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Allocation
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New Jersey Appellate Division Touches Upon Various Issues
Regarding Allocation and Exhaustion in a Long-Tail Environmental Claim
IMO Indus., Inc. v. Transamerica Corp., 2014 N.J. Super. LEXIS 132 (App.
. Sept.
30, 2014)
The Appellate Division: rejected an insured's contention that
it's insurer must cover defense costs for an endless time until it has
actually paid the indemnification limits of its policies; occurrence
and aggregates limits for multi-year policies; stub policies would be
treated as having separate annual aggregate limits; the insured's payment
of SIR was outside policy limits; and ruled that that coverage issues would
not be re-litigated for each individual asbestos claim based on the excess
insures decision to not associate with the underlying claims.
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Hurricane Sandy Litigation
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New Jersey District Court Dismisses
Counts from Insureds' Hurricane Sandy Coverage Suit
Gilliam v. Liberty Mutual Fire Ins.
Co., Civil Action No. 14--00361 (D.C.N.J., September 26, 2014)
dismisses counts of that
sought, in the context of damage stemming from Hurricane Sandy, recovery on
the basis of the Consumer Fraud Act and the policy's implied covenant of good
faith and fair dealing. The Court also rejected the insureds' bid for
punitive damages and attorney's fees as inappropriate in a first-party
insurance claim setting.
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Defective Products Coverage
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New Jersey Appellate Division Finds No Coverage for
Costs of Accepting Return of Defective Product
Titanium Industries, Inc. v. Federal Ins. Co., 2014 N.J.
Super. . LEXIS 2208 (App. ., September 10, 2014)
The New Jersey Appellate Division
finds covered for costs related to the return of defective
titanium it sold to a third party. The law of warranty rather than that of
insurance coverage guides the apportionment between transacting parties of
this type of loss.
An insured incurred liability when it
sold defective titanium to a manufacturer of orthopedic implants and
devices. In particular, the titanium material contained a defect called
"alloy segregation" - or, the failure of alloys in the metal to
completely melt, causing the alloy to separate over time. The manufacturer
consequently scrapped items already made with the defective metal and
returned the raw material to the insured.
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Late Notice Defense
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No Prejudice Requirement Added to New York Common Law
Late Notice Standard
Indian Harbor Ins. Co. v. The City of
San Diego, 2014 U.S. App. LEXIS 18986 (2d Cir. October 2, 2014)
The United States Court of Appeals for
the Second Circuit finds no coverage for an insured who delayed fifty-eight
days in notifying its insurer, clarifying that New York's common law does
not require insurers asserting a late notice defense to show prejudice in
addition to untimely notice.
The insured, a City, sought coverage
in relation to three late-notified claims, including one in which the City
waited fifty-eight days to notify its insurer of the relevant claim. The
insurer in response filed a declaratory judgment action, arguing that late
notice precluded coverage, though it did not argue it had suffered
prejudice because of the insured's delay.
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Environmental Liability Allocation
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New York Judge Addresses Allocation of Continuous
Trigger Liability
Keyspan Gas East Corp. v. Munich
Reinsurance America, Inc., et al., 2014 N.Y. Misc. LEXIS 4469 (Sup. . New York County, October 14, 2014)
Judge Scarpulla of the New York County
Supreme Court reaffirms that allocation of continuous trigger environmental
liability generally does not include years in which coverage was
unavailable in the marketplace, but also decides that in this case a, 1971
law operated to force the insured to bear liability incurred during a
period when coverage was commercially unavailable.
An insured incurred liability in
connection with environmental cleanup at two former manufactured gas plant
sites. It sought coverage from an insurer who had, between 1953 and 1969,
issued the insured's predecessor-in-interest eight excess liability
policies.
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