Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

October 2016 Archives

Offensive Sewage Odors were Recently Held to be Pollutants and Fell Within an Insurance Pollution Exclusion

The South Carolina Court of Appeals recently held that offensive odors from sewage could be classified as fumes or gasses for purposes of a pollution exclusion. In South Carolina Ins. Reserve Fund v. East Richmond County Public Service District, 2016 WL 1125810 (S.C. App., 3/23/16), the Court held that a pollution exclusion applied to a homeowner's negligence and trespass claims brought against a public service district that was responsible for releasing offensive odors from a sewage force valve. In reaching this decision, the Court noted that the exception to the exclusion for sudden and accidental releases did not apply to expected and necessary regular discharges from a sewage force valve.

Does a Parent Corporation Have Standing to Bring a Declaratory Judgment Action Against One of Its Subsidiaries Insurers? This question was recently answered by the California Court of Appeals.

The California Court of Appeals recently held in D.Cummins Corp. v. U.S. Fidelity & Guar. Co., 246 Cal.App.4th, 201 Cal.Rptr.3d 585 (1st Dist., 2016), that a parent corporation lacked standing to sue one of its subsidiary's insurers for declaratory relief. In this case, the parent corporation did not qualify as an insured under the subsidiary's liability policies. Therefore, the Court held that the parent company lacked standing to seek a declaratory judgment establishing the duties of the subsidiary's liability insurers to defend and indemnify for asbestos claims. The Court found that a mere practical interest in the outcome of a contractual dispute was not sufficient to establish standing. Under the Declaratory Judgment Act the plaintiff must show the existence of an "actual controversy" which required the court to evaluate the rights and duties that the plaintiff was asserting in making a standing determination. The Court found that the parent corporation's responsibility for the subsidiary's litigation strategy, which included making decisions about when to settle the personal injury actions, did not give the parent corporation sufficient direct in the subsidiary's liability policy to support jurisdiction. The California Declaratory Judgment Act gave discretion to the trial court in which the court could refuse to exercise the power granted by the Act in any case where the declaration or determination was not necessary or proper at the time under all of the circumstances presented. When the trial court declined jurisdiction under the Act, the trial court's decision would be viewed on an abuse of discretion standard.

In a Split Decision, the Colorado Supreme Court Recently Rejected an Actual Prejudice Standard in Determining Whether an Insured Violated the Policy's Consent No-Voluntary-Payments Clause When it Settled a Claim Without the Insurance Company's Permission

In Travelers' Property Cas. Co. of America v. Stresscon Corp., 370 P.3d 140 (Colo. 2016), the Colorado Supreme Court held that an insured contractor's settlement for a bodily injury claim that arose on a construction site where the subcontractor was working, without the insurance company's consent, violated the insurance policy's no-voluntary-payments clause and forfeited coverage as a matter of law irrespective of whether the insurer was able to prove that it was actually prejudiced by the settlement.

The Montana Supreme Court Brings Clarity to the Meaning of "Accident" in a CGL Policy's Occurrence Definition

In Employers Mutual Cas. Co. v. Fisher Builders, Inc., 383 Mont. 187, 371 P.3d 375 (2016), the Montana Supreme Court was called upon to interpret the term "accident" in a CGL policy's "occurrence" definition. The Court found that the term "accident" could include intentional acts if the damages "were not objectively intended or expected by the insured." Therefore, triable issues of fact existed regarding whether the insured, a construction contractor, had objectively intended or expected to violate a construction permit during a remodeling project.

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