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 H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., 2015 WL 5781295, 2015 U.S. Dist. LEXIS 138080, (W.D.Pa., Oct. 1, 2015), an insurer lost that fight when a federal court in Pennsylvania required it to produce the files. The case is noteworthy, but arguably limited in terms of its application to other disputes. A Phase One trial was directed solely to the insurer’s efforts to rescind the policy because of material misrepresentations in the application, and discovery addressing whether the insured was being treated the same way as other similarly-situated policyholders was uniquely important given that fact. As the court recognized, it was “the main mechanism” for plaintiff to defend itself.
The insured manufactured and sold a dry, high-protein baby cereal in China. On August 18, 2014, the Food & Drug Administration of Zhejian Providence seized hundreds of boxes of the product after tests revealed high levels of lead. The cause was ultimately determined to be a contaminated production run of defatted soy powder from Qingdao Longhi Food Company, one of the policyholder’s ingredient suppliers. The insured recalled the cereal and made claim under its product contamination policy for an “on-going” loss that it estimated to be in excess of $30 million. Read more ›
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.”
The insureds owned a house in Tarzana. In early 2013, concerned over recurring watermarks, they had a general contractor and a structural engineer inspect the rear deck on the home. The consultants found severe decay from corrosion in steel beams beneath the structure in an area concealed by the deck floor, and they advised the policyholders that the upper portion of the house was in danger of falling. The insureds immediately took steps to remediate the home, and they ultimately spent $91,000 in doing so. 
The insureds owned a home in Little Silver that was inundated by 20”-36” of water when a creek behind their property overflowed its banks during Superstorm Sandy on October 29, 2012. They initially attempted to clean the house themselves, removing the carpeting and hiring a certified cleaning and restoration company. When the president of the clean-up concern visited the site, however, he told everyone to stop what they were doing, saying that the water was “very unhealthy and dangerous.” He later opined that it was Category 3 water – a substance that is “highly contaminated and could cause death or serious illness if consumed by humans.” 
Two weeks ago in 
The insured owned a seasonal cabin in Duck Creek that was not used during the winter months, and his practice was to leave both the water and the heat turned on. At some point during the early months of 2011, a valve under the sink in the basement wet bar failed. The consequences were discovered when the wife of one of his employees visited the building in April, 2011. According to the insurance adjuster’s report, there was “extensive mold damage throughout the house” and “[m]old upstairs on every wall and ceiling in [the] home.” Water district records showed that the policyholder’s water bill had jumped from $15 in January to $93.75 in March, but this went unnoticed because the bills were “automatically paid” by his office. 