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

December 2017 Archives

Allocating Defense Costs in Long Latency Cases in Louisiana

Louisiana has recognized a pro rata allocation method for determining indemnification in long latency exposures. However, the Louisiana courts have not resolved the issue of whether defense costs should also be allocated in those type of cases. The Louisiana Supreme Court recently resolved that issue in Arceneaux, et al. v. Amstar Corp., et al., 2016 WL 4699163 (La. September 7, 2016). In Arceneaux the court applied a pro rata method of allocation of defense costs. In doing so, the court found that a pro rata allocative method did not violate the reasonable expectations of the insurers or the insured because neither party could reasonably expect the insurer was liable for losses that occurred outside the policy coverage periods. The court noted that a pro rata allocation scheme was an equitable system for resolving long latency disease cases. Under the court's ruling, insureds are required to pay for its defense costs during years in which it did not acquire any insurance coverage, i.e., the orphan period.

Court Finds that an Earth Movement Exclusion Included Landslides

In Parker v. Safeco Insurance Co. of America, 2016 WL 3911544 (Mont. July 19, 2016) the issue was whether damage to a vacation cabin from a large bounder that fell down a hillside and into the cabin structure was covered under the Safeco policy. Safeco's policy contained an earth movement exclusion in which "earth movement" was defined as the "shrinking, rising, shifting, expanding, or contracting of earth." Examples given in the policy included earthquake, landslide, mudflow, mudslide, sinkhole, subsidence and erosion. The Montana Supreme Court held that the earth movement exclusion was not limited to damages caused by soil movement and it was broad enough to include damage from a falling boulder. There was no basis to separate rocks from soil for purposes of application of the exclusion. The policy included landslides as an example of earth movement without mentioning soil. The court found that a common understanding of the term "landslide" included a large boulder that came down the hill and onto plaintiff's cabin.

What's in a Label? Coverage for advertising injury?

The 2nd Circuit recently found that the sale of counterfeit branded goods was not covered as advertising injury under a commercial general liability policy. In USF&G v. Fendi Adele S.R.L., 823 F.3d 146 (2nd Cir. 2016), applying New York law, upheld the district court's ruling that the commercial general liability policy issued by USF&G did not cover sales of counterfeit goods because the sale of counterfeit goods did not qualify as an advertising injury. The court found that the sale and resulting injury of counterfeit goods was not, itself, an advertisement of the counterfeit goods. The court drew a distinction between the act of placing a counterfeit branded label on a handbag and the act of actually soliciting customers through advertisements.

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