Top Developments – November 2022

SPOTLIGHT: Third Circuit Court of Appeals Affirms No Coverage for Sex Trafficking Claims

In Nautilus Insurance Co. v. Motel Management Services Inc., the Court of Appeals granted a motion for judgment on the pleadings dismissing claims for defense and indemnification of underlying sex trafficking claims on the ground that they clearly fell within the insurer’s assault and battery exclusion. While the Court noted that Policy does not define the terms “assault” or “battery”, the Court nonetheless held that they “are legal terms of art that receive their well-defined meanings under Pennsylvania law.” In denying coverage for the underlying claims, the Court concluded that “[a]n ‘assault’ involves intentionally placing another person in ‘imminent apprehension of a harmful or offensive bodily contact’” and that “the term ‘battery’ refers to ‘a harmful or offensive contact with the person of another’ absent the other’s consent.” Firm insurer client represented by Tony Miscioscia.

Climate Change

Everest Insurance v. Gulf Oil (Suffolk Superior Court, MA): In this case, which has since been voluntarily dismissed, firm insurer client sought a declaration that it had no duty to defend or indemnify Gulf Oil in an underlying climate change adaptation suit brought by the Conservation Law Foundation. Firm insurer client was represented by Eric Hermanson, Adam Berardi and Austin Moody.


Contamination Exclusion

APX Operating Co. LLC v. HDI Global Insurance Co.  (Delaware Supreme Court): Delaware high court affirmed the trial court’s ruling that the contamination exclusion barred coverage for the claims by the owner of multi-state water parks for losses arising out of closings brought on by COVID. John Balaguer was local counsel for the insurer client.

No Broker Liability

Wilson v. USI (Third Circuit):  This case is among several recently argued before the Third Circuit involving coverage for underlying COVID-related losses.  In one of the first cases to consider the potential liability of an insurance producer (i.e., broker) in this context, the trial court (E.D.Pa.) dismissed the claim against both the insurer and the firm broker client. Chris Leise and Marc Penchansky represent the firm broker client in this case.

Duty to Defend

Travelers v. Northrop Grumman (SDNY): Trial court denied insured’s motion for summary judgment that firm insurer client had an “immediate” duty to defend a proposed mass tort class action by private parties alleging bodily injury and property damage from pollution, finding questions as to whether the insured had provided timely notice. Firm insurer client is represented by Shane Heskin, Adam Berardi and Sara Tilitz.

Intentional Acts

Rosenberg v. Chubb Indem. Ins. Co. (W.D. Pa. Oct. 31, 2022): The underlying complaint alleged that the insured-parents concealed the gun their son had used in a murder, delaying the discovery of the body and causing emotional distress to the victim’s mother. The insureds sought defense and indemnity under their homeowners and umbrella policies. The court granted the insurers’ motions for judgment on the pleadings, dismissing the insureds’ claims because the underlying complaint was “rife” with allegations of intentional conduct that did not constitute a covered “occurrence” and triggered exclusions. Similar motions in a related declaratory judgment action, against the insured-son, are pending. Firm insurer client is represented by Mike Kassak and Paul Briganti.

No “Occurrence” (Construction Defect)

Admiral Insurance v. Tocci Building Corp. (1st Circuit):  The insured is seeking review by the First Circuit Court of Appeals of the trial court ruling granting partial summary judgment to firm insurer client on the grounds that it had no duty to defend underlying construction claims against the insured which alleged faulty workmanship, which was not the result of an “occurrence.” Firm insurer client is represented by Eric Hermanson and Austin Moody.

Pollution Exclusion

ACE American v. Pardee Resources (C.P. Commerce Philadelphia): Trial court granted the motion for judgment on the pleadings on behalf of firm insurer client holding that, based upon the pollution exclusion, it had no duty to defend or indemnify underlying claims involving releases of coal mining waste. Firm insurer client represented by Shane Heskin and Sara Tilitz.

Kuhlman Electric v. Traveler’s et al. (Circuit Court of Hinds County Mississippi, First Judicial District):  Trial court granted insurer client’s motion for summary judgment applying pollution exclusion to underlying claims, rejecting insured’s argument that the claims involved “personal injury,” which did not fall within the scope of the pollution exclusion. The Court noted that the insured failed to recognize the insurer “was free to provide coverage for personal injury losses except those that its policies excluded. Unfortunately for [the insured], [these] policies exclude coverage for the particular type of personal injury damage it seeks to recover.” Firm insurer client is represented by Robert Walsh, Sara Mirsky and Lynndon Groff.