Court Denies Coverage where Architect’s Notice of Potential Claim not Detailed Enough

The U.S. District Court for the Southern District of New York recently denied the University of Pittsburgh’s effort to obtain coverage on behalf of the architect who designed a troubled $40 million university campus construction project.  The Court held that the insured architect failed to properly notify Lexington Insurance of a potential claim because the notice sent by the architect lacked a proper description of the alleged damage and claim.

The Ballinger Company designed an 80,000-square-foot addition to the art deco Salk Hall on the University of Pittsburgh’s campus.  Under the terms of the Lexington policy, Ballinger was required to notify the insurer of any potential claim prior to the policy period ending and was required to set forth in its notice a description of the alleged breach of professional duty, when it occurred, what damage occurred and the circumstances of the alleged breach.  The day before the policy expired, Ballinger submitted an industry standard Acord General Liability Notice of Occurrence/Claim to Lexington.

The notice listed the location of the occurrence and set forth the following description: “senior management has been advised by the University of Pittsburgh that this project is experiencing problems and delays in its early stages.”  Lexington followed up with Ballinger requesting additional information, but Ballinger failed to provide any additional information.

Lexington denied coverage.  Subsequently, the University of Pittsburgh filed suit against Lexington and moved for a determination by the Court that Ballinger’s notice was sufficient to trigger coverage under the Lexington policy.

The Court denied the University of Pittsburgh’s motion for summary judgment seeking a determination that the notice was sufficient.  The Court held that the language used by Ballinger was “entirely nonspecific” and “could mean just about anything” and that the Lexington policy language required Ballinger to “provide more than a simple statement conveying that there is ‘trouble brewing at Pittsburgh.”

The court concluded that Ballinger’s notice was “plainly deficient on its face.”

This case demonstrates a court’s willingness to enforce the insured’s obligations under specific policy language, even when failure to meet those obligations has grave consequences to the insured.

The case is University of Pittsburgh v. Lexington Insurance Co., et al., case number 1:13-cv-00335, in the U.S. District Court for the Southern District of New York.  Please contact us if you would like a copy of the case or have any questions.

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Broker Beware

When analyzing coverage issues arising out of a hurricane, we in South Carolina often look to states affected by Hurricane Katrina and Superstorm Sandy.  The courts of the Gulf Coast and New York have provided, and continue to provide, an ever evolving body of law addressing coverage in the aftermath of a hurricane.

One ongoing battle in the Southern District of New York involves Alliant Insurance Services, Inc. (“Aliant”) and Cammeby’s Management Co. (“Cammeby’s”).  In that matter, a jury found that Alliant unilaterally lowered the flood coverage for Cammeby’s from $30 million to $10 million for the flood sublimit at the Industry City at Bush Terminal complex in Brooklyn.  Thus, Alliant was ordered to pay Cammeby’s the difference between the policy amounts – the $30 million Cammeby’s originally signed up for less the $10 million already paid out under the new lower limits policy — plus $6.3 million in prejudgment interest.  The most recent move in this case?  Alliant is requesting that the Court discard the jury verdict (which, it should be noted, was found after a 2-week retrial on the issue of New York law of ratification) because the Judge improperly limited that retrial to a ratification defense rather than requiring Cammeby’s to prove that broker negligence had directly caused a reduction in coverage.  The original holding in 2014 was overturned when Alliant successfully argued that the Judge provided an improper instruction to the jury as to ratification.  Alliant has argued, and continues to argue that two Cammeby’s employees knew of the change in policy and “clearly manifested” approval.  In New York, a policy change can arguably be ratified by not objecting to it.   While that may be the law of the land, based on the two verdicts thus far, it appears that New York juries do not buy it.   It is likely that a South Carolina jury would agree with New Yorkers on this issue.  Despite “knowledge” of a thing, South Carolinians would probably agree that it is a bit much to hold that a business has approved the unilateral reduction of coverage limits made sua sponte by a broker.

The case is Cammeby’s Management Company, LLC v. Affiliated FM Insurance Company, 1:13-cv-02814.  If you would like a copy of the recent orders in this case or have a question about the case, please do not hesitate to contact us.

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The Iowa Supreme Court recently held that property damage caused by defective work performed by an insured’s subcontractor may constitute an accident, and therefore an occurrence for which coverage exists under the commercial general liability policy.  The ruling affirmed the Iowa Court of Appeals decision demanding the insurer National Surety Corporation (“NSC”) pay $12,439,500, plus statutory interest, for the underlying settlement of construction defect claims.

In 2002, developers and a general contractor began construction on a multi-unit apartment complex in West Des Moines, Iowa; during construction, the project was sold to Westlake Investments, LLC (“Westlake”).  The developers and general contractor had purchased a primary commercial general liability policy with a $1,000,000 policy limit from Arch Insurance Group (“Arch”) and an excess CGL policy with a $20,000,000 policy limit from NSC.  The terms of the Arch policy defined the scope of coverage under the NSC policy; the NSC policy incorporated by reference the terms, conditions, and exclusions of the Arch policy.

During original construction, water intrusion issues surfaced in several of the buildings.  Westlake proceeded with the purchase because the parties believed the defects to be only aesthetic in nature; however, the defects remained, resulting in extensive water intrusion damages.  In February 2008, Westlake sued the developers and the general contractor seeking to recover lost profits, repair costs and other damages under tort and contract theories.  The developers and general contractor then sued numerous subcontractors and the architect as third-party defendants.

In early 2012, Westlake settled with the developers, general contractor and all but one of the subcontractors for $15,600,000.  Arch tendered its policy limits towards the settlement.  Pursuant to the terms of the settlement agreement, the developers and general contractor assigned their claims on the NSC excess policy to Westlake.

Subsequently, NSC sought a ruling in Iowa state court that the subcontractors’ defective workmanship could not constitute an accidental occurrence under the CGL policy.  The court disagreed, holding that defective work by a subcontractor can be an occurrence as defined by the policy. The case proceeded to trial and the jury found the NSC was liable for the unpaid portion of the settlement.

NSC appealed the decision to the Iowa Supreme Court seeking a determination that a subcontractor’s shoddy workmanship can never be an occurrence under a CGL policy by virtue of the state high court’s precedential 1999 decision in the case of Pursell Construction v. Hawkeye-Security Insurance.  The court distinguished Pursell, finding that case only dealt with costs of repairing the policyholder’s own defective work.  The court found the policy anticipates coverage for some property damage caused by defective workmanship on the part of the insured’s subcontractor.

This case was the first time the Iowa Supreme Court directly addressed this issue; lengthy dissents pronounced the ruling as counter to precedent established in analyzing CGL policies.  The dissent stated that an accident is an “undesigned, sudden and unexpected event,” and there is “nothing sudden about the gradual infiltration of rainwater through leaky window frames over seasons.”  Further, the dissent opined “the majority in effect converts the liability insurance policy into a home warranty.”

This case stands for the seemingly unpredictable nature of judicial interpretation of insurance policies, and the willingness of courts to depart from precedent in certain circumstances.  This case will have a great effect on insurance coverage matters in Iowa and beyond.

The case is National Surety Corp. v. Westlake Investments LLC, case number 14-1274, in the Supreme Court of the State of Iowa. If you would like a copy of the opinion or have any questions, please feel free to contact us.

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London Calling

No stranger to hurricanes, South Carolinians remember Hurricane Hugo which, in 1989, devastated the low country. An interesting side effect of that storm was the boom of rebuilding and the migration of contractors from various parts of the country who came to help in the rebuilding and remained thereafter. Given that hurricane season officially opened June 1, the recent opinion from the Southern District of New York is an interesting reminder that storms may come and storms may go, but the policies which cover storm damage can have unintended consequences requiring years of litigation.

At issue is an ongoing dispute between Infrassure Ltd. and First Mutual Transportation Association over $20 million in coverage for the 2012 Hurricane Sandy damage. First Mutual is appealing the lower court’s decision to deny their bid to compel arbitration in London. First Mutual argues that the contract includes a “London Arbitration Clause” provision which should govern resolution. Infrassure has argued that an endorsement to the agreement entitled, “London Arbitration and Governing Law (UK and Bermuda Insurers Only)” limits the “London Arbitration Clause”. First Mutual has rebutted this arguing that the endorsement falls under the definition of a “title” which, pursuant to the “Titles Clause”, is merely for convenience and not intended to limit or affect the provisions to which they relate. And so on and so forth.

How this issue would play out in South Carolina courts remains to be seen. However, South Carolina does have a few unique statutory features which could lead to some interesting arguments. First, the South Carolina Uniform Arbitration Act mandates, “Notice that a contract is subject to arbitration pursuant to this chapter shall be typed in underlined capital letters, or rubber-stamped prominently, on the first page of the contract…” Failure to abide by these notice provisions eviscerates the compelling party’s ability to force arbitration. But, the parties to a contract are free to agree that South Carolina state law or a specific set of arbitration rules and procedures will apply to an arbitration agreement. Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 539, 542 S.E.2d 360, 363 (2001). However, to the extent South Carolina state law may invalidate the arbitration agreement, that state law is preempted if the arbitration agreement is valid under The Federal Arbitration Act (“FAA”). Soil Remediation Co. v. Nu-Way Envtl., Inc., 323 S.C. 454, 459, 476 S.E.2d 149, 152 (1996). The Federal Arbitration Act (“FAA”) applies in federal or state court to any arbitration agreement regarding a transaction that in fact involves interstate commerce, regardless of whether or not the parties contemplated an interstate transaction. Munoz, 343 S.C. at 538, 542 S.E.2d at 363. Thus, a well drafted choice of law clause might be read by a Judge to allow a party to enforce an arbitration provision wherein the Notice provisions under the South Carolina Uniform Arbitration Act were not followed. Suffice it to say that all South Carolinian coverage attorneys would agree that we would prefer not to have a hurricane hit our home state but that if such an event were to occur, there would be a lot to litigate.

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“Internal Corporate Screw-Ups” No Excuse; 4th Circuit Denies Coverage after Insured Gives Late Notice to Carrier

Following its recent decision to deny coverage based on an insured’s failure to timely notify its carrier (see post dated March 7, 2016), the Fourth Circuit again came to the rescue of St. Paul Mercury Insurance Company, affirming the district court’s decision that found an insured’s own “internal corporate screw-ups” could not justify the failure to timely notify the carrier of a pending lawsuit.

Plaintiff Amiel Cueto, a disbarred lawyer and convicted felon, filed suit against American Bank Holdings, Inc. (“ABHI”) and ten other defendants alleging they fraudulently failed to fund his $8 million sale of real property. ABHI failed to timely answer the complaint, and Cueto was able to obtain a default judgment in the amount of $7.3M in compensatory damages, $66.5M in punitive damages and $24.6M in attorneys fees ($98M total!).

ABHI eventually was able to get this default judgment overturned, but it took $1.8M in defense costs to do it. ABHI sought reimbursement of these costs from its insurer St. Paul Mercury Insurance, who denied coverage based upon ABHI’s failure to timely notify it of the lawsuit.

The lawsuit was served on ABHI on June 18, 2008, through its registered agent CT Corporation. CT Corp transmitted the suit papers to ABHI’s office, addressed to its CFO, in accordance with its standing instruction. As of that time, the CFO had left ABHI. Another officer of ABHI came across the suit papers and forwarded them to its local counsel in July 2008; but that lawyer claimed he never received the documents.

ABHI did not act on the lawsuit until February 2009, when Cueto attempted to collect on the default judgment. ABHI then notified St. Paul for the first time about the lawsuit. St. Paul formally denied coverage on April 15, 2009, based on a lack of timely notice.

Prior to notifying St. Paul, ABHI had already hired attorneys to attempt to unwind the default judgment. Ultimately, those attorneys were successful, but were paid $1.8M, which ABHI argued should be reimbursed under its policy with St. Paul.

The Fourth Circuit held that “the defining characteristic of the notice obligation is notice given ‘as soon as practicable.’” Under the facts of this case, considering more than six months had passed since proper service, no one could credibly argue the “as soon as practicable” obligation had been achieved.

Under Maryland law, even if notice is not provided as soon as practicable, the insurer must still establish that the lack of notice resulted in “actual prejudice.”

The Court indicated that ABHI’s late notice denied the insurer “the opportunity to participate in the selection of counsel, to speak with counsel, … to discuss credible defense strategies, … to consider[] the possibility of settlement negotiations prior to the default judgment and prior to the expenditure of $1.8M incurred by ABHI to vacate it.” In other words, St. Paul was denied the opportunity to properly defend the case in a timely fashion.

When late notice precludes an insurer from exercising meaningful contractual rights provided to it by its policy, this amounts to actual prejudice suffered by the insurer.

As a result, due to those internal corporate screw-ups, ABHI was left paying $1.8M in attorneys fees to overturn a judgment in a lawsuit it deemed “frivolous, if not fraudulent.”

This case is another hard lesson for insureds: failing to follow the terms of an insurance policy can be an expensive mistake.

The case is St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc., No. 15-559 (4th Cir. April 14, 2016). If you would like a copy of this case or would like to discuss it further, please do not hesitate to contact us.

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Insurance Companies Avoid Providing Coverage in Settlement of Defective Window Installation

In a recent decision coming from the Northern District of Illinois, a federal judge ruled that Allied Property & Casualty Co. (“Allied”) and Amco Insurance Co. (“Amco”) did not have to provide coverage for a window installer’s settlement of claims stemming from its poor workmanship which caused extensive water intrusion into the Metro North Condominium complex (“Metro North”). The judge found the policies did not cover damages included in the settlement agreement.

The judge granted Allied and Amco’s motion for summary judgment finding that most of the damages caused by water intrusion in Metro North were not recoverable under the policy.

CSC Construction, Inc. (CSC Construction) entered into a subcontract to provide window and glazing services for Metro North during original construction. Metro North is a condominium building located in Chicago, which is governed by Metro North Condominium Association. Allied and Amco provided commercial liability policies to CSC Construction from March 30, 2006 to March 30, 2007.

On October 2006, during original construction a rainstorm began to cause water intrusion issues. Metro North claimed the water intrusion caused damage to the building and to the unit owners’ personal property and brought claims against CSC Construction for breach of the implied warranty of habitability.

Allied and Amco provided CSC Construction with an independent defense in the underlying lawsuit under a reservation of rights. Ultimately, Metro North settled its claims with CSC Construction for $700,000 and accepted an assignment of the subcontractor’s rights against Allied and Amco.

Next, Allied and Amco sued Metro North requesting a ruling that their policies do not cover Metro North’s claims against CSC Construction because the damages sought are not recoverable based on a claim of breach of the implied warranty of habitability. The court looked at Illinois case law and determined in Illinois consequential damages tied to the breach of the implied warranty of habitability are not recoverable unless the property is rendered uninhabitable. The judge found Metro North was not rendered uninhabitable as a result of the water infiltration.

In concluding the opinion, the judge looked to make a determination regarding whether or not the defective work of CSC Construction was an accidental occurrence triggering coverage under the policies. He found, “when a subcontractor who installs windows performs defective work, the natural and ordinary consequence is water infiltration that will damage the rest of the building.” thus “there is no accident, so there is no occurrence, so there is no coverage.”

This case is an example of how a court may be hesitant to find consequential damages from the breach of implied warranty of habitability when construction defects are serviceable and do not render a building truly uninhabitable. Further in this case, the court held a CGL policy is not meant to cover “an accident of faulty workmanship but rather faulty workmanship which causes an accident.” In conclusion, this opinion serves as an example of the way jurisdictions can differ on their interpretation of CGL policies and how the consequential damages from the implied warranty of habitability are understood.

This case is Allied Property & Casualty Insurance Co. et al. v. Metro North Condominium Association, case number 1:15-cv-03925, in the U.S. District Court for the Northern District of Illinois. Please contact us if you would like a copy of the case or have any questions.

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Ninth Circuit to Insurers: If You Are Going to Deny Coverage, Do it Right

The Ninth Circuit recently upheld a Montana District Court decision that found an insurer breached its duty to defend by failing to issue a proper denial of coverage letter– and concluded, that as a result of that breach, the insurer was on the hook for settlement costs and costs to defend the underlying matter, as well as attorneys fees incurred in bringing the declaratory relief matter.

Scottsdale Insurance, Co. issued a policy to a homebuilder, Montana Pride, which had bought a piece of property and built a home on that property. Montana Pride maintained a Scottsdale policy throughout the construction of the home. Montana Pride was sued for construction defects a few years later by the purchasers of the home.

When Montana Pride tendered the case, Scottsdale issued a denial of coverage letter citing a number of exclusions in the policy, including an exclusion for “owned property” — which set forth that damage to “property you own, rent or occupy” was not covered. Scottsdale refused to defend Montana Pride.
A subsequent insurer of Montana Pride, Mountain West, defended Montana Pride in the homeowner’s lawsuit and ultimately paid $275,000 in settlement to resolve the matter. Montana West obtained an assignment from Montana Pride of any rights they may have against Scottsdale under their policy and then brought the declaratory judgment action.

The Ninth Circuit found that Scottsdale’s denial of coverage letter “merely quoted various policy provisions and exclusions” without explaining why the exclusions applied to the applicable facts set forth in the lawsuit. Under Montana law, Scottsdale was required to “demonstrate unequivocally” that its policy did not provide coverage to Montana Pride, which Scottsdale failed to do by merely reciting exclusions.

Because of Scottsdale’s breach of its duty to defend Montana Pride, the Ninth Circuit ordered Scottsdale to pay all settlement costs and all attorneys fees incurred in defending and resolving the homeowner lawsuit and all fees incurred by Mountain West in bringing the declaratory relief action.
The lesson to be learned? Pay careful attention to how you craft denial of coverage letters and always be sure to provide some level of explanation as to why there is no coverage under the policy.

The case is Dowson, et al v. Scottsdale Insurance Company, US Court of Appeals for the Ninth Circuit, Case No. 13-36087. If you would like a copy of the Order or would like to discuss this case further, please do not hesitate to contact us.

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In Georgia, Coverage for Lead Paint Exposure Excluded as Pollutant Under CGL Policy

This month, the Georgia Supreme Court held that a CGL policy did not provide coverage for brain damage to a child as a result of exposure to lead paint in a rental home.

The suit arose out of a toddler suffering brain damage due to exposure to lead paint in a rental home. The home was insured by a CGL policy issued to the landlord, and the insurer filed a declaratory judgment action arguing that there was no coverage for the claim because bodily injuries due to exposure to pollutants were excluded. Summary judgment was granted to the insurer in the trial court, but the Court of Appeals reversed, holding that the policy did not specifically exclude lead paint as a pollutant. On certiorari, the Georgia Supreme Court reversed the Court of Appeals, agreeing with the trial court that the pollution exclusion barred coverage for the claim.

Specifically, the policy excluded coverage for “(1) ’bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured.” “Pollutant” was defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

Ruling for the insurer, the Supreme Court acknowledged that the question of whether lead paint was a pollutant was one of first impression in the State, but it held that prior cases excluding coverage for different pollutants (such as carbon monoxide) under policies with similarly broad language were controlling. In keeping with those cases, the Court held that “lead present in paint unambiguously qualifies as a pollutant” and “the plain language of the policy’s pollution exclusion thus excludes [the claim] from coverage.” Key in this ruling was the Court’s lengthy discussion of the history and purpose of pollution exclusions in CGL policies.

The case discussed herein is Georgia Farm Bureau Mut. Ins. Co. v. Smith, No. S15G1177 (Ga. March 21, 2016). Please contact us if you would like a copy of the case or have any questions.

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Fourth Circuit Denies Coverage when Developer Failed to Timely Notify Insurer

The Fourth Circuit recently ruled against the Insured in a construction defect action as to coverage when the Insured failed to timely notify its insurance companies of a potential claim. The court ruled the Insured was not covered under its two insurance policies (St. Paul Mercury Insurance Co. and National Surety Corp.) because it delayed giving notice to the insurance companies, depriving them of the opportunity to pursue claims against the subcontractors involved in the project.

THF Clarksburg Development Two LLC (“THF”) entered into two agreements in 2002 with Lowe’s Home Centers, Inc. (“Lowe’s”) for over $4,000,000 to develop a large track of land in Clarksburg, West Virginia, including the preparation of a building pad area where a Lowe’s store could be built. THF subcontracted with CTL Engineering (“CTL”) to build the pad and provide geotechnical engineering certification that would support the construction of the Lowe’s store. CLT delivered the certified building pad to THF on April 9, 2002 and THF delivered it to Lowe’s on April 15, 2002.
Lowe’s built the store, but during the one-year inspection Lowe’s discovered a settlement problem that would likely cause worsening foundation failure and continued wall movement. Lowe’s notified THF of the issue on April 20, 2003. THF then notified CLT of the problem and hired them again to determine the cause of the settlement. CLT investigated and determined the problem was unrelated to the construction of the building pad and was likely caused by an external force. THF sent the findings to Lowe’s on March 20, 2005.

After eight months without a response from Lowe’s, THF sent another letter saying it presumed Lowe’s lack of response meant Lowe’s was in agreement with the findings in the report. After almost two years had passed, Lowe’s sent a letter to THF stating the delay in response was due to its own engineers investigating the issues. Lowe’s engineers ultimately determined the soil failures were a latent defect to which THF’s extended warranty applied and subsequently put THF on notice of the claims. On April 26, 2012, over nine years since becoming aware of the issue, Lowe’s filed suit.
In June 2012, THF notified its insurers St. Paul Mercury Insurance Co. and National Surety Corp. about the lawsuit and two years later, in 2014, the Insurers moved for a declaratory judgment seeking a determination by the court regarding of the existence of coverage. The Northern District of West Virginia determined THF was not entitled to coverage due to its delay in notifying the insurers of the potential claims.

The court determined the delay in notice prejudiced the insurers as a matter of law because West Virginia’s 10-year statute of repose would bar the insurers from asserting claims against the subcontractors. The court upheld the district court’s ruling in favor of St. Paul Mercury Insurance Co. and National Surety Corp. and against THF.

This case is a hard lesson of which developers, builders, design professionals, and contractors should take note. Whenever there is the existence of even a potential claim, the insurance carrier must be notified as soon as possible to avoid prejudice to the carrier. Even if the claims appear to be unrelated to a construction entity’s scope of work, allowing the Insurer to have the relevant information to determine liability could have a huge impact on the Insured as in the instant case. Finally, this case reinforces the ever-present need by attorneys and insurance carriers to determine relevant dates during construction and delivery to avoid issues related to statute of limitation and statute of repose in construction defect cases.

This case is St. Paul Mercury Ins. Co. v. THF Clarksburg Dev. Two, LLC, No. 15-1453, 2016 WL 715007 (4th Cir. Feb. 23, 2016). Please contact us if you would like a copy of the case or have any questions.

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Brokers Beware: California Court Confirms Assignability of Claims against Insurance Broker

In a recent decision the California Court of Appeal, Fifth District, held that a claim against an insurance broker is assignable, following similar decisions in other states and affirming what now appears to be the majority rule.

Amarjit Singh owned a two-story building in Sonora, California. His negligence caused a fire which spread through his building and to a neighboring commercial property and restaurant, causing extensive damages to all three buildings. The commercial property was insured by AMCO Insurance Company, which paid its insured for their losses and then filed a subrogation action against Singh. The neighboring restaurant owner sued Singh directly for losses suffered.

Singh tendered these claims, as well as his first party claims, to “his” insurance company, only to have those claims denied because there was no policy in effect at the time of the fire. Singh asserted that though he had recently received a notice of non-renewal from his insurer, he had communicated with his broker, All Solutions Insurance Agency, and believed he was insured at the time of the fire.

Singh stipulated to judgments in excess of $550,000 for the damages allegedly suffered by his neighbor and AMCO, and then assigned them the rights to a claim against his insurance broker for failing to obtain proper insurance. The restaurant Owner and AMCO then brought suit against the broker, alleging negligent failure to obtain an insurance policy and breach of contract.
The broker filed for summary judgment and won, in part because the lower court determined that in this scenario, Singh could not assign his cause of action against the broker. But the appellate court reversed, refusing to treat assignments of causes of action against an insurance broker like legal malpractice claims (which are not assignable). The Court held that the relationship between a lawyer-client and a broker-client are not similar because communications with a broker are not confidential and the standardized nature of insurance policies means that the product delivered is not highly unique or personal. As such, the legal validity of the assignment was upheld and the broker’s motion for summary judgment denied.

Under the right scenario, this outcome gives a defendant party with limited resources and no insurance coverage a way out of what could otherwise be a life-altering legal judgment. Confessing a judgment and assigning rights to a corollary claim may be the only way to avoid payment of money out of pocket. This leaves the door open to an exaggerated confession and may force brokers to defend inflated damages claims.

The case is AMCO Insurance Company v. All Solutions Insurance, Court of Appeal, Fifth District, California. Please contact us if you would like a copy of the case or have any questions.

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