Kollross Wins String Of Insurance Coverage Appeals
June 30, 2010
CM partner and Appellate Practice Group co-chair Melinda Kollross has scored a trio of first and third-party insurance coverage appeal victories in the first half of 2010.
FIRST-PARTY PROPERTY
Arizona Appellate Court Rejects $100 Million Business Interruption Claim
Insured casino owner sought over $100 million in business interruption (“BI”) coverage from various excess insurers following a garage collapse during construction of an Expansion Project at its Atlantic City casino. Affirming the entry of summary judgment secured by CM partners Andy Jacobson, Celeste Hill and Courtney Murphy, the appellate court agreed with CM’s position that the Expansion Project was not covered property, a requirement for standard BI coverage to exist under the policy. The court also found there was no contingent BI loss because the Expansion Project was not a "contributing" property at the time of the loss. The court further held that the 365-day extended period of indemnity did not apply to the ingress/egress and civil authority coverages that were limited to 30 days. Melinda Kollross briefed and argued the case on appeal with invaluable input from the trial attorneys.
THIRD-PARTY LIABILITY
Illinois Appellate Court Finds No “Targeted Tender” Where Insured Asks Its Own Insurer to Stay Involved and Contribute to Settlement
General contractor (“GC”)’s primary and excess insurers filed a declaratory judgment action against subcontractor’s insurer alleging that GC had "targeted" the subcontractor and a sub-subcontractor’s policies and de-selected its own policies such that GC’s insurers were entitled to reimbursement of settlement monies paid up to subcontractor’s $5 million umbrella policy limits and were not responsible for any defense costs. The trial court found that the GC had triggered its own policies by requesting them to provide full coverage for the injury plaintiff’s claim and never deactivated those policies. The court further found that each of the primary policies contained mutually repugnant "other insurance" clauses, thereby requiring pro rata allocation of defense costs between the three primary insurers.
The Illinois Appellate Court, First District affirmed, holding that there was no targeted tender as the GC had not deactivated its own policies and placed its carriers on "standby/excess notice" where the GC sought simultaneous coverage from its own insurers; instructed its insurers to stay involved in the personal injury litigation and contribute to settlement due to the enormity of the risk presented; and the GC’s insurers’ contributions were necessary to effectuate a settlement prior to exhaustion of the other policies. The appellate court also agreed that the three primary policies' "other insurance" provisions were of the "same sort" and thus incompatible, requiring the three primary insurers to share defense costs on a pro rata basis.
The case was won in the trial court by CM partner Marge Orbon and Kathleen Johnson. Melinda Kollross won affirmance from the appellate court, which decided the case on the strength of briefs alone, without oral argument.
Assault and Battery Exclusion Bars Coverage for Alleged “Provocation” Leading to Auto Accident
Insured valet parking service and nightclub sought defense and indemnity for a lawsuit filed by injured passenger in car struck by fleeing taxicab following alleged altercation between taxi driver and employee of valet and/or nightclub. The subject liability policy contained a broad assault and/or battery exclusion barring coverage for any alleged assault and/or battery and any actual or alleged injury arising out of (1) any combination of any assault and/or battery-related cause of action and a non-assault or battery-related cause of action; (2) a chain of events which includes assault and/or battery; and (3) assault or battery as a concurrent cause of injury. The insureds claimed that complaint allegations asserting that the employee “provoked, assaulted and/or battered” the taxi driver gave rise to potential coverage and a duty to defend because “provocation” is separate from assault and/or battery.
The trial court entered judgment on the pleadings for the insurer and the Illinois Appellate Court affirmed. The appellate court found that the alleged “provocation” (which can be raised as an affirmative defense to assault and battery) was both “inextricably intertwined with assault and battery,” and part of the “chain of events” involving assault and battery, and thus within the scope of the broad assault and/or battery exclusion.
This winning result was again obtained at the trial level by CM partner Marge Orbon and Kathleen Johnson, and sustained on appeal by Melinda Kollross.
For more information on CM’s expertise in handling first-party property and/or third-party liability insurance coverage appeals, please contact Melinda at mkollross@clausen.com or Ed Kay at ekay@clausen.com.
