In Steel v. Philadelphia Indemnity Co., 381 P.3d 111 (2016), a daycare center employee was convicted of child rape and child molestation while working at a daycare center. The parents brought a negligence action against the center. The daycare center had $1 million in coverage. Plaintiffs offered to settle for $4 million, which was rejected by Philadelphia. As trial approached, the insureds entered into a $25 million covenant judgment settlement with the plaintiffs. As part of the settlement the insureds received a covenant not to execute and the plaintiffs received an assignment of the insured's bad faith claims.
In Burnett v. GEICO, 389 P.3d 27 (2017) the Alaska Supreme Court, as a matter of first impression, held that a liability insurer can owe a tort duty to a third-party claimant when the insurer's claims handling actions affirmatively create a new and independent duty to the claimant. In Burnett, GEICO's insured crashed into a cabin which caused, in part, a fuel leak. The fuel leak was required to be remediated environmentally in accordance with the Alaska Department of Environmental Conservation (DEC) standards. GEICO hired a contractor to perform an environmental site assessment and to coordinate the necessary clean-up of the spill. However, GEICO delayed in the remediation effort. As a result, the fuel spill spread underneath the cabin itself. Because of this, the cabin owner sued not only the GEICO insured for the accident, but also GEICO for its negligent activities in timely cleaning up the environmental spill.
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.
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.