Insurance Law Alert

October 2017

In This Issue
Pennsylvania Supreme Court Rejects Motive Requirement For Statutory
Bad Faith Claims
Addressing a matter of first impression, the Supreme Court of Pennsylvania rejected an“ill-will” or motive requirement for statutory bad faith claims against an insurer. Rancosky
v. Washington National Ins. Co., 2017 WL 4296351 (Pa. Sept. 28, 2017). (Click here forfull article)“Simpson Thacher
has many litigators
who are very experienced
in handling complex,
multi-faceted litigation
involving novel issues.”–Benchmark 2018quoting a client

No Coverage Where Policyholder Failed To Meet Its Burden To Allocate
Damages, Says Second Circuit
The Second Circuit ruled that although a liability policy covered a portion of losses arising fromfaulty construction claims, the insurer had no duty to indemnify based on the policyholder’sinability to allocate the underlying jury verdict between covered and non-covered losses. Univo
v. Harleysville Worcester Ins. Co., 2017 WL 4127538 (2d Cir. Sept. 19, 2017). (Click here forfull article)

Second Circuit Rules That Statutory Prejudgment Interest Begins To
Accrue On Date Of Sworn Loss
The Second Circuit ruled that statutory prejudgment interest begins to accrue when a sworn
proof of loss is submitted, not when the policyholder has fulfilled conditions precedent tocoverage. Warehouse Wines and Spirits v. Travelers Prop. Cas. Co. of Am., 2017 WL 4227943(2d Cir. Sept. 21, 2107). (Click here for full article)

Applying Nevada Law, Second Circuit Rules That Insured v. Insured
Exclusion Unambiguously Bars Coverage For Director’s Suit
The Second Circuit ruled that under Nevada law, an insured v. insured exclusion bars coverage
for a suit brought by a former director regardless of whether the suit was brought in an
individual or fiduciary capacity. Intelligent Digital Systems, LLC v. Beazley Ins. Co., Inc., 2017
WL 4127540 (2d Cir. Sept. 19, 2017). (Click here for full article)

Eleventh Circuit Deems Reservation Sufficient And Rejects Coverage-ByEstoppel Argument
The Eleventh Circuit ruled that reservation of rights letters unambiguously and effectively
disclaimed coverage and that the insurer was not estopped from denying coverage. North
American Specialty Ins. Co. v. Bull River Marina, LLC, 2017 WL 279211 (11th Cir. Sept. 27,2017). (Click here for full article)

Simpson Thacher & Bartlett LLP

1

New Jersey Court Rules That Waste Disposal At Multiple Landfills Gives
Rise To Separate Occurrences
A New Jersey district court ruled that a policyholder’s disposal of waste at numerous landfill
sites constitutes multiple occurrences. Penn Nat’l Ins. Co. v. Crum & Forster Ins. Co., 2017 WL
3835667 (D.N.J. Sept. 1, 2017). (Click here for full article)

Eleventh Circuit Rules That Multiple Personal Injuries Are Related Claims
Subject To A Single Per Claim Limit
The Eleventh Circuit ruled that multiple personal injuries caused by the unsanitary repackingof eye medication constituted a single “claim” under an insurance policy. Amercian Cas. Co. of
Reading, PA v. Belcher, 2017 WL 4276057 (11th Cir. Sept. 27, 2017). (Click here for full article)

Maryland Court Addresses Period Of Lead-Related Damages Under Pro
Rata Allocation
A Maryland federal district court ruled that for purposes of calculating an insurer’s pro rata,
time-on-the-risk indemnity obligation for lead paint-related injuries, the “entire period ofdamages” is calculated by looking at when the claimant moved into the premises and when hepermanently vacated the premises. Penn. Nat’l Mut. Cas. Ins. Co. v. Jacob Dackman & Sons,
LLC, 2017 WL 4098749 (D. Md. Sept. 14, 2017). (Click here for full article)

New York Appellate Court Finds All-Risk Coverage Where Cause Of
Damage Began Before Policy Inception
A New York appellate court ruled that an insurance policy covered losses arising from themalfunction of a turbine engine, notwithstanding that the mechanical issues were caused bya turbine crack that had begun before the policy incepted. TransCanada Energy USA, Inc. v.
National Union Fire Ins. Co. of Pittsburgh, PA, 2017 WL 4125652 (N.Y. App. Div. 1st Dep’t
Sept. 19, 2017). (Click here for full article)

Texas Court Rules That Arbitrability Issues Are Within Court’s Purview
And May Be Addressed Prior To Personal Jurisdiction
Addressing a matter of first impression under Texas law, a Texas district court ruled that
arbitrability of a dispute is a matter for the court to decide and is a procedural issue that canbe addressed prior to personal jurisdiction arguments. Halliburton Energy Services, Inc. v.
Ironshore Specialty Ins. Co., 2017 WL 4536089 (S.D. Tex. Oct. 5, 2017). (Click here for fullarticle)2Bad Faith Alert:

Pennsylvania Supreme Court
Rejects Motive Requirement For
Statutory Bad Faith Claims
Addressing a matter of first impression, theSupreme Court of Pennsylvania rejected an“ill-will” or motive requirement for statutory
bad faith claims against an insurer. Rancosky
v. Washington National Ins. Co., 2017 WL
4296351 (Pa. Sept. 28, 2017).

The dispute arose out of health carecoverage for a postal employee with cancer.
The employee sued the insurer, alleging
breach of contract and bad faith underPennsylvania’s bad faith statute, 42 Pa. C. S.
§ 8371. Following a jury trial on the breach ofcontract claim (which resulted in an award in
the employee’s favor), a trial court ruled thatbad faith had not been established. The court
noted that although the insurer was “sloppy
and even negligent” in its claim handling, theemployee had failed to demonstrate that theinsurer lacked a reasonable basis for denying
coverage. In particular, the trial court heldthat the employee failed to prove that theinsurer acted out of “some motive or selfinterest or ill will.”
A Superior Court panel vacated the badfaith claim judgment, deeming the insurer’s
subjective intent irrelevant to whether the
insurer “lacked a reasonable basis for denying
benefits.” The Superior Court further held,
based on its independent review of the record,that the insurer did not have a reasonablebasis for denying benefits under the policy.
The Superior Court remanded the matterfor a determination of whether the insurer
knew it had recklessly disregarded a lack of areasonable basis in denying benefits.

On discretionary review, the Supreme Court
ruled that the proper method for evaluating
statutory bad faith claims is the two-part test
set forth in Terletsky v. Prudential Prop. &Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994).
Under this standard, a plaintiff must present
clear and convincing evidence that the insurer(1) did not have a reasonable basis for denying
benefits under the policy and (2) knew of or
recklessly disregarded its lack of a reasonablebasis. The court held that proof of an insurer’s
self-interest or ill will is not a prerequisite
under § 8371, but is probative of the second
prong. In rejecting a culpability requirement,
the court noted that requiring a showingof ill motive would “create an unduly highthreshold for bad faith claims” by limiting
recovery “to the most egregious instances
only where the plaintiff uncovers some sortof ‘smoking gun’ evidence indicating personalanimus towards the insured.” The court
remanded the matter for factual findings as toboth prongs of the bad faith test.

Damages Alert:

No Coverage Where Policyholder
Failed To Meet Its Burden To
Allocate Damages, Says Second
Circuit
The Second Circuit ruled that although aliability policy covered a portion of losses
arising from faulty construction claims, theinsurer had no duty to indemnify based on
the policyholder’s inability to allocate theunderlying jury verdict between covered andnon-covered losses. Univo v. HarleysvilleWorcester Ins. Co., 2017 WL 4127538 (2d Cir.
Sept. 19, 2017).
The dispute arose out of faulty construction
claims against a general contractor. In
the underlying suit, a jury awarded thehomeowners approximately $317,000
in general damages and $83,000 inconsequential damages. In a subsequent
coverage action, a New York district court
ruled that at least some of the underlying
claims were covered by the contractor’s
general liability policy. In particular, the court
concluded that losses arising from damage
to others’ work or property was covered
but that claims based on the contractor’s
own defective work were not covered.
Notwithstanding this finding, the court held
3

that the insurer had no indemnity obligation
because the homeowners were unable toestablish a reliable method for allocating
between covered and non-covered losses. The
Second Circuit affirmed.

policy conditions (e.g., examinations underoath and records inspection) because its
indemnity obligations were not triggered untilthat point. The Second Circuit disagreed andaffirmed the ruling.

The Second Circuit ruled that the burdenof allocating damages rests with thepolicyholder, not the insurer. Additionally,
the court rejected the notion that the insurer
should bear the burden in this case, based on
its alleged failure to advise the contractor touse special interrogatories in the underlying
action that would have established allocation.
The court explained that New York law does
not support this type of burden shift, andthat in any event, the insurer made it clear
in a motion to intervene in the underlying
case that it believed most, if not all, of thedamages were not covered. Finally, the court
held that the homeowners failed to meet theirburden, explaining that the damages awarded
did not correspond with any of the evidence
submitted in the underlying case and that the
homeowners failed to suggest any alternative
method for allocating damages.

Section 5001 of New York Civil Practice
Law and Rules, which permits a prevailingparty in a breach of contract action to
obtain prejudgment interest, provides
that “[i]nterest shall be computed fromthe earliest ascertainable date the cause ofaction existed.” The court explained thatin insurance coverage disputes, the statuterequires prejudgment interest to be calculated
from the date that the insurer became
obligated to indemnify the insured. The court
concluded that this obligation arose when
the policyholder submitted a sworn proof ofloss. The court explained that although thepolicy entitles Travelers to investigate theclaim, it “cannot circumvent § 5001(b) bydenying coverage while conducting a nearly
year-long investigation . . . and then, once it isadjudicated liable, avoid paying prejudgmentinterest from the ‘earliest ascertainable datethe cause of action existed.’”Prejudgment
Interest Alert:

D&O Policy Alert:

The Second Circuit ruled that statutory
prejudgment interest begins to accrue whena sworn proof of loss is submitted, not when
the policyholder has fulfilled conditions
precedent to coverage. Warehouse Wines andSpirits v. Travelers Prop. Cas. Co. of Am.,2017 WL 4227943 (2d Cir. Sept. 21, 2107).

The Second Circuit ruled that under Nevada
law, an insured v. insured exclusion bars
coverage for a suit brought by a former
director regardless of whether the suit was
brought in an individual or fiduciary capacity.
Intelligent Digital Systems, LLC v. BeazleyIns. Co., Inc., 2017 WL 4127540 (2d Cir. Sept.
19, 2017).

Second Circuit Rules That Statutory
Prejudgment Interest Begins To
Accrue On Date Of Sworn Loss

The policyholder sought coverage for losses
incurred in connection with stolen property.
A New York federal district court granted thepolicyholder’s summary judgment motion as
to coverage, and calculated damages owed
under the policy, including prejudgmentinterest. On appeal, Travelers argued, among
other things, that the district court erredin imposing prejudgment interest from thedate on which the policyholder submitted its
sworn proof of loss. Travelers argued thatprejudgment interest did not begin to accrue
until the policyholder had fully complied with

Applying Nevada Law, Second
Circuit Rules That Insured v.
Insured Exclusion Unambiguously
Bars Coverage For Director’s Suit

4

Jay Russ sold his technology company toVisual Management Systems (“VMS”). As
part of the transaction, VMS agreed to add
Russ to its Board of Directors. After thetransaction closed, Russ attended three board
meetings and was paid for his board member
services. Several months later, Russ resigned
and threatened suit against VMS based on
certain alleged payment deficiencies fromthe sale of his company. The parties reached
an agreement, pursuant to which the VMS
directors assigned their rights under a D&O
policy to Russ. Thereafter, Russ sued Beazley,
VMS’s D&O insurer, seeking indemnification
for the underlying settlement amounts.
Beazley denied coverage based on an insured
v. insured exclusion. A New York district
court denied the parties’ cross-motions forsummary judgment, finding that issues of fact
existed as to whether Russ was “duly elected”
to the Board of Directors. A jury subsequently
found that Russ had been a duly elected
director within the meaning of the exclusion
and, therefore, that there was no coverage
under the policy. The Second Circuit affirmed.

The Second Circuit ruled that the insured
v. insured exclusion, which bars coveragefor “any Claim . . . by, on behalf of, or at
the direction of any of the Insureds,” isunambiguous and applies to any claim by adirector, regardless of the capacity in which
the director brings suit. The court further
held that Russ was “duly elected” as a director
within the meaning of the policy (disagreeing
with the district court’s ruling that the bylawsof the company created ambiguity as towhether Russ was “duly elected”). Finally, theSecond Circuit held that even assuming thebylaws were ambiguous, the jury finding that
Russ was “duly elected” was well supported by
the evidence.

Reservation Of
Rights Alert:

Eleventh Circuit Deems
Reservation Sufficient And Rejects
Coverage-By-Estoppel Argument
The Eleventh Circuit ruled that reservationof rights letters (“ROR”) unambiguously
and effectively disclaimed coverage and thatthe insurer was not estopped from denying
coverage. North American Specialty Ins. Co.
v. Bull River Marina, LLC, 2017 WL 279211(11th Cir. Sept. 27, 2017).
North American issued two policies to Bull
River Marina: a commercial general liability
policy (“50C”) and a marina operators policy(“50M”). Thereafter, Bull River notified North
American of a boating incident that resulted
in various personal injuries. The notice listed
only the 50C policy. When Bull River waslater sued, it sent copies of the summons andcomplaint to North American. The insurer
issued an ROR listing only the 50C policy on
the subject line and agreeing to defend while
reserving its right to deny coverage at a later
date. Approximately one year later, North
American sent a second ROR that listed both
policies on the subject line and added various
bases for non-coverage. Three additional
cases were later filed against Bull River andin response, North American issued two more
RORs outlining its coverage position underboth policies.
North American sought a declaration thatneither policy provided coverage. Bull Riverargued that the initial ROR was ambiguous
and that North American was estopped fromdenying coverage under the 50M policy.
Ruling on cross-motions for summary
judgment, a Georgia district court held thatneither policy covered the underlying claims,
but that North American was estopped
from arguing non-coverage under the 50M
policy. The estoppel ruling was based on
two premises: (1) that the original ROR was
ineffective as to the 50M policy; and (2) that
North American had denied coverage while
simultaneously reserving its right to raise
new grounds for non-coverage, in violationof Hoover v. Maxum Indem. Co., 291 Ga.
402 (2012) (see July/August 2012 Alert). The
Eleventh Circuit affirmed in part and reversedin part.

5

The Eleventh Circuit reversed the district
court’s estoppel ruling. Under Georgia law,
an insurer may be estopped from denying
coverage if it assumes the defense of an action
without reserving its rights to assert noncoverage. The Eleventh Circuit explained that
because the original ROR addressed only
the 50C policy, North American had neverassumed Bull River’s defense under the 50M
policy. Further, the court noted that evenassuming the original ROR was tantamountto a denial of coverage under the 50M
policy, Georgia precedent would not requireestoppel. The court stated: “we fail to see how
Hoover mandates, as a remedy, that North
American be estopped from denying coveragealtogether. It seems to us that Hoover would
only prohibit North American from assertinga policy defense under 50M that it shouldhave raised the first time around” and here,
there was no belated assertion of a new basis
for non-coverage.

arose out of multiple occurrences or a single
occurrence.
North River argued that Bittner’s disposal ofwaste at each landfill is a separate occurrence,and that the statute of limitations on any
contribution claim that Penn National might
have had with respect to each site began to
accrue upon settlement of the claims for thatsite. In contrast, Penn National contended
that Bittner’s hauling activities at all threelandfills constitute a single occurrence, suchthat its contribution claims against North
River did not accrue until the last underlying
settlement was finalized.

Number of
Occurrences Alert:

New Jersey Court Rules That Waste
Disposal At Multiple Landfills Gives
Rise To Separate Occurrences
A New Jersey district court ruled that apolicyholder’s disposal of waste at numerous
landfill sites constitutes multiple occurrences.
Penn Nat’l Ins. Co. v. Crum & Forster Ins.
Co., 2017 WL 3835667 (D.N.J. Sept. 1, 2017).
Bittner, a waste hauling company, delivered
waste to three separate landfills. The dumping
at each site gave rise to a separate superfund
lawsuit against Bittner. During the relevanttime period, Bittner was insured underprimary policies issued by Penn National andexcess policies issued by North River. Afterthe three superfund suits settled, Penn Nation
sued North River, seeking reimbursementfor defense and indemnity incurred in theunderlying actions. North River argued that
Penn National’s contribution claim withrespect to one of the suits (which had settled
in 1998) was time bared under New Jersey’s
six-year statute of limitations. Resolution ofthis issue turned on the accrual date of thecontribution claim, which in turn, depended
on whether the claims in the three suits

The court concluded that Bittner’s waste
disposal at the three landfills are separate
occurrences under New Jersey’s cause-based
approach. Focusing on the “temporal andspatial connection” between the events, thecourt emphasized that the landfills were in
separate geographic locations and that thehauling occurred at different times overnearly a decade. Additionally, the court
noted that Penn National’s own conduct(and the testimony of its corporate designee)
contradicted its single-occurrence argument.
In particular, Penn National brought thecontribution claim two years before thelast underlying settlement, thus belying its
argument that its contribution claim was notripe until after the last settlement.
Having determined that the activities at eachlandfill constitute a separate occurrence,the court concluded that the contribution
claim arising from a 1998 settlement ofan underlying suit was time barred. With
respect to the other two suits, the court ruledthat Penn Nation had failed to establishthat its primary limits were exhausted – aprerequisite to contribution from North River
under its excess policies.
6Related
Claim Alert:

Eleventh Circuit Rules That
Multiple Personal Injuries Are
Related Claims Subject To A Single
Per Claim Limit
The Eleventh Circuit ruled that multiple
personal injuries caused by the unsanitary
repacking of eye medication constituted asingle “claim” under an insurance policy.
Amercian Cas. Co. of Reading, PA v. Belcher,2017 WL 4276057 (11th Cir. Sept. 27, 2017).
The policy provided that related claims shallbe considered a single claim and defined“related claim” as “all claims arising out ofa single act, error or omission.” The court
concluded that eye injury claims by several
patients were “related,” notwithstandingthat the syringes were prepared on different
dates, the patients received injections on
different dates, the patients received two
different types of medication, and the patientswere infected with at least two different
strains of bacteria. The court reasoned that,
under Florida law, “arising out of” means
originating from and does not require
proximate causation. Applying this standard,
the court held that the patients’ claims were
logically and causally connected because
the syringes were all prepared in the sameplace, by the same person, using the sameprocess, and involving the same health andsafety violations. Therefore, the policyholder’scoverage was limited to a single $1 million
per claim limit, rather than $3 million inaggregate coverage.

Allocation Alert:

Maryland Court Addresses Period
Of Lead-Related Damages Under
Pro Rata Allocation
A Maryland federal district court ruled that,for purposes of calculating an insurer’s pro
rata, time-on-the-risk indemnity obligation
for lead paint-related injuries, the “entire
period of damages” is calculated by looking at
when the claimant moved into the premises
and when he permanently vacated thepremises. Penn. Nat’l Mut. Cas. Ins. Co.
v. Jacob Dackman & Sons, LLC, 2017 WL
4098749 (D. Md. Sept. 14, 2017).
Daniel Heggie lived on East Hoffman Street
from January 12, 1994 until September
9, 1998. It is undisputed that Heggie was
exposed to lead paint during that time.
Heggie sued the building’s landlord, andwas ultimately awarded damages exceeding$1 million. In ensuing litigation between
the landlord and its liability insurer, Penn
National, the parties disputed the proper
method for calculating Penn National’s
indemnity obligation. The parties agreed that
Penn National’s policies were in effect for 426
days and that its indemnity share is basedon its pro rata time on the risk. However, theparties disagreed as to the “denominator” of
the calculation – i.e., the “entire period during
which damages occurred.”
Penn National argued that the damage
period was the 2,589 day period between
January 12, 1994, when Heggie moved into
the building, and February 13, 2001, thelast date on which Heggie had an elevatedblood lead level. In contrast, Heggie argued
that the damage period ran from August 18,
1995, when Heggie’s blood lead level was
first elevated, to July 8, 1997, the date of
Heggie’s last elevated blood lead level before
he vacated the premises. The court adopted acompromise position.
The court held that the damages period began
on January 12, 1994, when Heggie moved
into the lead-polluted premises, reasoningthat the move-in date best reflects the dateof first exposure. The court held that thedamage period ended on September 9,
1998, when Heggie vacated the premises.
Although Heggie’s blood lead levels remained
elevated after that time, the court explainedthat there was no known exposure after7

September 9 that would trigger insurance
coverage since Heggie had vacated thepremises. Thus, the court concluded that the“entire period of damages” was the 1,701 day
period during which Heggie actually resided
at the contaminated premises. Based on
this finding, Penn National was responsiblefor indemnifying approximately 25% of thetotal loss.

Coverage Alert:

New York Appellate Court Finds
All-Risk Coverage Where Cause
Of Damage Began Before Policy
Inception

sales were not calculated and paid until after
May 18, 2009, the revenue losses represent
decreased revenues sustained during the“period of liability.” As the trial court noted,
New York law typically holds that “businessinterruption losses experienced by the insured
beyond the time needed to physically restore
the destroyed or damaged property are notrecoverable.” However, the Appellate Division
deemed this case distinguishable based on
the particular manner in which TransCanadacalculated and paid its capacity revenues.
Finally, the court rejected application of a“capacity payments” exclusion, finding that
it applies to losses of bonus-type payments
based on the attainment of certain productionlevels, which were not implicated here.

A New York appellate court ruled that aninsurance policy covered losses arisingfrom the malfunction of a turbine engine,
notwithstanding that the mechanical issues
were caused by a turbine crack that had begun
before the policy incepted. TransCanada
Energy USA, Inc. v. National Union Fire Ins.
Co. of Pittsburgh, PA, 2017 WL 4125652 (N.Y.
App. Div. 1st Dep’t Sept. 19, 2017).
TransCanada sought coverage under an
all-risk policy for losses that resulted whena power turbine was taken out of operation
due to excessive vibrations. The turbine wasremoved from operation during the policy
period, although a crack in the turbine had
begun to form prior to the policy period. The
insurer denied coverage on several bases,
each of which was rejected by a New York
trial court, which granted summary judgment
in TransCanada’s favor. The appellate
court affirmed.
The appellate court ruled that the covered
physical loss occurred when the turbine wastaken out of operation, emphasizing thatthe policy does not exclude physical loss
that originated prior the commencementof the policy. The court further held that
TransCanada’s business interruption coverage
was not limited by the date upon which
the turbine was returned to service. The
insurer argued that a “period of liability”
provision, defined as the period beginningat the time of physical loss until the time ofrepair or replacement, limited damages tothe period ending on May 18, 2009, when theturbine was reinstalled. The court disagreed,
explaining that although TransCanada’s lost

Arbitration Alert:

Texas Court Rules That Arbitrability
Issues Are Within Court’s Purview
And May Be Addressed Prior To
Personal Jurisdiction
Addressing a matter of first impression
under Texas law, a Texas district court ruledthat arbitrability of a dispute is a matterfor the court to decide and is a procedural(rather than merit-based) issue that canbe addressed prior to personal jurisdiction
arguments. Halliburton Energy Services,
Inc. v. Ironshore Specialty Ins. Co., 2017 WL
4536089 (S.D. Tex. Oct. 5, 2017).
The dispute arose out of fracking-related
damage. Ironshore insured the operator of thegas facility at which the fracking operations
were conducted. Ironshore indemnified thefacility operator for nearly $12 million, butsought reimbursement from Halliburton (thefracking operator) pursuant to a subrogation
provision in the insurance policy. Halliburton
8filed a declaratory judgment action seeking
a ruling that Ironshore had waived its
subrogation rights. Ironshore moved to staythe case pending arbitration based on anarbitration clause in the fracking agreement.
Ironshore argued that it became a party to thearbitration agreement through subrogation,and that the arbitration clause is triggered
because the court would need to look to thefracking agreement in order to determine
whether Ironshore had waived its right tosubrogation. Ironshore also moved to dismisson personal jurisdiction grounds. The court
denied Ironshore’s motion to stay.
First, the court ruled that the question ofwhether a dispute is subject to arbitration is a“procedural, jurisdictional issue rather than amerits issue.” Therefore, the court deemed it
proper to rule on the question of arbitration
before determining whether it had personal
jurisdiction.
Second, the court ruled that the applicabilityof the arbitration clause was a gateway issue
for the court, rather than a matter for an
arbitration panel. The court reasoned thatthe arbitration question necessarily turnedon whether Ironshore was a subrogatedparty to the fracking agreement, which
depended on whether Ironshore had waived
its subrogation rights under the insurance
policy. (If Ironshore was not subrogated to
the fracking agreement, it was a non-party
to that agreement and would have no rightto enforce the arbitration clause). Citing caselaw addressing the rights of non-signatories
to enforce arbitration clauses, the court
concluded that it must decide the thresholdissue of subrogation waiver in order todetermine whether a valid arbitration clauseexisted between Ironshore and Halliburton.
Finally, on the merits of the subrogation
issue, the court held that Ironshore had
waived its right to subrogation and thus
could not enforce the arbitration clauseagainst Halliburton. The court explainedthat although the insurance agreement
expressly provided a right of subrogation,it also provided that Ironshore waives any
such right “[t]o the extent required by written
contract.” Here, the fracking contract between
Halliburton and the insured gas site operator
specifically provided that the operator “willcause its insurer to waive subrogation against[Halliburton].”9

Simpson Thacher has been an international leader in the practice of insurance and reinsurance law for
more than a quarter of a century. Our insurance litigation team practices worldwide.

David J. Woll
+1-212-455-3136
dwoll@stblaw.com

Bryce L. Friedman+1-212-455-2235
bfriedman@stblaw.com

Deborah L. Stein+1-310-407-7525
dstein@stblaw.com

Mary Beth Forshaw+1-212-455-2846
mforshaw@stblaw.com

Michael D. Kibler+1-310-407-7515
mkibler@stblaw.com

Craig S. Waldman+1-212-455-2881
cwaldman@stblaw.com

Andrew T. Frankel+1-212-455-3073
afrankel@stblaw.com

Michael J. Garvey+1-212-455-7358
mgarvey@stblaw.com

Susannah S. Geltman+1-212-455-2762
sgeltman@stblaw.com

Lynn K. Neuner+1-212-455-2696
lneuner@stblaw.com

Tyler B. Robinson+44-(0)20-7275-6118
trobinson@stblaw.com

Elisa Alcabes+1-212-455-3133
ealcabes@stblaw.com

Chet A. Kronenberg+1-310-407-7557
ckronenberg@stblaw.com

George S. Wang
+1-212-455-2228
gwang@stblaw.com

Summer Craig+1-212-455-3881
scraig@stblaw.com

This edition of the
Insurance Law Alert was
prepared by Mary Beth Forshaw
mforshaw@stblaw.com /+1-212455-2846 and Bryce L. Friedman
bfriedman@stblaw.com /+1-212-4552235 with contributions
by Karen Cestarikcestari@stblaw.com.

The contents of this publication are for informational purposes only. Neither this publication nor the
lawyers who authored it are rendering legal or other professional advice or opinions on specific facts
or matters, nor does the distribution of this publication to any person constitute the establishment of an
attorney-client relationship. Simpson Thacher & Bartlett LLP assumes no liability in connection withthe use of this publication. Please contact your relationship partner if we can be of assistance regardingthese important developments. The names and office locations of all of our partners, as well as ourrecent memoranda, can be obtained from our website, www.simpsonthacher.com.
Please click here to subscribe to the Insurance Law Alert.
10SimpsonThacherWorldwide

UNITED STATESEUROPE

SOUTH AMERICANew York
425 Lexington Avenue
New York, NY 10017+1-212-455-2000

LondonCityPoint
One Ropemaker Street
London EC2Y 9HUEngland+44-(0)20-7275-6500

São Paulo
Av. Presidente Juscelino
Kubitschek, 1455
São Paulo, SP 04543-011
Brazil+55-11-3546-1000

Houston
600 Travis Street, Suite 5400
Houston, TX 77002+1-713-821-5650
Los Angeles
1999 Avenue of the Stars
Los Angeles, CA 90067+1-310-407-7500
Palo Alto
2475 Hanover Street
Palo Alto, CA 94304+1-650-251-5000
Washington, D.C.
900 G Street, NW
Washington, D.C. 20001+1-202-636-5500

ASIA

Beijing
3901 China World Tower
1 Jian Guo Men Wai Avenue
Beijing 100004
China+86-10-5965-2999
Hong Kong
ICBC Tower
3 Garden Road, Central
Hong Kong+852-2514-7600
Seoul
25th Floor, West Tower
Mirae Asset Center 1
26 Eulji-ro 5-gil, Jung-gu
Seoul 100-210
Korea+82-2-6030-3800
Tokyo
Ark Hills Sengokuyama Mori Tower
9-10, Roppongi 1-Chome
Minato-Ku, Tokyo 106-0032
Japan+81-3-5562-6200
11