Commercial General Liability Dispatch

COMMERCIAL
GENERAL LIABILITY
Dispatch
July 2014
Volume 5 | Issue 7
Editors: Joanna L. Crosby | Linda Tai Hoshide | James A. Pinderski
Contributing Editors: Amber Coisman | Anthony Balice | Yvonne Schulte
In This Issue...
TRESSLER WINS ............................................................. 1-3
No Ifs, Ands or Buts – The Impaired Property
Exclusion Applies to Preclude Coverage for
Defective Materials Installed by the Insured...............4
What Did George Know and When Did He Know
It? Indiana Court of Appeal Remands “Known
Loss” Issue to be Decided by a Jury..............................5
In Vino Veritas: Race Track “In the Business” of
Selling Alcohol via Subcontracted Concessionaires
Is Not Entitled to Coverage Under a CGL Policy
Containing a Liquor Liability Exclusion..........................6
If You Commit This Offense (Disparaging Former
Employer), You Will Get No Defense Under This
CGL Policy..............................................................................7
TRESSLER NOTES....................................................... 9
Speaking Engagements............................................ 10
News / Publications........................................................ 11
TRESSLER WINS
GK Skaggs, Inc. v. Hartford Cas. Ins. Co., 2014 U.S. App. LEXIS 11161 (9th Cir. Cal. Jun. 16, 2014).
Tressler partners, David Simantob and Elizabeth L. Musser, handled the GK Skaggs case as part of a team of co-counsel on behalf of The
Hartford. An article describing the GK Skaggs case can be found on Page 2.
Integral Resources, Inc. v. Hartford Fire Ins. Co., 2014 U.S. Dist. LEXIS 83793 (June 13, 2014).
Tressler partners, David Simantob and Linda Tai Hoshide secured this win for The Hartford. An article describing the Integral case can be
found on Page 3.
Hartford Casualty Ins. Co. v. Swift Distribution, Inc., 59 Cal. 4th 277 (Cal. 2014).
Tressler partners, David Simantob and Elizabeth L. Musser handled the Swift case as part of a team of co-counsel on behalf of The
Hartford. CLICK HERE for a PDF copy of Tressler’s Special Alert on the Swift case.
Street Surfing, LLC v. Great American E&S Insurance Company, 2014 U.S. App. LEXIS 10737, Case No. 12-55351 (9th Cir. June 10, 2014).
Tressler partner, Linda Bondi Morrison, and Tressler associate, Ryan Luther, handled this matter on behalf of Great American E&S Insurance
Company. The case was discussed in the June issue of the CGL Dispatch. CLICK HERE for a PDF copy of the Street Surfing article.
CALIFORNIA | ILLINOIS | NEW JERSEY | NEW YORK
TRESSLER WINS
Ninth Circuit Holds That Breach of Contract Claim Cannot
Form the Basis for a Disparagement Claim
In GK Skaggs, Inc. v. Hartford Cas. Ins. Co., 2014 U.S. App. LEXIS 11161 (9th Cir. Cal. Jun. 16, 2014), the Ninth
Circuit affirmed the District Court’s ruling that Hartford Casualty Insurance Company (Hartford) had no duty to
defend a claim arising out of breach of contract.
Kimberly Sou,
Associate in the
Los Angeles Office
The allegations in the underlying action were as follows: Leonel & Noel Corporation (L&N), GK Skaggs, Inc. and
Gregory Skaggs (collectively GKS) entered into a contract to allow L&N to distribute Guatemalan beer in the
Midwest as a downstream distributor. The complaint alleged that GKS drove L&N out of the market by raising
wholesale prices, withholding access to popular beer brands, and terminating its contract as a sub-distributor
of beer. L&N sought damages for wrongful termination of, and interference with, beer distribution contracts on
the basis that GKS and other defendants terminated L&N’s right to sell Guatemalan beer in the Midwest. As part
of an exhibit to the complaint, L&N attached a letter from GKS to L&N terminating their distribution contract.
GKS tendered the underlying action to Hartford under its commercial general liability policy. However, Hartford
denied coverage on the basis that there was no covered injury and the “breach of contract” exclusion precluded
coverage. In response, GKS sued Hartford, seeking a declaration that Hartford had a duty to defend GKS because
the termination letter used unflattering language, which purportedly formed the basis for a disparagement
claim. The District Court ruled in favor of Hartford on a motion for summary judgment, finding that the policy did
not cover the underlying action because (1) the complaint did not seek “damages because of” any injury arising
out of a “disparagement” offense; and (2) the wrongful termination of a distribution agreement fell within the
policy’s “breach of contract” exclusion.
On appeal, the Ninth Circuit affirmed the District Court’s ruling. The Ninth Circuit found that the termination letter
could not form the basis for a potential disparagement claim because GKS sent the letter to L&N after the other
defendants terminated their contracts with L&N. Second, the court refused to allow “speculative inferences” to
bring the claim within coverage by dismissing GKS’ argument that it had allegedly made disparaging statements
about L&N to others in the chain of beer distribution because it had “chastised [the downstream distributor]
for its decline in sales.” Third, the court found that L&N’s Lanham Act claim did not expressly or impliedly allege
disparagement. Finally, the court found that the breach of contract exclusion barred coverage because any
disparaging statement purportedly made allegedly culminated in the defendants’ breaching their contracts with
L&N, and thus, the injury “arose out of a breach of contract.”
Tressler Comments
In another victory for Tressler and insurers, this decision not only narrows the scope of potential disparagement
liability, but also confirms a series of recent decisions that apply a broad interpretation of “arising out of”
language in the context of a policy exclusion. Here, the Ninth Circuit stated, “‘[e]xamin[ing] the conduct
underlying [L&N’s] lawsuit, instead of the legal theories attached to the conduct,’ the injury here arose out of
a breach of contract.”
This decision, along with another recent decision by the Supreme Court of California in Hartford Casualty
Ins. Co. v. Swift Distribution, Inc., 59 Cal. 4th 277 (Cal. 2014), further narrows the scope of coverage in the
“advertising injury” coverage part of a CGL policy. Tressler partners, David Simantob and Elizabeth L. Musser,
handled GK Skaggs and Swift as part of a team of co-counsel on behalf of The Hartford.
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Page 2
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TRESSLER WINS
District Court Applies TCPA Exclusion to Preclude
Coverage for Common Law Causes of Action Arising Out
of Unsolicited Telephone Calls
Linda Tai Hoshide,
Partner in the
Los Angeles Office
In Integral Resources, Inc. v. Hartford Fire Ins. Co., 2014 U.S. Dist. LEXIS 83793 (June 13, 2014), the U.S. District
Court for the Central District of California found that claims couched as common law causes of action are
also precluded by a statutory exclusion when the same facts give rise to both the common law and statutory
claims. In Integral, the District Court rejected the insured’s arguments that causes of action for negligence and
invasion of privacy fall outside of the Telephone Consumer Protection Act (TCPA) Exclusion because all of the
causes of action arose out of the same facts.
The insured asserted that common law causes of action for negligence and invasion of privacy regarding
unsolicited telephone calls to one’s cell phone fell within the CGL policy’s “personal and advertising injury
offense” of “[o]ral, written or electronic publication of material that violates a person’s right of privacy.” The
District Court agreed with the insurer, Hartford Fire Insurance Company (Hartford), that Hartford had no duty
to defend and indemnify, finding:
1.Under California law, the offense for “[o]ral, written or electronic publication of material that violates
a person’s right of privacy” only affords coverage for claims involving the disclosure of private facts,
not for unsolicited phone calls, which was asserted in the underlying action.
2.The underlying action did not allege any publication of any private information to the public. Rather,
the underlying action arose only out of alleged TCPA violations, which bars making calls using an
automatic dialing system. 47 U.S.C. § 227 (b)(1)(A)(iii). Moreover, violations of the TCPA simply do
not require any type of publication of material, but merely that the customers are called on their
cellular phones.
3.“Publication” under the offense for “[o]ral, written or electronic publication of material that violates
a person’s right of privacy” requires disclosure to a third party. “Material” under this offense requires
confidential information to be alleged to have been published to the public.
4.The policy’s TCPA exclusion is “clear and explicit” and broadly applied to preclude coverage for the
entire action, including all common law causes of action as the common law cause of action arose
out of the same facts. The “arising directly or indirectly out of” language in the TCPA exclusion is
broadly applied to preclude coverage for the entire action.
Tressler Comments
This is another win for Tressler and insurers narrowing the application of the “personal and advertising injury”
offense of “[o]ral, written or electronic publication of material that violates a person’s right of privacy” and
expanding the application of the TCPA exclusion to preclude coverage for common law claims arising out the
same facts giving rise to a TCPA claim. Tressler partners, David Simantob and Linda Tai Hoshide secured this
win for The Hartford.
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Page 3
Authored By
No Ifs, Ands or Buts – The Impaired Property Exclusion
Applies to Preclude Coverage for Defective Materials
Installed by the Insured
Mohammed S. Mandegary
Partner in the
Orange County Office
n Regional Steel Corp. v. Liberty Surplus Ins. Corp.,
2014 Cal. App. LEXIS 517 (2014), Regional Steel
Corporation (Regional) subcontracted with JSM
Construction, Inc. (JSM) to provide reinforcing steel,
including seismic hooks, for the construction of an
apartment building. Regional began construction on the
project using both 90-degree and 135-degree seismic
hooks, as approved in shop drawings. Three months
later, the city building inspector issued a correction
notice requiring the exclusive use of 135-degree hooks.
I
The underlying lawsuit was commenced when Regional
filed a lawsuit against JSM for unpaid invoices. In turn,
JSM filed a cross-complaint against Regional alleging
that Regional failed to comply with the subcontract and
applicable building code by installing 90-degree hooks. JSM
further alleged that it was damaged by having to open up
numerous locations in concrete walls, weld reinforcements
and otherwise strengthen the inadequate installation. JSM
also alleged damage for project delays this caused, resulting
in loss of use and loss of rental income.
Regional twice tendered the underlying lawsuit to
Liberty Surplus Insurance Corporation (Liberty) but
Liberty denied both tenders. Ultimately, the underlying
lawsuit was settled with the settlement agreement (to
which Liberty was not a party) specifically stating that
Regional “caused or was responsible for damage to,
and loss of use of, tangible property at the PROJECT,
including but not limited to out-of-level, cracked or
otherwise damaged floors.” However, Regional was
released from all claims for “damage to and/or loss of
use of tangible property at the PROJECT, out-of-level,
cracked or otherwise damaged floors.”
Regional then commenced a bad faith lawsuit against
Liberty asserting causes of action for breach of contract
and breach of the implied covenant of good faith and
fair dealing. On summary judgment, the trial court
found that Liberty had no duty to defend Regional
against claims brought by JSM arising out of Regional’s
installation of defective steel framing in the apartment
building. The Court of Appeal affirmed the trial court’s
summary judgment ruling, holding that:
(1) There was no property damage – noting that
the only allegations against Regional were that
it failed to install the proper tie hooks “and
its failure to do so necessitated demolition
and repair of the affected areas – allegations
squarely within the ambit of the rule of F&H
Construction that this type of repair work is
not covered under a CGL policy.”
(2) The Impaired Property exclusion applied to
bar coverage. Specifically, the exclusion bars
coverage for property damage to property that
has not been physically injured arising out of
either deficiencies in Regional’s performance
of its work or Regional’s failure to perform its
contractual obligations. “JSM’s action alleged
that Regional negligently installed improper
tie hooks and thus the underlying suit arose
from deficiencies in Regional’s performance of
its work or from Regional’s failure to perform a
contract in accordance with its terms, or both.”
Tressler Comments
Initially unpublished, the Court of Appeal published this decision on June 13, 2014. This decision
not only reinforces the finding of no property damage in F&H Construction v. ITT Hartford Ins.
Co., 118 Cal. App. 4th 364 (2004), but reinforces that the cost to remove, repair and replace
defective construction that is incorporated into other property and the concomitant resultant
damage from that removal, repair and replacement does not constitute property damage.
Furthermore, there is now a published decision on the scope and applicability of the impaired
property exclusion. The decision also clearly distinguishes other Court of Appeal decisions
generally relied upon by policyholders involving incorporation of hazardous materials into
products, (i.e., Armstrong and Shade Foods), confirming the inapplicability of those decisions
in the typical construction defect coverage context. This is a significant California decision
that stays true to the basic principle that general liability policies are not designed to provide
coverage for defective materials or faulty workmanship.
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Authored By
What Did George Know and When Did He Know It?
Indiana Court of Appeal Remands “Known Loss” Issue
to be Decided by a Jury
I
Mary E. McPherson,
Partner in the
Orange County Office
n Indiana Insurance Company v. Kopetsky, 2014
Ind. App. LEXIS 252 (Ind. Ct. App. June 4, 2014),
the Indiana Court of Appeal held that while
the trial court correctly concluded on summary
judgment that allegations of contamination on
the lots of a housing development qualified as
“property damage” caused by an “occurrence”
under the policies at issue, an issue of material fact
existed regarding whether the insured was aware
of the contamination prior to the purchase of
those policies. Thus, the court remanded the case
for a jury to determine whether the “known loss”
doctrine applied to preclude coverage.
In 1998, KB Home Indiana, Inc., (KB Home) entered
into an Agreement with George Kopetsky (George)
to purchase property lots located in Cedar Park
(Cedar Park Lots). In the Agreement, George
affirmatively represented that he was unaware of
any contamination in Cedar Park and agreed that at
each lot closing, he would certify that he had not
received any notice from any governmental agency
or private person concerning the existence of any
toxic or hazardous waste on that lot. However,
after purchasing the lots, KB Home became aware
that some of them were contaminated by TCE
(trichloroethylene). In 2007, KB Home sued George
alleging that he knew of possible contamination
in the Cedar Park Lots as early as April of 2002,
negligently failed to notify the company, breached
the sale agreement, and committed fraud. George
tendered his defense to his insurer, Indiana
Insurance. However, Indiana Insurance filed a
declaratory judgment action against George and KB
Home, seeking a declaration that it had no duty to
defend and/or indemnify George, alleging among
other things, that George knew about the TCE
contamination prior to the inception of the policies.
George filed a counterclaim for “bad faith.” George
died in 2010 and his widow, Patricia, was substituted
as a defendant and continued to prosecute the bad
faith claims.
The trial court granted summary judgment in favor
of Patricia finding that the damages alleged by KB
Home qualified as “property damage” caused by an
“occurrence” and that “expected and intended” and
“contractual liability” exclusions and the “known
loss” doctrine did not apply to bar coverage. Further,
and although the underlying lawsuit was still being
litigated, the trial court ruled that Indiana Insurance
would have to indemnify Patricia for any judgment
rendered in KB Home’s favor. However, the court
found that Indiana Insurance had not acted in bad
faith. Both Indiana Insurance and Patricia appealed.
On appeal, the appellate court concluded that there
is a genuine issue of material fact as to whether the
“known loss” doctrine bars coverage. Specifically,
Indiana Insurance set forth evidence that George
was aware of the soil contamination before the
policies went into effect. Although George testified
“[n]obody ever told me nothing” regarding the soil
testing, the evidence indicated otherwise:
George knew, before the policies went into effect on
April 29, 2002, that the property was contaminated
and had given permission for the performance of
soil testing and the installation of monitoring wells
in Cedar Park.
George knew that the property was engaged in an
environmental cleanup pursuant to a December
2001 letter sent by an environmental consulting firm.
In 2002, George’s counsel had taken steps to arrange
a meeting with the firm to discuss the monitoring
wells installed on George’s property. Importantly,
the court held that in order to apply the “known
loss” doctrine to bar coverage, a showing of
“absolute certainty” of the facts by the insurer is not
required. The court held that a trier of fact should
decide the question of whether George had actual
knowledge of the contamination prior to selling the
lots and procuring the insurance policies.
Though it was not the central issue, the court also
addressed the application of the “contractual
liability” exclusion to breach of contract actions.
Finding no Indiana case precisely on point, the
Kopetsky court, as a matter of first impression
in Indiana, proclaimed “today we join those
jurisdictions who have held that contractual liability
exclusions in CGL policies bar coverage not for
liability incurred by a contract breach but, rather for
liability assumed from a third party, which seems to
be the majority position by a wide margin.”
Tressler Comment on next page
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Page 5
Continued from Page 5
Tressler Comments
This decision is significant partly because an Indiana court (which is generally “pro-policyholder”)
sided with the insurance company. It is also significant as it rules on the application of the
contractual liability exclusion. Finally, it is significant in demonstrating that Indiana, unlike
California and some other jurisdictions, still recognizes and applies the “known loss” doctrine.
In Vino Veritas: Race Track “In the Business” of Selling
Alcohol via Subcontracted Concessionaires Is Not Entitled
to Coverage Under a CGL Policy Containing a Liquor
Liability Exclusion
Authored By
Samuel M. Goffinet,
Associate in the
Newark Office
I
n KSPED LLC v. Va. Sur. Co., 2014 U.S. App.
LEXIS 10443 (6th Cir. 2014), the U.S. Court of
Appeals for the Sixth Circuit grappled with a
liquor liability exclusion. Particularly, in August
2005, Cynthia Bivens (Bivens) and John Marsh
(Marsh) attended an event at the Kentucky
Speedway, a racetrack in Sparta, Kentucky. While
at the event, Marsh was served alcohol by DJ’s
Food Service Management Group, Inc. (DJ’s), a
concessionaire that subcontracted the right to
sell food and beverages from OS Speedway, LLC
(OS), which itself contracted with the racetrack’s
owner, Kentucky Speedway (Speedway) to sell
food and beverages at the track. Later that day,
Bivens was involved in a fatal accident while in
a vehicle driven by Marsh. Bivens’ estate filed a
wrongful death lawsuit against Speedway and
DJ’s, which was then consolidated with a previous
lawsuit brought by Bivens’ estate against OS. The
liability insurers for OS and DJ’s ultimately settled
for $350,000, and Speedway settled its portion for
$10,000. Speedway also incurred about $74,000
in defense fees and costs.
Speedway then sued its liability insurer, Virginia
Surety Company, Inc. (Virginia Surety) in the
Eastern District of Kentucky for breach of contract
and bad faith for failing to defend or indemnify
Speedway in the underlying action. Both parties
moved for summary judgment, and the District
Court granted Speedway’s motion, finding that
Virginia Surety’s failure to defend and indemnify
constituted a breach of contract. Both parties
appealed.
A divided Sixth Circuit panel reversed the grant
of summary judgment on the breach of contract
Page 6
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claim. With respect to the duty to defend, the
Virginia Surety policy contained an exclusion
for liability arising out of the sale of alcoholic
beverages “only if you [the insured] are in the
business of manufacturing, distributing, selling,
serving or furnishing alcoholic beverages.”
The policy did not define the meaning of “in
the business of . . . selling.” However, at the
time it declined to defend Speedway, Virginia
Surety possessed documentation extrinsic to
the underlying complaint that demonstrated
Speedway and its concessionaires were “engaged
in a joint enterprise of selling alcohol, over which
Speedway exercised substantial control.” These
activities fell within the ambit of the liquor liability
exclusion, and Virginia Surety therefore had no
duty to defend Speedway against the underlying
lawsuit.
The Sixth Circuit panel likewise found that Virginia
Surety owed no duty to indemnify Speedway.
Speedway’s involvement with the sale of alcohol
was an activity undertaken with a “direct profit
objective.” Speedway also exercised a significant
degree of control over its concessionaires;
reserved the right to prevent an impaired patron
from purchasing more alcohol; and further
prevented patrons from bringing alcohol into the
racetrack. The majority concluded that Speedway
was therefore in the business of selling alcohol
and hence Virginia Surety was not required to
indemnify Speedway in the underlying lawsuit
pursuant to the liquor liability exclusion.
The lone dissenter, Judge Moore, would have
affirmed the District Court’s judgment in its
entirety. Judge Moore noted, however, that
Continued from Page 6
the Virginia Surety policy did not define what it
meant to be “in the business” of selling alcohol.
Speedway, Judge Moore observed, strategically
subcontracted out alcohol sales at the racetrack
to concessionaires, and was not in a true “joint
venture” with OS or DJ’s. Moreover, the sale of
alcohol was not a “regular activity” to which
Speedway, as opposed to its concessionaires,
devoted significant time and attention. Speedway
therefore was not in the “business of . . . selling
alcohol” and Virginia Surety, in Judge Moore’s
opinion, breached its duty to defend and
indemnify Speedway in the underlying lawsuit.
Tressler Comments
The KSPED majority emphasized that, although they ruled in Virginia Surety’s favor, the liquor
liability exclusion could have been more clearly worded. The majority cited to a 1975 opinion by
New York State’s mid-level appellate court that contained an exclusion which included a reference
to the owner of the premises. Particularly, the court noted that “[I]n County of Schenectady v.
Travelers Ins. Co., the insurance policy provided that it did not apply to bodily injury or property
damage for which any insured ‘may be held liable, as a person or organization engaged in the
business of manufacturing, distributing, selling or serving alcoholic beverages or as an owner
or lessor of premises used for such purposes, by reason of the selling, serving or giving of any
alcoholic beverage.’ 368 N.Y.S.2d 894, 897-98 (N.Y. App. Div. 1975) (emphasis added).” As can be
seen, had the Virginia Surety policy contained the highlighted language (or something similar),
the vagaries of the phrase “in the business of . . . selling” alcohol would have been substantially
reduced or eliminated, leading to a more streamlined and predictable result.
If You Commit This Offense (Disparaging Former
Employer), You Will Get No Defense Under This
CGL Policy
Authored By
Mark R. Vespole,
Partner in the
Newark Office
H
ere’s a new twist on the ongoing issue of
potential coverage under the personal
and advertising injury coverage of a
CGL policy for lawsuits by companies against
former employees who leave and then poach
confidential and proprietary information, as well
as customers, disparage their former employer
and allegedly commit other anti-competitive acts.
In Hansen v. Sentry Insurance Company, 2014
U. S. App. LEXIS 12092 (1st Cir. June 25, 2014),
an employee (Hansen) of a New Hampshire
tactical equipment manufacturer (Wilcox), who
had signed a nondisclosure non-solicitation
agreement, left to form his own company. At
his new company, among other things, Hansen
solicited his former employer’s customers to sell
competing products that were manufactured
using confidential information from his former
employer. The employer sued the former
employee for breach of contract, unfair
competition, misappropriation of trade secrets,
www.tresslerllp.com
breach of fiduciary duty, intentional interference
with contractual relations, making harmful false
statements about the former employer and its
technology to its customers, etc.
During the course of discovery, the employer’s
president claimed that Hansen made disparaging
remarks to Wilcox customers while still a vice
president for Wilcox. Armed with this testimony,
Hansen tendered his defense of the lawsuit
against him by Wilcox to Wilcox’s own CGL insurer,
Sentry. After Sentry disclaimed, Hansen filed this
declaratory judgment lawsuit.
In upholding the trial court’s summary judgment
to Sentry, the U.S. Court of Appeals for the
First Circuit concluded that only one count of
the complaint potentially was covered under
only one of the offenses defined in the policy
as a personal and advertising injury. The only
allegation or count of the complaint for which
coverage might be available was the claim that
Page 7
Hansen made false statements about Wilcox and
its technology to Wilcox customers. On its face,
this allegation plausibly constituted the offense
of an oral or written publication that slanders
or libels a person or organization or disparages
a person’s or organization’s goods, products or
services, as set forth in the policy.
The court’s decision was based upon two issues.
The named insured under the Sentry policy was
Wilcox and its “executive officers and directors...
but only with respect to their duties as your
officers or directors.” Further, the policy clearly
stated that the personal and advertising injury
insurance “applies to ‘personal and advertising
injury’ caused by an offense arising out of your
business...” The court concluded that Hansen was
essentially breaching his fiduciary duty while still
a vice president at Wilcox when he disparaged
Wilcox’s products and marketed the products
of his own new company to Wilcox customers.
Based upon these uncontested facts, Hansen’s
self-dealing conduct neither arose out of his
duties as an officer of Wilcox nor arose out of
Wilcox’s business.
As all the allegations by Wilcox against Hansen
fell outside of the policy’s coverage, there was
no duty to defend. Because the duty to defend
is broader than the duty to indemnify, there was
also no duty to indemnify.
Tressler Comments
While the court noted that Hansen’s arguments for coverage were creative, it concluded that “a
da Vinci he is not.” The only reason that Hansen even got his foot in the door, without potential
Rule 11 sanctions, is because Wilcox’s president testified that Hansen made disparaging remarks
while he was still an officer of Wilcox and during the period that the CGL coverage was in force.
One interesting issue that the court declined to address (because the case otherwise failed on
its merits) is the idiosyncrasy of New Hampshire law, which, by statute, requires that declaratory
judgment actions to determine insurance coverage must be filed within six months after the
filing of the complaint or other pleading which triggers the coverage question. That six-month
timeframe, however, does not apply if the facts giving rise to the coverage dispute are not known
or reasonably discoverable until after the expiration of the six months.
Page 8
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TRESSLER NOTES
Composite Structures Inc. v. The Continental Insurance Co.,
12-15866, (11th Cir. March 20, 2014)
In March 2014, the U.S. Court of Appeals for the Eleventh Circuit in Composite Structures Inc. v. The Continental
Insurance Co., 12-15866, (11th Cir. March 20, 2014), affirmed the District Court’s decision granting summary
judgment to Continental Insurance Company. Particularly, the District Court had looked beyond the Complaint
to determine the duty of the insurer. The insured Marlow had argued on appeal that the District Court erred in
looking beyond the underlying complaint and concluding there was no duty to defend. The underlying action
alleged that two seamen working on a boat were exposed to excessive amounts of carbon monoxide. The seamen
sued Marlow which built, designed, completed, outfitted, manufactured and sold the vessel. Applying Florida
law, the Eleventh Circuit noted that Florida recognizes exceptions to the four corners rule. Tressler previously
reported on this opinion in our April 2014 CGL Dispatch and now wants to point out that on June 5, 2014, the
Eleventh Circuit denied appellee’s motion for publication of the decision.
Century Surety Company v. Casino West, Inc., 2014 U.S.
App. LEXIS 11149, (9th Cir. June 16, 2014)
On June 16, 2014, the U.S. Court of Appeals for the Ninth Circuit issued its opinion (unpublished) in Century
Surety Company v. Casino West, Inc., 2014 U.S. App. LEXIS 11149. In Tressler’s June 2012 CGL Dispatch, we
reported that the Ninth Circuit had certified two questions for review by the Nevada Supreme Court. Particularly,
the Nevada Supreme Court was asked to address “(1) Does the pollution exclusion in Century’s insurance policy
exclude coverage of claims arising from carbon monoxide exposure? (2) Does the indoor air quality exclusion in
Century’s insurance policy exclude coverage of claims arising from carbon monoxide exposure?” The DJ action
arose out of four deaths in a motel when carbon monoxide fumes from the motel pool’s heater permeated the
room. The Nevada Supreme Court issued its decision in May 2014. Of particular importance was the Court’s
ruling that “to demonstrate that the absolute pollution exclusion applies to nontraditional indoor pollutants, an
insurer must plainly state that the exclusion is not limited to traditional environmental pollution.” Based upon
the Nevada decision, the Ninth Circuit has now affirmed the District Court’s denial of summary judgment to
the insurer on the basis that its policy exclusions were ambiguous. If you are handling a carbon monoxide claim
where Nevada law will apply, we recommend you familiarize yourself with the Nevada decision in Century, 2014
Nev. LEXIS 50, and the District Court’s analysis at 2010 U.S. Dist. LEXIS 19807 (D. Nev. 2010). Further, Tressler
notes that the Casino West decision finding the exclusion ambiguous is contrary to the U.S. District Court for the
Western District of Oklahoma’s decision in Siloam Springs Hotel, LLC v. Century Surety Co., 2014 U.S. Dist. LEXIS
65935 (W.D. Okla. May 14, 2014), which was reported on in our June 2014 CGL Dispatch.
Insurance Covered.
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our insurance industry clients coast to coast in a broad range of legal issues. From insurance policy
interpretation, drafting and coverage analysis, underwriting consulting, and claims counseling and
coordination to successfully advocating insurance company positions in litigation, mediations and
arbitrations, we have insurance covered.
DISCOVER TRESSLER.
www.tresslerllp.com
www.tresslerllp.com
Page 9
SPEAKING ENGAGEMENTS
Dec. 5, 2014
(I Can’t Get No) Satisfaction… of My Self-Insured
Retention
Presented by Chicago Partner Devin C. Maddox
New York Marriott Marquis, New York, NY
Chicago Partner, Devin C. Maddox, will co-present “(I Can’t Get No) Satisfaction … of My
Self-Insured Retention” at the Insurance Coverage and Practice Symposium at the New York
Marriott Marquis, on December 4-5, 2014.
>> CLICK HERE TO VIEW ALL OF OUR
Page 10
UPCOMING EVENTS ON OUR WEBSITE
www.tresslerllp.com
NEWS / PUBLICATIONS
July 7, 2014
Insured-Insurer Privilege Part II
Tressler Partner Shaun Baldwin posted an article to the National Insurance
Law Forum blog
Tressler Partner, Shaun M. Baldwin, posted a follow-up article entitled “Insured-Insurer
Privilege Part II” to the National Insurance Law Forum blog on July 7, 2014.
July 2, 2014
Is It Time for a Codified Insured-Insurer Privilege?
Tressler Partner Shaun Baldwin posted an article to the National Insurance
Law Forum blog
Tressler Partner, Shaun M. Baldwin, posted an article entitled “Is It Time for a Codified
Insured-Insurer Privilege?” to the National Insurance Law Forum blog on July 2, 2014.
June 2014
“Charge” Ahead: What the EEOC’s Recent
Enforcement and Litigation Data Statistics Really
Mean for EPL Insurers
Tressler Partner, Devin C. Maddox, and Senior Counsel, Michelle L. Hall, co-authored “’Charge’
Ahead: What the EEOC’s Recent Enforcement and Litigation Data Statistics Really Mean for
EPL Insurers” which was a featured article in the June edition of the Insurance Coverage
Law Report.
May 2014
“The Reinsurance ‘Cut-Through’ Provision – No Privity,
No Problem,” by Michael A. Conlon
HarrisMartin’s Reinsurance Publication published, “The Reinsurance ‘Cut-Through’ Provision –
No Privity, No Problem,” by Chicago Associate, Michael A. Conlon, on May 20, 2014.
>> CLICK HERE TO VIEW ALL OF OUR
PUBLICATIONS ON OUR WEBSITE
www.tresslerllp.com
Page 11
QUESTIONS? If you have any questions concerning this Bulletin, please contact:
Joanna L. Crosby - Newark Office
973.848.2908jcrosby@tresslerllp.com
Linda Tai Hoshide - Los Angeles Office
310.203.4816lhoshide@tresslerllp.com
James A. Pinderski - Chicago Office
312.627.4092jpinderski@tresslerllp.com
LOCATIONS
INFORMATION
>> CHICAGO (HEADQUARTERS)
Willis Tower: 233 South Wacker Drive, 22nd Floor, Chicago, IL 60606
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This newsletter is for general information only and is not intended to provide and should not be relied upon for legal advice in any particular circumstance or fact
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