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BT Policyholder Protection Blog
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18 Feb 2015 RECENT CASE LAW ILLUSTRATES IMPORTANCE OF WORDING FOR “FINAL ADJUDICATION” REQUIREMENT IN D&O EXCLUSIONS

Directors and officers and management and professional liability policies generally contain so-called “conduct exclusions,” which exclude coverage for deliberate fraud, willful violation of a statute, the gaining of a profit to which the insured was not entitled and similar conduct. Most policies today, however, require a “final adjudication” for these exclusions to apply. Disputes frequently arise between insureds and insurance companies about what constitutes a final adjudication and what that adjudication must contain to exclude coverage.   Several courts have held that a settlement does not constitute a final adjudication within the meaning of these exclusions. For example, in U.S. Bank N.A. v. Indian Harbor Ins. Co. (D. Minn. Dec. 16, 2014), a federal court in Minnesota applying Delaware law held that coverage was not…

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13 Feb 2015 Eleventh Circuit Decision Epitomizes the Differing Standards of Justice Received by Insureds in State Versus Federal Courts

The unpublished opinion of the Eleventh Circuit in Wellons Inc. v. Lexington Insurance Company 2014 WL 1978412 (11th Cir. 2014) is yet another federal court decision which ignores the insured’s substantive insurance rights under state law. The great divide between “State Court Justice” and “Federal Court Justice” continues to widen and thereby frustrates our constitutional system.   In Wellons, the Eleventh Circuit was asked to decide whether a series of prior, general reservation of rights letters by Lexington (AIG) preserved Lexington’s right to deny coverage after a lawsuit was filed and Lexington undertook the defense. The Wellons claim involved the construction of a dryer energy thermal oxidation system to produce heat for production of oriented strand board (OSB), customarily used in home construction and flooring….

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04 Feb 2015 Insurance Company Favorite: The “Loss Adjustment Expense”

As you’re evaluating your company’s liability insurance program for 2015, consider closely the application of the policy’s deductible.  Specifically, take a look for any endorsement that defines “Allocated Loss Adjustment Expense,” or “ALAE,” to make sure the language matches up with what you think you are purchasing.   Liability policies are usually sold with some form of deductible, which remains the policyholder’s obligation in the event a claim is asserted against the policyholder. In assessing its risk tolerance, an insurance purchaser may buy policies with higher or lower deductibles. The deductible applies to the insurance company’s obligation to indemnify for claims asserted against the policyholder.  But most often, it does not apply to the costs of defense. In other words, the defense obligation purchased by…

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28 Jan 2015 2014 Year in Review

On Tuesday, Jan. 27, Barnes & Thornburg insurance recovery attorneys presented on 2014’s major legal developments and trends in insurance coverage and recovery. Approximately 145 people joined the webinar and learned more about how past events affected:   Directors and Officers (D&O) coverage Excess umbrella liability coverage Coverage for business torts and consumer false advertising claims Coverage for environmental contamination claims Cyber liability and data breach   Charlie Edwards opened the discussions with comments about directors and officers liability insurance coverage, what D&O coverage decisions were issued in 2014, what key terms insureds should consider when looking at D&O coverage, and what insureds should expect in the marketplace for 2015. Chris Lynch then discussed developments in excess and umbrella liability insurance cases in 2014. He…

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23 Jan 2015 “1-23-15 ALERT: VERMONT SUPREME COURT STRIKES DOWN AMBASSADOR IN LIQUIDATION’S 12/31/13 BAR DATE!

Today, the Vermont Supreme Court issues its opinion in the Ambassador in Liquidation case striking down the estate’s previously-published 12/31/13 bar date for final Proofs of Claim. The Ambassador Ins. Co. liquidation has been in process since 1987.  After the estate obtained over $300,000,000 in reinsurance and settlement proceeds from its former auditing firm, the estate essentially became “solvent”—paying Priority Four claims at 100 percent (plus interest). Seeking to bring the estate to a close, the liquidator set a final Proof of Claim date of 12/31/13 to require claimant-insureds to settle their underlying claims and submit them to the Ambassador estate. Many of the insureds have long-tail liabilities which are still developing and could not be resolved by the 2103 bar date. NICO, successor to…

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21 Jan 2015 Did the Supreme Court just make removal easier for insurance companies?

On Dec. 15, 2014, the Supreme Court issued its opinion in the case Dart Cherokee Basin Operating Company, LLC v. Owens (the Dart case). 135 S.Ct. 547. The Dart case involved the removal of a class action to federal court pursuant to the Class Action Fairness Act of 2005. At issue was whether the defendant was required to submit evidence of the amount in controversy with its notice of removal. The Supreme Court granted certiorari to resolve a circuit split and addressed the following question:   “To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation?”   135 S.Ct. at 551….

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15 Jan 2015 Ken Gorenberg to speak at upcoming Strafford live webinar A live 90-minute CLE webinar with interactive Q&A

Ken Gorenberg, from Barnes & Thornburg’s Policyholder Insurance Recovery Group, will be speaking at an upcoming Strafford live webinar, “Drafting Enforceable Limitation of Liability Clauses in Business Contracts,” on Tuesday, March 3, 1-2:30 p.m. EST.   Ken will be a member of a panel that will provide guidance to business counsel for drafting and negotiating enforceable limitation of liability clauses in business contracts.   The panel will review key issues such as: What considerations should business counsel take into account when drafting and negotiating limitation of liability provisions in contracts? What enforceability challenges do parties commonly face when seeking to invoke a limitation of liability clause? What is the interplay between limitation of liability clauses and indemnification provisions in business agreements?     We hope…

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13 Jan 2015 Your Liability Insurer Agreed to Defend? Don’t Relax Yet.

You tendered a lawsuit to your liability insurer. You cooperated with its investigation of the claim, and maybe you had to challenge an initial denial. Now, you have a hard-earned letter from your insurer agreeing to defend the suit. This is a significant milestone in managing your risk for the liability, but the need for vigilance to maximize your insurance benefits and protect your rights is far from over. Whether there are thousands or millions at stake, policyholders must remain vigilant and active, to ensure they are receiving maximum benefit from their coverage.   Even after your insurer agrees to defend, numerous disputes may still arise that can affect whether you maintain control over decisionmaking, whether the insurer pays everything it owes under the policies,…

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09 Jan 2015 2014 Year in Review: A National Insurance Recovery Webinar

Mark your calendar and join us for a national insurance recovery webinar on Tuesday, Jan. 27 at 3 p.m. (Eastern). The Barnes & Thornburg insurance recovery attorneys will review 2014’s major legal developments and trends in insurance coverage and recovery. You will learn more about how the events of the past year affected:   Directors and Officers (D&O) coverage Excess umbrella liability coverage Coverage for business torts and consumer false advertising claims Coverage for environmental contamination claims Cyber liability and data breach   BARNES & THORNBURG SPEAKERS             Charlie Denton   Bob Devetski   Charlie Edwards   Scott Godes            Ken Gorenberg   Chris Lynch   David Schack You won’t want to miss this lively discussion of…

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06 Jan 2015 Scott Godes quoted in, “Insurers cover fraction of costs in Catholic dioceses’ clergy abuse cases”

Scott Godes, a partner with Barnes & Thornburg, was quoted in Business Insurance’s article, “Insurers cover fraction of costs in Catholic dioceses’ clergy abuse cases.”   The article discusses the role of insurance coverage in the context of clergy abuse cases.  The author posits that liability insurers have paid only a fraction of the U.S. Catholic dioceses’ costs in clergy abuse cases. Nonetheless, insurance companies have paid, or been ordered to pay, millions of dollars for those claims.  Legal wrangles have arisen, among other issues, over the number of occurrences in clergy abuse cases and the allocation of losses among the decades of policies potentially involved.   Godes, who has worked on multiple cases involving insurance for clergy abuse cases, is quoted saying, “There’s a…

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