Top Developments – April 2021

Top Developments


Citizens Property Insurance Corporation v. Manor House, LLC, 2021 Fla. LEXIS 91 (Fla. Jan. 21, 2021)

Florida Supreme Court holds that extra-contractual, consequential damages for a first-party insurer’s alleged wrongful denial of a claim are not available in a breach of contract action. The court reasoned that the contractual amount due to an insured is the amount owed pursuant to the terms of the insurance policy and, therefore, an insured seeking extra-contractual damages must bring a separate “bad faith” claim under Fla. Stat. § 624.155.* It ultimately concluded that the insurer in this case, a state-created entity that provides property insurance, was not subject to statutory “bad faith” claims pursuant to Fla. Stat. § 627.351(6)(s)1, which immunizes member insurers for “any action taken by them in the performance of their duties or responsibilities under this subsection [627.351(6)(s)].” The court denied the insureds’ motion for rehearing on March 17, 2021.

* Fla. Stat. § 624.155 provides: “[a]ny person may bring a civil action against an insurer when such person is damaged by a violation by the insurer of certain statutory provisions, including section 626.9541(1)(i), which prohibits unfair claim settlement practices.”


Nautilus Insurance Company v. Access Medical, LLC, 2021 Nev. LEXIS 11 (Nev. Mar. 11, 2021)

Nevada Supreme Court (in a 4-3 decision) concludes that a CGL insurer which had no duty to defend was entitled to recoup its defense costs from an insured that had accepted the defense subject to the insurer’s reservation of its right to reimbursement. The majority grounded its decision in the doctrine of unjust enrichment:

When a court determines that an insurer never owed a duty to defend, the insurer expressly reserved its right to seek reimbursement in writing after defense was tendered, and the policyholder accepted the defense from the insurer, then the insurer is entitled to that reimbursement. Under generally applicable principles of unjust enrichment and restitution, the insurer has conferred a benefit on the policyholder; the policyholder appreciated the benefit; and, because it is reasonable for the insurer to accede to the policyholder’s demand, it is equitable to require the policyholder to pay. This result gives effect to the parties’ agreement, as well as the court’s judgment, by recognizing that the insurer was never contractually obligated to furnish a defense.

It disagreed with courts that have characterized an insurer’s reservation of the right to seek reimbursement as a “unilateral amendment to the insurance contract,” reasoning that there is “no contract” where the policy does not apply. The majority also noted that the ALI Restatement of Liability Insurance justified its departure from “the usual rule” (permitting reimbursement) based on “special considerations of insurance law” that are inconsistent with Nevada precedent that “legal principles applicable to contracts generally are applicable to insurance policies.”

American Western Home Insurance Company v. Gjonaj Realty & Management Company, 138 N.Y.S.3d 626 (App. Div. 2d Dep’t 2021)

New York appeals court holds that a CGL insurer could not recover its defense fees and costs from an insured pursuant to a reservation of rights, even though the insurer was found to have had no duty to defend or indemnify. The court acknowledged: (1) a trend allowing insurers to seek reimbursement of defense costs where no duty to indemnify is found; and (2) New York cases (including decisions by federal courts interpreting New York law) that have affirmed orders allowing insurers to recover defense costs in those circumstances. Ultimately, it concluded that recoupment was inappropriate where the policy at issue provided for a duty to defend but did not expressly allow recovery of defense costs. The court also found that equitable remedies (unjust enrichment) were not available as a basis to recover defense costs where, as here, the parties are “contractually bound by the terms of the policy.”


Berkley Specialty Insurance Company v. Masterforce Construction Corporation, 2021 U.S. Dist. LEXIS 14006 (M.D. Pa. Jan. 26, 2021)

Pennsylvania federal court holds that damage to a residence resulting from a subcontractor’s faulty installation of a roof does not qualify as an “occurrence” under Pennsylvania law and, therefore, a CGL insurer had no duty to defend. The court reasoned that, although the faulty workmanship resulted in third-party property damage, the damage was foreseeable and thus not a covered “occurrence” under Kvaerner Metals Division of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A. 2d 888 (Pa. 2006). In reaching this conclusion, the court was “not persuaded” to follow Pa. Mfrs. Indem. Co. v. Pottstown Indus. Complex LP, 215 A.3d 1010 (Pa. Super. Ct. 2019) (claims against commercial landlord-insured for storm water damage to tenant’s inventory due to insured’s failure to properly maintain and repair a roof alleged an “occurrence” potentially within the scope of coverage of CGL policy at issue). Instead, based on the Third Circuit’s “well-reasoned opinion” in Specialty Surfaces Int’l v. Continental Cas. Co., 609 F.3d 223 (3d Cir. 2010), it predicted that the Pennsylvania Supreme Court “would determine that damage to third-party property caused by faulty workmanship does not qualify as an accident sufficient to trigger insurance coverage.”*

The insured filed a Notice of Appeal on February 15, 2021.

* In addition to finding no “occurrence,” the court held that: (1) although the insurer’s ROR letter did not address one policy at issue, it was not precluded from later denying coverage because the policy was not “triggered” in any event and there was no evidence of waiver; and (2) there was no coverage for treble damages and attorneys’ fees awarded to the claimants because the damages were based on the insured’s intentional acts and the attorneys’ fees did not arise out of covered property damage.

The attorneys representing the insurer include Anthony L. Miscioscia and Marianne Bradley.


Gregg v. Ameriprise Financial Inc., 2021 Pa. LEXIS 608 (Pa. Feb. 17, 2021)

Pennsylvania Supreme Court (in a 4-3 decision) finds that the state’s Unfair Trade Practices and Consumer Protection Law (CPL) does not require a showing of intent, thus providing for strict liability. The majority concluded that, under the CPL, “the test for deceptive conduct … is essentially whether the conduct has the tendency or capacity to deceive, which is a lesser, more relaxed standard than that for fraud or negligent misrepresentation.” It further determined that, because commercial vendors have a duty to comply with the CPL regardless of their intent, failure to fulfill the duty may be fairly characterized as a strict liability offense. Thus, “the actor’s state of mind as to either the truth or falsity of the representation or the effect that the misrepresentation will have on the consumer is irrelevant” under the CPL.

The dissent disagreed that the CPL imposes strict liability, noting that, unlike other Pennsylvania regulatory statutes that “expressly and unmistakably [declare that deceptive] conduct is absolutely or strictly prohibited,” the CPL does not contain “any similar language indicating a legislative intent to impose strict liability on a vendor of goods and services for violating its prohibition against engaging in deceptive conduct.”

Cases to Watch

Bitco General Insurance Corporation v. Monroe Guaranty Insurance Company, 2021 Tex. LEXIS 232 (Tex. Mar. 19, 2021)

Texas Supreme Court (on certified question) to decide the propriety of an exception to the state’s “eight corners” rule that would allow consideration of extrinsic evidence in determining an insurer’s duty to defend where the evidence relates to the undisputed date of property damage. The questions certified by the Fifth Circuit are:

    1. Is the exception to the eight-corners rule articulated in Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (5th Cir. 2004), permissible under Texas law?

    2. When applying such an exception, may a court consider extrinsic evidence of the date of an occurrence when (1) it is initially impossible to discern whether a duty to defend potentially exists from the eight-corners of the policy and pleadings alone; (2) the date goes solely to the issue of coverage and does not overlap with the merits of liability; and (3) the date does not engage the truth or falsity of any facts alleged in the third party pleadings?

Bitco Gen. Ins. Corp. v. Monroe Guar. Ins. Co., 2021 U.S. App. LEXIS 7394 (5th Cir. Mar. 12, 2021).

Note: The Texas Supreme Court declined to address this exception in Richards v. State Farm Lloyds, 597 S.W.3d 492 (Tex. 2020), but subsequently adopted an exception to the “eight corners” rule in cases of collusive fraud in Loya Ins. Co. v. Avalos, 610 S.W.3d 878 (Tex. 2020).