Nick Arnold’s Post

This is BIG news in Louisiana tort reform!!! -Filing of an action against an insured will interrupt liberative prescription for all insurers whose policies provide coverage for the claims asserted in the action. -The name of the insurer cannot be included in the caption of an action brought against the insurer; the action must be captioned only against the insured defendant or other noninsurance defendants. -A court cannot disclose the existence of insurance coverage to a jury or mentioning coverage in the jury’s presence. -A court can dismiss the action of any insured or other defendant if the action cannot proceed due to the insured's insolvency or other circumstances described in present and proposed law (R.S. 22:1269(B)(1)).

Yesterday a California appellate court held that an insurer did not owe a duty to defend, even though the insurer's own claim examiners "admitted" during the claim-review process that they believed an underlying action triggered the duty to defend. Rancho Oaks Investments, LLC v. Mid-Century Ins. Co., 2024 WL 3872235 (Cal. Ct. App. Aug. 20, 2024). It did not matter, the court explained, that "[t]he opinions are contained within [the insurer's] claim files that were produced in discovery.” Id. at *4. The court's astute explanation went further: "They merely expressed their opinions on the duty-to-defend issue during confidential communications with other employees. If their opinions were deemed to be binding upon [the insurer], free discussion among insurance company employees would be seriously impeded. An employee would be reluctant to express an opinion that the company had a duty to defend for fear that the opinion would be discoverable and would be used against the company if it decided not to defend." Id. at *5. #insurance #insurancecoverage

Such common sense response if refreshing! Thanks for sharing.

“Continental conceded at oral argument that the claims file contains a ‘blow by-blow’ diary of the insurer’s investigation and decision-making process with regard to Brown’s loss of earnings claim. The tort of bad faith arises when an insurance company intentionally denies, fails to process, or fails to pay a claim without a reasonable basis for such action….The portions of the claims file which explained how the company processed and considered Brown’s claim and why it rejected the claim are certainly relevant to these issues. Further, bad-faith actions against an insurer, like actions by client against attorney, patient against doctor, can only be proved by showing exactly how the company processed the claim, how thoroughly it was considered and why the company took the action it did. The claims file is a unique, contemporaneously prepared history of the company’s handling of the claim; in an action such as this the need for the information in the file is not only substantial, but overwhelming.” -- Brown v. Superior Court, 670 P.2d 725 (Ariz. App. Ct. 1983).

This 2024 case of the Ontario Superior Court of Justice is an excellent case discussing the principal of promissory estoppel and how it can be used to extend a missed limitation period. In this case, a restaurant missed the limitation period to claim against its insurer for water damage. It sought to engage promissory estoppel (i.e., the actions of the insurer impliedly waived reliance on the limitation period). The Court found that promissory estoppel did not apply as the insurer constantly reminded the insured that the limitation period was approaching. Once you know this principle, a Plaintiff with the right set of facts can use it to extend a missed limitation period and a Defendant can ensure that they have sent the right correspondence to the insured to ensure a missed limitation period will not be extended. Promissory Estoppel The principles of promissory estoppel require that the promissor, by words or conduct, intend to affect legal relations. Accordingly, an admission of liability which is to be taken as a promise not to rely on the limitation period must be such that the trier of fact can infer from it that it was so intended. There must be words or conduct from which it can be inferred that the admission was to apply whether the case was settled or not, and that the only issue between the parties, should litigation ensue, is the issue of quantum. Whether this inference can be drawn is an issue of fact. If this finding is in favour of the plaintiff and the effect of the admission in the circumstances led the plaintiff to miss the limitation period, the elements of promissory estoppel have been established. The issue of promissory estoppel was also addressed and rearticulated recently by the Supreme Court, confirming that (1) the parties be in a legal relationship at the time of the promise or assurance; (2) the promise or assurance be intended to affect that relationship and to be acted on; and (3) the other party in fact relied on the promise or assurance. It is implicit that such reliance be to the promisee’s detriment. Normal dealings between an insured and an insurer attempting to resolve a claim do not extend the limitation period.   See Relevant Excerpts Highlighted As always, if you found this post helpful, please like and share for maximum reach.

The recent High Court decision in Asertis Ltd v Lewis Barry Bloch examined whether an after-the-event (ATE) insurance policy with an anti-avoidance endorsement (AAE) could provide adequate security against a security for costs application. The court found that this ATE policy was insufficient due to its limited indemnity and several termination clauses that could invalidate it. This contrasts with last year’s ruling in Saxon Woods Investments Limited v Francesco Costa and Ors [2023] EWHC 850 (Ch), where a similar policy was deemed sufficient. The case stemmed from the liquidation of Genesis Capital (UK) Ltd, where Asertis alleged the director breached fiduciary duty by authorizing a £2.8 million transfer to a third party. The defendant, seeking security for costs, raised concerns about Asertis’s financial instability and the reliability of its ATE policy. Key issues with the policy included: - Termination Provisions – The policy allowed the insurer to terminate coverage under certain conditions, creating uncertainty mid-litigation. - Indirect Payment Structure – Payments under the policy would go to Asertis rather than the defendant, posing a risk if Asertis became insolvent. - Strict Compliance Requirements – Several conditions, such as insurer approval for specific actions, could invalidate the policy if unmet. - Limited Indemnity – Coverage was capped at £250,000, less than the defendant’s estimated costs. The court ultimately granted the security for costs application, highlighting the importance of carefully structured ATE policies for dependable security in litigation. #HighCourtDecision #ATEInsurance #AntiAvoidance #SecurityForCosts #LitigationFinance #FiduciaryDuty #LegalRisk #IndemnityCoverage #TerminationClauses #UKLaw #CommercialLitigation #Liquidation

After an #insurance claim decision is made and a coverage or bad faith lawsuit is filed, I think the tendency of some insurers is to see the matter as now one for the lawyers. In other words, the parties will now litigate the claim decision, but the conduct of the insurer and its lawyers in the litigation (e.g. the filing of pleadings, discovery responses, assertions of privilege, etc.) will not be considered by the jury to determine whether the insurer’s pre-suit claims decision was correct or made in good faith. In many jurisdictions, that is largely true. Judicial privilege or judicial immunity may prevent the jury from learning about the litigation conduct of the insurer and its lawyers. Depending on the particular litigation conduct and the jurisdiction, however, that may not be the case at all. And that may surprise some insurers. I had a great time discussing in a Strafford webinar today with Nick Arnold how these issues can play out in real cases. If you have any questions about this emerging doctrine, please do not hesitate to reach out to Nick or me!

On Friday 22 March 2024, Jackman J delivered judgment in the first case brought by ASIC against an insurer for unfair contract terms. His Honour found that a term requiring an insured notify their insurer if "anything changes about your home and contents" was not unfair (as defined by s12BG(1) of the ASIC Act). The judgement, in the comments, is worth reading in its entirety. However, I want to highlight what it says about the interaction of the unfair contract terms regime and the Insurance Contracts Act, particularly sections 13 and 54. Essentially, Jackman J held that the presence of ss13 and 54 fettered the insurer's discretion to refuse claims on the basis of an insured's failure to comply with the notification clause. Those fetters meant that term did not cause a significant imbalance in the rights and obligations of the parties under the contract. Basically, the insurer needed to exercise its discretion consistently with commercial standards of decency and fairness, which would prevent it from exercising its capriciously. Additionally, s54 operated so that the insurer would only be able to reduce the claim by the amount of its prejudice caused by the insured's failure. Taken as a whole, the ICA's operation was central to the first limb of the ASIC Act test of unfair contract terms not being met. When the unfair contract terms regime extended to insurance contracts, commentators wondered about the necessity of its extension because of ss13 and 54 of the ICA. This decision does not answer that concern as it remains difficult to conceive of terms that would be, on their face unfair, but are untouched by ss13 and 54. #auslaw #insurance #insurancelaw #aila

Addressing a novel issue in law, the High Court widens the application of s 292 of the Companies Act 1993 by finding that an insurer's outstanding claims liabilities (OCL) are to be considered “due debts” when assessing an insurance company's (in)solvency. Read our article that summarises the key takeaways and relevant implications for insurance businesses below. https://lnkd.in/daHr7j2s

Is it just me or have there been an inordinate number of claims involving notice provisions in claims-made policies lately? In an e-mail this morning, IRMI shared details of a recent Kansas federal district court ruling in favor of an insurer. The case involved a claims-made professional liability policy first purchased in 2019. When applying for the policies, the insured did not mention the existence of a putative class action lawsuit filed in 2016. Not until after a court certified the class action in late 2022 was a notice of the lawsuit given to the insurer, who dutifully and unsurprisingly denied coverage citing the policy definition of a claim, which was "a written demand for money damages received by an INSURED, including service of suit and the institution of administrative or arbitration proceedings." In siding with the insurer, the court highlighted the fact that a "certified class doesn't come with a new demand for money damages." Since the original putative class action contained a demand for money damages and was filed prior to the purchase of coverage, no coverage would apply. Always best to err on the side of caution when it comes to notifying carriers of incidents or complaints that could fall under the policy definition of a claim.