In Millennium Inorganic Chemicals, Ltd. v. National Union Fire Ins. Co. et al., — F.3d. — , 2014 WL 642993 (4th Cir., Feb. 20, 2014), the United States Court of Appeals for the Fourth Circuit recently clarified who constitutes a direct supplier of goods and services under contingent business interruption (CBI) insurance, and it specifically rejected arguments that the undefined term “direct” in the coverage grants of the CBI endorsements at issue was ambiguous in nature.
The policyholder, Millennium Inorganic Chemicals, Ltd., processed titanium dioxide at its facility in Western Australia, using natural gas that it received via a pipeline. It purchased the gas from Alinta Sales Pty Ltd., a retail gas supplier. Alinta, in turn, purchased the gas it supplied to Millennium from others, including Apache Corporation.
Apache extracted and processed natural gas and then injected it into the pipeline, where it comingled with gas from other producers. As soon as the substance was injected, custody, title, and risk for it passed to Alinta, and Apache had neither any ownership interest in the pipeline nor any contractual relationship with Millennium.
In 2008, an explosion shut down Apache’s facility, and the Australian government subsequently imposed controls, giving priority for delivery of the substance to essential services. The result was that Millennium was forced to shut down for a number of months.
Millennium had CBI coverage with National Union Fire Insurance Company and ACE American Insurance Company. The CBI endorsements in the two contracts of insurance provided Millennium with $10 million in coverage for “any unnamed direct contributing properties,” and they recited that only a “direct supplier of materials to the Insured’s locations” could be a “contributing property.” Read more ›
Faced with what she described as “an onslaught” of lawsuits, the district’s Chief Judge Carol Bagley Amon ordered the clerk to open a miscellaneous civil case captioned “In Re: Hurricane Sandy Cases,” Docket No. 14 MC 41, on January 10 “for the purposes of Pretrial Case Administration in all actions seeking insurance coverage for damage caused by Hurricane Sandy.” She simultaneously directed three magistrate judges “to evaluate and make a recommendation regarding how to best handle all Hurricane Sandy cases.”
Peerless Insurance Company issued a $1 million fire insurance policy to Executive Plaza. This gave Executive the choice to select payment of “actual cash value” or payment of “replacement cost.” The policy also provided that Peerless would not pay the replacement cost for any loss or damage until the property had actually been repaired or replaced. Finally, the policy contained a suit limitation clause that required the insured to commence any legal action within two years from the date of loss.
In October of 2005, Hurricane Wilma damaged three apartment complexes in Broward County, Florida. The property manager for all three was Banta Properties, Inc., a company owned by various Banta family members. The individual family members also owned two of the three properties at the time of the storm, having sold the third one (Parkcrest Apartments) to an unrelated, non-party entity two months beforehand.
The Preislers owned a dairy farm with cattle, and they used a well to stock a pool on the property. For several years, they had defendant Kuettel’s Septic spray several thousand gallons of septage on their farmland. Kuettel’s Septic was in the business of removing, hauling, storing and disposing of the substance, which comes from septic tanks, grease traps, floor pits, and car washes. It is disposed of by either taking it to a treatment facility or by spreading it on farmland as a fertilizer. It contains high levels of nitrogen.
Of course, when we’re dealing with commercial construction and property insurance, the most significant incentive for “going green” is probably economic. Over time, green buildings can reduce operating costs, improve employee productivity and satisfaction (a happy employee is a productive employee!), enhance asset value and profits, generate a better return on the owner’s investment (e.g., higher rents, sales prices and occupancy rates), reduce liability risks, and optimize the performance of a building during its life-cycle. There are also federal, state or local tax incentives for certain types of green construction.
On November 27, 2013, an intermediate level Texas court handed down an opinion addressing the extent to which a policyholder’s claims for a covered loss survive foreclosure. Peacock Hospitality, Inc. v. Association Casualty Ins. Co., 2013 WL 6188597 (Tex.App. San Antonio) arose after the policyholder Peacock Hospitality (“Peacock”) made claim against its property insurance carrier, Association Casualty Insurance Company (“Association Casualty”), for water damage from frozen pipes at a Holiday Inn. The loss occurred on January 9, 2010.
Adams v. Cameron Mutual Ins. Co., 2013 Ark. 475 (Ark., Nov. 21, 2013) arose after a tornado damaged the Adamses’ home in Mena, Arkansas. Their homeowners insurance carrier, Cameron Mutual Insurance Company, depreciated the entire repair estimate including the labor-only services such as the removal of roof decking, siding, and carpet and vinyl flooring. The policyholders asserted that the contract of insurance did not allow for such depreciation, and they brought a would-be class action against the insurer in the Western District of Arkansas. The federal court then certified the following question to Arkansas’ Supreme Court:
The question came to the forefront in Juan Pinzon and Jaqueline Espitia v. The First Liberty Ins. Corp., 2013 WL 5487027 (M.D.Fla., Sept. 30, 2013), a breach of contract action under a homeowners insurance policy. The insureds contended that their property had suffered damages from sinkhole activity, but First Liberty denied the claim after securing a professional engineer’s report that concluded that “none of the damage at the Pinzon & Espitia residence are [sic] structural damage as defined by the Florida Statutes.” A lawsuit followed. After removal, First Liberty filed for summary judgment and requested that the court apply the narrow five-part definition of “structural damage” adopted in 2011 to the insureds’ claim.