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In Louisiana, Insurers Are Not Vicariously Liable For The Negligence Of A Roofer Who Was Provided To The Insured Under The Insurance Company's "Direct Repair Contractor Program"

In Rubin v. American Insurance Co., 193 So. 3d 408 (La. App. 2016), American Insurance Company had a direct repair contractor program which was a list of approved contractors. If the insured used one of the approved contractors, the program provided that AIC would "be responsible" for the roof it provided. In this case, the insureds agreed to use the approved contractor provided by AIC to repair a roof damaged by a hail storm. The insureds alleged that the roofer was negligent when it removed the roof, but did not adequately protect the roof thereafter, nor did the approved contractor return to the job for several days while it was raining. It was alleged that mold grew in the house because of this negligence. The insureds sued AIC, alleging that AIC was responsible for the contractor's negligence under theories of vicarious liability or joint venture. The case was tried to a jury, which rendered a verdict in favor of the insureds, although the jury found that the insurance company was not, itself, negligent. The trial court then granted AIC's motion for a directed verdict as to the complaint.

Criminal Acts Exclusion Conclusively Applies In Cases Where The Insured Is Convicted Of A Crime

In Country Mutual Insurance Co. v. Dahms, 116 Ill. App. (1st) 141392, 2016 WL 2941713 (Ill. App., May 19, 2016) the Court found that a criminal conviction extinguished the insurance company's obligation to defend the insured. The Court held that prior to a criminal conviction the insurance company was required to defend its insured in a mixed complaint, alleging both negligence and criminal activity, because there was the potential for coverage based upon the non-criminal allegations. However, when the insured was convicted by a jury of aggravated battery, the criminal acts exclusion became applicable and the duty to defend ceased. Following the conviction, the insurance company could rely upon the jury verdict, which was based on the highest burden of proof known to the American legal system.

Insured's Duty To Defend Could Not Be Based On Speculation Over Whether Unpled Claims Existed Or Not

While it is an obvious conclusion, the Montana Supreme Court recently held in Fire Insurance Exchange v. Weitzel, 371 P.3d 457 (Mont. 2016) that the insured's duty to defend could not be based on speculation over whether unpled claims existed or not. The Court found that the complaint in question did not potentially seek damages for false imprisonment or bodily injury where the sole allegation was that the insured defrauded an elderly person. The Montana Supreme Court noted that a complaint did not need to expressly allege a covered cause of action to trigger the insurer's defense obligation, the complaint did need to contain facts that would support a covered claim.

Supreme Court Finds That a Policyholder's Arbitration Agreement With tts Insurer Does Not Apply to Disputes Between the Policyholder and the Insurance Agent

In Jody James Farms, J.V. v. Altman Group, Inc., 547 S.W.3d 624 (Tex. 2018), the insurance agent failed to timely submit a hail and rain claim on behalf of the insured to the insurance company. The agent was then sued by the policyholder, alleging breach of fiduciary duty and deceptive trade practices. The insurance agency moved to compel arbitration, which was granted by the Texas District Court. The case then proceeded through arbitration and resulted in a panel finding in favor of the agency. The trial court then affirmed the arbitration award. However, the Texas Supreme Court reversed the trial court's ruling.

Binding the Insurer to Relevant Facts Through a Consent Settlement

Recently the Missouri Supreme Court in Allen v. Bryers, 512 S.W.3d 17 (Mo. 2016), as modified (Apr. 4, 2017), reh'g denied (Apr. 4, 2017), cert. denied sub nom. Atain Specialty Ins. Co. v. Allen, 138 S. Ct. 212, 199 L. Ed. 2d 118 (2017) held that an insurance company's wrongful refusal to defend its insured bound the insurer to the findings made in the underlying tort action. The court found that when the insurer improperly refused a defense to its insured, the insured was entitled to enter into a consent judgment which bound the insurer to findings of fact that were made in the underlying tort action. In this case, the insured failed to pursue a declaratory judgment action, failed to appeal the denial of a motion to intervene in the tort action, and subsequently made an untimely motion to intervene. However, the court did find that the insurance company was not liable for damages in excess of the policy limits where there had been no finding that the insurer engaged in bad faith when it denied coverage.

Failure to Read Insurance Policy Not Required in Deceptive Business Practice Action Against Agent

Generally, insureds are required to read their insurance policies in Texas. However, where the nature of the lawsuit brought against the agent or broker involves affirmative misrepresentations under Texas' Deceptive Business Practices statute, the insured's failure to read the insurance policy is not fatal to proceeding with that type of claim under Texas law.

Can Issuing a Supplemental ROR Letter Cure the Insurer's Failure to Seek Reimbursement in the Original ROR Letter?

In James River Insurance Co. v. Medolac Laboratories, 290 F.Supp.3d 956 (C.D. Cal. 2018) the court held that a liability insurance company's failure to seek reimbursement of defense costs in an initial reservation of rights letter did not preclude the insurance company from later reserving the right to do so from the date of a supplemental reservation of rights letter. In so holding, the court rejected the insured's contention that the insurance company had waived its right to reimbursement or was estopped from asserting the right to reimbursement of attorney's fees which were incurred after the date of the supplemental reservation of rights letter (where the insurer first reserved its right to seek reimbursement). Regarding waiver, the court held there was no evidence that the insurer's failure to assert the right in its first ROR was a voluntary relinquishment of a known right. Regarding the estoppel claim, the court found that the insured's admission that she had acted more proactively in monitoring her insurer-appointed attorney after receiving the supplemental ROR precluded a finding of detrimental reliance and therefore the necessary element of the estoppel claim was missing. 

Florida Requires UIM Coverage Limits to Mirror the Policy's Liability Coverage

In Amica Mutual Insurance Co. v. Willis, 235 So.3d 1041 (Fl. App. 2d Dist. 2018) the Florida Court of Appeals held that the scope of UIM coverage must mirror the policy's liability coverage. In so finding, the Court of Appeals struck down a golf cart exclusion in the automobile policy's UIM section because there was no reciprocal exclusion in the policy's liability coverage.

An Insurance Company's Refusal To Authorize Settlement While Defending Under Ror May Breach The Insurer's Duty To Defend And Settle Under Illinois Law According To Illinois Court Of Appeals

In this case, the insurance company authorized the retention of independent counsel chosen by the insured due to the insurer's reservation of rights. As the case was being defended, independent counsel advised the insurer that the demand made by the claimant for settlement was reasonable in light of the likelihood that an excess judgment would be entered. Notwithstanding this advice from independent counsel, the insurer threatened to withdraw coverage if the insured continued to negotiate a settlement with the claimant. The court in Rogers Cartage Co. v. Travelers Indemnity Co., _____ N.E.3d _____ 2018 Ill. App. (5th) 160098 (Ill. App. 5th Dist. April 5, 2018) held that under those case facts, the insurance company was estopped from asserting its coverage defenses.

CALIFORNIA COURT OF APPEALS WEIGHS IN ON STATUTE OF LIMITATION FOR FAILURE TO PROCURE INSURANCE By Steven Plitt

In Lederer v. Gursey Schneider, 22 Cal. App. 5th, 508, 231 Cal.Rptr.3d 508 (2nd Dist. 2018) the issue before the court was when the statute of limitations began to run against an accounting firm that handled the client's insurance needs. It was alleged that the accounting firm failed to procure the requested UIM coverage. The court held that the statute of limitations began to run when the insurance company paid the UIM limit rather than when the insured was injured and discovered the inadequate amount of coverage.

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