Farella Braun + Martel

Massachusetts Appeals Court Gets It Right – Mostly

Hot on the heels of the Federal Tenth Circuit Court of Appeals’ decision in MTI, Inc. v. Employers Insurance Company of Wausau, __ F.3d __, 2019 WL 321423 (10th Cir. 2019) (about which I wrote earlier this month), the Appeals Court of Massachusetts also found that the phrase “that particular part” as used in exclusions j(5) and j(6) in the CGL policy must be applied narrowly. In All America Ins. Co. v. Lampasona Concrete Corp., 95 Mass. App. Ct. 79 (2019), the court held that damage caused to an underlying vapor barrier and a tile and carpet finish applied on top of the concrete floor slab poured by Lampasona was not excluded from coverage by the j(6) exclusion in the Lampasona’s policy. The court found that Lampasona did not install the vapor barrier or the tile/carpet, so they were not “that particular part” on which Lampasona was working.Continue Reading “That Particular Part” – Yet More

We do not often write about coverage opinions from jurisdictions as far away as Oklahoma; however, a recent case from the Federal Tenth Circuit looked at one of our favorite topics and came out with a much better reasoned opinion than recent decisions from the Ninth Circuit.

I’ve written before on the topic of the meaning of “that particular part” as the phrase is used in exclusions j(5) and j(6) of the Commercial General Liability (“CGL”) policy. The “j” exclusions exclude coverage for damage to certain property. Specifically, the j(5) and (6) exclusions state that the insurance does not apply to:

(5) That particular part of real property on which you or any contractors or subcontractors working directly indirectly on your behalf are performing operations, if the “property damage” arises out of those operations; or

(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

The part of these exclusions that some courts consistently get wrong is the meaning of the phrase “that particular part.” In particular, in June 2017 I wrote about the way the Ninth Circuit (supposedly applying California law) has on several occasions ignored the insurance industry’s own explanation of the meaning of the phrase “that particular part” and applied the exclusion to the entire project a contractor was working on.
Continue Reading The 10th Circuit Correctly Construes “That Particular Part” Narrowly

settlement-statementFor decades, California courts have mandated that an insurer is obligated to accept a “reasonable” settlement demand within policy limits on behalf of its insured. If it fails to do so, it is liable for the entire judgment, including amounts in excess of the policy limits. Comunale v. Traders & Gen. Ins. Co. (1958) 50 Cal.2d 654, 659. Subsequent cases have addressed whether an insurer can escape excess liability if its decision-making process, as opposed to the settlement itself, was “reasonable”. California law is clear that even an honest mistake as to whether the claim is covered does not absolve an insurer from excess liability. Johansen v. Calif. State Auto Association Inter-Ins. Bureau (1975) 15 Cal.3d 9, 15-16. However, courts have also considered whether an insured must show the insurer acted “unreasonably” in assessing the value of the claim. In Crisci v. Security Ins. Co. of New Haven (1967) 66 Cal.2d 425, 431, the California Supreme Court held that the very fact of an excess judgment created an inference that the insurer was liable for the excess judgment. Other cases, however, looked at whether the insurance company properly investigated all facts relating to liability and damages. See, e.g., Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 707.
Continue Reading Insured May Bear the Consequences of Insurer’s Negligence

people talking in front of a courthouseAre communications among a client, a third party, such as an insurance broker, and the client’s attorney privileged? The answer is yes, if the communications are confidential and reasonably necessary to accomplish the purpose for which the lawyer was consulted. Behunin v. Superior Court, 2017 WL 977095 (2d Dist. March 14, 2017), decided last week, addresses this question.
Continue Reading Communications With Your Broker May Be Privileged

Blog-Image---Are-You-CoveredA recent case in the Northern District of California offers two cautionary tales to policyholders. First, when buying insurance, companies should understand their risks and ensure that the policies they’re buying match those risks as closely as possible. Second, when a claim arises, policyholders must carefully consider all the allegations, not just the formal causes of action, in the complaint to determine whether they might trigger an insurer’s defense obligation.
Continue Reading CGL Coverage for False Advertising and Intellectual Property Claims: Sometimes It’s There, but You Need to Know Where to Look for it

Blog-Image---attorney-clientAttorney invoices may be protected in their entirety by the attorney-client privilege during ongoing litigation. After litigation has concluded, however, those same invoices may be discoverable. So concludes the California Supreme Court in a fascinating ending to a case we have been following since last June of last year, County of Los Angeles Board of Supervisors v. Superior Court (opinion). In a 4-3 decision that mirrored the split we observed in oral argument, the Court reversed the decision of the Court of Appeal.
Continue Reading California Supreme Court Concludes Attorney Invoices Privileged During Ongoing Litigation

Blog-Image---attorney-clientOn October 6, the California Supreme Court heard oral argument in Los Angeles Board of Supervisors v. Superior Court, a case that we have blogged about twice in the past because of its possible impact on policyholders (see posts Submitting Your Defense Bills to Insurers Could Mean Waiving Privilege and California Supreme Court Will Review Appellate Decision Holding That Attorney Bills Are Privileged). On appeal, the Court will decide whether to affirm the California Court of Appeal’s decision that legal invoices sent to the County of Los Angeles by outside counsel are within the scope of attorney-client privilege and thus exempt from disclosure under the California Public Records Act. As this issue could have a major impact on policyholders’ ability to share defense bills with insurers, we attended the oral argument.
Continue Reading California Supreme Court Leans in Favor of Treating Defense Bills as Privileged Communications

workers comp formIn two previous posts, on April 19, 2016 and June 21, 2016, we reported on the EquityComp workers’ compensation program offered by Berkshire Hathaway subsidiaries Applied Underwriters (Applied) and California Insurance Company (CIC). In the wake of the California Insurance Commissioner’s ruling in Shasta Linen that the EquityComp program is invalid and unenforceable, Applied Underwriters and the Commissioner on September 6, 2016 stipulated to a Cease and Desist Order. The Order can be found online here: Stipulated Consent Cease and Desist Order. Insureds under the program should read it carefully, as it presents them with a number of options. 
Continue Reading NEW UPDATE: Is Your Workers’ Compensation Program Unlawful?

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Policyholders should always consider the potential for coverage under their CGL policies if they suffer a data security breach. However, as the cases described in my article for Corporate Counsel, coverage is highly fact-dependent and subject to interpretation by the courts even in the absence of a data-related exclusion. The addition of such an