• Posts by Peter S. Selvin
    Partner

    Peter S. Selvin, Chair of ECJ's Insurance Coverage and Recovery Department, is a business trial lawyer with more than 30 years of experience. While he specializes in the areas of insurance coverage and international litigation, his ...

Construction Defect Damages May Exceed Cost To Repair

Construction defect cases often involve damage claims beyond simply the cost to repair the allegedly defective unit or component. These consequential damages may include damages for loss of use, expenses for mitigation and even attorney fees. For this reason, builders, suppliers, contractors and subcontractors who are faced with such claims should carefully review their insurance coverages, especially their CGL policies.

At the threshold, a defendant seeking coverage under its CGL policy in connection with a construction defect claim must satisfy the policy’s ...

Companies Vulnerable to Data Breaches Are Now Vulnerable to Litigation

Data breaches by large companies have been in the news for some time. Over the last several years several companies, including Marriott, Yahoo and Volkswagon, have been victimized by hackers who have broken into a company’s computer network. In some cases, the hackers have put the company’s confidential information on the internet. In other cases, the hackers have held the company’s information hostage through ransomware.

While companies are rightly concerned about the security of their own networks, there is another risk. Recent court cases are testing the liability of ...

Ruling Breaks New Ground For CGL Policy Data Breach Coverage Hackings

A recent case from the 5th U.S. Circuit Court of Appeals breaks new ground on the question of whether a commercial general liability policy provides coverage for damages arising from a data breach caused by a third-party hacker. Landry’s Incorporated v. Insurance Company of the State of Pennsylvania, 4 F. 4th 366 (5th Cir. 2021). In brief, the court in Landry’s held that there was coverage for a data breach where the insured was sued by a credit card processing company for breach of contract.

Landry’s operated retail properties including restaurants, hotels and casinos ...

Insurance Coverage and Recovery Developments in the Post-COVID World

This article provides a summary of a presentation Peter Selvin gave on April 22, 2021 to the Litigation Counsel of America. 

PART 1: Business Interruption: COVID-19

COVID-19 has impacted nearly every aspect of business and insurance is no exception. While infection rates continue to fall, there is a rise in business interruption insurance claims and litigation. This article highlights some of the emerging themes and notable developments in COVID-related insurance litigation claims.

In March 2021, the Los Angeles Lakers filed a COVID-19 business interruption lawsuit against ...

Bad Faith Liability Can Arise Even Absent A Demand Within Policy Limits 

In some circumstances an insurer’s duty to settle may arise even in the absence of a demand by the claimant within policy. The recent case of Planet Bingo, LLC v. The Burlington Insurance Company, 2021 DJDAR 2510 (March 18, 2021) is the latest decision to address this point.

In Planet Bingo, the insured manufactured handheld gaming devices. Those devices were distributed in the U.K. by Leisure Electronic Limited. Leisure leased some of the Planet Bingo’s devices to Beacon Bingo, which operated a bingo hall in London.

In September 2008 there was a fire at Beacon’s bingo hall ...

'Notice-Prejudice Rule' Ruling Could Provide New Arguments

The “notice-prejudice rule,” often applied in the context of occurrence-type policies, requires an insurer to prove that the insured’s late notice of a claim has substantially prejudiced its ability to investigate the insured’s claim. This principle has been applied in the context of both first-party policies. Pitzer College v. Indian Harbor Ins. Co., 8 Cal. 5th 93 (2019), applying the notice-prejudice rule to a consent provision in a first-party policy) and third-party policies written on an “occurrence” basis. See, e.g., Campbell v. Allstate Ins. Co., 60 Cal. 2d ...

Negligent Retention, Hiring Rulings Show Importance of Policy Language

Where an employee of a company commits an intentional act, such as a battery or sexual molestation, the managers of that company are often named as defendants on a theory of “negligent supervision”, “negligent retention” or some other form of vicarious liability. While the company’s liability policy of insurance may contain exclusions which bar coverage for loss arising from the employee’s intentional act, the question arises whether the negligence claims against the managers or the company are nevertheless covered by liability insurance.

The threshold question ...

The Perils of Playing Hard Ball

A recent case from California, Barickman vs. Mercury Casualty, 2 Cal.App.5th 508 (2016) illustrates the perils that may arise when an insurance company, evidently playing hardball with its insured, refuses to deviate from its “form” releases.

In Barickman, the Mercury’s insured (McDaniel) injured two individuals (Barickmand and McInteer) in a car accident in which McDaniel was found to have been intoxicated while driving his car. McDaniel was criminally prosecuted and there was the possibility that McDaniel, as part of any sentence in the criminal proceeding, might be ...

Liability Insurance Coverage: Basic Principles - Part Two

There are certain core principles that must be applied in analyzing coverage under a liability insurance policy.

This two-part article sets out those principles. It also explores some counter-intuitive situations in which such coverage may come into play.

Examples of Coverage in Counter-Intuitive Situations

  • Patent infringement
  • Business and IP disputes
  • Cyber-related risks
  • Trade dress claims
  • Unfair competition claims

Patent Infringement

  • See, e.g., com International, Inc. vs. American Dynasty Surplus Lines Ins. Co., 120 Wash. App. 610 (2004) (patent infringement covered ...
Liability Insurance Coverage: Basic Principles

There are certain core principles that must be applied in analyzing coverage under a liability insurance policy.

This two-part article sets out those principles. It also explores some counter-intuitive situations in which such coverage may come into play.


Insurance Liability

  • Hidden opportunities to obtain coverage in liability cases
  • Sometimes counter-intuitive
  • Often obscured by jargon and complexity
  • What strategies will assist in uncovering these opportunities?

The 8 Key Points

1. Law Tilted in Favor of Policyholders

Liability insurance provides protection (i.e ...

Litigation Practice Meets Covid – The View From California

The Covid-19 pandemic has had a profound and likely lasting impact on the way litigation lawyers conduct their practice. Below are some practical tips for managing in this new environment.

Civil Trial Scheduling

While our local Superior Court has not made an official announcement to this effect, it has been our experience that civil trials will be continued into 2021. This is in part because of the backlog of criminal and unlawful detainer cases, which have priority. While law and motion hearings have continued to proceed, these are all done remotely in our local Superior and US ...

Overcoming Intellectual Property Exclusions In Insurance Policies

A key challenge for policyholders seeking coverage under commercial general liability, directors and officers and other insurance policies is the presence of the so-called “intellectual property exclusion.” In a typical formulation, this provision excludes from coverage claims “based upon or arising out of any actual or alleged infringement, contributory infringement, misappropriation or theft of any intellectual property rights by the insured, including, but not limited to patent, copyright or trademark, service mark, trade dress, trade dress, trade secret, or ...

An Interview With Peter Selvin: Dispute Resolution 

Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes in major jurisdictions around the world. This interview discusses dispute resolution in the United States. 

1. What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration?

The principal alternatives to court litigation are arbitration and mediation.

As to arbitration, there has been considerable appellate ...

Rulings Disagree: Is Loss of Use of a Leasehold 'Property Damage'?

Is a party’s loss of use of a leasehold or other interest in real property considered “property damage” within the meaning of a comprehensive general liability (CGL) policy? Two recent cases go in different directions on this point.

The starting point is the CGL’s Coverage A which typically provides coverage for “bodily injury and property damage liability”. In turn, “property damage” is typically defined to include the “loss of use of tangible property that is not physically injured”. The key question addressed by the following cases is whether a party’s ...

Courts Wrestle With Coverage of Cyber-Related Claims

Cyber insurance is designed to fill an enterprise's coverage gaps, where coverage under other forms of in­surance may not be triggered by these kind of losses. At the same time, and because cyber insurance is a relatively new prod­uct, there are few reported cases involving coverage disputes. Importantly, those cases highlight the need for policyholders to scru­tinize the menu of available coverage grants in any proposed cyber insurance policy.

While to date there has been relative­ly few reported cases involving cyber in­surance coverage disputes, there has been much ...

Insureds Seek Coverage For Breaches Under Traditional Policies

There have been a number of high-profile insurance coverage cases arising from losses due to cyber fraud – especially data breaches, "spoofing'' and payment instruction fraud. While cyber insurance is specifically designed to address these kinds of losses, insureds covered under traditional insurance products such as commercial general liability, errors and omission and crime poli­cies have continued to seek coverage under those policies for cyber-related losses.

For example, in a case filed on Nov. 15, Target seeks recovery for its cyber fraud-related losses from its ...

Appellate Rulings Depart From Treaty Interpretation Norms 

International treaties and conventions such as the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (“the Hague Service Convention”), and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6998 (“the New York Convention”) are considered to be federal law and hence prevail over inconsistent state common law. U.S. Const., art. VI, cl. 2: American Ins. Assoc. v. Garamendi, 539 U.S. 396 (2003). For ...

Can Companies Be Liable If Third-Party Contractors Suffer Data Breaches?

The California Consumer Privacy Act became effective on Jan. 1. Included among its provisions is the grant of a private right of action on behalf of any consumer “whose nonencrypted and nonredacted personal information … is subject to an unauthorized access and exfiltration, theft or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices.” Civil Code Section 1798.150.

An interesting question is whether a company may face liability under this statute (or based on common law theories) where one ...

Ruling May Shed Light On Physical Losses and COVID-19

In the context of the numerous lawsuits have recently filed by policyholders seeking compensation for lost business income occasioned by the pending pandemic, a key issue will be whether those policyholders have suffered “direct physical loss or damage” to their businesses. A case decided earlier this year (albeit in a different factual context) sheds some light on whether this requirement can be satisfied in the present circumstances.

In Nat’l Ink & Stitch, LLC vs. State Auto Prop. & Cas. Ins. Co.,  2020 WL 374460 (D. Md. Jan. 23, 2020), plaintiff policyholder was the victim of ...

Exceptions to Insurers’ Right to Rescind for Inaccurate Information

Life insurers faced with a claim for benefits within two years after policy inception will often conduct a post-claim investigation to ascertain whether the statements made by an applicant about his or her medical history and health habits were accurate. In those cases where an insurer determines that those statements were inaccurate, the insurer may seek to rescind the policy.

But there are exceptions to the principle that inaccurate information in an application automatically gives the insurer an absolute right to rescind. Thus, while the general rule is that an insurer may ...

Business Interruption Insurance Coverage: A Guide for Restaurants

Restaurants whose operations have been shut down due to the coronavirus crisis are looking to their business interruption or business income insurance policies for relief, and have found resistance from insurance companies paying these claims.

As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

In cases where coverage is triggered, an insured business may be entitled to recover the net income it would ...

Business Interruption Insurance Coverage in the Age of Coronavirus

Businesses whose operations have been shut down due to the coronavirus crisis rightly look to their business interruption or business income policies for relief. As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

In cases where coverage is triggered, an insured business may be entitled to recover the net income it would have received but for the interruption and its operating expenses during the time ...

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