Troutman Sanders’ Insurance Group Earns Accolades and Victories
Troutman Sanders is pleased to share with its insurance clients and friends the results of the very productive and successful first half of 2015, featuring a string of litigation victories and Chambers rankings.
Chambers Rankings
The Chambers USA Guide recognizes and ranks the best law firms and lawyers in the country based upon in-depth interviews of lawyers and clients and a review of the cases and results obtained by law firms and attorneys servicing various industries. In its 2015 edition, Chambers USA recognized eleven (11) Troutman Sanders attorneys for their expertise and work in representing insurers – giving Troutman Sanders more Chambers-ranked insurance attorneys than any other insurer-side firm in the country. The national reach of the firm’s insurance practice was also acknowledged, with ranked attorneys spanning the firm’s offices from California, the District of Columbia, and Illinois.
The 2015 attorneys ranked by Chambers include Leslie Ahari, Eileen Bower, Clint Cameron, Jonathan Constine, David Cutter, Gary Dixon, John Duchelle, John Gerstein, David Gische, Terrence McInnis, and Rebecca Ross.
Year-to-Date Litigation Victories
During the first six months of 2015, Troutman attorneys have obtained a series of significant litigation victories for their insurance clients in jurisdictions across the country, including California, New York, Florida, Illinois, Missouri and Arizona, and involving a broad range of policies and coverage issues. Nine of these recent decisions are described below.
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After an insurer denied coverage for a class action brought by tenants of a mobile home park in Missouri, the policyholder agreed not to defend the suit if the recovery was limited to insurance proceeds. As a result, an $82 million class action judgment was entered against the policyholder. Plaintiffs thereafter brought a garnishment proceeding against the insurer, asserting that it breached its duty to defend and so was liable under Missouri law for the entire amount of the judgment. Troutman first succeeded in removing the case to federal court, prevailing on the argument that class’s effort to garnish insurance was a “class action” under the Class Action Fairness Act. Troutman then obtained a determination from the district court that the denial of coverage was proper, and so judgment was entered in the insurer’s favor. John Gerstein and Patrick Hofer represented the insurer in Williams v. Employers Mutual Casualty Co., No. 4:13-cv-2393-RLW (E.D. Mo.).
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In Health Net, Inc. v. American International Lines Specialty Insurance Co., et al., Case No. BC357436 (CA Super. Ct., Los Angeles County), Health Net sought to recover $100 million under its Managed Care E&O coverage tower, including $25 million from Troutman’s client, the primary insurer. Health Net had been sued in ERISA and RICO class actions for alleged systematic underpayment of health care claims. Health Net incurred more than $80 million in defense costs and paid more than $200 million to settle the class actions. Its insurers denied coverage for the class actions and Health Net sued them in Los Angeles Superior Court for breach of contract and bad faith. After protracted litigation, and just three weeks before trial, the court granted the insurers’ motion for summary judgment, finding that the insurers had no obligation to pay any portion of the defense costs or the settlement. The court held that Health Net's failure to pay benefits it contractually owed to its subscribers was not a "Wrongful Act" under the Insuring Agreement, as Health Net had a pre-existing obligation to pay those amounts and ERISA did not allow for recovery of extra-contractual damages against Health Net. The court also held that the RICO claims were not covered because they were premised on findings of intentional conduct and thus excluded under Cal. Ins. Code Section 533. The primary insurer was represented in the case by Robert Pozin, John Gerstein, Jennifer Mathis, Melissa Perez, and Binh Pham.
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OneWest Bank FSB v. Houston Casualty Company, Case No. 2:14-cv-00547-BRO-JCG (C.D. Cal.), involved an insured’s defective notice to an insurer, and insured’s subsequent settlement of a claim without the insurer’s knowledge or consent. OneWest Bank was sued in connection with its mortgage servicing work. When it attempted to tender the suit to its financial institutions professional liability insurer, it failed to submit the notice in accordance with the policy’s terms. The bank thereafter negotiated a settlement of the suit and only sought the insurer’s consent after a binding agreement was in place. The insurer denied coverage for the settlement based on the policy’s voluntary payments provision, and OneWest sued for breach of contract and bad faith. The bank alleged that the insurer’s delay in acknowledging the claim (as a result of the misdirected notice), excused the bank from obtaining the insurer’s consent before agreeing to a settlement. Troutman obtained summary judgment for the insurer in the district court, finding that the bank’s failure to obtain consent prior to the settlement was not excused, and that coverage was therefore unavailable for the settlement. Terrence McInnis and Ross Smith represented the insurer in the case.
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In Nammo Talley Inc., v. Allstate Ins. Co., Case No. 2:11-cv-01007 (D. Ariz.), Nammo Talley sought coverage for the cleanup of water and soil contamination at a weapons and rockets manufacturing facility. While the policy contained a pollution exclusion, the insured argued that an exception to the exclusion – for sudden and accidental discharges – applied. However, because Nammo Talley could not identify any specific instance of a “sudden” discharge, the court ruled that the exception did not apply. The court also rejected the insured’s argument that the doctrine of regulatory estoppel precluded the insurer from invoking the pollution exclusion. Summary judgment was granted in favor of the insurer, who was represented in the case by Louise McCabe and Tara Goodwin.
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In Maplewood Partners, et al. v. Indian Harbor Insurance Co., No. 1:08cv23343 (S.D. Fla.), Troutman argued that because the insured had already recovered all loss and defense costs from another party pursuant to an express indemnification agreement, any additional recovery under a financial services liability policy issued by the insurer would be a windfall double recovery. The court was persuaded by Troutman’s arguments and granted summary judgment in the insurer’s favor. The insurer was represented by David Gische, Gabriella Richeimer, Tom Hay, and Steven McNutt.
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In Darwin National Assurance Co. v. Westport Insurance Corp., 2015 U.S. Dist. LEXIS 42550 (E.D.N.Y.), the court was called upon to determine which of two insurers afforded coverage for a suit against the Incorporated Village of Old Westbury for alleged interference with the development of a cemetery. In 1996, the Village was sued by the Roman Catholic Diocese of Rockville Centre for alleged interference in the development of Queen of Peace Cemetery. Years later, in 2009, the Diocese brought a second action against the Village alleging continuing interference in the development of the cemetery. Troutman represented the insurer on the risk in 2009, and obtained summary judgment that the claim related back to the 1996 suit and so no coverage was afforded under the 2009 policy. Jon Constine represented the 2009 insurer in the case.
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After the insurer paid $4.6 million in covered loss to Fox Valley Systems, Inc. for fire damage to its facility, Fox Valley sued its insurer to obtain an additional $9.7 million on the theory that it was underinsured and the insurer should have recommended higher limits. Troutman obtained the dismissal of the suit, with prejudice, on statute of limitations grounds. David Cutter, Charles Hadden, Daniel Cohen and William Pipal represented the insurer in Fox Valley Systems, Inc. et al. v. Country Mutual Ins. Co., Case No. 14-LA-83 (Il. Cir. Ct., McHenry County).
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In Nyack Manor Nursing Home v. Montpelier US Ins. Co., et al., Index No. 035154/2013 (N.Y. Sup. Ct., Rockland County), an insured sought coverage for a malpractice claim under professional liability policies it had obtained from different insurers over several years. Troutman represented one of the insurers involved, and obtained summary judgment in favor of its client, persuading the court that the policy’s extended reporting period did not afford coverage for the claim. Tony Jones and Jordan Rubinstein represented the insurer in the case.
- A psychiatrist sought coverage under his Psychiatric Services Liability policy for a lawsuit against him alleging sexual misconduct, sexual assault and civil conspiracy related to his medical treatment of a patient. The insurer denied coverage on the ground that the suit involved intentional, rather than negligent conduct, and so did not fall within the policy’s definition of a covered Medical Incident. Troutman prosecuted a declaratory relief action on behalf of the insurer, seeking a declaration that it had no duty to defend or indemnify the doctor. The court agreed with the insurer and granted judgment in its favor. The insurer in Fair American Insurance & Reinsurance Company v. Dr. Anil K. Ramachandran, et al., Case No. 14-MR-1078 (Cir. Ct. of Lake County, Illinois), was represented by Eileen Bower and William Pipal.