Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/2012/08/index.html
Timestamp: 2019-04-22 09:58:14+00:00

Document:
Robert Keown, the insured, was a real estate agent. See Keown v. Tudor Ins. Co., 2012 Haw. App. LEIS 801(Haw. Ct. App. Aug. 16, 2012). Keown had a professional liability policy with Tudor.
The insured was also one of several unpaid directors of Koloa Early School, a non-profit entity on Kauai. The School operated on land subleased from Honpa Hongwanji Mission of Hawaii, also a non-profit entity that operated a Buddhist temple and supervised the Koloa Hongwanji Mission.
In 2003, the School agreed to jointly purchase the leased property occupied by the School and Koloa, and later subdivide it with Honpa. Honpa, rather than Koloa, was to be named the co-purchaser with the School. Keown handled many of the details on behalf of both the School and Honpa, including being the point person for the transaction, arranging for an appraisal and survey of the property, working with county officials, etc.
The sale was closed without an agreement on how the property would be divided. The deed conveyed an undivided, one-half interest to the School and an undivided one-half interest to Honpa. Without informing Honpa or Koloa, Keown also recorded a mortgage for himself as mortgagee of an undivided one-half interest in the property to secure a $230,000 loan he had made to the School to finance purchase of the school building and the land under it.
No agreement was reached on the division of the property. A year after closing, Honpa filed suit against the School and Keown, seeking partition of the property and making a claim against Keown for negligence. The suit alleged Keown breached his duty of care by, among other things, causing Honpa to be in dispute with the School over the ownership of the property.
Keown tendered the complaint to Tudor, which denied coverage based upon exclusions in the policy. Exclusion G was broadly worded, providing that there was no coverage for "[a]ctions against the insured arising out of or connected with the performance or failure to perform services for any person or entity" that was "controlled by" or "in which any Insured is a director."
Keown hired counsel to defend the underlying suit. The case eventually settled with all claims against Keown being dismissed with prejudice. Keown then sued Tudor for declaratory relief. The circuit court found in favor of Tudor.
The ICA affirmed. Keown was a director on the School's board and was the point person for the transaction. Therefore, the underlying action brought by Honpa was an action connected with or arising out of services Keown performed for an entity which he helped control and was a director.
Damon Key will host a film festival geared towards the legal field September 1 to 6, 2012. The films will be presented at the Honolulu Museum's Doris Duke Theater. Afternoon and evening presentations are being offered.
A full listing of the times and dates of the films, and an opportunity to purchase tickets on line, can be found at the Doris Duke Theater's website.
In a long awaited decision regarding California's liability for damages caused by the Stringfellow Acid Pits case, the California Supreme Court adopted the "all sums" method of allocating coverage among multiple insurers for long-tail claims. Further, the court concluded that stacking of policy limits was consistent with the CGL policy language. See State v. Cont'l Ins. Co., 2012 Cal. LEXIS 7324 (Cal. Aug. 9, 2012).
We discussed in a prior post the decision by the Court of Appeal. By way of summary, in 1955 a state geologist determined that a Riverside County quarry was a suitable location for disposal of industrial waste. Based on this recommendation, the site was developed and went into operation in 1956. Problems with the site developed, leading to, among other things, contamination of groundwater and the release of contaminants from the site during heavy rains. The site was closed in 1972.
In 1998, a federal court found the State liable for harm caused by the site and delaying in its remediation. The State was held responsible for all past and future cleanup costs. When its insurers refused to provide coverage under liability policies, the State sued. The trial court held that each insurer was liable for damages, subject to its particular policy limits, for the total amount of the loss. It also held that the State could not recover the policy limits in effect for every policy period, and could not "stack" policy periods to recover more than one policy's limits for covered occurrences. "Stacking" referred to the stacking of policy limits across multiple policy periods that were on a particular risk. The State had to choose a single policy period for the entire loss coverage, and it could recover only up to the specific single policy limit in effect at the time the loss occurred.
The Court of Appeal, like the trial court, held that once coverage was triggered, all of the insurers had to indemnify the insured for the loss. However, the Court of Appeal reversed the trial court's ruling that prohibited the State from stacking the total policy limits in effect for any one policy period.
The Supreme Court affirmed the Court of Appeal.The court had previously held that as long as the property was insured at some point during the continuing damage period, the insurers' indemnity obligations persisted until the loss was complete or terminated. See Aerojet-General Corp. v. Transport Indem. Co., 17 Cal. 4th 38 (1997). The policies at issue here supported adoption of the all sums coverage principles. The policies compelled the insurers to pay "all sums which the insured shall become obligated to pay . . . for damages . . . because of injury or destruction of property . . . ." This grant of coverage did not limit the policies" promise to pay "all sums" of the policyholder's liability solely to sums or damage "during the policy period." Therefore, the policies obligated the insurers to pay all sums for property damage attributable to the Stringfellow site, up to their policy limits as long as some of the continuous property damage occurred while each policy was "on the loss."
Next, the court considered whether the consecutive policies could be stacked to allow recover up to the policy limits of multiple policies. In other words, stacking policy limits meant that when more than one policy was triggered by an occurrence, each policy could be called upon to respond to the claim up to the full limits of the policy.
Absent anti-stacking provisions in the policy, the standard policy language permitted stacking. The court disapproved FMC Corp. v. Plaisted & Companies, 61 Cal. App. 4th 1132 (1998), which prevented an insured from stacking multiple consecutive policies in a case in which the insured had caused toxic contamination over a period of many years.
The court considered the number of occurrences when food infecting several hundred people with E. coli was prepared and served at two different places. Republic Underwriters Ins. Co. v. Moore, 2012 U.S. App. LEXIS 14907 (10th Cir. July 20, 2012).
The insured restaurant prepared and served E. coli-contaminated food between August 15 and August 25, 2008. Three hundred, forty-one people were infected, 21 of whom ate at a church gathering catered by the restaurant. There was one fatality.
The insurers argued that the entire contamination period constituted one continuing occurrence as defined by the policies. The event giving rise to all the alleged injuries was the restaurant's preparation, handling, or storage of food that purportedly became contaminated with E. coli.
The restaurant relied on an investigation report which was inconclusive as to how the bacteria contaminated the restaurant. The report suggested multiple likely contributing factors, including contamination by food-handlers, as well as cross-contamination from food-preparation equipment, counter surfaces and storage areas.
The magistrate judge found two occurrences because two separate locations were used to prepare and serve the food.
The Tenth Circuit reversed. As long as the injuries stemmed from one proximate cause, there was a single occurrence. Here, all the injuries were proximately caused by the restaurant's ongoing preparation of contaminated food. Therefore, there was only one occurrence.
When the additional insured argued it was entitled to coverage for loss to its cars due to a rain storm, the court disagreed because the endorsement only provided for third party coverage. BMW of N. Am. v. Complete Auto Recon Servs., 2012 S.C. App. LEXIS 218 (S.C. Ct. App. Aug. 1, 2012).
BMW had a services agreement with Complete Auto to provide washing and maintenance services on a fleet of BMW vehicles. One night, a Complete Auto employee left the windows of six BMW vehicles open during a severe rain storm. The vehicles suffered property damage totaling $601,720.
Complete Auto had a Garage Insurance Policy with Colony Insurance Company. It provided liability coverage caused by an accident resulting from garage operations. "Comprehensive" coverage was provided for loss to a customer's auto by any cause except collision with another object. Finally, an endorsement named BMW as an additional insured, but only for liability. The endorsement did not mention any other types of coverage.
After the rain storm, BMW filed a claim with Colony, which was rejected. BMW sued Colony. The trial court granted summary judgment to Colony.
On appeal, BMW argued Complete Auto was paying premiums for "Comprehensive" coverage under the "Garage Keepers" coverage, which is separate and distinct from any liability premiums Complete Auto paid, and BMW was an additional insured to that coverage. Colony argued the endorsement only provided liability coverage to BMW. Thus, because liability coverage extended to cover an insured's liability to a third party and BMW had not been found liable to a third party, there was no coverage for BMW.
The appellate court agreed BMW was not afforded coverage under the policy as to the damage to the vehicles.
In a sad fact situation, the property owner had no coverage when sued for the death of one child and serious injury to another who were playing on his property. Allstate Ins. Co. v. Naai, No. 10-15415 (9th Cir. July 24, 2012).
A driver backed her vehicle over two children on property owned by defendant Naai. The children's parents sued and named Naai as a defendant for negligently designing or constructing the property in such a way that the resident manager's building and parking area were located in an area used by tenants' children as a playground.
Naai tendered the defense to Allstate. Allstate filed for declaratory relief in the Hawaii federal district, court seeking a declaration that there was no possibility for coverage. The policy excluded coverage for bodily injury or property damage arising out of the ownership, operation, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motorized land vehicle or trailer. Judge Ezra found the exclusion barred coverage. See Allstate Ins. Co. v. Naai, 684 F. Supp. 2d 1220 (D. Haw. 2010).
The Ninth Circuit affirmed. The exclusion was not limited to the insured's ownership, operation, maintenance, or use of an automobile, as argued by Naai. Instead, by its terms, the exclusion did not cover bodily injury arising out of the operation of any motor vehicle.
Here, the children's injuries arose from the operation of a motor vehicle. Therefore, the policy unambiguously excluded coverage for the injuries no matter who was operating the motor vehicle at the time.
Special thanks to Daniel Kim, Esq. who represented the insured, for the heads up on this case.
The California Court of Appeal reversed the trial court's ruling and held that the insurer had a duty to defend a "personal injury" and/or "advertising injury" suit. See Travelers Prop. Cas. Co. of Am. v. Charlotte Russe Holding, Inc., 2012 Cal. Ct. App. LEXIS 807 (Cal. Ct. App. July 13, 2012).
A clothing manufacturer, Versatile, sued a distributor of its products, Charlotte Russe, for breach of contract, fraudulent and negligent misrepresentation. The parties had entered a contract under which Charlotte Russe would be the exclusive sales outlet for Versatile's "People's Liberation" brand of apparel,which included jeans and knits. Charlotte Russe promised to promote the sale of Versatile's products, which Versatile deemed to be a premium product.
The underlying complaint alleged Charlotte Russe sold Versatile's products at a severe discounts, which not only violated the contract, but would also result in significant and irreparable damage to the People's Liberation brand and trademark. An expert opined that a 70 to 85 percent markdown of People's Liberation brand clothing had the potential of creating a disparaging effect on the People's Liberation brand.
Charlotte Russe was insured by Travelers. The CGL policy included "personal injury" and "advertising injury" coverage. Personal injury "caused by an offense arising out of your business . . ." was covered. Further, advertising injury coverage applied to "'[a]dvertising injury' caused by an offense committed in the course of advertising your goods, products or services. . ."
Travelers denied the tender. Travelers contended there was no coverage because the reduction of a product's price was not a disparagement of that product. The district court granted Travelers' motion for summary judgment.
The Court of Appeals reversed. In was not essential that the underlying claims be expressly phrased in terms of "disparagement" or trade libel in order to trigger personal injury coverage. The underlying claims could trigger a duty to defend if the conduct for which the policy provided coverage was charged by implication, as well as by direct accusation. Here, Versatile's pleading alleged that the People's Liberation brand had been identified in the market as premium, high-end goods; and that Charlotte Russe had published prices for goods implying they were not. Versatile therefore pled that the implication carried by Charlotte Russe's pricing was false. This was enough to invoke a duty to defend.

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