) Do exclusions k(5) and k(6) absolve an insurer of its duty to defend its insured for allegations of faulty workmanship? Reprinted courtesy of Grace V. Hebbel, Saxe Doernberger & Vita P.C., Andrew G. Heckler, Saxe Doernberger & Vita P.C. and Jeffrey J. Vita, Saxe Doernberger & Vita P.C. Ms. Hebbel may be contacted at GHebbel@sdvlaw.com Mr. Heckler may be contacted at AHeckler@sdvlaw.com Mr. Vita may be contacted at JVita@sdvlaw.com Read the court decision
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Texas Allows Wide Scope for Certificate of Merit

January 07, 2025 — Lian Skaf - The Subrogation Strategist
The purpose of certificate of merit (sometimes referred to as affidavit of merit) statutes is to identify frivolous claims before the court wastes time and resources during litigation. More common in medical malpractice cases, several states have enacted similar requirements for professional negligence claims dealing with construction-related issues. While a subrogation attorney should not be bringing a frivolous case to suit anyway, the requirement adds another step in the process that plaintiffs need to properly navigate. Chapter 150 of the Texas Civil Practice and Remedies Code requires that in an action arising out of professional services by a licensed or registered professional, claimants must file an affidavit from a qualified expert attesting to the theories of recovery, the negligence and the factual basis for the claims. The expert must be competent, have the same professional license or registration as the defendant and practice in the area of practice of the defendant. In Janis Smith Consulting, LLC v. Rosenberg, No. 03-23-00370-CV, 2024 Tex. App. LEXIS 7961, the Court of Appeals of Texas, Third District (Court of Appeals) addressed a challenge from the defendant as to the sufficiency of the plaintiff’s certificate of merit in an interlocutory appeal. The Court of Appeals affirmed the lower court’s dismissal of the defendant’s motion to dismiss based on the allegedly improper certificate of merit, holding that the plaintiff’s expert was sufficiently qualified to certify the legitimacy of the case. Read the court decision
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Reprinted courtesy of Lian Skaf, White and Williams LLP
Mr. Skaf may be contacted at skafl@whiteandwilliams.com

Coverage Denied for Insured's Defective Product

October 15, 2014 — Tred R. Eyerly – Insurance Law Hawaii
The court found there was no coverage obligations for the insured's defective product. Titanium Indus., Inc. v. Federal. Ins. Co., 2014 WL 4428324 (N.J. Super. Ct. App. Div. Sept. 10, 2014). The insured, Titanium Industries, supplied titanium bar materials to Biomet Manufacturing Corporation. Biomet manufactured orthopedic implants and devises. The titanium was used to manufacture screws to incorporate into Biomet's products. Biomet notified the insured of a potential defect in some of the titanium material, described as "alloy segregation," i.e., the failure of alloys in a metal to completely melt, causing the alloy to separate and undermine the strength of the finished product. The insured and Biomet negotiated a settlement, which included lost profits and the cost of returning the titanium. 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

Suppliers of Inherently Dangerous Raw Materials Remain Excluded from the Protections of the Component Parts Doctrine

December 02, 2015 — Leah B. Mason & Michael J. Worth – Haight Brown & Bonesteel, LLP
In Brady v. Calsol, Inc. 2015 No. B262028, the California Court of Appeal, Second District, reversed summary judgment for a raw materials supplier where there was a triable issue of fact as to whether the benzene levels contained in the supplier’s mineral spirits could have caused plaintiffs’ leukemia. Plaintiffs were mechanics Ernest Brady and David Gibbs, who used Safety-Kleen solvent to degrease automotive parts. Brady and Gibbs were diagnosed with leukemia allegedly caused by exposure to Safety-Kleen solvent during the course of their employment. In 2008, Plaintiffs sued Calsol, Inc., a distributor of mineral spirits for the ultimate manufacturer, Safety-Kleen Systems, Inc. Plaintiffs asserted negligence and strict products liability claims. Specifically, plaintiffs alleged that benzene, a carcinogen found in mineral spirits, caused their leukemia. Benzene is only carcinogenic to humans at certain levels. The parties dispute the levels of benzene found in the mineral spirits supplied to Safety-Kleen. Calsol contended the benzene levels were present only in low concentrations. Plaintiffs alleged the benzene levels were capable of causing injury. Reprinted courtesy of Leah B. Mason, Haight Brown & Bonesteel LLP and Michael J. Worth, Haight Brown & Bonesteel LLP Ms. Mason may be contacted at lmason@hbblaw.com Mr. Worth may be contacted at mworth@hbblaw.com Read the court decision
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California Supreme Court Allows Claim Under Unfair Competition Statute To Proceed

October 16, 2013 — Tred Eyerly — Insurance Law Hawaii
The California Supreme Court determined that insurance practices violating the state's Unfair Insurance Practices Act (UIPA) could support a claim under the state's unfair competition law (UCL). Zhang v. Superior Court, 57 Cal. 4th 353 (2013). Zhang purchased a CGL policy from California Capital Insurance Company. She sued California Capital in a dispute over coverage for fire damage to her commercial property. The complaint included causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the UCL. In her UCL claim, Zhang alleged that California Capital had "engaged in unfair, deceptive, untrue, and/or misleading advertising" by promising to provide timely coverage in the event of a compensable loss, when it had no intention of paying the true value of the insureds' covered claims. Zhang specifically alleged unreasonable delays causing deterioration of her property; withholding of policy benefits; refusal to consider cost estimates; misinforming her as to the right to an appraisal; and falsely telling her mortgage holder that she did not intend to repair the property, resulting in foreclosure proceedings. Read the court decision
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Reprinted courtesy of Tred Eyerly
Tred Eyerly can be contacted at te@hawaiilawyer.com

Use It or Lose It: California Court of Appeal Addresses Statutes of Limitations for Latent Construction Defects and Damage to Real Property

August 02, 2017 — Omar Parra & Jesse M. Sullivan - Haight Brown & Bonesteel LLP
The First Appellate District of the California Court of Appeal recently confirmed California’s latent defect statute of limitations, codified in California Code of Civil Procedure section 337.15, bars only claims based on construction defects. Estuary Owners Association v. Shell Oil Company, No. A145516, (Cal. Ct. App. July 26, 2017). The Court also reemphasized that under California’s three-year statute of limitations for damage to real property, delineated in California Code of Civil Procedure section 338(b), the actual and constructive knowledge of the prior landowner is imputed to the current landowner. Estuary Owners Association concerned the development and construction of a 100-unit condominium by Signature at the Estuary, LLC (“Signature”) on land Shell Oil Company (“Shell”) previously used as a fuel distribution terminal. Construction of the condominiums was completed in 2006. In 2008, it was discovered that residual concentrations of petroleum related chemicals remained in the soil, soil gas, and groundwater beneath the development. Later that year, Signature revealed that the condominiums had been constructed with moisture barriers beneath the building slabs instead of the vapor/gas barriers called for in the corrective action plan. Reprinted courtesy of Omar Parra, Haight Brown & Bonesteel LLP and Jesse M. Sullivan, Haight Brown & Bonesteel LLP Mr. Parra may be contacted at oparra@hbblaw.com Mr. Sullivan may be contacted at jsullivan@hbblaw.com Read the court decision
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