Two issues stand out among several issues presented in the Insurance Coverage case of Forrest Construction, Inc. v. Cincinnati Insurance Co., 2013 WL 135372 (6th Cir. January 11, 2013)(case involved Tennessee substantive law). The first standout issue was decided long ago under Tennessee law. Where the Liability Insurance Company denied coverage under its CGL Policy but reserved rights "to make additional defenses at a later date, ... it was not estopped from making additional or different arguments after it was sued by [its contractor Insured] if it believes other grounds existed on which to deny coverage." Forrest Construction, Inc. v. Cincinnati Insurance Co., 2013 WL 135372 *4 n.2 (6th Cir. January 11, 2013).
The second issue that stands out is a new one. In truth, it bears the marks of an issue sprung full blown from the Insurance Company's mind in this case without ever seeing a courtroom anywhere before. The Liability Insurer in this case urged "a new rule" which would require Insureds in cases where Coverage was denied but the law supposedly changed thereafter, to "'request reevaluation of coverage after the applicable law changes.'" Contrary to this Coverage contention, however, the Sixth Circuit panel left no doubt but that "the law in this regard is quite clear. The insurer severs all the insured's responsibilities once it unequivocally denies coverage." Forrest Construction, Inc. v. Cincinnati Insurance Co., 2013 WL 135372 *6 (6th Cir. January 11, 2013). Moreover, "[i]t should not be incumbent upon the insured to continue negotiations with the insurer once the denial letter has issued." Forrest Construction, Inc. v. Cincinnati Insurance Co., 2013 WL 135372 *6 (6th Cir. January 11, 2013).
Something old, something new. The CGL Carrier in this case prevailed in its position on a settled issue, but lost the novel issue it also advanced. While winning one battle but losing another, the Carrier also lost the war in this case, so to speak: The Appellate Court affirmed the Trial Court's grant of Summary Judgment to the Contractor-Policyholder.
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Also check out the outstanding Cavalcade of Risk at http://www.workerscompinsider.com/2013/01/cavalcade-of-ri-94.html, hosted by Julie Ferguson.
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