Three years out, Superstorm Sandy litigation continues to wend its way through New Jersey’s courts. Last weekend, a federal judge in the state handed a victory to the insurer in Stiso v. State Farm Fire & Cas. Co., 2015 U.S. Dist. LEXIS 155762, 2015 WL 7296081 (D.N.J., Nov. 18, 2015). In doing so, the court reaffirmed the enforceability of what it called anti-concurrent causation (ACC) “lead-in” language. It also rejected the doctrine of “spoliation based on encouragement” – the policyholders had argued that they could not meet the burden of showing that all of their loss was caused by a covered peril because the carrier had “actively encouraged” them to begin repair early on and thereby “persuaded” them to destroy evidence that they subsequently needed.
The insureds owned a split-level home in Point Pleasant Beach. The structure was two-and-one-half blocks from the Atlantic, and it was inundated when Superstorm Sandy struck on October 29, 2012; water lines inside the home were four-and-one-half feet high on the lower level and 12” high on the upper story’s walls. The policyholder made clam for $154,186. Read more ›
The ultimate risk is enormous. Computerized industrial control systems run the world’s financial institutions, its manufacturing and chemical facilities, its transportation systems, and its energy infrastructure, including the electrical grid and power and water treatment plants. These control systems are composed of devices such programmable logic controllers (PLCs) and supervisory control and data acquisition (SCADA) equipment that were originally designed to be open systems, which is to say systems focused on interoperability and ease of communication and repair. Security was a secondary consideration at best. If hijacked by a piece of malware, such systems could cause property damage and business interruption loss on a literally catastrophic scale. 
Two of its policyholder’s employees sought reimbursement under the D&O policy for attorney’s fees and costs after successfully defending against federal criminal charges. The carrier denied liability based on a “change in control” exclusion that barred coverage if the alleged wrongful acts occurred after new management had taken control of the insured, and it filed a declaratory judgment action seeking to vindicate that position. On cross-motions for summary judgment, the district court found the exclusion to be ambiguous, and it interpreted it in favor of coverage pursuant to Texas’ contra proferentem doctrine – a rule of contractual interpretation that provides that an ambiguous term is to be construed against the draftsman. It also rejected the insurer’s invitation to apply a sophisticated insured exception to that doctrine. 
The first case was 
Carriers routinely resist efforts to compel production of the underwriting and claims files on other policyholders on the basis of relevance. Early last month in 
The policyholder owned a 25-story condominium building in Miami. There was a tiled elevator landing on each floor separating the east and west hallways, and those portions of the structure on floors three through twenty-five had a uniform appearance by design. On February 11, 2013, a valve broke in an air conditioning unit on the east side of the 11th floor, and cascading water damaged the hallways on the east side of the building all the way down to the third floor. 
While not as prolonged and torturous as Dickens’ Jarndyce v. Jarndyce, the case litigated in one form or another for fifteen years. After a garage collapse in lower Manhattan in early 1999, the policyholder retained the PA and executed a retainer agreement that set the adjuster’s fee at 7% “of the amount of loss and salvage . . . when adjusted or otherwise recovered.” Efforts to settle with the insurer were unsuccessful, however, and the insured brought suit in 2001. Two trials, three trips to the Appellate Division, and ten years later, a settlement was reached in May of 2010. 
The policyholder was a management association that operated a condominium complex in Manchester. Many of the units had cantilevered balconies, and those began experiencing structural problems in 2007. By 2012, it had become apparent that joists under the balconies had suffered moisture infiltration leading to rot and deterioration, and a structural engineer recommended that they be taken out of service altogether. According to the insurer’s expert, this was attributable to “construction and design issues.”
Monday saw a unanimous panel of Massachusetts’ intermediate level appellate court reject a policyholder’s ensuing loss arguments. In 
The policyholder had a building in Burnsville that had been vacant for four months when the mortgagee/bank was added to the contract of insurance. Seven months later, while still vacant, the structure was vandalized. The bank submitted an insurance claim, but this was denied because the policy recited that loss by vandalism was excluded “[i]f the building where loss or damage occurs has been vacant for more than 60 consecutive days before that loss or damage occurs.”