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September 29, 2014

HURRICANE HUNTING ... WITH DRONES AND OTHER AIRCRAFT WITHOUT PILOTS.

A huge leap has recently been taken in Hurricane hunting. You are probably very familiar with the "Hurricane Hunters," aircraft crews which fly into and out of Hurricanes at continuing risks to their lives, in order to tell us about how our lives are likely to be affected by the storms.

A little-reported story, however, is that NASA has budgeted funds for several years of successful tests involving remotely piloted aircraft which do much the same thing. But at a much lower risk to human life.

The NASA project involves the use of drones powered by jet engines to fly over Hurricanes, drop sensors, and analyze the results. Already, the project is a success. See Scott Dance, "Mission to Analyze Hurricanes From Above Coming to Quiet End / NASA Goddard Scientists Use Unmanned Aircraft to Learn Why Tropical Storms Form and Fade" (Baltimore Sun Online September 26, 2014). (The title of this linked article refers to this year's project coming to an end because the Hurricane season is also coming to an end this year. It does not refer to funds being removed from the NASA budget for this project.)

The positive effects on insurance coverage availability for Hurricanes and Catastrophes are enormous.

If the project is allowed to succeed.

Posted by Dennis J. Wall on September 29, 2014 at 06:33 AM in Catastrophe Claims, Hurricanes | Permalink | Comments (0)

September 24, 2014

NO "RIGHT OF REMOVAL" REQUIRES DISMISSAL RATHER THAN ABATEMENT.

An insurance company sued for alleged bad faith refusal to settle appealed an order from a trial court. That is not news. The carrier's contention was newsworthy, though:

The carrier contended that it had a "right to remove" the bad faith lawsuit from State Court to Federal Court.

Building on the "right to remove" premise, the carrier contended that when the trial court in that case entered an order abating the bad faith lawsuit rather than dismissing the bad faith lawsuit, the carrier's "right to remove" was deeply infringed and so the order was illegal; in other words, all the trial court could do (despite settled Florida law to the contrary) was to dismiss and never to abate since abatement destroyed the carrier's "right to remove" the case to Federal Court.

On appeal to Florida's Fourth District Court of Appeal, the appellate court said "no". The trial court's order was correct. The appellate court acknowledged that although it had ruled in several previous cases "that an order which prevented removal of a [bad faith] case to federal court constituted irreparable harm and departed from the essential requirements of law," they did not make that a bright-line rule which applies every time in every case.

Far from it, that decision was distinguished in the present case. The appellate court wrote that although there was "irreparable harm" here, the insurance company failed to show "that the trial court departed from the essential requirements of law." Far from it. Here, "the trial court's abatement of the bad faith action in lieu of dismissal" is supported by the law.

The trial court's order of abatement stands. Safeco Insurance Co. v. Beare, 2014 WL 4626851 (Fla. 4th DCA September 17, 2014).

Posted by Dennis J. Wall on September 24, 2014 at 05:50 AM in Remand Back to State Court from Federal Court | Permalink

September 22, 2014

PREMATURITY: THE CATCH IN SIMULTANEOUS MOTIONS TO REMAND AND DISMISS.

In Wallace v. GEICO General Insurance Co., 2014 WL 4540328 (M.D. Fla. September 11, 2014), an Uninsured Motorist carrier removed its policyholder's bad faith lawsuit from State Court to Federal Court. Then the policyholder filed a motion to remand and the insurance carrier filed a motion to dismiss.

The basis was the same for both motions: Prematurity.

The Federal Court had no problem whatsoever finding that the instant case involved prematurity: "A bad faith claim does not accrue until the conclusion of the underlying uninsured motorist case. [Citations omitted.] It is undisputed that the state court has not entered a final judgment in the underlying uninsured motorist case." Wallace v. GEICO General Insurance Co., 2014 WL 4540328 *2 (M.D. Fla. September 11, 2014).

This helped only the policyholder on his motion to remand, however. It was fatal to the UM carrier's motion to dismiss. The insurance company defendant failed to provide the Federal Court with a basis in the record to determine "that the value of the bad faith claim meets the jurisdictional threshold of $75,000." Wallace v. GEICO General Insurance Co., 2014 WL 4540328 *1 (M.D. Fla. September 11, 2014). Accordingly, said the Federal Court, "the Defendant has not met its burden to demonstrate that the Court has subject matter jurisdiction."

The moral of this story (well, one of the morals, anyway): Be careful what you wish for. You might get it. In this case, the defendant wished that the Judge would find that the bad faith claim against it was premature. The Judge gave the defendant what it wanted, in that sense: The Judge found that the bad faith claim was premature.

Then the Judge granted the plaintiff's motion to remand the case back to State Court.

Posted by Dennis J. Wall on September 22, 2014 at 06:05 AM in Remand Back to State Court from Federal Court, Uninsured/Underinsured Motorist Coverage | Permalink

September 17, 2014

SILENCE IN THE FACE OF IMPROPER REMOVAL IS NOT REWARDED.

Know when to hold 'em and when to fold 'em. And -- when to play 'em.

Suppose you represent an insurance company. One of the tools in your toolkit when your client, the insurance company, is sued in State Court is to remove the case to Federal Court.

Suppose that is exactly what happens. After you remove the case against your client to Federal Court, suppose the Federal Judge on her own motion raises the issue of why the case should not be remanded, and asks you and the policyholder's lawyers to brief the issue.

Suppose further that after the Federal Judge raises the issue of remand on one ground, the plaintiff-policyholder-corporation (in this case) who filed suit in State Court and whose case was removed to Federal Court, then files its own motion to remand the case back to State Court including on the ground raised by the Federal Judge on her own motion.

Suppose, apparently, that the Federal Court enters an Order thereafter, remanding the case and that the plaintiff files its motion for attorney's fees.

Wouldn't you argue, or be tempted to argue, that under these circumstances the plaintiff should not be entitled to attorney's fees since the plaintiff's motion to remand was filed and served after the Federal Court previously asked for briefing on one of the grounds for remand? Might you not raise the contention on behalf of your client, in opposition to an award of attorney's fees upon remand under these circumstances, that in this case the plaintiff's motion for remand was "unnecessary and duplicative" such that your client should not have to pay the attorney's fees incurred by the plaintiff in connection with that motion?

Well, this was the insurance company's "primary objection" to an award of attorney's fees upon granting remand back to State Court, according to the Federal Judge in the case of Leeward Sound Corp. v. Service Ins. Co., 2014 WL 4376189 *1 (M.D. Fla. September 4, 2014).

The motion for attorney's fees was first considered by a U.S. Magistrate Judge who recommended and reported that the motion be approved. The District Judge agreed and accepted the report and recommendation, noting that the plaintiff's attention to a ground for remand that the District Judge raised herself, which the plaintiff "included" in its motion to remand, "does not preclude Plaintiff from recovering its attorneys fees incurred as a result of the improper removal." Leeward Sound Corp. v. Service Ins. Co., 2014 WL 4376189 *2 (M.D. Fla. September 4, 2014).

The Federal Judge pointed out, before concluding her Order, that the defendant "failed to object to the hourly rate or the hours expended specified in Plaintiff's Motion for Attorneys Fees". Leeward Sound Corp. v. Service Ins. Co., 2014 WL 4376189 *2 n.3 (M.D. Fla. September 4, 2014). Regardless of the lack of objections, the U.S. Magistrate Judge conducted an independent review of both the specified hourly rate and the hours expended. See Leeward Sound Corp. v. Service Ins. Co., 2014 WL 4376189 *4-*5 (M.D. Fla. September 4, 2014). The Federal Judge adopted the findings in this regard of the U.S. Magistrate Judge and entered her Order accordingly. Leeward Sound Corp. v. Service Ins. Co., 2014 WL 4376189 *2 n.3 (M.D. Fla. September 4, 2014).

Please Read The Disclaimer.

Posted by Dennis J. Wall on September 17, 2014 at 05:53 AM | Permalink

September 15, 2014

DISABILITY INSURANCE EXAMINED.

The ins and outs, pluses and minuses of disability insurance are examined by Ron Lieber, "Your Money / Looking Out for Yourself With Disability Insurance" p. B1, col. 1 (New York Times Nat'l ed., Saturday, September 13, 2014). You and I and our clients and customers can learn from this newspaper article about a type of insurance that is not indicated for all of us in all situations. Recognizing for whom and when and where this insurance is a good fit is valuable knowledge.

Posted by Dennis J. Wall on September 15, 2014 at 07:58 AM | Permalink

September 10, 2014

PROFESSIONAL LIABILITY COVERAGE FOR LENDER FORCE-PLACED INSURANCE KICKBACKS?

The Court in the case of QBE Americas, Inc. v. ACE American Ins. Co., 44 Misc. 3d 1224(A), 2014 WL 4250089, 2014 N.Y. Slip Op. 51330(U)(N.Y. Sup. Ct., New York County August 27, 2014)(table, text in Westlaw), concisely described the nature of that lawsuit:

Background

This is an insurance coverage action in which QBE seeks indemnification for its participation in alleged kickback schemes involving forced-placed insurance. QBE claims it is entitled to coverage in approximately 40 lawsuits and a state government investigation, though other lawsuits and investigations may be pending.

However, the Court carefully stated several times that the present, unofficially reported ruling ostensibly did not reach QBE's Professional Liability Insurance Coverage claims. The only issue it was deciding at this time, said the Court, was "QBE's entitlement to defense costs from its primary carriers, AIG and Darwin, during the pendency of this action."

The Court determined that AIG had no duty to advance defense costs under its policy, but Darwin does have such a duty at least with respect to "pending litigation for which Darwin has consented to advance defense costs," in the words of the Court in this case. AIG's policy requires the exhaustion of a self-insured retention, and QBE provided no evidence that it exhausted its self-insured retention. Darwin in contrast "has a duty to defend. Hence, Darwin (under New York, California, and Georgia law [the jurisdictions potentially implicated in choice-of-laws governing interpretation of Darwin's policy]) is obligated to advance all of QBE's llitigation costs so long as each lawsuit presents the possibility that any of the QBE entities or any of the claims asserted might be covered." [Emphasis in original.]

The ideas that the duty to defend is determined by comparing the claims alleged against the insured with the terms of the policy, and that Courts will hold that there is a duty to defend so long as any of the alleged claims are potentially covered, are universal. These tests are applied generally, but they do not ordinarily translate into a concomitant determination that the duty to defend includes a duty to advance defense costs particularly, as in this case, while the insured and the carrier contest all coverage.

"An informed coverage determination simply cannot be made at this juncture." This limitation on the Court's decision is clear and concise. There may be a question though whether it disguises the coverage determination that the Court has apparently already made applying the Darwin Professional Liability insurance Policy to cover its insured's lender force-placed insurance kickbacks.

Posted by Dennis J. Wall on September 10, 2014 at 06:03 AM in Duty to Defend, Force Placed Insurance | Permalink

September 03, 2014

HELD: NO PRIVILEGE, NO WORK PRODUCT OVER REPORTS TO REINSURER.

Two requests for production to a Director's and Officer's Liability Insurance Company, Progressive, were at issue in a recent decision by a U.S. Magistrate Judge, Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.). They were requests for production of:

12. All documents relating to the purchase, placement or ceding of any reinsurance by you [the liability insurance carrier] that relate to the Policy, including all status reports provided by you to such reinsurance companies and memoranda relating to meetings with reinsurers.

23. All documents relating to any communications with any reinsurer about the Claims.

The discovery pleading defined "Policy" as the liability insurance policy at issue in the case, and "Claims" as "'any and all demands for insurance coverage and/or payment made by the FDIC and/or any officers or directors of Vantus Bank." Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *1 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

The liability insurance company that received these requests contended that it could redact (black out) parts of reinsurance communications on the grounds of either attorney-client privilege or work product immunity or both, after a previous Order directing production of the requested documents.

The Court overruled objections based on work product immunity from discovery. First, the Court agreed with FDIC, the plaintiff in this case and the party that propounded the requests, "because the information was created in the ordinary course of Progressive's business":

The documents were prepared and distributed to the reinsurance companies and broker for business purposes. Progressive itself admits that the documents were provided for case updates pursuant to the reinsurance agreements, or in response to specific requests, and included the matter's history, its present posture, current activity, assessments of coverage and liability issues, amounts paid and reserve, and plans for future handling. Doc No. 75 at 10. Those are all typical business purposes for the reinsurance industry. Progressive has not met its burden of showing that these documents were “prepared or obtained because of the prospect of litigation.” [Citation omitted.] Therefore, they are not subject to protection under the work product doctrine.

The Court further overruled objections based on the attorney-client privilege, for two reasons. First, "Progressive waived any applicable attorney-client privilege when it distributed the communications to its reinsurers and broker." Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *4 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

Second, even assuming that the so-called "common interest doctrine" applied under the circumstances, still that doctrine as defined by the Court requires an identity of legal interests, not commercial interests. "The relationship between Progressive and its reinsurers and broker is commercial and financial in nature, not legal." Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *4 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

Based on the record before it, the Court granted the plaintiff's motion to compel production of the requested documents without redaction in this case.

Please Read The Disclaimer.

Posted by Dennis J. Wall on September 03, 2014 at 02:26 PM in Attorney-Client Privilege, Directors and Officers (D&O) Coverage, Discovery, Reinsurance, Work Product | Permalink

September 01, 2014

LABOR DAY, CALIFORNIA EARTHQUAKE, SAME MESSAGE: HOME IT.

On this Labor Day, we are all mindful of the earthquake that just struck California. In the past, we have been mindful of the Hurricanes that strike the Southeast. As we work to provide for our families, repair the damage, and build a better home for ourselves and our neighbors, let's take the time in the very near future to do our annual review of our homeowner's coverage. See Ann Carrns, "After Napa Jolt, Quake-Proofing Your Homeowner's Insurance" p. B5, col. 1 (New York Times Nat'l ed., "Personal Business," Saturday, August 30, 2014).

Remember Labor on this Day!

Posted by Dennis J. Wall on September 01, 2014 at 05:11 AM in Catastrophe Claims, Earthquake Insurance, Homeowners Insurance, Hurricanes | Permalink

Claims And Issues