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John is a commercial litigator with three decades of experience in recovering money from insurance companies under insurance policies such as commercial general liability, directors' and officers' liability, professional E&O, technology E&O, cyber liability, commercial property and builders-risk policies. He has litigated, arbitrated or mediated high stakes coverage matters and has helped clients obtain over $1 billion in insurance recoveries. John is a fellow in the American College of Coverage Counsel.

General liability insurance is frequently overlooked in business litigation. These policies, however, include coverage for “disparagement” and “malicious prosecution.” Both terms are construed broadly and may provide coverage for a variety of lawsuits, including antitrust claims, patent disputes, trade secret claims, as well as other commercial litigation between competitors, or suppliers and their customers.

What should clients and counsel look for? There are two types of allegations in particular which should immediately raise a red flag regarding the potential for insurance: 1) any allegation that the insured made unfavorable comments about the plaintiff or its products, or 2) any allegation that the insured filed improper lawsuits or otherwise misused the litigation process. Today’s post will examine coverage for “disparagement”-type claims; Part 2 will examine claims for the misuse of legal process.


Continue Reading General Liability Policies May Cover Antitrust, Patent, and Other Business Litigation – Part 1

Published in the ABTL Report, Vol. 22, No. 3, Winter 2013.

Insurers and insureds have long disagreed whether an insurer’s duty to settle is limited to the duty to accept a reasonable settlement offer made by a plaintiff, or whether the insurer has a duty to affirmatively seek a settlement within limits.  This issue was recently addressed in Reid v Mercury Insurance Co., 220 Cal.App.4th 262 (2013).  In Reid, the insurer recognized shortly after the accident that the exposure exceeded the $100,000 policy limits, but decided it needed a witness interview and the claimant’s medical records before making a policy limits offer.  It requested this information, but didn’t tell the claimant it was considering a policy limits offer.  While the claimant later testified he would have accepted $100,000 to settle at that time, his counsel did not make a policy limits demand.  A few months later, after getting the medical information, the insurer offered policy limits,  which the claimant promptly rejected. The matter went to trial and judgment was entered for $5.9 million, forcing the insured into bankruptcy.  


Continue Reading California Court of Appeals Clarifies Carrier’s Duty to Settle

In a recently decided California of Appeals case, Housing Group v. PMA Capital Ins. Co., 193 Cal. App. 4th 1150 (2011),  the court examined the issue of whether a carrier breaches its duty to defend by stating it is “investigating” the claim (rather than unambiguously accepting the defense) and then failing to pay defense costs until after the underlying matter is over.  The court in Housing Group held such conduct did not satisfy the duty to defend, and held the insurer therefore could not invoke the right under Civil Code § 2860 to limit the rates paid to independent counsel.


Continue Reading Case Confirms Insurer Loses Right to Section 2860 Fee Cap Where Insurer Does Not Promptly and Fully Defend the Insured

Policyholders and insurers frequently speak of “tendering” a claim.  Insurers in particular speak as if “tendering a claim” is some sort of magical incantation that must be stated in exactly the right words in order to be effective.  Despite the common use of phrases such as “tender the claim,” “date of tender,” etc., no insurance

Folklore sometimes develops regarding a particular insurance issue, to the point where the actual policy wording is ignored or forgotten.  One such area is the common discussion about the supposed difference between “accident based” and “occurrence based” coverage.  According to this fairy tale, “Once upon a time, policies covered only events called ‘accidents’….”  The story

A typical CGL policy covers the “loss of use” of property as one form of “property damage.”  If a contractor or product manufacturer performs defective work or provides a defective product to a factory, and the factory goes in and out of service, or operates inefficiently or at less than capacity, there is a “loss

In recent years, asserting a rescission claims has been an increasingly favored defense raised by insurers, often with little or no factual basis. In addition to pursuing rescission claims with no factual support, carriers also try to distort the legal standard, by misstating the “innocent misrepresentation” rule under California law.

Under California law, an insurer

The law imposes serious consequences on insurers for breaches of their duties.  If a carrier refuses to defend a lawsuit, the insurer can be held liable for any resulting default judgment.  If the carrier refuses to accept a reasonable settlement, the carrier can be liable for the resulting judgment in excess of policy limits.  We

In a prior post, we discussed the main holding in the California Court of Appeals decision, State of California v. Continental Insurance Co., which approves "stacking" of limits from multiple years of coverage.  Digging deeper into the case, there are a number of additional interesting holdings. For one, the case helps clarify an

The Supreme Court heard argument today in this case, involving the Stringfellow site. Two main issues were argued. First, what is the relevant “discharge” for purposes of the pollution exclusion’s “sudden and accidental” exception: if contaminants were placed in pits intentionally, but escaped accidentally, does the sudden and accidental exception to the pollution exclusion apply?