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 March 2020

Message from Insurance Coverage Section Leadership:

For those of you who attended the Winter Meeting, I hope that you enjoyed my beautiful home state of Arizona! Convention chairs Craig Marvinney and his wife Paula planned an amazing meeting for us, and the substantive programming planned for us by program chair Jennifer Johnson was among the finest I’ve had the pleasure of attending. Perhaps most importantly, we enjoyed our time catching up with longtime friends within our Federation family in a beautiful setting.
I hope also to have a chance to visit with each of you at the Annual Meeting in Bermuda in a few months (July 25-August 1, 2020). FDCC meetings are critically important to the process of getting connected with fellow Federation members and experiencing the fellowship that is possible in this remarkable organization.
This year, the Insurance Coverage Section hopes to continue to make significant contributions to these meetings and to the Federation as a whole. We have great section meeting presentations already underway, and we will be reaching out to all of you to help our section be actively involved in future opportunities afforded by the FDCC.
We urge you this year to get involved, get connected, and get the most from your membership in the Federation of Defense & Corporate Counsel!
Gena L. Sluga,
Christian, Dichter & Sluga, PC

The 2020 FDCC Winter Meeting was held at the Camelback Inn in Scottsdale, Arizona. The theme for the meeting was “The Wonder of it All,” and it included outstanding programing as well as unique and enjoyable events.
The Insurance Coverage Section was well represented at the meeting! On Tuesday, March 3, the FDCC hosted the Insurance Coverage Training Academy: CGL Boot Camp. Insurance Coverage Section Vice-Chair Lauren Curtis and Section Member Ned Currie chaired the project that led to this outstanding program, which was taught by 21 section members. The program was a tremendous success, and Lauren Curtis already is working to refine the program for a future presentation. Thank you to all who participated in this great program, which was a shining example of the kind of value that our section loves to bring to the Federation and its members!
On Thursday, March 5, our section participated in the Section Open House. Long-time section members like Dan Kohane and David bell were there to interact with new members like Melissa D’Alelio, Whitney Eschenheimer, and Micalann Pepe. We had great discussion on some new ways to bring value to our section members, so be on the lookout for new things of the horizon.

Finally, on Friday, March 6, the Insurance Coverage Section teamed with several other sections in a blockbuster, two-hour section presentation: “Endless Variations on a Theme.” The panel--which included new member Meredith Murphy from FM Global—presented to a standing-room only crowd. They discussed the development and use of themes throughout bad faith cases, from beginning to end. Case evaluation, witness preparation, depositions, expert selection, opening statements, and closing arguments all can and should include your trial themes, and this panel did a great job of instructing us in the best ways to do so.

Thank you to all who helped make this meeting a great one!

We have several delightful new members who attended — and participated actively in — the Winter Meeting. We’ll help you get to know each of them a bit here, with the help of some of the FDCC members who supported their applications for admission!

New Member Melissa D’Alelio (introduced to us by Barbara O’Donnell)
Please join me in extending a warm FDCC welcome to our new member, Melissa D’Alelio, a partner with Robins Kaplan LLP, based in the Boston office. When Joyce Wang asked me to second Melissa’s nomination to the FDCC, given their work together on the ABA/TIPS Property Insurance Committee, I enthusiastically confirmed my readiness to do so.

Melissa and I have remained good friends following our shared years of working together in Robinson & Cole’s insurance practice in the Boston office. On many occasions over the ensuing years, I have marveled at Melissa’s ability to juggle the non-stop demands of her busy practice with the non-stop adventures involved in raising three young children (Salvatore, Angelo and Stella) with her husband Mike.
As a testimonial to her depth of experience, leadership, and professionalism, Melissa’s firm asked her to co-chair Robins Kaplan’s Insurance and Catastrophic Loss Group following her daughter Stella’s welcome arrival last year
Based upon her active involvement in the ABA/TIPS Property Insurance Committee, as well as the Massachusetts Women’s Bar Association, I am certain that Melissa will prove and active and valuable contributor to the FDCC’s Insurance Coverage and Property Law Sections. From many enjoyable gatherings with our circle of friends, I can also attest to Melissa’s terrific sense of humor and readiness to lend support to her friends and family when they are dealing with stressful situations or set-backs.
If you didn’t have a chance to meet Melissa in Scottsdale during our Winter Meeting, you’ll have another chance at the upcoming Corporate Counsel Symposium where Melissa will be speaking on artificial intelligence in insurance on a panel that Valerie Kellner is chairing.
Whitney Eschenheimer

Whitney Eschenheimer is a Shareholder in the Litigation Group of Johnson & Jones in Tulsa, Oklahoma. Her practice includes insurance coverage and bad faith defense, as well as catastrophic injury and transportation.
Whitney is a Tulsa native and a lifelong resident of her hometown, with the sole exception being her years as a Jayhawk at the University of Kansas where she obtained her undergraduate degree.

Early in her legal career, Whitney worked as corporate counsel for Mid-Continent Insurance. During her time in-house, she supervised large exposure losses, supervised litigation, made coverage evaluations and drafted coverage position letters. She has instructed claims professionals in the areas of underinsured motorist insurance coverage, misrepresentation and good faith claims handling. She is a member of the Oklahoma Bar Association, Defense Research Institute, the Oklahoma Claims Association, and the Oklahoma Association of Defense Counsel where she served as a Board Member from 2010 to 2013.
Even before joining the Federation, Whitney had strong relationships with long-time members. Tulsa member Jim Johnson approached her about potential FDCC membership years ago, and she also learned of the FDCC from Past President John Woodard, who was a next door neighbor to Whitney’s parents. Years after Jim first approached her about the Federation, Whitney was convinced to apply for membership because of her desire to develop a network of professional friends and colleagues practicing outside of Oklahoma, who might help her develop a more nationwide perspective on industry issues and trends.
When asked for a fun fact about herself that you might not easily learn about her at an FDCC event or cocktail party, Whitney shared that she has two sons (ages 15 and 20) who are avid wrestlers, so she has spent quite a lot of time over the years attending youth sports events. She also shared that she is a wonderful example of the success of adoption from foster care. She became part of a loving family at the age of 3 ½ years, having been adopted from the foster care system. In addition to her adoptive family, we’re happy to welcome Whitney into the Federation Family now!

Micalann Pepe (interviewed for us by Alison Christian)
Alison: Welcome to the FDCC! As one of the youngest lawyers in the Federation, what attracted you to join this group?
Micalann: I “grew up” as a lawyer listening to the wonderful stories of FDCC friendship and family from you, Doug Christian, and Gena Sluga. I value relationships and meaningful connections greatly, so the idea of being a part of such a tightknit organization that includes the most brilliant and talented defense attorneys, industry members, and corporate counsel in the nation was a professional and personal dream of mine since law school.

Alison: What keeps you interested in insurance coverage and litigation?
Micalann: Because this is a safe space with other insurance coverage enthusiasts
who get it, I will admit that the intellectual exercise of analyzing complex coverage
issues is fun—yes, fun! My favorite memories as an attorney involve discussing
and debating coverage concepts and arguments. The beauty of insurance is that,
even when you see the same policy forms over and over again, the facts always
differ greatly, which keeps things interesting.

Alison: How do you think your business background has helped shaped your career?
Micalann: I think growing up in a family business in South Dakota has given me a unique perspective to counsel my clients and approach problem solving. Not only do I understand the legal implications of particular strategies, but I also understand and consider the business implications.

Alison: You have held many leadership roles in your short career, what calls you to lead?
Micalann: Since I was a little girl, I felt compelled to help people (though this also got me into trouble because, to many, this made me quite “bossy”). I discovered that helping people gets easier when you are in a leadership role. Whether I use my leadership roles to connect people, to get people information they need, or to lend my ideas, expertise, and time to others to propel them or organizations forward, leading energizes me, enables me to build more relationships (also something that drives me), and makes me feel like I’m making a difference.

Alison: What is something that we wouldn’t know by looking at you?
Micalann: I grew up being a total tomboy in South Dakota, including hunting and fishing, and I look forward to fantasy football every year.

I know you recently obtained a defense verdict, what did you enjoy most about the trial process?
Micalann: As a connector, I most enjoyed all the different connections I strengthened and forged. Our trial team rented a house in the small town where the trial was held and collaborated every day on all aspects of our case with one another and our client representatives, strengthening our team and our defense. I forged new connections with the judge, the judicial staff, and even the jury in various ways throughout the process to the benefit of our client. Rather than coming across as “big city” lawyers who the judge and jury may have wanted to “hometown,” our authentic, professional, and kind demeanors and interactions with everyone in the courtroom also minimized what could have otherwise been a big risk and established our credibility.

Welcome, Melissa, Whitney and Micalann, to the Federation of Defense & Corporate Counsel!

FDCC Annual Meeting
July 25-August 1, 2020
Fairmont Southampton Resort
Southampton, Bermuda
Want To Get Away From It All?

Mark your calendars now for the 2020 Annual Meeting at The Fairmont Southampton Resort in beautiful Bermuda!

Convention Chair Johnny Sarber and Program Chair Heidi Goebel have a wonderful week planned for us at Bermuda's luxurious Fairmont Southampton Hotel. This will be an extremely family-friendly meeting with endless opportunities for both children and family activities, including lighthouses, parks, museums, zoos, and a dolphin encounter.

Bermuda offers a distinctive blend of British and American culture and is most known for its pink-sand beaches, golf courses, and lighthouses. Horseshoe Bay, minutes from the Fairmont, is arguably one of the best beaches in the world. It is a crescent-shaped blush-pink-sand beach set against dramatic rock formations.

For our golfers, you can enjoy an afternoon on the Turtle Hill Golf Course. Ranked one of the top five Par 3 courses in the world by Golf Magazine, Turtle Hill features 18 challenging Par 3 holes, most with stunning views of the Atlantic Ocean!

This trip will offer other exciting activities, including snorkeling and a catamaran tour! We will finish off the week with a beach party, and the opportunity hear from Captain Richard Phillips as the keynote speaker.

We look forward to meeting with you in Bermuda!

Insurance Coverage Section Opportunities – Get Involved!

One of the best ways to make the most of your Federation membership is to get active in substantive sections like the Insurance Coverage Section. Substantive sections afford opportunities to get connected with other members who are doing similar work. Each Substantive Section of the Federation has several responsibilities, each of which presents a chance for you to be more involved. Opportunities for member participation in our section include:
1. FDCC Insights
2. Section Newsletters
3. Presentations and Speaking Opportunities
4. New Member Development

FDCC Insights Publications

FDCC Insights is a scholarly journal is comprised of relevant and cutting-edge articles directly impacting defense and corporate counsel and industry professionals. Each substantive section in the Federation is expected to submit at least one article per year to the Quarterly, and we would love to submit multiple articles from the Insurance Coverage Section. Articles submitted for publication in the Quarterly must be the original work of the author(s). An article prepared for the Quarterly must of sufficient quality, both in terms of writing and legal scholarship, that the author considers it to be suitable for publication in a scholarly law journal. If you are interested in writing an article for submission this year, please contact Gena Sluga
Section Newsletters

This year’s Insurance Coverage Section leadership has a goal of providing regular newsletters this year that contain substantive content for our members. If you have any articles, cases notes, or other interesting content for the Newsletter, or are interested in helping to serve as Newsletter Editor for our section, please contact Gena Sluga
Speaking Opportunities

Your Section leadership has planned compelling presentations for our section meetings through 2020. If you have an interest in working on future presentations, please share your ideas with your Chair or any of the Section Vice-Chairs. In the meantime, please remember to pass along any suggestions you may have for opportunities for members of our section to speak at events and conferences hosted by other organizations. We always are seeking opportunities to promote our members, and the Federation as a whole, by demonstrating to other organizations the excellence of our members.

New Membership Development

Each FDCC substantive section is responsible for nominating new FDCC members each year. The Federation is particularly focused on recruiting young, diverse talent for our organization in the future. If you would like to nominate a new member whom might be nominated by the Insurance Coverage section this year, please communicate directly with any of your section Vice-Chairs or Chair.

Click here to read the March 2020 Insurance Coverage Section Newsletter.



September 2019

Message From the Section Chair


My name is Gena Sluga, and I will have the honor of serving as your Section Chair this year. I have big shoes to fill, and I am thankful to our former section chair Alan Rutkin for his leadership over the last two years. We’ve enjoyed some great programming during Alan’s time as chair, and that tradition will be continued in the coming months.  


Your section Vice-Chairs (Kathleen Browne, Lauren Curtis, Phillip Priore, Jay Sever, Heather Sanderson, Stacy Broman, Christine Vessels, Joanne Locke and ex officio member Alan Rutkin) and I look forward to working with you to make this year a great one for our section. You should expect to hear more from us in the coming months, but for now, suffice it to say that we are eager for your feedback and input as to how we can make this section valuable to you and your insurance coverage practice.  Please feel free to reach out to me anytime at


The most important information for me to share with you right now is that you should plan on attending the Insurance Industry Institute (I-3) on November 6-8, 2019 at the Wagner Hotel in New York City. Program chairs Lee Hall and Marc Harwell have put together a great program for us.



For anyone who isn’t yet familiar with I-3, the FDCC hosts this event every other year. The program is intended for attorneys and claims professionals whose work focuses upon complex insurance issues (i.e. this isn’t insurance 101!). This year’s seminar will equip, empower and offer you new solutions to the challenging issues you face each day in the insurance industry.


Like many FDCC events, there is no registration cost for industry members; please spread the word about this outstanding event to all of your colleagues in the insurance industry. We expect that at least 50% of the attendees at this year’s event will be insurance industry professionals.  


Some highlights from the program include keynote speaker Dr. Steven Weisbart, Chief Economist of the Insurance Information Institute; Randy Maniloff, author of the book Insurance Key Issues and monthly newsletter Coverage Opinions; Todd Presnell, author of Presnell on Privileges; and a roundtable discussion between four state insurance commissioners.

If you are an outside lawyer who represents insurers (or you have partners in your firm who do such work), please consider attending. Attendance is not limited to FDCC members, so feel free to invite others in your firm to join us.  I-3 is a great way to introduce people to our organization.

The complete program brochure and PDF registration form are attached, or you may click here for electronic copies. Click Here  

For Online Registration: Click Here

Hotel Reservations: A limited number of rooms are reserved for the FDCC I-3 meeting at The Wagner Hotel at $339 per night (plus tax). Reservations will be accepted at this rate through October 4, 2019 or until the room block is filled.  For reservations, please call The Wagner Hotel at 212-344-0800. To make your hotel reservations online, please click this link: The Wagner Hotel FDCC Online Reservations  (Access code: FDCCG)


Update Regarding the Expert Directory


Our previous section chair Alan Rutkin worked hard to coordinate our thoughts and input and develop an expert witness directory for our shared benefit. Our Executive Director Bernie Heinze is working to ensure that this directory will be made available for us on the FDCC’s new and improved website that will be launched later this year! Thank you, Bernie, and thank you, Alan, for your hard work on this directory!

2019 Annual Meeting Review


During the 2019 Annual Meeting in Sun Valley, Idaho, our section joined forces with the Construction Section and the Reinsurance, Excess and Surplus Lines Section on a panel presentation entitled: A Hot Corner: The Intersection of Criminal Law and Insurance Coverage.”  The panelists discussed the recent trend of criminal law issues arising in the insurance context. The panelist really reflected the FDCC’s commitment to diversity and emphasis on the lessons we can learn from our industry members. FDCC Board member Sean Griffin moderated a panel of three female industry members who shared their insights with us. Thank you to speakers Elizabeth Fitzpatrick of Island Companies; Kiera Goral of QBE North America; and Joanne Locke of Liberty Mutual Insurance for your hard work on this program!



2020 Winter Meeting Preview


            I hope to see all of you here in my home state of Arizona for the 2020 Winter Meeting. Contention Chair Craig Marvinney, and Program Chair Jennifer Johnson, have put together plans for a great week of both learning and fun. The Insurance Coverage Section will be part of a two-hour Blockbuster section panel discussion on the Development and Use of Trial Themes. We will be pairing up with the Trial Tactics section, as well as all of the other substantive sections devoted to insurance issues (Property Insurance, Extra-Contractual, Liability, and Reinsurance/Surplus Lines). The two-hour program will be facilitated by jury consultant and long-time FDCC sponsor Stuart Simon. We’re excited about the program, and this unique opportunity a longer and more in-depth exploration of issues in the context of a two-hour section meeting. See you there!


June 2019


What has the section/committee accomplished since its last report?


Our programming is excellent.


Our Austin Panel was elevated to Plenary.  We also held a second “Section Panel.”


We have a truly diverse panel for Sun Valley.  All of speakers contribute to diversity, and three are in-house. 


We’ll hold a major conference, I3, later this year.


We also met our other assigned responsibilities.


What are the section’s committee’s priorities and goals during the next three to six months?


In June, the Section Chair and Vice Chairs held a frank call concerning the Section’s strengths and weaknesses.


Our biggest shortcoming is recruitment.  While we have a subcommittee and subcommittee chair, recruitment has lagged.  That should be reinvigorated.




What, if any challenges are inhibiting the section’s/committee’s ability to achieve its goals?


The FDCC’s website hurts us.  We developed an expert directory.  It was to be published on a soon-to-arrive new website.  But, the website didn’t arrive and publication has not happened.  That’s really too bad.


Also, it’s difficult to communicate to the Section through the website.  Many complain that they don’t get these emails.  I believe it because, despite several efforts at correction, I do not get Section emails sent through the website.



Does the section/committee remain relevant and necessary to the FDCC’s strategic objectives and value to the membership?


Absolutely.  Many FDCC members practice in this area.  In fact, Bob Christie has been encouraging new members to join a section.  Many are joining the Insurance Coverage Section.




What support or action does the section/committee need from the Board of Directors?


New website.


March 2019


Please be sure to sign up for the FDCC Winter Meeting. I was told that the hotel is filling up.

Our programs are set for both Austin and Sun Valley.  In fact, at Austin, we will be part of the plenary.

Our recruitment is lagging. Some on the call suggested that recruitment would proceed better if the review process went faster. Even allowing for FDCC’s high standards and strict scrutiny, it was suggested that we should be quicker. That said, if you have someone, please send an email to both our recruitment vice chair (Kim Jackson) and me:

Our expert guide lives on, but its roll-out awaits FDCC’s roll-out of a new website. The current version is at this link.


Finally, we have an insurance law year-in-review, California-focused, from Bob Olson (Greines, Martin, Stein & Richland LLP).  Thank you Bob!




I.             INSURANCE

A.           Coverage

1.            Scope of Coverage

1.        Liberty Surplus Ins. Corp. v. Ledesma & Meyers Construction Co. (2018) 5 Cal.5th 216.

Claimant sued a contractor constructing school premises alleging that she was molested by one of its employees and claiming negligent hiring and supervision against the contractor. The policy defines a covered “occurrence” as an “accident.” The California Supreme Court held that as to the insured employer, a claim based on the negligent hiring, retention, and supervision of the employee who intentionally injures a third party is an “accident” within the meaning of coverage. Although the employer intended to hire the employee, it did not intend the act that caused injury. For the purposes of insurance coverage the necessary causation triggering coverage for the insured is the substantial factor tort standard.  If hiring and supervision are alleged to have been a substantial factor, they are sufficient to trigger coverage for injury caused by an accident.


2.        Heckart v. A-1 Self Storage, Inc. (2018) 4 Cal.5th 749, California Supreme Court.

Plaintiff rented a storage unit. The rental agreement required the renter to insure the stored property with the facility disavowing any liability or, for $10 per month, the facility would assume the risk for the first $2,500 in damage. The California Supreme Court held that the $10 per month alternative did not meet the statutory definition of insurance which does not reach indemnification agreements between parties to a transaction if the indemnification agreement is incidental to the principal object and purpose of the parties' transaction. In this case, the indemnification agreement was incidental to the principal object and purpose of renting storage space.


3.        Doyle v. Fireman’s Fund Ins. Co. (2018) 21 Cal.App.5th 33, Fourth District, Division Three.

Insured bought policy that covered property damage. Insured bought $18 million of supposedly rare vintage wine. Seller turned out to be a con man who was filling old bottles with cheap wine and putting expensive labels on them. The Court of Appeal held that the fraud loss, lost expected value, was not property damage. Property damage means physical injury, not economic loss from fraudulent misrepresentation.


4.        Thee Sombrero, Inc. v. Scottsdale Ins. Co. (2018) 28 Cal.App.5th 729, Fourth District, Division Two.

After a fatal shooting, a nightclub’s conditional use permit was revoked allowing it only to be operated as a banquet hall. It sued the insured security company claiming that the security company’s negligence had allowed the shooting which caused the loss of its conditional use permit. The Court of Appeal held that the loss of the conditional use permit constituted “property damage,” not mere economic loss, within the meaning of the security company’s liability policy which defined “property damage” to include loss of use of tangible property. Loss of any significant use of the premises constitutes “loss of use of tangible property”; the loss of all uses is not required.


5.        Albert v. Truck Ins. Exchange (2018) 23 Cal.App.5th 367, Second District, Division Seven.

Claimant asserted that the insured, on the insured’s own property, blocked (i.e., put a fence across) an easement for ingress and egress of the claimant’s adjoining property. No claim was made that the insured in any way physically occupied the claimant’s land. The Court of Appeal, disagreeing with Sterling Builders, Inc. v. United Nat. Ins. Co. (2000) 79 Cal.App.4th 105, held that the carrier owed a duty to defend under the policy’s “personal injury” coverage for “wrongful eviction, wrongful entry or invasion of the right of private occupancy.” It found the phrase “invasion of the right of private occupancy” to be ambiguous and susceptible to including non-physical invasions of rights in real property.


6.        Lat v. Farmers New World Life Ins. Co. (2018) 28 Cal.App.5th 212, Second District, Division One.

A rider to a universal life insurance policy waived premium payments if the insured established total disability, but the insured had to pay premiums until that determination was made and the rider ended with the policy itself. The carrier notified the insured that policy would be canceled for nonpayment of premiums. The policy lapsed. Within a month after the cancelation the insured notified the carrier that for the last year she had had terminal cancer. She died a month later. The carrier denied coverage on the ground that the rider had by its own terms ended before the insured provided notice of her disability. The Court of Appeal held the policy and rider to be “analogous to” an occurrence liability insurance policy (as distinct from a claims-made-and-reported policy) such that the notice-prejudice rule applied to revive the canceled policy and deem the unpaid premiums to have been waived. (See Pitzer College v. Indian Harbor Insurance Company, pending California Supreme Court case no. S239510 [insurance policy contains New York choice of law and provision requiring carrier consent before the insured incurs any expense; the California Supreme Court will decide whether the notice-prejudice rule is a fundamental California public policy for choice-of-law purposes and, if so, whether it applies to such an expense consent provision].)


7.        Jones v. IDS Property Casualty Ins. Co. (2018) 27 Cal.App.5th 625, Third District.

After an auto accident, plaintiffs obtained a stipulated judgment for $1.35 million in favor of the injured husband and $150,000 in loss of consortium for his wife. The carrier paid plaintiffs its $250,000 per person limit. Plaintiffs sued claiming that there was a separate policy limit available for each plaintiff. The policy specified that “[t]he bodily injury liability limits for each person is the maximum we will pay as damages for bodily injury, including damages for care and loss of service, to one person per occurrence.” The Court of Appeal held that the language adequately provided that a spouse’s claim for loss of consortium is subject to the same “per person” limit as the injuries suffered by the other spouse in an auto accident even though the policy did not expressly refer to the aggregation of consortium claims as such. “[B]odily injury … to one person per occurrence” includes derivative loss of consortium claims.


2.            Exclusions

8.        All Green Electric, Inc. v. Security National Ins. Co. (2018) 22 Cal.App.5th 407, Second District, Division Eight.

The insured was sued because a loose bolt in a cabinet it installed caused medical equipment to malfunction. The medical equipment was not damaged, it just did not operate correctly. The Court of Appeal held that the claim fell within the “impaired property” exclusion—property of which the insured’s work is a component or property that has not been physically injured, that is not working properly because of some defect in the insured’s work.


3.            Excess And Other Insurance

9.        Montrose Chemical Corp. v. Superior Court, California Supreme Court pending case no. S244737.

Insured is subject to continuous property damage claims spanning several years arising from its production of DDT. It purchased multiple layers of insurance over the years. The insured wants to “selectively stack” the insurance so as to select particular years’ excess policies to respond after those years’ primary policies had exhausted even though other years’ primary policies may not have exhausted. At issue is whether “horizontal exhaustion” is required, that is, whether the insured has to exhaust excess insurance at lower levels for all periods before obtaining coverage from higher level excess insurance in any or, instead, whether the insured can selectively require just vertical exhaustion, that is, exhaustion of underlying policy limits in one policy year triggering the excess policies in that policy year.


B.           Bad Faith, Cumis, Contribution & Reimbursement

10.     PacifiCare Life & Health Ins. Co. v. Jones (2018) 27 Cal.App.5th 391, Fourth District, Division Three.

The Insurance Commissioner charged a health insurer with 900,000 violations of Insurance Code section 790.03. The Court of Appeal held valid the Commissioner’s regulations that (1) deem a single unfair act as a potential violation, (2) define the word “‘[k]nowingly’ “to include implied and constructive knowledge, and (3) define the word “‘[w]illful’” without requiring any specific intent to cause harm or violate the law. Any language in Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, that an “unfair claims settlement practice” must “refer to an insurer’s pattern of conduct, rather than to any individual act,” is dicta. A “prohibited ‘practice’ is an activity that occurs within the insurance industry generally. An insurer engages in such a prohibited ‘practice’ by committing the described act once or more than once.”


11.     Case v. State Farm Mutual Automobile Insurance Co., Inc. (2018) 30 Cal.App.5th 397, Second District, Division Four.

Plaintiff was involved in a vehicle accident. She sought both workers compensation benefits (she had been driving back from a work event) and uninsured motorist benefits from her personal auto carrier. Plaintiff informed the auto carrier of the amount that workers compensation had paid. The carrier declined to provide uninsured motorists payments until it received notice that all workers compensation claims had been fully resolved. The policy excluded coverage for bodily injury “to the extent [such coverage would] benefit[ ] [¶] ... any workers’ compensation ... insurance company.” The Court of Appeal held that until the carrier received confirmation that no further workers compensation benefits could be paid, a genuine dispute existed as to its obligation, defeating bad faith, regulations requiring prompt resolution of claims notwithstanding.


12.     Centex Homes v. St. Paul Fire & Marine Ins. Co. (2018) 19 Cal.App.5th 789, Third District.

In construction-defect litigation, a subcontractor’s carrier agreed to defend a developer as an additional insured under a reservation of rights. The carrier reserved the right to deny coverage for damage to the subcontractor’s own work or damage caused by other subcontractors not insured by the carrier. The carrier also reserved the right to reimbursement of costs incurred defending uncovered claims. The Court of Appeal held that the reserved rights did not trigger a Civil Code section 2860/Cumis right by the developer to select independent counsel. For a right to independent California counsel to arise, there has to be an actual conflict, not just a potential conflict. Rules of Professional Conduct, rule 3-310 does not require otherwise. The developer presented no evidence as to how the appointed counsel could adversely affect a coverage outcome.


13.     Strawn v. Morris, Polich & Purdy, LLP (2019) ___ Cal.App.5th __, First District, Division Two.

Defendant law firm represented a carrier in adjusting a suspicious fire claim. In doing so, the firm requested the insured’s tax returns. The insured properly objected on privilege grounds. Nonetheless, the insured’s accountant inadvertently disclosed the tax returns with other documents. The law firm sent the returns on to the carrier and a forensic accounting firm without letting the insured know of the inadvertent disclosure. At the time, a criminal arson prosecution had been dismissed but the insured had not yet sued for bad faith. The insured sued the law firm (along with suing the carrier for bad faith) alleging claims of invasion of privacy and financial elder abuse. The Court of Appeal held that the law firm’s communication of the tax returns to its client (and client’s expert) could fall within the litigation privilege but, as pleaded, an issue remained as to whether litigation was in fact contemplated, rather than just possible, in the period between arson prosecution dismissal and the insured’s bad faith suit. The invasion of privacy claim, thus, survived. The financial elder abuse claim, however, was effectively the same as a bad faith claim and therefore barred by the rule that an insured cannot sue an agent (the attorneys) for the carrier’s bad faith.


December 2018


The ADR section has been busy preparing for the upcoming Austin meeting where we will join with the INSURANCE COVERAGE section to present on the topic of arbitration disputes returning to Court.   


The moderator will be: Marie Chafe, Cornell & Gollub, Boston, MA


The speakers will be:

                Stephen Carter, Carter Perry Bailey, London, United Kingdom

                Sean Griffin, Dykema Gossett, Washington, DC

                Vicki Smith, Bodyfelt Mount, Portland, OR

                Paul Van Osselaer , VAN OSSELAER DISPUTE RESOLUTION PLLC, Austin, TX


                Arbitration clauses have been common place in many consumer transactions and  when they reach disputes that sound in traditional negligence, such as Nursing Home care, the Courts are  examining these provisions and the reaching a range of results.        The paper and the panelist will address these issues with practical insight supported by up to date legal research. 


                Please join us for this session.


The Sun Valley program is being designed to be more interactive.   John Trimble, of Lewis Wagner has agreed to sit in the mediator hot seat to talk about what he sees work from the cases he mediates.


The working title of this program is “ Thoughts  from the End of the Table.”   This is to interactive and  practical.    I am suggesting everyone read:   Getting to Yes: Negotiating  Agreement Without Giving In.   Available on Amazon  and in most everyone’s local public library.    This book from 1991 will help us  focus our time together.     I am putting together about 5-6 scenarios just in case the discussion is slow and please email me with your suggestions. 



September 2018


Margulis Wins for Zurich

On September 5, Andy Margulis (Ropers, Majeski, Kohn & Bentley PC) got a nice win for Zurich.

Investigation began before policy started.  So, claim was first made before the policy period.  Coverage was not triggered.

Interestingly and somewhat geekily, the court also rejected policyholder’s request to enforce a “rational” broader view.  Court noted that policyholder had not shown the policy to be ambiguous.

Case is attached.  Jalbert v. Zurich, No. 17-12227 (D. Mass. Sept. 5, 2018).

O’Donnell Leads Austin Program

Barbara O’Donnell is leading our program for the winter meeting.  Panel will discuss legislative efforts to restrict ADR enforceability and other related topics.

DRI in December

Would you be interested in dining with Section Members during the December DRI meeting in NYC?  If so, please email me:

Johnsen on Stormy Weather

Hurricane Florence may lead us to look back at the claim statistics from Harvey and Irma.  To that end, Jen Johnsen suggested a few links.

Here is an article about Harvey in the online Insurance Journal from 2/13/18:

Here is information from the FL Office of Insurance Regulation on Irma claims:



July 2018


Being in the lazy days of summer, the biggest section news is the upcoming annual meeting.  Maui should be great, and our section will contribute with a CLE led by David Zizik.


Beyond that, I did not receive any news for our monthly blog.  So, I’ll offer a thought of my own.


Cyber coverage cases, like other areas of law, are starting to evolve around a few recurring issues.  One of the issues is causation.  When does a loss result from computers directly?  In May, the 11th Circuit Court of Appeals, weighed in on this issue, and it sided with the insurance industry.  If you’re working in this area, you might spend a few minutes considering this case, Interactive Communications International v. Great American Insurance Co., 2018 U.S. App. LEXIS 12410.


The policy covered “loss of, and loss from damage to, money, securities and other property resulting directly from the use of any computer to fraudulently cause a transfer….”  The issue quickly became: what does “directly” mean.  And both policyholder and insurer were able to cite supporting cases, because two different approaches have evolved on this issue.


Policyholder argued for a “proximate cause” approach.  Under this view, if the use of the computer set in motion a chain of events that caused the loss, then the computer caused the loss “directly.”


Insurer argued for a literal approach.  To result “directly,” there must be immediacy between conduct and result.


The 11th Circuit adopted a methodology that insurers often endorse:  “[W]e look to the plain language of InComm’s policy.  It is a fundamental principle of Georgia law—and law more generally—that words in contracts ‘generally bear their usual and common signification.”  To that end, the court turned to dictionaries, and found that their theme is unmistakable: “one thing results ‘directly’ from another if it follows straightaway, immediately, and without any intervention or interruption.”


Key point is “resulting directly” has become a recurring important issue in this area.  Courts have gone both ways on this issue.  But Interactive is a big win for the good guys (insurers).



April 2018

Submitted by: Alan Rutkin


The Insurance Coverage Section is active!


Thank you Wystan Ackerman!  Our expert directory may be added to the FDCC’s website.  If you have not already done so, please add your thoughts through this link:


Maui Meeting Memo


Hawaii FDCC Members Wes Ching and Peter Olson are working feverishly to prepare our Section’s presentation at the Annual Meeting this summer in Maui, “Cyber Insurance: Reading Between the Lines of the ISO Forms Before the Attack Happens.”  David Zizik is moderating the panel, on which Peter and Wes will be joined by insurance guru Craig Uradomo of The Island Insurance Companies.  If any of you have information about real life examples of cyber attacks on law firms or corporations that you have been involved with, or local cases which provide examples of such incidents, or information/cases about coverage disputes arising from such incidents, please contact David at (401) 421-1238, or via email at Such information will be greatly appreciated!



Bad faith and CPA claims permissible against insurance claims adjusters in Washington

By: Vicki M. Smith, Bodyfelt Mount, Portland, OR


It’s not news that Washington has tough laws and regulations for insurers and claims handling practices.  A recent case from Washington’s Court of Appeals gives insureds another tool to use against insurers and its employees.


The Washington Court of Appeals, Division One, held that employee insurance adjusters can be held liable for bad faith.  Keodalah v. Allstate Ins. Co. and Tracey Smith, 2018 Wash App LEXIS 685 (Div 1, March 26, 2018). The court reasoned that the bad faith statutes provide that “all persons” involved in insurance owe a duty of good faith. That duty of good faith applied to insurance claims adjusters as well as the companies; therefore, bad faith claims are viable against claims adjusters.


This court disagreed with the previous decisions that distinguished between bad faith claims involved third-party claims companies and those involving claims adjusters directly employed by the insurer. This court found any distinction was not significant, as both are representatives of the insurer. Here, the named adjuster was an employee of the insured. 


The court also held that claims adjusters can be held liable for violations of the Consumer Protection Act (“CPA”).  The court rejected the adjuster’s argument that there must be a contractual relationship between her and the insured to establish such a claim.  Instead, the court held the CPA is intended to deter unfair or deceptive practices, is to be liberally construed, and applies to insurance adjusters.


One consequence of this case is that insureds may name in-state claims adjusters to defeat diversity and keep their cases out of federal court.  This case also serves as a reminder that insurers and claims adjusters must know and strictly adhere to Washington’s claims handling regulations and laws. And, unfortunately, despite all efforts, insurers and claims adjusters should not be surprised to be included in future Washington lawsuits.



March 2018

Submitted by: Alan Rutkin


The Insurance Coverage Section again asks for your support on our expert project.  Under Wystan Ackerman’s leadership, the Section is preparing a directory of experts. If you have already submitted information, thank you! If you have not yet submitted info, please click here to do so today.


Once we have enough material, we will ask FDCC to make our guide available through FDCC’s website.


At the FDCC Winter Meeting on Amelia Island, Jay Sever’s panel (pictured below) was truly a rousing success.  The seats were filled, and people stood in the back.  Also, Jay was a moderator who was really able to engage the audience as well as the panelists.  Congratulations!



At the Annual Meeting this summer in Maui, the Insurance Coverage Section will hold a panel presentation entitled: “Cyber Insurance: Reading Between the Lines of the ISO Forms Before the Attack Happens.”  The presentation will be moderated by David Zizik, and the panel will include FDCC members Wes Ching and Peter Olson, as well as Craig Uradomo of The Island Insurance Companies. The panel will take a practical look at what “cyber insurance” is and why law firms and businesses need it; the evolution of ISO and manuscript forms that cover such risks (and those that don’t) over the past 20 years; and some basic considerations for law firms and corporate legal departments to be thinking about when deciding about the specific coverage they need.  Audience participation will be encouraged!





February 2018

Submitted by: Alan Rutkin



Section Project on Experts


We again ask for your support on our expert project.  Under Wystan Ackerman’s leadership, the Section is preparing a directory of experts. If you have already submitted information, thank you! If you have not yet submitted info, please do so today through this link:


Stephen Carter on the Move


Stephen Carter has been accredited as an ARIAS arbitrator.  He already qualified as a Member of the Chartered Institute of arbitrators.  Last year he was also again listed in Chambers Guide as a Leading Individual in Reinsurance and in Legal 500 as a Leading Individual in Insurance and Reinsurance Litigation.  Congrats!



Traub Lieberman Wins Big for Insurer


Traub Lieberman Straus & Shrewsberry LLP partners Brandt W. Allen and Michael S. Knippen recently obtained dismissal for an excess liability insurer in Illinois state court. The case involved the availability of coverage for an underlying malicious prosecution claim filed against the insured. The coverage dispute arose from the alleged malicious prosecution of an individual for a 1993 shooting, which resulted in the individual’s 1994 conviction for murder, attempted murder and robbery. After nearly two decades of incarceration, the individual’s initial conviction was vacated based on an ineffective assistance of counsel argument. The individual was re-tried in August 2013, which resulted in a hung jury, and again re-tried in July 2014, which resulted in an acquittal. The individual subsequently brought suit against the City and various police officers involved with the individual’s 1994 trial and conviction. The City and the various officers sought insurance coverage for the malicious prosecution claim from its liability insurer from 1994 (when the individual was initially convicted), as well as its general and excess liability insurers from 2010 to 2014 (the years encompassing the individual’s re-trials and eventual exoneration). After the general and excess liability insurers denied coverage for the claim under the 2010-2014 policies, the City brought suit against those insurers seeking a declaration that their policies provided coverage for the individual’s claims.


While the coverage litigation was pending, the City and the individual agreed to a consent judgment against the City, which resolved the underlying malicious prosecution claim. The City and its insurer from 1994 agreed to pay a part of the agreed judgment amount and assigned collection of the remainder of the judgment to the individual to be collected solely from the general and excess liability insurers from 2010 to 2014. After the individual was added as an additional party plaintiff in the coverage action, the insurers moved to dismiss the coverage case arguing, in part, that the allegation of malicious prosecution against the City did not trigger coverage under the 2010-2014 policies. Specifically, the insurers argued that coverage is triggered for malicious prosecution claims when the initial prosecution is initiated and not when the individual is eventually exonerated. Thus, the insurers argued that the City was only entitled to coverage from its 1994 insurer, as that insurer provided coverage to the City when the individual was initially prosecuted. The City and the individual argued that the language in the policies defined personal injury to encompass the offense of malicious prosecution, which they equated with a completed tort or accrual of a cause of action. The City and the individual argued that the offense of malicious prosecution happened upon exoneration and thus, the insurers’ policies in effect when the individual was exonerated were triggered for the underlying malicious prosecution case.


The Court disagreed with the City and the individual and held that their argument was not supported by Illinois law or the terms of the insurers’ policies. The Court held that there was no ambiguity in the policy language nor a legal or factual basis to hold that coverage was triggered upon the individual’s exoneration. Following Illinois precedent and the majority opinion nationwide, the Court concluded that the coverage trigger for a malicious prosecution claim is the initial filing of the malicious action against the accused and not the action’s termination or the accused’s exoneration. The Court observed that while exoneration is a required element and a necessary condition precedent before the malicious prosecution claim accrues, it is not an occurrence that causes injury or ham within the meaning of the policy. According to the Court, to hold otherwise would impermissibly convert the insurers’ occurrence-based policies into claims-made policies. The City and the individual have appealed the ruling.



Marshall, Conway & Bradley Deliver a Win on Rarely Used Policy Provision


The following case upheld an insurer’s right to disclaim based on the insured’s failure to cooperate.


In Diego Fernandez v. Philadelphia Indemnity Insurance Company, 16-cv-2533, United States District Court, Southern District of New York (Magistrate Judge Judith C. McCarthy), the insured purchased a Collector Vehicle policy for a 1962 Chevrolet Impala with an Agreed Value of $165,000.  The vehicle was reportedly stolen and the insured demanded full policy limits based on the Agreed Value endorsement. 


Ordinarily, under an Agreed Value policy, the insured has no real defenses and must pay the “agreed value” in the event of a covered loss, such as a theft.


However, an insurer is still entitled to investigate the claim and the insured must corporate in this regard, and an insurer may still disclaim if fraud is established. 


During the post-loss investigation, Philadelphia demanded routine documentation i.e., Bill of Sale; proof of upgrades to the vehicle etc.  The insured responded with production of a Bill of Sale and multiple invoices documenting upgrades to the vehicle that exceeded $200,000.  The insured refused to produce tax returns or proof of actual payment of the upgrade invoices.  Philadelphia ultimately determined that the documentation produced was phony and created after the fact.  Philadelphia disclaimed coverage based upon the fraud provision and breach of the corporation clause. 


The insured filed suit contending that under an agreed value policy, once his ownership of the vehicle and theft were established (which they were) the policy requires payment.  The District Court disagreed. 


In a well reason the decision, the District Court, applying New York law, recognized that “an insurance company bears a heavy burden” in disclaiming based on the failure to cooperate.  To establish lack of cooperation, the insurer must prove: (1) it acted diligently in seeking to bring about the insured’s cooperation; (2) its efforts were reasonably calculated to obtain the insured’s cooperation; and (3) the attitude of the insured was one of “willful and avowed obstruction.” Thrasher v. U.S. Liability Ins. Co., 278 N.Y.S.2d 793 (1967).


The District Court concluded that Philadelphia satisfied all three prongs.  It acted diligently in sending numerous letters and continued to follow-up even after the insured failed to respond.  Philadelphia also expressly warned that a failure to comply would jeopardize coverage.


With respect to third prong – “willful and avowed obstruction”, the Court was particularly expansive.  It should be noted that the insured was also quite aggressive in pressing this claim.  In fact, plaintiff’s own counsel, concerned that his client had or was perpetrating a fraud, retained his own personal ethics counsel – a fact that he disclosed to the Court. 


The District Court ultimately ruled, as a matter law, that the insured’s conduct constituted “willful and avowed obstruction.”  The District Court found that the insured had breached the cooperation clause by providing Philadelphia with false documents – a back dated bill of sale and invoices he “prepared” himself.  The District Court noted that a failure to provide “fair and truthful disclosures” constitutes a breach of the cooperation clause, as a matter of law. Nationwide Mut. Ins. Co. v. Graham, 713 N.Y.S.2d 602 (2000).


Despite the fact that plaintiff’s own counsel had advised the Court that the insured had “made-up” the invoices, he nonetheless was undeterred and pressed his case.  The insured contended that while the invoices themselves may not be genuine the actual work described on the invoices to upgrade the car was done.  The insured further contended that any potential misrepresentation was not material.  The insured also challenged Philadelphia’s right to even investigate this claim because it was an Agreed Value policy. The District Court rejected all of plaintiff’s arguments finding that plaintiff’s conduct did not amount to a “honest mistake” and the legitimacy of the bill of sale and invoices were “relevant and germane” to Philadelphia’s investigation.  The Court also determined that it was “too late” for the plaintiff to now attempt to cooperate by acknowledging the documentation was phony and, in effect, requesting an opportunity to prove his case in front of a jury.  The Court noted that cooperation was a “condition precedent” and is an absolute defense to an insurance claim. Blakeslee v. Royal Ins. Co. of Am., 1995 WL 122724 (March 22, 1995). The Court further stated that while the policy at issue required the insurer to demonstrate prejudice, New York is otherwise a “no prejudice” state in this regard. New York City Hous. Auth. V. Hous. Auth. Risk Retention Grp., Inc., 203 F.3d 145 (2000).


Fernandez is instructive for how a relatively benign policy condition can become a potent coverage defense.  The cooperation clause is infrequently asserted and even more rarely upheld by a Court.  Nonetheless, it should not be overlooked, especially when an insured is not being forthcoming in responding to routine and legitimate documents requests during the claim investigation phase.




January 2018

Submitted by: Alan Rutkin & Jay R. Sever



The following two recent cases involve interesting applications of business risk exclusions:

West Side Salvage, Inc. v. RSUI Indemnity Co., No. 16-3928, 2017 WL 6422107, at *1 (7th Cir. Dec. 18, 2017)


In West Side Salvage, the Seventh Circuit addressed the scope of the damage to property exclusion.  In the underlying tort action, the owner of a grain bin noticed that the

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