Insurance Law Alert

December 2015

In This Issue
Ninth Circuit Rules That Statutory Violation Exclusion Bars Coverage For
All Underlying Claims
Following an emerging trend, the Ninth Circuit ruled that a statutory violation exclusion barred
coverage for all underlying claims, including non-statutory claims. Big 5 Sporting Goods Corp.
v. Zurich Am. Ins. Co., 2015 WL 8057228 (9th Cir. Dec. 7. 2015) (unpublished decision).
(click here for full article)“SimpsonThacher & Bartlett
is an elite firm thathas demonstrated
expertise in handlinghigh-stakes matters.”–Chambers USA 2015,
quoting a client

Illinois Appellate Court Rules That Insurer Has Duty to Defend Nuisance
Suit
An Illinois appellate court ruled that an insurer was obligated to defend its insured in anunderlying nuisance suit. Country Mut. Ins. Co. v. Bible Pork, Inc., 2015 WL 7424845 (Ill. App.
Ct. Nov. 20, 2015). (click here for full article)

Rhode Island Court Rules That Tax Liens Are Insured Property
A Rhode Island federal district court ruled that tax liens on residents’ property are insured
property and that an insurer is obligated to indemnify losses caused by erroneous tax bills.
Pfeiffer v. Am. Alt. Ins. Corp., 2015 WL 7016319 (D.R.I. Nov. 12, 2015).
(click here for full article)

Application of Wrongful Acts Exclusion Turns on Policyholder’s
Subjective Knowledge, Says Sixth Circuit
The Sixth Circuit ruled that a wrongful acts exclusion was ambiguous and should be construed
to require subjective knowledge on the part of the policyholder that a prior wrongful act would
result in a claim. Maxum Indem. Co. v. Drive West Ins. Svs., Inc., 2015 WL 7292722 (6th Cir.
Nov. 18, 2015) (unpublished decision). (click here for full article)

Tenth Circuit Rules That Excess Insurers Are Not Required to “DropDown” for Insolvent Primary Insurer
Addressing a matter of first impression under Oklahoma law, the Tenth Circuit ruled that
excess and umbrella carriers did not have to “drop down” in the place of an insolvent primary
insurer to defend or indemnify a policyholder in underlying asbestos litigation. Canal Ins. Co.
v. Montello, Inc., 2015 WL 7597429 (10th Cir. Nov. 27, 2015). (click here for full article)

Simpson Thacher & Bartlett LLP

1

Georgia Appellate Court Addresses Notice Requirement in Excess Policies
A Georgia appellate court found that notice was untimely as a matter of law, but that policy
language required the insurer to establish prejudice, which presented a disputed issue of fact.
Plantation Pipe Line Co. v. Stonewall Ins. Co., 2015 WL 7306254 (Ga. Ct. App. Nov. 20, 2015).
(click here for full article)

New York Court Rules That Multi-Dog, Multi-Victim Attack Constitutes
One Occurrence
A New York federal district court declined to apply New York’s “unfortunate event test” todetermine the number of occurrences, finding that applicable policy language established theintent to aggregate multiple incidents into one occurrence. Verlus v. Liberty Mut. Ins. Co.,2015 WL 7170484 (S.D.N.Y. Nov. 12, 2015). (click here for full article)

Texas Supreme Court Rules That Incorporation of Defective Component
Is Not Physical Injury to Property
The Texas Supreme Court ruled that the installation of defective flanges in diesel units, without
more, did not constitute physical injury under a general liability policy. U.S. Metals, Inc. v.
Liberty Mut. Grp., Inc., 2015 WL 7792557 (Tex. Dec. 4, 2015). (click here for full article)

Iowa Court Defines Scope of Physical Damage Under Property Policy
An Iowa federal district court ruled that the threat of flooding and alleged loss of use of officespace did not establish physical damage for purposes of coverage under a property policy. The
Phoenix Ins. Co. v. Infogroup, Inc., 2015 WL 7755976 (S.D. Iowa Nov. 30, 2015).
(click here for full article)

2

Coverage Alerts:

Ninth Circuit Rules That Statutory
Violation Exclusion Bars Coverage
For All Underlying Claims
Applying an exclusion for statutory violations,
the Ninth Circuit barred coverage for all
underlying claims, including non-statutory
claims. Big 5 Sporting Goods Corp. v. Zurich
Am. Ins. Co., 2015 WL 8057228 (9th Cir. Dec.
7. 2015) (unpublished decision). This follows
a growing trend reported on in our April andMay 2014 and January 2015 Alerts.
Several class action suits were filed against
Big 5 Sporting Goods, alleging the violationof plaintiffs’ privacy rights by obtaining andpublishing consumers’ ZIP codes duringcredit card transactions. The complaints
alleged violations of the Song-Beverly Act andthe common law right to privacy. A California
federal district court ruled that the insurers
had no duty to defend or indemnify the suits
based on the policies’ Statutory Violation
Exclusion, which barred coverage for injury“arising directly or indirectly out of any
action or omission that violates or is alleged
to violate any statute … .” The Ninth Circuit
affirmed.

do not exist.” The court further dismissed
Big 5’s attempt to obtain coverage by framingsome of the underlying claims as based in
negligence. The court stated, “a rose by anyother name is still a rose, so a ZIP Code caseby under any other label remains a ZIP Codecase.” A Wisconsin appellate court employed
the same reasoning and ruled that a similarlyworded TCPA exclusion barred coverage forboth statutory and common law conversion
claims. See State Farm Fire & Cas. Co. v.
Easy PC Solutions, LLC, 2015 WL 8215533(Wis. Ct. App. Dec. 9, 2015).
Other courts have denied coverage for ZIP
code-related privacy claims on the basisthat they do not allege a covered advertising
injury. See, e.g., OneBeacon Am. Ins. Co. v.
Urban Outfitters, Inc., 2015 WL 5333845 (3dCir. Sept. 15, 2015) (discussed in our October
2015 Alert).

Illinois Appellate Court Rules
That Insurer Has Duty to Defend
Nuisance Suit
An Illinois appellate court ruled that aninsurer was obligated to defend its insured in
an underlying nuisance suit. Country Mut.
Ins. Co. v. Bible Pork, Inc., 2015 WL 7424845(Ill. App. Ct. Nov. 20, 2015).
Bible Pork, operator of a hog factory facility,
was sued by a group of property owners.
Plaintiffs alleged that the facility was a sourceof “disagreeable noises, odors, dust particles,
surface water contamination, and loss ofproperty values which would interfere with
their lives and render the facility a public
and private nuisance.” Bible Pork provided
notice of the suit to its insurer, Country
Mutual, which denied coverage. In ensuing
litigation, an Illinois trial court ruled that
Country Mutual was obligated to defend thesuit. An appellate court affirmed on the basisof several significant holdings relating to an
insurer’s duty to defend nuisance suits.

The court rejected Big 5’s argument that
insurers were obligated to defend because thesuits contained common law and California
constitutional right to privacy claims,
separate and apart from the Song-Beverly
Act violations. The court explained that “ingarden variety ZIP code cases like these, such
extra Song-Beverly Act privacy claims simply

First, the appellate court ruled that thenuisance suit sought “damages” as requiredby the policies. Country Mutual argued thatthe suit did not seek damages because it
requested only equitable relief in the form ofa declaratory judgment. The court disagreed,
explaining that the suit could be construed
to seek damages because, in addition toequitable relief, it asked for “other relief
deemed appropriate.” According to the court,
3this phrase was sufficient to establish a claim
for damages. Second, the court concluded
that the complaint alleged an “occurrence”
and that the “expected or intended injury”
exclusion did not apply. The court reasoned
that the focus of the occurrence inquiry iswhether the insured intended the resulting
injury, not whether the insured’s acts were
performed intentionally. Here, because Bible
Pork sought and was granted regulatory
approval prior to construction of the hog
factory, the court held that it could not be
considered to have expected or intended
to cause injury to the underlying plaintiffs.
Finally, the court ruled that the pollution
exclusion did not relieve Country Mutual ofits duty to defend because it was ambiguous
as to whether it applied to non-traditional
pollution emissions. In so ruling, the court
relied on Country Mut. Ins. Co. v. Hilltop
View, LLC, 998 N.E.2d 950 (Ill. App. Ct.
2013) (discussed in our December 2013
Alert), in which an Illinois appellate court
ruled that a pollution exclusion did not bar
coverage for nuisance claims based on theemanation of foul odors from a hog farm.

duties as prescribed by law, when such failure
has as its direct and immediate result a lossof your covered property.” The term “covered
property” was defined as property “that you
own or hold; or for which you are legally
liable.” The crux of the parties’ dispute waswhether the budget shortfall constituted“covered property.” The court held that it did.
The court reasoned that the tax liens could beconsidered property that the District “owned
or for which it was legally liable” because,
under governing local law, the District was
charged with the responsibility of assessing
taxes and those taxes constituted “a lien on
the real estate, due and owing until collected.”
In so ruling, the court rejected the insurer’s
argument that the loss was a speculative
projection, or “monies not due the District”
because of the accounting errors.

Rhode Island Court Rules That Tax
Liens Are Insured Property
A Rhode Island federal district court ruledthat tax liens on residents’ property are
insured property and that an insurer isobligated to indemnify losses caused byerroneous tax bills. Pfeiffer v. Am. Alt.
Ins. Corp., 2015 WL 7016319 (D.R.I. Nov.
12, 2015).
The Central Coventry Fire District in Rhode
Island has authority to tax the businesses
and residents within its geographical regionin order to fund fire-fighting and rescue
services. Under local law, the tax bills are alien on the taxed property. In 2010, the tax
collector made several errors in calculating
the District’s budget, resulting in a significant
shortfall for that fiscal year. The mistakes
went unreported and were repeated thefollowing year, further compounding theshortfall. Thereafter, a special master was
appointed to oversee the District’s finances.
The special master made a claim to theDistrict’s insurer seeking coverage for thelosses incurred in the two tax billing cycles.
The insurer denied the claim.
The policy covered the “[f]ailure of any‘employee’ to faithfully perform his or her

Application of Wrongful Acts
Exclusion Turns on Policyholder’s
Subjective Knowledge, Says Sixth
Circuit
Reversing an Ohio federal district court
decision, the Sixth Circuit ruled that awrongful acts exclusion was ambiguous andshould be construed to require subjective
knowledge on the part of the policyholder thata prior wrongful act would result in a claim.
Maxum Indem. Co. v. Drive West Ins. Svs.,
Inc., 2015 WL 7292722 (6th Cir. Nov. 18,
2015) (unpublished decision).
Starting in 2011, Mulberry, a wholesale
insurance broker, issued quotes andbinders for insurance coverage to National
Condo & Apartment Insurance Group(“NCAIG”). NCAIG later learned that thequotes and binders were fraudulent. Laterthat year, Mulberry and NCAIG received
4

cease-and-desist letters informing them thatthe quotes and binders were not authorized.
Mulberry also received a notice from theIllinois Department of Insurance, indicatingthat certain binders of insurance purportedlyissued by Mulberry might not be legally valid.
Sometime later, several property owners
sued NCAIG when they learned theirinsurance was not valid. NCAIG demanded
indemnification from Mulberry. Mulberry,in turn, sought coverage under an errors
and omissions policy issued by Maxum in2012. Maxum denied coverage based on an
exclusion that applied to “[a]ny claim arisingout of or resulting from any ‘wrongful act’
… [y]ou had knowledge of or information
related to, prior to the first inception date of… coverage with us, and which may resultin a ‘claim.’” In coverage litigation, an Ohio
district court ruled that the exclusion barred
coverage because the underlying claims arosefrom wrongful conduct “of which Mulberry
had related information” prior to the policy’s
March 2012 inception date. The Sixth
Circuit reversed.

endorsed the latter view, and held thatMaxum had not established such subjective
knowledge on the part of Mulberry. Although
Mulberry had received several cease-anddesist letters from insurers and a noticefrom the Department of Insurance prior to
the policy inception date, the court held thatthese notices did not establish subjective
awareness of potential litigation. In reaching
this conclusion, the court emphasizedthat none of the correspondence included
demands for relief or threatened litigation.
The court therefore reversed the trial court’ssummary judgment ruling in Maxum’s favorand granted NCAIG’s summary judgment
motion on the breach of the duty to defend
and indemnify under the policy.

Excess Alerts:

Tenth Circuit Rules That Excess
Insurers Are Not Required to“Drop Down” for Insolvent Primary
Insurer
Addressing a matter of first impression under
Oklahoma law, the Tenth Circuit ruled that
excess and umbrella carriers did not haveto “drop down” in the place of an insolvent
primary insurer to defend or indemnify apolicyholder in underlying asbestos litigation.
Canal Ins. Co. v. Montello, Inc., 2015 WL
7597429 (10th Cir. Nov. 27, 2015).

Applying California law, the Sixth Circuit
ruled that the exclusion was ambiguousand must therefore be construed in favorof coverage. Maxum argued that theexclusion applied to “all claims where theinsured simply had information prior tothe coverage period relating to a ‘wrongfulact’ that resulted in a claim.” Under thisinterpretation, the exclusion would bar
coverage. In contrast, NCAIG contended thatthe exclusion encompassed “only those claims
arising from wrongful acts that [Mulberry]subjectively believed, prior to inception of
the Policy, would result in claims.” Finding
both interpretations reasonable, the court

Home Insurance Company provided primary
insurance for Montello, a distributor ofasbestos-containing products. Home became
insolvent before any claims were paid on
Montello’s behalf. When it became apparent
that Home would be unable to fulfill its
contractual obligations, Montello sought
defense and indemnity from its excess andumbrella insurers. Because underlying limits
had not been paid, the excess and umbrella
insurers sought a ruling that they had no
duty to defend or indemnify Montello. An
Oklahoma federal district court ruled in
the excess insurers’ favor, predicting that
Oklahoma would follow the majority ofjurisdictions to find that an excess insurer is
not obligated to assume an insolvent primary
insurer’s defense or indemnity obligations,absent policy language indicating the intent
to do so. Canal Ins. Co. v. Montello, Inc.,
2013 WL 6732658 (N.D. Okla. Dec. 19, 2013)5

(discussed in our January 2014 Alert). The
Tenth Circuit affirmed.
Ruling that excess and umbrella insurers
had no duty to “drop down” to provide
defense or indemnity, the Tenth Circuit
rejected Montello’s argument that Home’s
insolvency was an “occurrence” coveredby the excess policies. The court similarly
rejected the argument that a primary
insurer’s inability to pay a loss is equivalent
to exhaustion by payment of loss. The Tenth
Circuit also dismissed Montello’s attempt
to obtain coverage pursuant to various
other policy provisions, including an “otherinsurance” clause, finding it inapplicable tothe case at bar. Finally, the court rejected
Montello’s suggestion that the “reasonable
expectations” doctrine provided a basis
for finding coverage, finding that policy
language was unambiguous, and that in any
event, a reasonable insured would not haveunderstood excess and umbrella policies toprovide coverage insuring the solvency of the
primary insurer.

Georgia Appellate Court Addresses
Notice Requirement in Excess
Policies
A Georgia appellate court issued a mixed
ruling on an excess insurer’s late notice
defense, finding that notice was untimely
as a matter of law, but that policy language
required the insurer to establish prejudice,which presented a disputed issue of fact.
Plantation Pipe Line Co. v. Stonewall Ins.
Co., 2015 WL 7306254 (Ga. Ct. App. Nov.
20, 2015).

The coverage dispute arose from a leak in
one of Plantation’s pipelines. The leak was
discovered and immediately repaired in
1976. More than thirty years later, in 2007,
contaminated soil traced to the 1976 leak was
discovered at the site. Plantation then sent
notice to its primary insurer and three excess
carriers. Three years later, in 2010, when
Plantation discovered the existence of theStonewall policy through a search conductedby Plantation’s former counsel, it notified
Stonewall that its policy was likely to be
implicated by third-party claims arising fromthe contamination. Stonewall denied coverageon several bases, including late notice. Rulingon cross-motions for summary judgment,a Georgia trial court ruled that Plantation
forfeited coverage under the Stonewall policyby failing to give timely notice. The appellate
court affirmed in part and reversed in part.
The appellate court affirmed the trial court’s
ruling that Plantation’s notice was untimely
as a matter of law. The appellate court
rejected Plantation’s arguments that (1) it
did not reasonably believe that its losses
would reach the $2 million attachment pointof the Stonewall policy before 2010; and(2) notice was reasonably prompt under
the circumstances. As to the first point,
the court explained that the factual record
established that Plantation knew as early as2008 that its costs would likely exceed $2
million, evidenced by the fact that Plantation
notified other excess carriers at that time. As
to the second point, the court held that evenassuming that an insured’s inability to locatea policy could constitute an excuse for late
notice (an issue the court declined to reach),there was “no evidence that the policy could
not have been … discovered any earlier.”6However, the appellate court parted ways
with the trial court on the issue of prejudice.
It explained that if a policy makes prompt
notice an express condition precedent tocoverage, an insurer is not required toestablish prejudice. Conversely, where a
notice provision does not contain explicit“condition precedent” language, an insurer
must demonstrate prejudice as a result of
the untimely notice. The court ruled that thetrial court erred in concluding that general
introductory policy language requiring bothparties to adhere to contract provisions wasa “condition precedent” clause. The appellate
court further ruled that Stonewall failed
to establish prejudice as a matter of law,
notwithstanding the more than two-year
delay in providing notice. The court explainedthat although Stonewall was entitled to timely
investigate claims, an excess insurer is “notnecessarily … entitled to an opportunity toinvestigate in the early days following an
occurrence that gives rise to an insured’s
liability, as a primary carrier may be.” In
this respect, the decision highlights thedistinction between the events that typicallytrigger an insured’s obligation to provide
notice to a primary insurer (i.e., knowledgeof an occurrence giving rise to liability) andthe events that trigger notice obligations
under excess policies (i.e., assessment
regarding likelihood that exposure will
exceed primary limits). The appellate court
noted that although Stonewall may succeedin establishing prejudice as a matter of fact
based on “particularized evidence of harm,”
its “bare assertion” that it was deprived of an
opportunity to investigate during the two-year
delay was insufficient to establish prejudice asa matter of law.

Number of
Occurrences Alert:
New York Court Rules That
Multi-Dog, Multi-Victim Attack
Constitutes One Occurrence

Our October 2015 Alert reported on a Second
Circuit decision holding that under New
York’s “unfortunate event” test, a series ofclosely-related automobile accidents withina short time span constitute three separate“accidents” for purposes of policy coverage.
Itzkowitz v. Nat’l Liab. & Fire Ins. Co., 2015
WL 5332109 (2d Cir. Sept. 15, 2015), as
amended (Sept. 22, 2015). There, the court
rejected the insurer’s contention that thepolicy language at issue (providing that all
injury and damage “resulting from continuousor repeated exposure to substantially thesame conditions will be considered as
resulting from one ‘accident’”) evidenced an
intent to aggregate separate accidents into asingle occurrence. In a decision issued lastmonth, a New York federal district court,
faced with nearly identical policy language,
reached the opposite conclusion and heldthat policy language established the intent
to aggregate multiple incidents into one
occurrence. Verlus v. Liberty Mutual Ins. Co.,2015 WL 7170484 (S.D.N.Y. Nov. 12, 2015).
Verlus arose from an attack by two dogs on
two pedestrians, Jean and Joanne, who werewalking down the street at the same time. One
dog attacked Jean, while the other attacked
Joanne. After less than a minute, Joanne
escaped to higher ground, at which point thedog that had been attacking her joined theother dog in attacking Jean. The pedestrians
successfully sued the dogs’ owners for theirinjuries. The pedestrians then received
a payment from the dog-owners’ insurer(Liberty Mutual) that fell far short of thejudgment awarded in the tort litigation.
Liberty Mutual argued that the sum paid was
the maximum allowed for a single occurrence
under the dog-owners’ policy. The pedestrians
sought a declaration that the dog attack
constituted three separate occurrences under
the policy (the attack on Jean, the attack on
Joanne, and the attack on Jean by the dogthat was originally attacking Joanne).
The court noted that New York applies the“unfortunate event” test to determine thenumber of occurrences unless policy language7

evidences the parties’ intent to aggregate
separate events into one occurrence. The
court held that the language before it (statingthat “continuous or repeated exposure to
substantially the same general harmful
conditions shall be considered to be theresult of one occurrence”) evidences suchintent. Therefore, the court declined toapply the unfortunate event test and instead
held that the proper inquiry was “whether
the underlying attacks emanated from thesame location at a substantially similar
time.” Applying this standard, the court
concluded that the attacks constituted a single
occurrence because the pedestrians werewalking close together, the dogs approachedfrom the same direction at the same time, andthe incident lasted for a short three to four
minute period.

to the diesel units when the only harm atthat point was the risk of leaks?; and (2) isproperty “restored to use” by replacing a
faulty component when the property must be
altered, damaged and repaired in the process?
The Texas Supreme Court ruled that physicalinjury requires harm that is tangible andmanifest. Therefore, incorporating a defective
component into a larger product is not, in andof itself, physical injury, even though there
may be intangible injury, such as diminution
in value or increased risk of damage.
However, the Court ruled that physicalinjury occurred when components were cut
and destroyed in order to replace the faulty
flanges. The Court distinguished between,on the one hand, the units considered asorganic wholes, and, on the other hand, theparticular components of the units. The Court
found that “Exclusion M” of the policy barred“Physical Loss”
Alerts:Texas Supreme Court Rules
That Incorporation of Defective
Component Is Not Physical Injury
to Property
Answering questions certified by the Fifth
Circuit, the Texas Supreme Court ruled thatthe installation of defective flanges in diesel
units, without more, does not constitutephysical injury under a general liability policy.
U.S. Metals, Inc. v. Liberty Mut. Grp., Inc.,
2015 WL 7792557 (Tex. Dec. 4, 2015).
U.S. Metals sold flanges to ExxonMobil foruse in diesel units. After the flanges were
installed, ExxonMobil discovered that they
were defective. The process of replacing theflanges required the destruction of several
components of the diesel units. U.S. Metals
agreed to pay ExxonMobil for the costs of
replacing the flanges as well as the loss of useof the diesel units during the process, andthen sought indemnification from Liberty
Mutual under a general liability policy.
Liberty Mutual denied coverage. In ensuing
litigation, a Texas federal district court
ruled in Liberty Mutual’s favor. On appeal,
the Fifth Circuit certified four questions
relating to interpretation of several policy
provisions. The questions presented twocentral issues: (1) did the mere installationof the faulty flanges cause “physical injury”

coverage for physical injury to the units
considered as organic wholes. Exclusion M
precludes coverage for impaired property thatcan be “restored to use.” The Court found thatthe diesel units were impaired property that
could be (and actually were) restored to use.
Exclusion M did not apply, however, to thoseparticular components of the units (e.g. theinsulation and gaskets) that were not restored
to use but destroyed and replaced. The policy
therefore covered the cost of replacing suchcomponents.
The Court acknowledged the “perverse
aspect” of the decision, noting that had
ExxonMobil been negligent in failing totest the flanges, and had damage resulted,
the policy would have provided coverage.
However, the Court emphasized that coverage
8issues are dictated by policy language, not by“what coverage should be available.”

Iowa Court Defines Scope ofPhysical Damage Under Property
PolicyAn Iowa federal district court ruled that thethreat of flooding and alleged loss of useof office space did not constitute physicaldamage for purposes of coverage under aproperty policy. The Phoenix Ins. Co. v.
Infogroup, Inc., 2015 WL 7755976 (S.D. Iowa
Nov. 30, 2015).
Faced with threats of Missouri River flooding,a policyholder relocated its business and thensought compensation for its relocation costs
and associated expenses from its insurer,
Phoenix Insurance. Phoenix initially advanced
some money, but later brought suit seeking adeclaration that it had no coverage obligation.
The parties disputed several aspects ofcoverage, including whether the policyholder
established “direct physical loss or damage,”a prerequisite for coverage under the Extra
Expense Clause (“EEC”). The policyholder
argued that it sustained physical loss in two
respects: (1) the “loss of use” of its office dueto the threat of flooding; and (2) physical loss
at various times after it relocated its office.
The court rejected both contentions.
First, the court held that physical loss ordamage “generally requires some sort ofphysical invasion, however minor.” The court
therefore reasoned that the policyholder’s lossof use of its office space due to a threatened
event (rather than actual, existing damage)
did not constitute a physical loss. The court
further held that the factual record did
not establish a loss of use of the property
because the policyholder continued to house
employees and equipment at its original officeduring the relevant time frame. Second, thecourt ruled that to the extent the policyholder
suffered physical losses after relocation, thoselosses were not covered by the EEC because
there was no causal relationship between the
covered physical losses and the policyholder’s
decision to relocate (i.e., that the physicaldamage caused the policyholder to incur
moving expenses). No causal relationshipexisted here because all alleged physicallosses occurred after the policyholder had
already relocated. In emphasizing the causal
relationship requirement, the court cited toUnited Airlines, Inc. v. Ins. Co. of the Stateof Pa., 385 F. Supp.2d 343 (S.D.N.Y. 2005),
in which the court rejected a claim for $1.2
billion in business interruption coveragefollowing the World Trade Center attack
because the amount of recovery sought,
based on the total shutdown of U.S. aviation
system, bore no relation to the actual property
damage suffered by the policyholder at its
World Trade Center ticket counter. See
December 2012 Alert.

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.
Mary Kay Vyskocil+1-212-455-3093
mvyskocil@stblaw.com

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

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

Andrew S. Amer
+1-212-455-2953
aamer@stblaw.com

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

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

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

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

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

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

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

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

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

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

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

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

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