Articles Posted in Insurance

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Federal Courts of Appeal

Dam Claims Collapse
On May 7, 2019, the U.S. Court of Appeals for the Eleventh Circuit decided the case of Navelski, et al. v. International Paper Company. After a major storm, a dam constructed by International Paper to serve the operations of its local paper mill, was breached, releasing millions of gallons of water into a nearby creek resulting in the flooding of many homes located downstream from the creek. IP was sued by the homeowners in a class action, alleging negligence and strict liability for conducting an abnormally dangerous activity. The trial court dismissed the strict liability claim, and the jury found IP was not negligent in the operation of the dam. On appeal, the court upheld the jury verdict, agreeing that the verdict was supported by the evidence heard by the jury. The appeals court also agreed that the strict liability claim was properly dismissed as a matter of law because the operation of this dam was not an abnormally dangerous activity under Florida law. The plaintiffs had also argued that the jury should not have been advised that the home county, Escambia County, has applied for a FEMA grant which apparently made the case that some of the downstream homes were naturally prone to flooding. A redacted version of the application was allowed to be shown to the jury, but the appeals court held that the plaintiffs had not demonstrated that the court ruling was prejudicial.

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On January 25, the Texas Supreme Court issued a unanimous ruling in the case of Anadarko Petroleum Corp. and Anadarko E&P Co. v. Houston Cas. Co., et al., characterized as an “interlocutory permissive appeal,” reversing the decision of the U.S. Court of Appeals for the Ninth Circuit, sitting in Beaumont, TX, regarding Anadarko’s insurers’ obligation to pay a significant amount of Anadarko’s legal defense costs that resulted from its liability in the Deepwater Horizon oil spill.

“[W]e hold that the Joint Venture Provision does not limit the Underwriters’ liability for Anadarko’s defense expenses insured under section III.”

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There were 442 bills passed by the 115th Congress and signed by the President. Most of these new laws have attracted very little attention, so it may be helpful to review a few of them. The list below provides a glimpse into the myriad issues that face each Congress, and the implementation issues that will be the responsibility of the federal agencies:

• PL 115-265, the Save our Seas Act of 2018. The law reauthorizes and amends the Marine Debris Act, located at 33 U.S.C. § 1952, to “promote international action to remove marine debris”. The law requires the Department of State and other federal agencies to develop outreach and educational strategies to address the source of marine debris and provide technical assistance reduce the incidence of marine debris and provide technical assistance to expand waste management systems on an international basis. In case of a “severe marine debris” event, to assist in the cleanup. It is also the sense of Congress that the President should support research and development on systems that result in the reduction of derelict fishing gear and land-based sources of debris that enters the marine environment. The law addresses the membership of an Interagency Marine Debris Coordination Committee. The enormous amount of plastic waste deposited in the ocean must have been a concern to the legislators. Continue reading

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In Ohio Supreme Court Finds Subcontractor’s Faulty Workmanship Causing Damage to the Work Itself Not Covered under CGL Policy, my colleague Matt Stockwell discusses a decision last week by the Ohio Supreme Court, in Ohio Northern University v. Charles Construction Services, Inc., that unfortunately narrowed the scope of insurance coverage for a subcontractor’s faulty workmanship. The Court held that a subcontractor’s faulty workmanship in a construction defect case is not an “occurrence” under standard-form commercial general liability (CGL) policies in Ohio.

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In Hurricane Florence: Maximizing Insurance Recoveries, Pillsbury’s Joe Jean, Peter Gillon and Matt Putorti discuss the immediate and proactive steps affected businesses and other organizations should take to maximize their insurance recovery.

1. Obtain and Review Your Insurance Policies.
2. Assess All Possible Coverages.
3. Place All Insurers on Notice.
4. Document and Mitigate Your Losses.
5. Detail Your Business Interruption and Contingent Business Interruption Claims.
6. Engage Experts.
7. Follow the Policy to Preserve the Claim.
8. Consider Government Funds for Nonprofits Providing Critical Infrastructure and Essential Services.

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In Hurricane Florence: Is Your Company Prepared for a Disaster?, Pillsbury’s Joe Jean, Tamara Bruno, Matt Jeweler and Janine Stanisz discuss how important it is for companies to understand how their insurance policies cover the company’s risk in the event of an unexpected or catastrophic loss. Having the correct insurance policies in place is only the first step.

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cracked-wall-picture-id524885417-300x200On January 18, 2018, in McMillin Albany LLC v. Superior Court, the California Supreme Court published a closely followed decision resolving a lower court split interpreting California’s Right to Repair Act (S.B. 800, Civ. Code § 895 et seq.). The Court determined that the legislature intended to alter the common law when it came to economic loss and property damage, making the Act the exclusive remedy for construction defects.

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The Federal Emergency Management Agency (FEMA) and New York City have announced that they will be working together to update the City’s flood flood-300x200maps. The need for updating FEMA’s flood maps has become more than apparent since at least 2005. Cities like New York, Houston, and Baton Rouge, which have been devastated by floods in recent years, are all too familiar with the shortcomings of FEMA’s flood maps. New York City, in particular, suffered in the wake of Hurricane Sandy, when approximately 80% of those who experienced flood damage did not have flood insurance.

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On August 25, the U.S. Court of Appeals for the Tenth Circuit, in an unpublished opinion, affirmed the lower court’s ruling that the cost to remediate environmental contamination at a ski resort was subject to a contractual exclusion in the facility’s commercial general liability insurance policy. The case is Taos Ski Valley, Inc., v. Nova Casualty Company.

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On September 15, the U.S. Court of Appeals for the First Circuit released a significant Oil Pollution Act (OPA) ruling. The case is Ironshore Specialty Insurance Company v. U.S., et al. The Court of Appeals affirmed the District Court’s decision that neither the U.S. nor American Overseas Marine Company, LLC (AMSEA) , a contractor that provided specified services to the U.S. Navy in connection with the operation of “the FISHER,” a government-owned transport vessel and vehicle cargo ship, were liable under the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701-2761 (OPA), for a fuel oil discharge. However, Ironshore Specialty Insurance Company (Ironshore), BSR’s insurer, negligence claims against the U.S. (but not AMSEA) were remanded to the District Court for further proceedings.

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