Actual Cash Value Does Not Allow for Depreciation of Labor Costs The Illinois Appellate Court for the Fifth District, in an opinion written by Justice Cates with Justices Moore and Barberis concurring, applying Illinois law, answered a certified question and held that “actual cash value” does not include depreciation of intangible labor costs. A policyholder filed a putative class action suit... Read More
Governmental Closure Orders Not “Direct Physical Loss” While it is still in the beginning stages, the early results in the coronavirus insurance litigation over losses related to governmental closure orders have favored insurers. In the two recent opinions described below, the courts each noted that while it sympathized with the policyholders’ situation, it found that as a matter of law... Read More
Unearned Wage and Benefit Theft Subject to Salary Exclusion The Illinois Appellate Court for the Second District, in an opinion written by Justice Hutchinson with Justices McLaren and Bridges concurring, applying Illinois law, affirmed the trial court and held that wage theft is not covered under the insurance policy at issue. According to the appellate court, unearned salary payments are... Read More
Extrinsic Evidence Not Allowed to Prove Exclusions to Duty to Defend The United States Court of Appeals for the Fifth Circuit, applying Texas law, reversed and remanded the decision of the district court because, in contravention of the eight-corners rule, the district court improperly allowed extrinsic evidence into its review of whether State Farm Lloyds (“State Farm”) had a duty... Read More
Coverage “Arising Out of” Policyholder’s Operations Triggered Even if Not Named in Complaint The Seventh Circuit Court of Appeals, applying Illinois law, affirmed the district court’s judgment on the pleadings holding that Columbia Insurance Group, Inc. (“Columbia”) owed a duty to defend a property owner and property manager as additional insureds in an underlying suit involving a construction injury. In... Read More
Broad Discovery Permitted of Experts Retained by Insurer The Illinois Appellate Court for the Second District, in an opinion written by Justice Zenoff with Justices Jorgensen and Schostok concurring, applying Illinois law, upheld the trial court’s discovery order directing defendant Allison Rancour to produce documents relating to two controlled expert witnesses retained by her insurer, State Farm Insurance Company (“State... Read More
Replacement Vehicle Taxes and Fees Not Compulsory in a Total-Loss Claim The Seveth Circuit Court of Appeals, in an opinion written by Chief Justice Sykes, applying Illinois law, affirmed the District Court’s dismissal of a proposed class action suit against Geico Casualty Company (“Geico”) for breach of contract finding that neither the underlying policy nor the Illinois Insurance Code requires... Read More
Theoretical Amended Complaints and Tortured Grammar not Enough for Duty to Defend The Second Circuit Court of Appeals, applying New York Law, affirmed summary judgement granted by the district court finding that a fabric manufacturer’s insurer had no duty to defend or indemnify in a suit for copyright infringement. Spandex House, Inc. (“Spandex House”) was sued by Rex Fabrics for copyright... Read More
Insured’s Knowledge of Potential Harm Enough to Defeat Coverage The Seventh Circuit Court of Appeals, in an opinion written by the Honorable Judge Scudder, applying Indiana law, affirmed the decision of the lower court finding that Westfield Insurance Company (“Westfield”) did not have an obligation to defend or indemnify its insured under a general commercial liability insurance policy because... Read More
“Gross Negligence” Can be an “Accident” Triggering Coverage The Iowa Supreme Court, applying Iowa law, reversed a trial court decision holding an insurer had no duty to defend or indemnify for allegations of gross negligence. The trial court opinion held that “gross negligence” fell outside of the scope of coverage of the applicable CGL policy because it could not... Read More
