Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/2014/12/index.html
Timestamp: 2019-04-22 09:57:22+00:00

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The court denied the insurer's motion for summary judgment, holding that the insurer had a duty to defend the additional insured against claims for construction defects. Centex Homes v. Lexington Ins. Co., 2014 U.S. Dist. LEXIS 164472 (C.D. Cal. Nov. 24, 2014).
Centex contracted with Gateway Concrete, Inc. to install concrete foundations for a housing development. Gateway was required to purchase insurance with an endorsement naming Centex as an additional insured. Gateway obtained the policy from Lexington.
The homes Gateway worked on were sold between August 2005 and October 2007. Several individuals sued Centex and all of the subcontractors for property damage to their homes. In February 2009, Centex tendered the defense and indemnity to Lexington. Lexington declined coverage. In September 2011, Centex settled with the homeowners for $1,078,000, and then sued Lexington for breach of contract and bad faith.
Lexington moved for summary judgment, arguing (1) only Gateway could satisfy the self-insured retention (SIR) and never did so; (2) policy exclusions barred coverage for the types of damages alleged to have resulted from Gateway's work.
Under the SIR Endorsement, Gateway was to assume the retained limit, and Lexington had no duty to defend until the retained limit was exhausted. The court first held that Centex could satisfy the SIR. Unless a policy expressly provided otherwise, a retained limit could be satisfied by a codefendant's payment or by other insurance obtained by the insured. At a minimum, the SIR Endorsement was ambiguous as to whether payment to satisfy the requirement could only be made by Gateway.
Lexington next argued that Exclusions j (5) and j (6) precluded coverage. The underlying action alleged damage both for the costs of replacing and reconstructing faulty work "as well as to correct, replace and reconstruct the damage to the property resulted therefrom." Therefore, because the homeowners alleged damage to other property, Exclusions j (5) and j (6) did not apply.
Finally, the court denied Lexington's motion for summary judgment as to Centex's claim for the breach of good faith and fair dealing. Centex argued that Lexington took nearly 14 months to make a decision to deny coverage and the delay was unreasonable. Viewed in a light most favorable to Centex, a jury could conclude that Lexington acted unreasonably.
Injury suffered by children of different families living at different times in the same apartment was limited to one occurrence under the policy's noncumulation clause. Nesmith v. Allstate Ins. Co., 2014 N.Y. LEXIS 3350 (N.Y. Nov. 25, 2014).
Regardless of the number of insured persons, injured persons, claims, claimants or policies involved, our total liability . . . for damages resulting from one accidental loss will not exceed the limit shown on the declarations page. All bodily injury . . . resulting from one accidental loss or from continuous or repeated exposure to the same general conditions is considered the result of one accidental loss.
The Young family lived in the apartment from November 1992 to September 1993. In July 1993, the Department of Health notified the landlord that one of the children had an elevated blood lead level and that several areas in the apartment were in violation of state regulations. Repairs were made and the Department advised the landlord in August 1993 that the violations had been corrected.
After the Young family moved out, the Patterson family moved into the apartment. Again, one child was found to have an elevated blood lead level. The Department of Health sent another letter stating that violations had been found and needed to be corrected.
In 2004, Young and Jannie Nesmith, on behalf of the Patterson children (her grandchildren), brought two separate actions against the landlord for personal injury caused by exposure to lead paint. Young settled in 2006 for $350,000, which Allstate paid. In 2008, Nesmith settled her claim pursuant to a stipulation that reserved the issue of the applicable policy limit. Allstate paid the $150,000 that it claimed was the remaining coverage under the landlord's policy. Nesmith then sued Allstate for a declaratory judgment, asserting that a separate $500,000 limit applied to each family's claim, and that her grandchildren could recover an additional $350,000.
The trial court agreed with Nesmith, finding it could not conclude that the children in the two cases were injured by exposure "to the same conditions." The Appellate Division reversed. In a prior case, Hiraldo v. Allstate Ins. Co., 5 NY3d 508 (2005), the Court of Appeals interpreted a noncumulation clause found in successively-issued liability policies. The court held that a person suing for exposure to lead paint during the terms of all the policies could recover no more than one policy limit. Therefore, under the plain terms of the noncumulation clause here, the number of claims and claimants could not make an additional limit available.
The Court of Appeals affirmed. The court rejected Nesmith's argument that the injuries to the Young children and Nesmith's grandchildren were separate losses because they did not result "from continuous or repeated exposure to the same general conditions." Young's children and Nesmith's grandchildren were exposed to the same hazard, lead paint, in the same apartment. The landlord's remedial efforts were not wholly successful, and the same general conditions - the presence of lead paint that endangered children's health - continued to exist. Because Young's children and Nesmith's grandchildren were injured by exposure to the same general conditions, their injuries were part of a single "accidental loss," and only one policy limit was available to the two families.
Indemnity obligations and additional insured coverage were at issue in Strauss Painting, Inc. v. Mt. Hawley Ins. Co., 2014 N.Y. LEXIS 3347 (N.Y. Nov. 24, 2014).
Strauss Painting, Inc. (Strauss) contracted with the Metropolitan Opera Association, Inc. (the Met) to strip and repaint the rooftop steel carriage track for the opera house's automated window-washing equipment. The contract provided that Strauss would indemnify and hold the Met harmless. Exhibit D to the contract set forth three types of insurance that Strauss was to procure: (1) workers' compensation; (2) owners and contractors protective liability (OCP); and (3) comprehensive general liability. The OCP policy was to add the Met as an additional insured. Strauss failed to obtain the OCP policy.
At the time it contracted with the Met, Strauss had a CGL policy issued by Mt. Hawley. The policy's additional insured endorsement (ICO form CG 20 33 07 04) stated that "an insured" included "any organization for whom Strauss is performing operations when Strauss and such organization have agreed in writing that such organization be added as an additional insured."
During the project, an employee of a subcontractor, Manuel Mayo, was injured. Mayo sued the Met. The Met tendered to Strauss, who tendered to Mt. Hawley. Mt. Hawley denied coverage. Eventually, the Met brought a third-party complaint against Strauss in the Mayo lawsuit for indemnification and for breach of contract for failure to purchase the OCP policy required by the contract.
Strauss then sued Mt. Hawley and the Met, seeking a declaration that Mt. Hawley was obligated to defend and indemnify it in the Met's third-party action. The Met cross-claimed against Mt. Hawley, asking for a declaration that it was an additional insured on Strauss' CGL policy, thereby requiring Mt. Hawley to defend and indemnify it in the Mayo litigation.
The lower courts ruled that Mt. Hawley was required to defend the Met in the Mayo lawsuit. The contract directed Strauss to purchase liability insurance naming the Met as an additional insured, and the CGL policy issued by Mt. Hawley to Strauss contained an additional insured endorsement.
b. Owners and contractors protective liability insurance with a combined single limit of $5,000,000.00 Liability should add the Metropolitan Opera Association as an additional insured and should include contractual liability and completed operations coverage.
Mt. Hawley argued the second sentence simply required Strauss to purchase OCP coverage to protect the Met from risks arising out of Strauss' work, rather than mandating that Strauss include the Met as an additional insured on its CGL policy.
The court agreed with Mt. Hawley. The second sentence in paragraph "b" could only refer to the OCP coverage that Strauss promised to purchase for the Met in the first sentence, but never actually acquired. Therefore, the Met was not an additional insured on Strauss' CGL policy with Mt. Hawley.
The insurer prevailed in summary judgment, disposing of the insured's bad faith claim based upon the investigation of the loss. Nino v. State Farm Lloyds, 2014 U.S. Dist. LEXIS 163993 (S.D. Tex. Nov. 24, 2014).
The insured filed a claim with State Farm for damage resulting from a hailstorm on March 29, 2012. An independent adjuster, Charles Crump, conducted an investigation on behalf of State Farm. Crump inspected the roof, where he noted prior repair to the roof, and found no covered damage to the roof as the result of the 2012 hailstorm. Crump found minimal damage to other parts of the house, totaling $2,311.75, which resulted in no payment after the deduction. Crump provided the insured with a printed copy of his damage estimate.
The insured then hired a public adjuster who found damage totaling $31,991.72, including $10,051.22 in roof repairs.
The insured requested State Farm to conduct another inspection. State Farm assigned the second inspection to Richard Wallis. Like Crump, Wallis inspected the roof, noted previous repairs, and found no covered damage to the roof. He did find damage in the master-bedroom, which totaled $3,540.10, resulting in a post-deductible payment of $1,209.10. Wallis also gave the insured a copy of his estimate, as well as a denial letter.
The insured sued. State Farm filed a motion for partial summary judgment on the insured's bad faith claims, including common law breach of the duty of good faith and fair dealing and for statutory violation of the Texas Insurance Code.
In opposing State Farm's motion, the insured argued there were genuine issues of material fact regarding the reasonableness of the two State Farm inspections. The insured argued that the inspections were inadequate and results-oriented. The court disagreed. The insured did not offer any evidence showing that State Farm knowingly and repeatedly ignored evidence presented to the insured. Instead, State Farm sent two adjusters to inspect the property. The two inspectors, based on their expertise and inspection of the property, determined the property damage was not caused by hail, contrary to the findings of the public adjuster. A finding of hail damage by one expert did not prove another expert's contrary findings were based on an inadequate inspection.
The insured did not provide any expert testimony, proof of standard industry practices, or legal authority that State Farm's adjusters relied on inadequate testing and information.
The insured also argued that State Farm violated the Texas Insurance Code because Crump did not send her an acceptance or denial letter of coverage. Similar to Haw. Rev. Stat. sec. 431:10-103 (11) (B), the Texas Insurance Code required the insurer to "notify a claimant in writing of the acceptance or rejection of a claim no later than the 15th day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss." Further, if the insurer rejected the claim, it had to state the reasons for the rejection. The insured argued that Crump's estimate did not comply with the statute because it did not discuss coverage.
The court held, however, that Crump's estimate was a timely written document presented to the insured that discussed the basis of denial of her claim. Therefore, there was no statutory violation.
Consequently, State Farm was granted its motion for partial summary judgment.
Focusing on the facts surrounding the accident determined which of two insurers' policies were responsible for covering a serious injury to a worker. Nat. Am Ins. Co. v. Harleysville Lake State Ins. Co., 2014 U.S. Dist. LEXIS 160593 (S.D. Ind. Nov. 14, 2014).
Venture Logistics, Inc. offered trucking and warehouse services to its clients. Indy Powder Coatings was a customer of Venture Logistics. A Venture Logistics truck went to Indy Powder to deliver materials. Robert Harden was a forklift operator for Indy Powder and was unloading skids from the Venture Logistics tractor-trailer. The driver started to drive the truck away before Harden was finished unloading the skids. As the truck was moving, Harden got off the forklift to try and alert the driver.The forklift slid down the tractor-trailer and pinned Harden. Harden was seriously injured.
Harden sued Venture Logistics. At the time of the accident, Venture Logistics had two insurers - State National Insurance Company and Harleysville Lake State Insurance Company. State National's policy excluded "bodily injury" arising out of the operation and loading and unloading of any auto. State National defended Venture Logistics without reservation until it subsequently raised the "Movement of Property by Mechanical Device" exclusion. State National notified Harleysville that it may have obligations under its policy to defend and indemnify Venture Logistics.
The Harden lawsuit settled and State National paid Harden $800,000 on behalf of Venture Logistics. State National then sued Harleysville. The court noted that the case turned on whether Harden's injuries occurred due to his use of the forklift to load and/or unload skids from the tractor-trailer (meaning Harleysville would be liable) or if his injuries arose from the driver's premature driving away of the tractor-trailer (meaning State National would be liable).
The court agreed with Harleysville that what sent in motion the chain of circumstances leading to Harden's injury was the driver's use of the tractor-trailer when she pulled away prematurely. Harden's injuries did not result from the unloading of the skids; instead, the injuries resulted from the driver negligently driving the tractor-trailer away, causing the forklift to pin Harden. Had the driver not driven away, Harden would not have been injured.
Reaching into the weeds to analyze a business interruption claim, the Massachusetts Court of Appeals determined the cost of ordinary payroll could be included in the calculation of net profit or loss in determining business loss income when business is resumed quickly after a fire. Verrill Farms, LLC v. Farm Family Cas. Ins. Co., 2014 Mass. App. LEXIS 145 (Mass. App. Ct. Nov. 4, 2014).
The insured suffered a fire loss at its farm store. Within two days, the business was reopened at alternate locations at reduced capacity. Within a month, the business had resumed nearly full capacity in temporary locations. No employees were laid off. This allowed the insured to maintain its business and generate income.
The insured submitted a claim for loss of business income, based on its loss of net income in the year after the fire. The insurer paid a sum considerably less than the claim based upon its interpretation of what expenses could be included in a calculation of net profit or loss in order to determine loss of business income. The trial court held that the insurer did not have to pay the cost of ordinary payroll beyond the sixty-day limit, and granted summary judgment in the insurer's favor.
The insured never made a claim for a direct payment of the costs of its ordinary payroll, however. Instead, it only sought to include the cost in its calculation of net profit or loss for the appropriate time period. Consequently, the appellate court reversed, holding that loss of business income could only be determined by including the expense of ordinary payroll, and other unreimbursed continuing expenses required by the resumption of operations, in the calculation of net profit or loss.
An endorsement provided direct payment to the insured for the cost of "ordinary payroll expenses." The purpose of this coverage was to make a direct payment to the insured of the cost of ordinary payroll, for a specified period of time, in the event that the business could not resume its operations during the period of restoration. Here, however, the insured resumed its business operations at alternate locations within two days of the fire. Therefore, the insured made no claim for direct payment pursuant to the limited ordinary payroll endorsement.
The policy did not provide a methodology to calculate loss of business income if the insured was able to resume operations at an alternate location. The insurer argued that the necessary expense of ordinary payroll could not be included as a deduction from gross revenue earned during the resumption of operations by the insured in order to calculate net profit or loss. The lower court agreed.
While making no claim for direct payment of the cost of ordinary payroll, the insured instead used the cost of ordinary payroll as an operating expense to offset its revenue in determining net profit or loss during the period of restoration. The appellate court agreed that gross income had to be reduced by the expenses required to earn it in order to determine net income. Only if the net profit or loss was less than the net profit that the insured would have earned if no fire had occurred would the policy be called upon to make the payment for loss of business income.
Therefore, the judgment was vacated and the matter remanded for entry of a new judgment in the insured's favor. The new judgment would provide that loss of business income can only be determined by including the expense of ordinary payroll, and other unreimbursed continuing expenses required by the resumption of the insured's operation, in the calculation of net profit or loss.

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