Insurance Law

Insurer filed declaratory judgment action against its insured, alleging that she was barred from pursuing uninsured motorist claim because she did not demand arbitration within 2-year period required by policy. Accident occurred in Wisconsin, which has 3-year statute of limitations for personal injury suits. Thus, 2-year arbitration demand time deadline in policy is against public policy as to insured, as it effectively shortens the applicable Wisconsin statute of limitations from three to two years, and thereby places insured in a substantially different position than if the other driver had been insured. (HOLDRIDGE, concurring; McDADE, dissenting.)

(Court opinion corrected 8/29/11.) Plaintiff sued adverse driver's insurer for injuries to himself and his passenger from collision. Adverse driver's mother had car policy and truck policy with insurer. As adverse driver was driving truck at time of collision, the car policy was inapplicable, and the exclusion in the car policy excludes Plaintiff from recovering from that policy. Insurer did not waive exclusion by not asserting it in its reservation of rights letter. (CUNNINGHAM and CONNORS, concurring.)

Property owner sued Plaintiff, a successor tenant, and previous tenants, which manufactured electrostatic coating application equipment, for environmental contamination. Assignment of insurance benefits to successor tenant occurred afer loss, as the chose in action came into existence when contamination occurred, and chose in action was then established, as a conditional right to the insurance proceeds, and was assignable without consent of insurer. Underlying complaint sufficiently alleged that loss occurred during period of coverage and that conditions for assignment had occurred, so that insurer had duty to defend Plaintiff. (CUNNINGHAM and HARRIS, concurring.)

Court properly ruled that homeowners policy insurer was required to defend its insured in malicious prosecution suit, where policy definition of "personal injury" included injury arising from "malicious prosecution". Suit against insured seeks damages for common law tort of malicious prosecution, and thus alleges injury arising from malicious prosecution. Although policy generally excluded coverage of intentional conduct, it explicitly provided coverage for damages caused by malicious prosecution, and the insured could reasonably anticipate that policy protections would apply. (McDADE and O'BRIEN, concurring.)

Complaint alleged property damage to condominium from water leakage due to design and/or construction defects. Underlying pleadings sufficiently established that plaintiff insurer had a duty to defend window sealant subcontractor, to whom it provided CGL and umbrella insurance, in a third-party action alleging that subcontractor negligently completed its work. Pleadings alleged property damage and "occurrence" that bring the cause within, or potentially within, CGL policy coverage. (HALL and ROCHFORD, concurring.)

Court properly granted partial summary judgment in favor of former directors of two bankrupt Indiana entities, holding that per D & O liability policy, insurer must defend directors in underlying suit filed by bankruptcy trustee. Policy's bankruptcy exclusion is unenforceable, as policy is an asset of bankruptcy estate, and trustee cannot obtain indemnity benefit without permitting access to defense costs under policy. Bankruptcy exclusion is precluded by Bankruptcy Code as provision states that it is conditioned on debtor's insolvency and commencement of a bankruptcy case. Policy's "insured vs. insured" exclusion is inapplicable, as court-appointed trustee is an instrument of the law and an agent of the court, and is a distinct entity from the prefiling debtor working on behalf of creditors, not on behalf of debtor. (MURPHY and STEELE, concurring.)

Plaintiff insurer sought subrogation and reimbursement from County, which was a self-insured municipality, after insurer settled a lawsuit which alleged that county employee, intoxicated while driving a county vehicle, struck and severely injured driver of another vehicle. County employee, who was killed in collision, was a named insured on personal liability umbrella policy issued by insurer. County is not an insurer and does not provide insurance coverage, and is thus not a "carrier" of insurance. Principle of horizontal exhaustion, requiring insured to exhaust all available primary insurance before invoking excess insurance, is inapplicable, as County is not a "primary insurance carrier." (HUTCHINSON and SCHOSTOK, concurring.)