Earlier this week an Oklahoma federal court addressed a mortgagee’s claim for vandalism loss – a topic we also discussed in Wednesday’s post. In American Modern Home Ins. Co. v. Tulsa Fed. Credit Union, 2015 WL 2372549, 2015 U.S. Dist. LEXIS 64491 (E.D.Okla., May 18, 2015), the court rejected an insurer’s argument that because the vandalism was done by the insured, it could not constitute the covered peril of “vandalism” in a situation in which the policy neglected to define that term. The insured owned a house and secured a homeowners policy that also extended coverage to his mortgagee. The mortgage company instituted foreclosure proceedings and the policyholder vacated the dwelling, but only after removing fixtures and damaging property to…
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Oklahoma Court Holds the Policyholder Can Also Be the Vandal
Posted in Ambiguity, Homeowners Coverage, Loss Payees, Mortgagees, Theft or Dishonesty, Vandalism
Smelly Cat – Closely-Divided New Hampshire Supreme Court Addresses Whether Cat Urine Is a Pollutant
Last Friday, New Hampshire’s highest court unanimously held that the pungent aroma of cat urine could constitute physical loss or damage under a property policy. In Mellin v. Northern Security Ins. Co., 2015 WL 1869572, 2015 N.H. LEXIS 32 (N.H., Apr. 24, 2015), it split on whether such a loss was barred by standard pollution exclusion language, however. Three of the five justices (including a specially-appointed retiree) held that the exclusion was ambiguous in nature. The Chief Justice and another member of the court disagreed, labeling the provision “plain and unambiguous” and clearly applicable to preclude coverage for a pervasive cat odor problem. On the TV show “Friends,” Phoebe Buffay used to entertain patrons at the Central Perk coffee shop…
Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution
Silica Dust Damage Held Barred by Pollution and Faulty Workmanship Exclusions in New York
Building construction frequently generates silica dust, a substance that can cause lung disease and other respiratory problems. Abrasive sand-blasting or jack hammering as well as concrete drilling and block cutting can lead to its release. In Broome Cty. v. Travelers Indem. Co., – N.Y.S.2d –, 125 A.D.3d 1241, 2015 WL 790256, 2015 N.Y.App.Div. LEXIS 1706 (N.Y.App.Div., Feb. 26, 2015), a unanimous panel from New York’s intermediate level appellate court held that the pollution and faulty workmanship exclusions in a first-party policy barred coverage for the property damage when silica dust spread throughout an office building due to construction activities nearby. The insured was Broome County, the owner of a building in a government complex. During the construction of a parking…
Posted in Ambiguity, Contamination, Faulty Workmanship or Design, Particulates, Pollution
New York’s Highest Court Enforces a Water Damage Exclusion Despite an Ensuing Loss Exception
In Platek v. Town of Hamberg, et al., 2015 WL 685726, 2015 N.Y. LEXIS 252 (N.Y., Feb. 19, 2015), the New York Court of Appeals held that an exclusion for water below the surface of the ground was unambiguous and operated to bar coverage when a subsurface water main burst and flooded the insureds’ basement. The policyholders’ attempt to invoke an ensuing loss exception to the exclusion was also rejected in an opinion that surveys the historical genesis of ensuing loss provisions and explains the limited circumstances under which they operate to restore coverage. The insureds, Frederick and Mary Platek, owned a home in Hamberg, New York. On September 7, 2010, a subsurface water main abutting their property ruptured, flooding…
Posted in Ambiguity, Burden of Proof, Ensuing Loss, Explosion, Flood, Water
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…
Posted in All Risk, Ambiguity, Arson, Exclusions, Fire, Vacancy and Unoccupancy, Vandalism
Seventh Circuit: Under Wisconsin Law, “Continuous or Repeated Exposure” Language Means That a Continuous Trigger Theory Applies
Yesterday, in Strauss v. Chubb Indem. Ins. Co., – F.3d – , 2014 WL 6435314, 2014 U.S. App. LEXIS 21794 (7th Cir., Nov. 18, 2014), the Court of Appeals held that the use of the phrase “continuous or repeated exposure” in a Wisconsin first-party property policy’s definition of occurrence meant that the contract of insurance contemplated that the continuous trigger theory determined whether loss was covered. As a result, a claim for 11 years of gradual water damage under a series of insurance policies was held to be timely even though it was first presented when the damage was initially discovered, five years after the last contract of insurance had expired. The Strausses had constructed a home in Mequon, Wisconsin…
Posted in Ambiguity, Homeowners Coverage, Trigger, Water
Oklahoma Supreme Court Reconciles Sewer Backup Exclusion With Accidental Discharge Coverage Grant
In May, we reported that a New York court had found that a policy containing both an exclusion for water that backs up through sewers and drains and a coverage grant for accidental discharge or overflow from a plumbing system was neither internally inconsistent nor ambiguous in nature. The post can be found here. On June 17th, Oklahoma’s highest court agreed, albeit without citing the New York case, and it held that the two provisions were fully reconcilable and enforceable. The case in question is Porter v. Oklahoma Farm Bureau Mut. Ins. Co., 330 P.3rd 511, 2014 Okla. LEXIS 72 (Okla., June 17, 2014). Justin and Brandy Porter owned a home that was damaged when raw sewage entered the premises…
Posted in Ambiguity, Flood, Seepage or Leakage, Water
Argument That Rain Alone Can’t Cause a Flood “Would be News to Noah” Says a California Court
Last month an appellate court in California looked to the Bible, citing the Book of Genesis when rejecting the argument that an inundation caused solely by heavy rain was not an excluded flood. The opinion was handed down in Horvath v. State Farm General Ins. Co., 2014 WL 2931049 (Cal.App., June 30, 2014). The insureds, Peter and Susan Horvath, owned a home at the end of a cul-de-sac at the bottom of Bell Canyon Drive. On December 22, 2010, severe rainstorms led to what the husband described as a “river of water coming down the street.” The town’s drainage systems were overwhelmed, and the cul-de-sac quickly filled up, ultimately inundating the first floor of the insureds’ home with 18” of…
New York Court: Storm Surge is a Species of Excluded Flood
One of the most litigated issues in the Gulf States in the wake of Hurricane Katrina was whether flood exclusions bar coverage for loss by storm surge. The courts ultimately decided that the answer was yes. The Superstorm Sandy jurisdictions have yet to address that question, but a recent federal case in New York suggests that the matter will ultimately be resolved in the same fashion in the Empire State. The decision is New Sea Crest Healthcare Center, LLC, et al. v. Lexington Ins. Co., — F.Supp.2d —, 2014 WL 2879839 (E.D.N.Y., June 24, 2014). At present, the issue will not crop up nearly as frequently as it did in the wake of the 2005 storm because Katrina taught a…
The Fourth Circuit Clarifies Who Is A Direct Supplier Under Contingent Business Interruption Coverage
In Millennium Inorganic Chemicals, Ltd. v. National Union Fire Ins. Co. et al., — F.3d. — , 2014 WL 642993 (4th Cir., Feb. 20, 2014), the United States Court of Appeals for the Fourth Circuit recently clarified who constitutes a direct supplier of goods and services under contingent business interruption (CBI) insurance, and it specifically rejected arguments that the undefined term “direct” in the coverage grants of the CBI endorsements at issue was ambiguous in nature. The policyholder, Millennium Inorganic Chemicals, Ltd., processed titanium dioxide at its facility in Western Australia, using natural gas that it received via a pipeline. It purchased the gas from Alinta Sales Pty Ltd., a retail gas supplier. Alinta, in turn, purchased the gas it…
Posted in Ambiguity, Business Interuption, Contingent Business Interruption, Explosion
