Stay of Coverage Action Appropriate When Issues of Ultimate Fact in Underlying Action Not Yet Finally Resolved On interlocutory appeal, an Illinois court, applying Illinois law, reversed the trial court’s ruling denying a motion to stay a coverage proceeding pending the resolution of the underlying litigation.  The appellate court found that the trial court’s order establishing liability was not final... Read More

Duty to Defend Does Not Extend to Counterclaims On certification of questions from the United States Court of Appeals for the First Circuit, the Massachusetts Supreme Court held that, where an insurer has a contractual duty to defend, that duty does not extend to asserting affirmative counterclaims on behalf of the insured.  The court also held that the duty to... Read More

Insurer Denied Summary Judgment Due to Ambiguity Created by Conflict Between Binder and Renewal Certificate A Northern District of Illinois bankruptcy court, applying Illinois law, denied an insurer’s motion for summary judgment which sought a determination that an insurance binder was terminated and superseded by the policy renewal certificate and does not provide a separate limit of liability independent from... Read More

Although Ruling for Insurer, Estopped Insurer’s Assertion of No Prior Consent to Settlement Due to Previous Denial of Coverage The Seventh Circuit, applying Illinois law, affirmed the district court’s ruling granting summary judgment in favor of the insurer.  The Seventh Circuit denied coverage for contamination of warehoused products, by strictly enforcing policy provisions requiring proof that products were in the... Read More

Not Required When Insurer Previously Disclaimed Coverage The New York Supreme Court, Appellate Division, applying New York law, affirmed the lower court’s opinion that Bear Stearns did not breach its contractual obligations to its insurers by failing to obtain their consent prior to settling with the Securities and Exchange Commission, the New York Stock Exchange, and related private litigation, because... Read More

Applicability of Exclusions Requires Determination of Facts in Dispute in Underlying Litigation On interlocutory appeal, an Illinois court, applying Illinois law, upheld the trial court’s ruling granting a stay on the issue of whether Continental Casualty Company (“Continental”) owed a duty to indemnify Northwestern Medical Faculty Foundation (the “Foundation”) for any liability the Foundation incurred due to lawsuits filed against... Read More

Policy Ambiguous – Court Orders Discovery of Extrinsic Evidence A Tennessee chancery court, applying Tennessee law, held that the policyholders’ interpretation of “Medical Incident” was reasonable and, therefore, the court ordered discovery of extrinsic evidence relevant to policy interpretation.   In reaching its conclusion, the court refused to find as a matter of law that the 114 underlying lawsuits each constituted... Read More

The Court of Appeals for the Eighth Circuit, applying Minnesota law, upheld the district court’s ruling and found Food Market Merchandising, Inc. (“Food Market”) failed to provide its insurer with notice of an employee’s claim “as soon as practicable.”  The appellate court determined that a showing of prejudice was not required to bar coverage when timely notice is a... Read More

The Court of Appeals for the Second Circuit, applying New York law, upheld the district court’s ruling that a pollution exclusion barred coverage for damages stemming from sewer repair work.  In holding that the insurer had no duty to defend or indemnify its insured, the Second Circuit found sewage to be a “pollutant.” Roy’s Plumbing, Inc. (“Roy’s Plumbing”) appealed a... Read More

Four Month Delay of Notification of Discrimination Charge in Policy With 60 Day Requirement Bars Coverage The Court of Appeals for the Sixth Circuit, applying Ohio law, held that the filing of a housing discrimination charge constituted a proceeding and, therefore, triggered the notice requirement under a tenant discrimination liability insurance policy.  The Sixth Circuit found that notice four months... Read More