Complexity does not excuse need to assess exhaustion on a policy-by-policy basis A California appellate court, applying California law, declined to adopt a blanket rule for determining when an insured can trigger its excess policies to cover losses due to claims of environmental injury.  The appellate court refused to uphold the “horizontal exhaustion” approach applied by the trial court and... Read More

Trial Court’s Stay Was Abuse of Discretion An Illinois appellate court, applying Illinois law, reversed the trial court’s order granting a motion to stay a coverage dispute pending the resolution of the underlying case and found that a determination of coverage could be made without determining issues of ultimate fact critical to the underlying dispute. Johnson-Downs Construction, Inc.  (“Johnson-Downs), entered into... Read More

AIG Must Defend Waste Transporter Insureds A Texas federal district court, applying Texas law, held an insurer had a duty to defend in an underlying lawsuit which concerned the cleanup of a Superfund site where the insureds allegedly arranged for disposal of hazardous waste.  The court found that all of the policies at issue were potentially triggered, not just the... Read More

Documents Prepared by Policyholder Prior to Underlying Litigation Privileged An Illinois appellate court, applying Illinois law, reversed the trial court’s order requiring the production of documents which the policyholder claimed were subject to privilege, and instructed the trial court to conduct an in camera review to assess the privilege claims.  The appellate court found that attorney-client privilege was available to... Read More

Cause Was Unauthorized Entry Into System By Outsiders and Not Fact Employees Physically Transferred the Funds The United States District Court for the Southern District of New York, applying New York law, held that Federal Insurance Company’s (“Federal”) insurance policy provided coverage for email fraud that resulted in Medidata Solutions, Inc. (“Medidata”) wiring $4,722,226 to a hacker.  According to the... Read More

Untimely Arbitration Request Bars Policyholder from Challenging Denial of Coverage An Illinois appellate court, applying Illinois law, reversed and remanded a trial court’s ruling in favor of the policyholder and held that, because the policyholder did not unequivocally request arbitration for a coverage dispute with its auto insurer within the two year time frame required under the auto policy, it... Read More

Alleged Negligent Application of Sealant Was an “Occurrence” and Caused Damage to Structure Not Just Policyholder’s Own Work The Seventh Circuit, applying Illinois law, upheld the district court’s ruling that Westfield Insurance Co. (“Westfield”) must defend a construction defect claim against several developers and contractors.  The appellate court found that, in a construction defect case, negligently performed work can constitute... Read More

Documents Prepared Prior to Underlying Litigation Protected by Privilege An Illinois appellate court, applying Illinois law, reversed the trial court’s order requiring the production of documents which the policyholder claimed were subject to privilege, and instructed the trial court to conduct an in camera review to assess the privilege claims.  The appellate court found that attorney-client privilege was available to... Read More

Stay Was Abuse of Discretion An Illinois appellate court, applying Illinois law, reversed the trial court’s order granting a motion to stay a coverage dispute pending the resolution of the underlying case and found that a determination of coverage could be made without determining issues of ultimate fact critical to the underlying dispute. Johnson-Downs Construction, Inc.  (“Johnson-Downs), entered into a construction... Read More

Directed Verdict Not Proper When Trial Court Presented with Minimal Evidence Regarding Exposure to Specific Brand of Product  An Illinois appellate court, applying Illinois law, reversed the trial court’s ruling granting a motion for directed verdict and held that there was sufficient evidence to create an issue of material fact as to whether use of the defendant’s products caused... Read More