Yearly Archives: 2016

An Injured Third Party’s Knowingly False Deposition Testimony Establishes the Materialty Component for Insurance Fraud

On May 13, 2006, Edward Feierstein was driving home from his Philadelphia fitness club when his car was rear-ended. Two days later, Feierstein filed a claim with the tortfeasor’s liability insurer seeking reimbursement for his alleged bodily injuries.  Two years later he filed suit against the company’s insured.  The liability insurer, in its defense of the suit, hired a private investigator. Surveillance video footage was secured of Feierstein working out at a fitness center, and his club, while stretching, exercising on an elliptical machine, a weight-lifting machine, and playing tennis. At his deposition, Feierstein was unware of the video surveillance.  He testified that he had not played tennis at all since the accident, nor worked out in any gyms since

Posted in Fraud

New Jersey Supreme Court Holds that a Person Violates the Insurance Fraud Statute Even if Insurer is Not Duped Into Paying a Fraudulent Claim

In the recent case of State of New Jersey v. Robert Goodwin, 224 N.J. 102, 129 A.3d 316 (N.J. 2016), the Supreme Court of New Jersey held that a person violates the insurance fraud statute, N.J.S.A. 2C:21-4.6(a), even if he or she does not succeed in duping an insurance carrier into paying a fraudulent claim. In doing so, the Supreme Court reinstated Robert Goodwin’s conviction for insurance fraud. At trial, it was established that Goodwin and “Stacey” were involved in a romantic relationship since 2004 and living together in Newark, New Jersey. In April 2009, Stacey purchased an SUV for over $6,000, financed by Goodwin co-signing the loan. Insurance was procured from Progressive Insurance Company. Goodwin was the primary operator

Posted in Fraud

Recent Washington Decisions Illustrate Need to Handle Property Claims in Timely Manner

An issue that often arises in the context of property insurance is whether a carrier’s delay in adjusting a claim can create a basis for a viable bad faith claim.  The law in each state is different and the prudent practice is to consult a practitioner specializing in the law of the state in question.  This article focuses on Washington law and discusses two recent cases which illustrate the need to adjust property claims promptly. Failure to do so may expose a carrier to viable bad faith allegations sufficient to survive summary judgment and permit the policyholder to get its case before a jury. First, in Hays v. State Farm Ins. Co., No. 46679–1–II, 191 Wn. App. 1053, 2015 WL

Posted in Uncategorized

Virginia Federal Court Underscores Distinction Between a Loss and an Occurrence for Purposes of Notice Conditions

In Clarabelle Wheeler v. The Standard Fire Insurance Company, 2016 WL 1164651 (W.D. Va. Mar. 23, 2016), the insurer argued that the insured failed to give “prompt notice” of the loss as required by the policy’s notice condition because she waited six-months to report five large trees had fallen on her barn. In support of this argument, the insurer offered evidence that the insured’s delay in providing notice prejudiced it by depriving it of an opportunity to investigate the claim and mitigate the resulting damage to the barn. Summary judgment in favor of the insurer as to whether there is coverage for the insured’s claim under the policy would often be granted on these facts. But, the United States District

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Posted in Notice

Do Fidelity Policies Issued to Individual Partners Provide Coverage for Theft of Partnership Earnings?

The Eighth Circuit is set to decide this question in 3M Company, et al. v. National Union Fire Insurance Company of Pittsburgh, Pa., et al., Appeal No. 15-3495. The answer will likely determine whether a blanket crime policy and multiple excess policies cover $176 million in partnership earnings 3M lost because of its partners’ massive Ponzi scheme. Between 1999 and 2009, 3M invested over $100 million of its Employee Retirement Income Security Act (“ERISA”) plan assets and the earnings on those investments with an entity named WG Trading Company, L.P. Stephen Walsh and Paul Greenwood controlled WG Trading and were its general partners. 3M and two of its ERISA plans were limited partners in WG Trading. Unbeknownst to 3M, Walsh

Posted in Theft or Dishonesty

Colorado Court Finds Legal Marijuana Insurable Under Commercial Property Policy and Orders Trial on Claim for Damaged Buds

ArcView Group, which tracks the legal marijuana markets, recently estimated that legal U.S. pot sales could reach $6.7 billion in 2016. As the legal marijuana economy has grown, insurance coverage for this emerging industry has become a hot topic. The U.S. District Court for the District of Colorado in The Green Earth Wellness Center, LLC v. Atain Specialty Insurance Company, No. 13-cv-03452-MSK-NYW, 2016 WL 632357 (D. Colorado Feb. 17, 2016) was recently faced with determining the extent of coverage under a commercial property policy for damage sustained to marijuana plants at a growing facility and addressing whether legal marijuana was even insurable. Green Earth operates a retail medical marijuana business and an adjacent growing facility in Colorado Springs, Colorado. Green Earth contended

Posted in Uncategorized

Common Sense Prevails: State of Collapse Nonexistent Thirteen Years before Discovery of Decay

For years, property insurance policies that exclude rot damage have been called upon to cover rot because the policies extend coverage to “collapse”—an undefined term—caused by hidden decay, even if the structure remains standing and in use. The Homeowners Association of the Queen Anne Park Condominium in Seattle discovered decay within the walls of its buildings in 2011. State Farm insured the Association with policies effective between 1992 and 1998. The policies excluded coverage for rot, but covered “collapse” caused by hidden decay. The Association argued that its buildings were in a state of collapse in or before 1998 and that State Farm covered the decay damage. State Farm denied the claim and the Association sued in federal court in

Posted in Uncategorized

“Insanity Defense” Fails To Preserve Coverage For Insured’s Arson

Missouri resident James Roller set fire to his garage in an attempt to commit suicide.  When smoke and fumes surrounded him he changed his mind, fled the garage, and alerted his wife of the fire.  Mrs. Roller called 911.  A sheriff’s deputy escorted Mr. Roller to “protective custody” and obtained a 96-hour mental health detention order from the court.  Mr. Roller was treated at a hospital. The garage sustained severe fire damage.  Mrs. Roller notified the Rollers’ homeowners’ insurer, American Modern Home Insurance Company (AMHIC).  An independent adjuster inspected the damage, took photographs, obtained a statement from Mrs. Roller, and estimated the replacement cost of the garage to be $21,240.  AMHIC’s adjuster reserved the company’s rights and continued to investigate. 

Posted in Uncategorized

Texas Rule Change: Supreme Court Holds Loss of Use Damages Are Recoverable Where Property Total Loss

In J & D Towing, LLC v. American Alternative Insurance Corporation, No. 14-0574, 2016 WL 91201 (Tex. Jan. 8, 2016), the Texas Supreme Court considered J & D Towing, LLC’s (“J & D”) claim for loss of use damages under its underinsured motorist insurance policy, after J & D’s only towing vehicle was totally destroyed in an accident.  After discussing decades of Texas case law limiting loss of use damages to cases involving partial destruction, the Court held that the owner of totally destroyed personal property may recover loss of use damages, in addition to the property’s fair market value immediately before the injury.  The Court’s holding reverses over 60 years of prior case law prohibiting recovery of loss of

Posted in Uncategorized
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.
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