CM Report of Recent Decisions – 2017 Vol. 3

October 16, 2017 / CM Reports

SIDEBAR: Seventh Circuit Condemns Class Action Settlement That Merely Generates Fees For Plaintiffs Class Counsel As “Utterly Worthless”

In In Re Subway Footlong Sandwich Marketing & Sales Practices Litigation, 869 F.3d 551 (7th Cir. 2017), the United States Court of Appeals for the Seventh Circuit struck down a class action settlement because it did nothing more than generate attorney’s fees for class counsel.

SPECIAL ALERT—FOCUS ON EMPLOYMENT LAW: Dept. Of Justice Opposes The EEOC In A Gay Discrimination Lawsuit

In Zarda et al. v. Altitude Express d/b/a Skydive Long Island et al., pending in the United States Court of Appeals for the Second Circuit, No. 15-3775, plaintiff filed suit against his former employer, alleging that he was fired due to a customer complaint that he disclosed his sexual orientation.

Standard Fire Policy Terms Provide Relief For Innocent Insureds

Many states, including Illinois, through their respective Departments of Insurance, have adopted a Standard Fire Policy for homeowners. . . . When the policy issued to the homeowner differs from the Standard Policy to the detriment of the insured, a question arises concerning what terms control, the state Standard Policy or the homeowner’s policy.

Where “Best Efforts” Are Not Enough: Court Sides With Landmark In Determining That Terms Of The Policy Are Abrogated By Protective Safeguard Endorsement

455 Companies LLC alleged that Landmark breached their property insurance contract by denying their claim for water damage to the insured property. 455 owned a 114,000 square foot commercial building with five floors, a basement and two mechanical penthouses on the roof, all located at 455 West Fort Street in the downtown business district of Detroit, Michigan. The loss allegedly occurred in early January 2015, when a pipe broke in a women’s room on the fifth floor of the building causing extensive water damage to all lower floors.

Consequential Damages Dismissed As Too Speculative To Recover

Plaintiff 455 Companies LLC alleged that Landmark breached their property insurance contract by denying their claim for water damage to the insured property. Plaintiff claimed that as a result of the loss and damage, it lost approximately $4,250,000 in sale/rental opportunities/revenue—damages which were claimed to have been foreseeable and contemplated by the parties at the time the Policy was bound.

California Court of Appeals Rejects Policyholder’s Attempt At “Elective Stacking” Of Coverage

In a coverage dispute that has been roiling for more than 25 years and yielded two California Supreme Court decisions so far, the Court of Appeal, Second Appellate District (Los Angeles), recently rejected a policyholder’s attempt to “electively stack” coverage to allow it to access excess policies in a given year so long as lower-level policies in the same policy year have been exhausted. Montrose Chemical Corp. of California v. Superior Court, 14 Cal. App. 5th 1306 (2017)(Montrose III).

California Court of Appeal Narrowly Interprets Scope Of “Faulty Work” Exclusions

In what it described as a case of first impression, the California Court of Appeal, Fourth Appellate District (Riverside County), recently interpreted the scope of two “faulty workmanship” exclusions, j(5) and j(6), to apply only to work that the insured was actively performing at the time of damage, and then, only to the specific component of the insured’s work that was incorrectly performed. Global Modular, Inc. v. Kadena Pacific, Inc., 2017 Cal. App. LEXIS 778 (Cal. App. 2017).

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