Monthly Archives: February 2015

Sixth Circuit: Growing Marijuana is Not the Same as Buying a Houseplant or Entertaining Visitors

Half of the states in this country have now legalized marijuana for medical use, and that has led to a number of small-scale growing operations in policyholders’ homes.  While not nearly as dangerous as cooking meth on the kitchen stove, such activities can nonetheless pose unacceptable risks of loss.  On Tuesday in Nationwide Mut. Fire Ins. Co. v. McDermott, 2015 WL 756206, 2015 U.S. App. LEXIS 3012 (6th Cir., Feb. 24, 2015), a unanimous panel of the Court of Appeals roundly rejected policyholder arguments that starting up such an operation did not represent a change in use or occupancy that the insured was required to bring to the insurer’s attention. In 2005, Kasey McDermott purchased a home in Bay City, Michigan

Tagged with: , ,
Posted in Co-Insureds, Fire, Increase in Hazard

Florida Court Holds Arson is a Type of Excluded Vandalism and Malicious Mischief

Earlier this month a unanimous Florida appellate court joined a number of other states that have held that an all-risk policy exclusion for vandalism and malicious mischief operates to bar coverage for an arson loss.  The opinion can be found at Botee v. Southern Fid. Ins. Co., 2015 WL 477836, 2015 Fla. App. LEXIS 1566 (Fla.Dist.Ct.App., Feb. 6, 2015). The insured, Raziya Botee, owned a single-family home that was destroyed by an arsonist on October 10, 2012.  It was undisputed that the structure had been vacant for over a month when the fire broke out.  Her homeowner’s insurer, Southern Fidelity (SFIC), denied liability because the contract of insurance excluded coverage for losses caused by “vandalism and malicious mischief, theft or

Tagged with: ,
Posted in All Risk, Ambiguity, Arson, Exclusions, Fire, Vacancy and Unoccupancy, Vandalism

California: Service of Suit Endorsement Trumps Forum Selection Clause in Case Involving Product Recall Due to Contamination.

On February 5th in a case involving the recall of over $500,000 worth of oyster products made from Korean shellfish, the Southern District of California held: (1) that the policy’s service of suit clause, which gave the insured the choice of forum, trumped a forum selection clause that provided for suit in a New York state court; (2) that California law, as opposed to New York law, applied, and (3) that for purposes of a 12(b)(6) motion, plaintiff’s complaint, which alleged potential contamination, was sufficient to state a claim.  The decision is Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins. Co., 2015 WL 728477, 2015 U.S. Dist. LEXIS 23441 (S.D.Cal., Feb. 5, 2015). The case arose after Tri-Union Seafoods initiated a

Tagged with: , , , , ,
Posted in Bad Faith, Contamination, Contamination and Product Recall

Inventory Computation Exclusion Bars Employee Theft Claim in Alabama

Employee theft claims are frequently problematic when the only evidence of shortage is a comparison between computer records and a physical inventory conducted after the malefactor has been discharged.  In W.L. Petrey Wholesale Co. v. Great American Ins. Co., 2015 WL 404523, 2015 U.S. Dist. LEXIS 10943 (N.D.Ala., Jan. 30, 2015), an Alabama federal court recently granted summary judgment to the carrier where the contract of insurance barred employee dishonesty claims based solely on “inventory computation” and such a comparison was the policyholder’s only evidence of the loss. Petrey was a wholesale distributor of goods supplied to convenience stores, one of which was a two ounce “energy shot” drink called “5-Hour Energy.”  It hired salespeople for delivery routes, and each

Tagged with: , ,
Posted in Conditions, Exclusions, Theft or Dishonesty

Virginia Court Nixes Claim Chinese Drywall Damage to HVAC Systems is Covered as Equipment Breakdown

In Travco Ins. Co. v. Ward, 284 Va. 547, 736 S.E.2d 321 (2012), the Virginia Supreme Court held that loss occasioned by the sulfuric gas released by defective Chinese drywall was excluded under the primary coverage grant of a property policy because of exclusions for corrosion and pollution.  Last month, a Virginia federal court shut down claims that such a loss might nonetheless be covered under a policy’s secondary coverage provisions extending coverage to equipment breakdown.  The matter was Nationwide Mut. Ins. Co. v. CG Stony Point Townhomes, LLC, 2015 WL 236826, 2015 U.S. Dist. LEXIS 5682 (E.D.Va., Jan. 15, 2015). The policyholder made claim after the heating, ventilating, and air-conditioning (HVAC) systems in five townhouses at its Creek’s Edge

Tagged with: , , ,
Posted in Contamination, Corrosion, Mechanical Breakdown, Pollution
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
Stay Connected

Email:

Topics
Cozen O’Connor Blogs