by John Green
We encounter the following scenario from time to time: The defense counsel just scored a big victory, knocking out a key cause of action. The only problem is—the carrier now says that claim was the only covered cause of action, and since that claim has been dismissed, the insurer has no ongoing duty to defend. Can that be right?
The short answer is no. The duty to defend is based on the “potential” for coverage. That means that, if there is any “potential” that liability will ultimately be established on a covered ground, there is a duty to defend. For example, if an insured is sued for intentional battery, but could be found liable based on negligence, there is a potential the ultimate liability will be covered, and thus the insurer has a duty to defend.
by John Green
Several solar panel manufacturers and their distributors have been sued in class actions alleging that certain models of panels are defective and need to be replaced. Class actions can be very expensive to defend, and the ultimate liability can also be significant, depending on the number of panels at issue and the facts.
Fortunately, a manufacturer or distributor that is sued may have insurance to help defray these costs. As will be explained below, there are strong arguments that these claims are covered by general liability insurance (CGL), a type of policy purchased by virtually every business.
Read the full article on Solary Industry's website:
Claims For Defective Solar Panels Could Be Covered By General Liability Insurance
by John Green
Companies often monitor or record conversations between their employees and customers for training or quality control purposes. You’ve probably heard messages to this effect yourself. These announcements are meant to satisfy laws that prohibit monitoring or recording unless both parties to the call consent. Despite such precautions, however, companies sometimes run afoul of these laws and find themselves facing class action lawsuits alleging calls were recorded without the required notice.
Read the full article on the Corporate Counsel website.
Policyholders seeking insurance funds to settle a case often face an insurer’s demand that some amount should be allocated to uncovered claims or parties. The issue arises often under directors and officers liability (D&O) policies, when settlements resolve the liability of covered directors and the uncovered company. But general and professional liability and errors and omissions insurers also demand to allocate settlements.
by John Green
In 2003, the California Supreme Court ruled that a company’s contractual transfer of insurance rights to a subsequent purchaser was invalid, as it violated the policy condition against assignments without insurer consent. (Henkel Corp. v. Harford Accident & Indemnity Co.) The decision was surprising to many, as Asset Purchase Agreements routinely assign insurance policies along with other assets and liabilities of the seller. Many of these companies faced enormous exposure for so-called “long-tail exposures”—claims that individuals had been exposed to an injurious substance over a substantial period of time. Such liabilities are generally covered by the historical insurance policies issued at the time of such exposure or injury, and these policies are transferred as part of the sale to provide coverage for this assumed liability. The Henkel decision frustrated the intent of these transactions. It left purchasers holding the bag on liabilities without the assets that were intended to pay for such liabilities, and it gave a windfall to insurers who had agreed to cover those liabilities.
On April 30, 2015, we blogged about Hartford Casualty Insurance Company v. J.R. Marketing, LLC, Case No. S211645, then set for oral argument in the California Supreme Court. [see the prior post: California’s “Independent” Cumis Counsel Regime Faces a Novel Challenge] The Court decided the case on August 10, 2015, ruling that Hartford could seek reimbursement of unreasonable or excessive fees directly from Cumis counsel. We’ll outline here the implications of the ruling and suggestions for how policyholders and Cumis counsel might respond.
On the one hand, the Court took pains to describe its ruling as very narrow. Hartford had denied coverage and resisted paying the defense invoices even after the trial court found it owed a duty to defend. Squire Sanders, representing J.R. Marketing, then obtained an enforcement order requiring Hartford to pay its invoices within thirty days, but giving Hartford the right to seek reimbursement of uncovered fees and costs, including unreasonable or excessive fees, once the case was over. By the end of the case, Squire had been paid $15 million. The Court repeated that its decision was grounded in the enforcement order, which Squire had drafted and gave Hartford an express right to reimbursement. In that context, the Court held that allowing Hartford to recover from Squire in the first instance was consistent with the law of unjust enrichment and would not interfere in the attorney-client relationship. Running through the decision, including Justice Liu’s concurring opinion, is an undercurrent of suspicion that Squire, with an unsophisticated client and an enforcement order in hand, felt it had carte blanche to bill to its heart’s content.
In June, I blogged about County of Los Angeles Board of Supervisors v. Superior Court, 235 Cal. App. 4th 1154 (2015). In that case, the California Court of Appeal (Second Appellate District) concluded that legal defense bills qualified as privileged attorney-client communications, and therefore need not be produced in response to a California Public Records Act request. I noted that the case could have major implications for the insurer-policyholder relationship, particularly whether and/or when an insured could feel comfortable submitting defense bills to an insurer. The California Supreme Court has now granted review in the case. The ultimate pronouncement from the Supreme Court will likely provide useful guidance for insurers and policyholders alike regarding the appropriate treatment of defense counsel invoices.
Critical Insurance Issues for Your Next Mediation: What You Need to Know and Do to Settle a Complex Civil Case Involving Insurance Issues
On Wednesday, September 30, from 12:00 to 1:30 pm I will be co-moderating a panel discussion on insurance issues that arise in the context of mediating complex civil cases. Panelists will include Hon. William Bettinelli (Ret.), mediator at JAMS, and Daniel Purcell, Partner at Keker & Van Nest. The panel will be held at the Bar Association of San Francisco (301 Battery Street, Third Floor, San Francisco, CA). Click here for more information and to register.
Our Insurance Recovery Group is often asked to help emerging companies understand their insurance program and assist with claims. This is the first in a series of posts that will address the insurance issues impacting growing companies. The series will cover everything from how to analyze the coverage you have and placement issues, to contractual indemnity and insurance requirements, and how to proceed if you have a claim.
Today’s post is on understanding the insurance you currently have. If you are new to your company or new to your insurance role, you should work with your insurance broker to determine what coverage the company already has in place. The broker will also guide you through new policy placements as well as renewals of existing policies. Confidence in your broker is critical, because you will be relying on their judgment regarding rates, availability, scope of coverage and exclusions, limits, size of deductibles or self-insured retentions, and pricing. It is not uncommon for companies periodically to solicit competing proposals from brokers as they continue to grow and seek advice from professionals with specialized knowledge regarding their particular industry.
by John Green
Several solar panel manufacturers and their distributors have been sued in class actions alleging the panels are defective and need to be replaced. As will be explained below, these kinds of claims are covered by general liability insurance (CGL), the type of policy purchased by virtually any business.
Claims for Defective Solar Panels Allege Property Damage
General liability policies typically cover bodily injury and property damage. “Property damage” is defined to include “loss of use of tangible property that is not physically injured.” Claims that the panels are defective and have led to a loss of electrical generation capacity of the roof are claims for “loss of use” of the roof for that purpose.
Consumers bought solar panels so they could use their roof surfaces to generate electricity. Due to the alleged problems with the panels, class members are claiming damages for the lost use of their roof surfaces for collecting solar energy and generating electricity from it. Class members have also suffered loss of use of the inverters. Inverters are connected to the panel array and convert the DC power generated by the solar system into domestic AC power. Defective panels reduce the use of the inverter (as less current is passed through it and converted to usable AC). Moreover, inverters have minimum thresholds, and the reduced output may shut the inverter down entirely. Thus, the claims of class members would also include loss of use of their inverters.