In its recent decision in Jones, Foster, Johnston & Stubbs, P.A. v. Prosight-Syndicate 1110 at Lloyd’s, 2017 U.S. App. LEXIS 2550 (11th Cir. Feb. 14, 2017), the United States Court of Appeals for the Eleventh Circuit, applying Florida law, had occasion to consider whether a legal professional liability insurer had a coverage obligation with respect to an underlying contempt proceeding. Prosight insured the Jones Foster law firm under a professional liability policy insuring “all sums which the Insured shall become legally obligated to pay as damages for claims … arising out of any act, error, [or] omission … in the rendering of or failure to render Professional Services by any Insured covered under this policy.” The policy required Prosight to defend “any suit seeking damages to which the policy applied.” The policy defined the term “damages” as “compensatory judgments, settlements or awards [not including] punitive or exemplary damages, sanctions, fines or penalties assessed directly against any insured.” The policy also contained an exclusion for claims “[a]rising out of any dishonest, fraudulent, criminal or malicious act or omission, or deliberate misrepresentations,” although the exclusion required that Prosight provide a defense until an adjudication of such conduct. In connection with its representation of a client prosecuting a defamation suit, Jones Foster was alleged to have misused confidential information and to have filed a client affidavit containing knowingly false information. The defendant filed a motion to show cause against Jones Foster as to why it should not be held in contempt and punished for its misconduct. Among other things, the motion sought sanctions in the form of having the claim filed by Jones Fosters’ client stricken, with prejudice, as well as an award of attorneys’ fees and costs. Prosight denied coverage for the contempt proceeding on the basis that it did not seek relief coming within its policy’s coverage. The United States District Court for the Southern District of Florida agreed, granting summary judgment in Prosight’s favor. On appeal, the Eleventh Circuit agreed that Prosight had no duty under its policy to defend against proceedings seeking sanctions or non-pecuniary relief, explaining: There is simply no suggestion that the Contempt Motion underlying this action involved anything other than an attempt to sanction lawyers employed by Jones Foster for “their contumacious and outrageous conduct.” And, the Policy makes crystal clear that only suits seeking “compensatory judgments, settlements, or awards” trigger a duty to defend on the part of Prosight. In the words of the District Court below, “[b]ecause the contempt motion sought sanctions . . . [rather than compensatory damages], [Prosight] did not have a duty to defend [Jones Foster].” In reaching this conclusion, the court acknowledged that while monetary awards in a civil contempt proceeding can serve a compensatory purpose, they primarily serve the purpose of punishing the wrongdoer for “contemptuous behavior.” Thus, the court rejected Jones Foster’s argument that the award of fees and sanctions qualified as damages in the form of compensatory judgments. The court also rejected Jones Foster’s argument that the “defense until adjudication” language in the dishonest acts exclusion required Prosight to provide a defense in the contempt proceedings, finding that Prosight had no duty to defend a claim not seeking damages. In reaching this conclusion, the court reasoned that the exclusion “does not fashion new obligations,” on Prosight, i.e., it does not require a defense to “proceedings that allege dishonest or fraudulent acts … when those proceedings would not otherwise be covered by the Policy.” Add to Flipboard Magazine.
In William Blanchette v. The Superior Court of Imperial County [D070545, 2/20/17], the California Court of Appeals strictly construed the statutory requirement that a builder respond to a notice of claim of defects under the Right to Repair Act (Civil Code §§ 895 et seq.) (the “Act”) within 14 days of receipt even where the notice did not sufficiently identify the alleged defects. This, according to the court, is because the purpose of the Act is to encourage prompt pre-litigation resolution of claims. The plaintiff, William Blanchette, is the owner of 1 of 28 homes constructed by GHA Enterprises, Inc. (GHA). On February 2, 2016, Blanchette served GHA with a notice of claim under the Act, which set forth alleged defects in all 28 homes. The notice was non-specific and tracked the language of Section 896 of the Act, which sets forth the building standards for which a violation gives rise to an actionable claim against a builder. On February 23, 2016, GHA responded to the notice by written letter advising that the defect claims were not set forth with reasonable detail as required by Section 910 of the Act. In that letter, GHA also offered to inspect the homes. On February 26, 2016, Blanchette responded to GHA’s letter asserting that GHA’s response was untimely and therefore excused him and the other homeowners from further pre-litigation resolution obligations under the Act. Thereafter, Blanchette filed a construction defect class action complaint against GHA in the Superior Court of Imperial County. GHA moved for a stay of the action until Blanchette satisfied the pre-litigation requirements of the Act. Blanchette opposed the motion on the grounds that GHA had not timely responded to the pre-litigation notice of claim. The trial court agreed with GHA that Blanchette’s claim lacked sufficient detail to trigger GHA’s obligation under the Act, and then stayed the action pending completion of the pre-litigation procedures. Blanchette filed a petition for writ of mandate to the California Court of Appeals. The appellate court reversed the trial court’s ruling. The appellate court first recognized that the purpose of the Act is to give a builder the opportunity to resolve a homeowner’s construction defect claim in an expeditious and non-adversarial manner. The court also recognized that Section 910 of the Act lists the requirements for the pre-litigation notice of claim to the builder, which requires a reasonably detailed description of the extent and location of the defects, and that the notice is a pre-requisite to filing a lawsuit against the builder. However, the court applied a strict interpretation of Section 913 of the Act, which obligates the builder to respond within 14 days of its receipt of a notice of claim. The court reasoned that even if the notice did not comply with Section 910, the builder still had an obligation to timely respond to the notice, and if it failed to do so, the homeowner was released of its further pre-litigation obligations under the Act per Section 915. Thus, the court held that GHA should have responded within 14 days of receipt of the notice of claim from Blanchette raising the lack of specificity in the notice, because lack of specificity is not grounds to ignore the notice. Requiring prompt objection by the builder in responding to the claim is more consistent with the purpose of the Act. Add to Flipboard Magazine.
In its recent decision in Great American Alliance Ins. Co. v. Anderson, 2017 U.S. App. LEXIS 2277 (11th Cir. Feb. 8, 2017), the United States Court of Appeals for the Eleventh Circuit, applying Georgia law, had occasion to consider whether an employee’s violation of company policy regarding operation of a vehicle while impaired eliminated his status as an insured permissive user under the employer’s commercial auto policy. Great American’s insured, Looper Cabinet Co. (“LLC”), allowed its employee, Brian Hensley, to drive a pickup truck for work and personal reasons, including transportation to and from a lake house owned by Mr. Hensley’s father. At issue was Mr. Hensley’s right to insured status for an accident that happened while he was driving from the lake house while under the influence. LLC had a company policy in effect stating that an impaired employee was not allowed to drive. Great American denied coverage to Mr. Hensley for the underlying suit on the basis that he had exceeded the scope of the permissive use granted by LLC by driving while under the influence. The United States District Court for the Southern District of Georgia granted summary judgment in favor of Great American, concluding that the decision by a Georgia state appellate court in Barfield v. Royal Ins. Co. of Am., 492 S.E.2d 688 (Ga. Ct. App. 1997) stood for the proposition that by violating LLC’s internal policies, Hensley exceeded the scope of his permitted use of the vehicle, and thus negating his right to insured status. On appeal, the Eleventh Circuit observed that the decision in Barfield conflicted with a 1968 decision by the Georgia Supreme Court in Strickland v. Georgia Cas.& Sur. Co., 162 S.E.2d 421 (Ga. 1968), in which the Court held that a finding of permissive use under an auto policy “only required permission for the purpose served by the vehicle and that the operational aspects were unimportant.” In other words, an employee’s violation of express company rules is not a relevant coverage consideration so long as the individual was operating the vehicle for the original use or purpose intended. The Eleventh Circuit observed that the Barfield decision did not reference Strickland and could not be reconciled with it either. Concluding that Strickland had not been overruled, the Eleventh Circuit held that Strickland, not Barfield, represented Georgia controlling law on the issue and that as such, the lower court erred in holding in Great American’s favor. Citing to evidence in the record that Brian Hensley was operating the vehicle for a permitted use at the time of the accident, even if in violation of the company alcohol, the court held that Hensley was an insured for the purpose of the underlying action. Add to Flipboard Magazine.
In its recent decision in Saarman Construction, Ltd. v. Ironshore Specialty Ins. Co., 2017 U.S. Dist. LEXIS 13633 (N.D. Cal. Jan 31, 2017), the United States District Court for the Northern District of California had occasion to consider the application of a continuous and progressive injury exclusion in the context of a construction defect claim. The underlying suit arose out of Saarman’s work as a general contractor at a condominium complex performed in 2006 and 2007 to address pre-existing water intrusion problems. In 2011, a lessee of one of the units sued the unit owner, claiming that her unit suffered from several defects, including mold, plumbing leaks and water intrusion. The unit owner, in turn, sued several parties, including Saarman based on the theory that it failed to remedy the defects, which contributed to the mold growth. Ironshore insured Saarman under a general liability policy issued for the period June 30, 2010 to June 30, 2011. The policy contained an exclusion applicable to any claim alleging bodily injury or property damage “arising out of, in whole or in part, the actual, alleged or threatened discharge … of any mold, mildew, bacteria or fungus.” The policy also contained an exclusion applicable to any bodily injury or property damage: which first existed, or is alleged to have first existed, prior to the inception of this policy. “Property damage” from “your work,” or the work of any additional insured, performed prior to policy inception will be deemed to have first existed prior to the policy inception, unless such “property damage” is sudden and accidental and takes place within the policy period [sic]; or which was, or is alleged to have been, in the process of taking place prior to the inception date of this policy, even if such “bodily injury” or “property damage” continued during this policy period; or which is, or is alleged to be of the same general nature or type as a condition, circumstance or construction defect which resulted in “”bodily injury” or “property damage” prior to the inception date of this policy. Ironshore relied on both exclusions to deny coverage. On motion for summary judgment, Saarman argued that the mold exclusion did not apply, at least for duty to defend purposes, because the claim against it alleged harms other than mold, such as water intrusion and water damage. Ironshore countered that the exclusion, on its face, applied to any claim alleging any mold damage, even if that suit includes other damages attributable to other causes. In considering the issue, the court reasoned that Ironshore’s broad interpretation of the exclusion clashed with California law requiring an insurer to defend a lawsuit that includes covered and uncovered claims, and that California does not permit an insurer to contract around this obligation: As the California Supreme Court explained in Buss, “in a ‘mixed’ action, the insurer has a duty to defend the action in its entirety.” … Here, Ironshore has attempted to circumvent that principle by hinging its duty to defend on the presence of any allegations of non-covered damage in the “suit”—no matter how small or inconsequential those allegations may be. However, the court in Buss suggested that insurers could not contract around their duty to defend mixed actions in this way. …. In short, Ironshore cannot contract around California law that requires insurers to defend the entire action if there is any potentially covered claim. Because the language in the mold exclusion barring coverage for “any claim, demand, or ‘suit’ alleging [damage] arising out of, in whole or in part, the . . . alleged . . . existence of any mold” tries to do precisely that, it is unenforceable. Thus, finding that the underlying suit alleged damages that were independent of mold, i.e. water intrusion and water damage, the court concluded that the mold exclusion did not apply to the entirety of the underlying claim and thus did not operate to preclude a duty to defend. Turning to the policy’s continuous or progressive injury exclusion, referred to by the court as the CP exclusion, Saarman agreed that it finished its work prior to the policy’s issuance, and thus fell within the first paragraph of the exclusion. Saarman nevertheless argued that the damage at issue in the underlying was not continuous but instead intermittent based on rainfall events. The court rejected this argument, noting that the exclusion only requires the completion of work prior to the policy’s issuance for the exclusion to apply and does not focus on when or under what circumstances the property damage occurs. In so concluding, the court considered but rejected Saarman’s argument that the exclusion rendered the policy’s completed operations coverage illusory, finding that the policy still provided coverage for operations completed during the policy period, just not operations completed prior to the policy period. Add to Flipboard Magazine.
In its recent decision in BancorpSouth, Inc. v. Fed. Ins. Co., 2017 U.S. Dist. LEXIS 10817 (S.D. Ind. Jan. 26, 2017), the United States District Court for the Southern District of Indiana, applying Mississippi law, had occasion to consider the application of a fees or charges exclusion in a bankers’ professional liability policy. Bancorp sought coverage an underlying class action lawsuit seeking monetary damages, restitution and declaratory relief arising from its practice of charging allegedly excessive overdraft fees imposed on its customers. The suit claimed that Bancorp engaged in various schemes in an effort to ensure that such fees would be maximized. Bancorp sought coverage for the underlying suit, but Federal denied coverage on the basis of an exclusion in its policy applicable to loss arising from any claim “based upon, arising from, or in consequence of any fees or charges.” In the ensuing coverage litigation, Bancorp contended that Federal applied the exclusion in too broad a fashion. Specifically, Bancorp argued that because the underlying lawsuit alleged that its policies and procedures caused the harms alleged by the class, one of which was the imposition overdraft fees. In other words, Bancorp claimed that was at stake in the suit was its policies that resulted in overdraft fees, not the imposition of the fees itself. Bancorp also argued that the exclusion was ambiguous since it was not clear whether the exclusion applied to fees payable by Bancorp or fees paid to Bancorp. In considering the exclusion, the court noted two unpublished and diverging opinions: one from the Third Circuit, applying Texas law, in PNC Fin. Servs. Group, Inc., 647 Fed. Appx. 112 (3d Cir. 2016) and another by the Fifth Circuit, ironically applying Pennsylvania law, in First Comm. Bancshares v. St. Paul Mercury Ins. Co., 593 Fed. Appx. 286 (5th Cir. 2014). In First Community, the court held that the class action complaint alleged overdraft fees, but that “the primary harm stemming from these allegations is that customers could not ascertain their account balances and could not plan spending, withdrawals, and deposits.” The BancorpSouth court noted, however, that the facts and policy before it were factually distinguishable from First Community. Whereas the class action in First Community sought damages as a result of the bank customers only having access inaccurate balances, the suit against Bancorp was targeted at specific practices allegedly in furtherance of Bancorp’s scheme to impose and maximize overdraft fees. The court further noted, by contrast, that the class action at issue in PNC was factually similar to that filed against Bancorp. There the Third Circuit rejected arguments similar to those raised by Bancorp; namely, that the underlying suit sought damages for PNC’s allegedly improper practices, not for the fees themselves. The BancorpSouth court found this reasoning persuasive, concluding “there is no other way for us to construe [the exclusion] than to encompass the claims here.” The court also considered Bancorp’s argument that the failure to distinguish between payments to or by Bancorp rendered the exclusion ambiguous. The court rejected this argument, observing that the exclusion applied to both types of payments, but that its breadth should not be equated with ambiguity. Add to Flipboard Magazine.
In EmbroidMe.com, Inc. v. Travelers Prop. Cas. Co. of Am., No. 14-10616, 2017 U.S. App. LEXIS 368 (11th Cir. Jan. 9, 2017), the Eleventh Circuit had occasion to consider whether an insurer had an obligation to reimburse its insured for pre-tender defense costs that were voluntarily assumed by the insured, and whether the insurer’s disclaimer of such costs is governed by Florida Claims Administration Statute, Fla. Stat. § 627.426(2). Travelers insured EmbroidMe.com under a general liability policy that covered, among other things, web-site injuries. The underlying copyright litigation triggered Travelers indemnification and defense obligations, but EmbroidMe.com failed to notify Travelers of the suit and EmbroidMe.com assumed a defense on its own behalf. EmbroidMe.com retained counsel and from June 2010 until October 2011 EmbroidMe.com paid all of its own legal defense costs with no notice to Travelers that the litigation was ongoing. However, 18 months after the suit had been filed against EmbroidMe.com, EmbroidMe.com notified Travelers of the claim against it. In November 2011, Travelers sent EmbroidMe.com a letter that contained a “coverage analysis” making clear that Travelers would only pay post-tender defense costs. EmbroidMe.com refused to accept Traveler’s denial of pre-tender costs, which totaled upwards of $400,000. The Eleventh Circuit noted that EmbroidMe.com “repeatedly sought to change Travelers’ mind as to the decision it had set out in its November 2011 letter.” Shortly after settlement of the underlying action, Travelers sent EmbroidMe.com a letter reiterating its position that it was not required to pay the pre-tender defense costs. Months later, EmbroidMe.com filed suit against Travelers, challenging Travelers’ disclaimer of the pre-tender defense costs on the basis that the policy did not expressly bar coverage for pre-tender costs and that Travelers’ disclaimer of coverage for such amounts 39 days after tender was untimely and thus in violation of the Florida Claims Administration Statute, § 627.426(2). The Statute states, in relevant part, that an insurer is estopped from denying coverage unless “(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery.” Both parties filed motions for summary judgment. EmbroidMe.com contended Travelers was estopped from denying its duty to pay pre-tender defense costs because it violated § 627.426(2). Travelers argued the Statute only applies to “coverage defenses” and its denial of pre-tender costs was predicated upon a “coverage exclusion,” such that the Statute was inapplicable and it was not estopped from denying pre-tender costs. The District Court agreed with Travelers, granting their motion for summary judgment and ruling that Travelers was not required to pay EmbroidMe.com’s pre-tender legal expenses. The District Court’s decision was the topic of a previous post on the TLSS Insurance Law Blog. EmbroidMe.com appealed. In its recent decision, the Eleventh Circuit affirmed the District Court’s conclusion that Travelers’ refusal to reimburse EmbroidMe.com for pre-tender costs did not constitute a “coverage defense,” meaning that the statutory time period for an insurer to notify its insured of its defense to coverage did not apply. The Eleventh Circuit reasoned that the plain language of the policy indicated Travelers’ refusal to reimburse was an exclusion, not a defense. Specifically, the policy provided that “no insured will, except at the insured’s own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.” The Eleventh Circuit found this language to be clear, “if not common sense.” Because the pre-tender costs are specifically excluded from the policy, the provision addressing Travelers refusal to pay for those costs is not a coverage defense pursuant to the Statute, rather it is an exclusion. Travelers therefore properly denied coverage for the pre-tender defense costs. Add to Flipboard Magazine.
The United States District Court for the District of New Jersey closed out 2016 with a declaration that the Products and Workmanship exclusions found in a manufacturer’s Building and Personal Property policy is ambiguous. In National Manufacturing Company v. Citizens Insurance Company of America, et al., 2016 U.S. Dist. LEXIS 180145 (D.N.J. Dec. 30, 2016), a manufacturer of stainless steel battery casings sought coverage for losses to its stock after an anti-corrosive chemical applied during the manufacturing process caused pits to develop in the casings. The chemical pitting rendered the casings unfit for their intended use in medical pacemaker batteries. The policy contained a “Products Exclusion” that negated coverage for product losses “caused by or resulting from error or omission by any person or entity . . . in any stage of the development, production, or use of the product[.]” The policy also contained a “Workmanship Exclusion” for losses caused by “faulty, inadequate or defective . . . materials.” Both exclusions were subject to an exception when the excluded loss “results in a ‘Covered Cause of Loss’.” Covered Cause of Loss, in turn, was defined as “Risks of Direct Physical Loss unless the loss is Excluded.” The court held that the loss fell within the broadest scope of the Products and Workmanship exclusions, but the “Covered Cause of Loss” exceptions “at best render the exclusions ambiguous and at worse incomprehensible.” Both the insurer and the insured had argued that the exceptions were intended to invoke the ensuing loss doctrine, but the court rejected these arguments because the policy did not use the term “ensuing loss.” Instead, the court reasoned that the policy language was circular because loss was covered unless it was excluded and excluded unless it was covered. The court construed the exclusionary language against the insurer and concluded that the loss was covered. Add to Flipboard Magazine.
In its recent decision in Pizter College v. Indian Harbor Ins. Co., 2017 U.S. App. LEXIS 668 (9th Cir. Jan. 13, 2017), the United States Court of Appeals for the Ninth Circuit had occasion to consider the applicability of a New York choice of law provision in the context of late notice disclaimer of coverage. Indian Harbor insured Pitzer College under a pollution liability policy containing a choice of law provision stating that “all matters … related to the validity, interpretation, performance and enforcement of this Policy shall be determined in accordance with the law and practice of the State of New York … .” At issue was Pitzer’s right to coverage for a pollution condition it discovered and remediated several months before giving first notice to Indian Harbor. The Indian Harbor policy contained a condition stating that except for actions undertaken on an emergency basis, Indian Harbor’s prior consent was required before Pitzer could undertake any remedial efforts. Indian Harbor subsequently denied coverage to Pitzer on the basis that it failed to give timely notice of the pollution condition and also that it failed to obtain consent prior to undertaking remedial efforts. On motion for summary judgment, the United States District Court for the Central District of California held in Indian Harbor’s favor, concluding that as a result of the policy’s choice of law provision, New York law governed the coverage dispute and that under New York law, Pitzer’s untimely notice and its failure to have obtained Indian Harbor’s consent before undertaking remedial efforts vitiated its right to coverage under the policy. Central to the court’s ruling was that California did not have a fundamental public policy interest in applying its own notice-prejudice law to the coverage dispute that would require the court to reject the policy’s New York choice of law provision. On appeal, the Ninth Circuit observed that under California law, a contractual choice of law provision should be enforced unless it conflicts with a fundamental public policy of the state. Thus, reasoned the court, application of the New York choice of law provision in the Indian Harbor provision should be enforced unless California’s notice-prejudice rule qualifies as a fundamental public policy. The court acknowledged that this was a crucial question to the underlying dispute, since under California law, Indian Harbor likely would not be able to establish that it was prejudiced as a result of Pitzer’s late notice. Given the uncertainty as to whether California’s notice-prejudice rule constitutes a fundamental public policy, the Ninth Circuit certified the following questions to the California Supreme Court: Is California’s common law notice-prejudice rule a fundamental public policy for the purpose of choice-of-law analysis? May common law rules other than unconscionability not enshrined in statute, regulation, or the constitution, be fundamental public policies for the purpose of choice-of-law analysis? If the notice-prejudice rule is a fundamental public policy for the purpose of choice-of-law analysis, can a consent provision in a first-party claim insurance policy be interpreted as a notice provision such that the notice-prejudice rule applies? Add to Flipboard Magazine.
In its recent decision in FDIC v. BancIsure, Inc., 2017 U.S. App. LEXIS 452 (Jan. 10, 2017), the United States Court of Appeals had occasion to consider the scope of an insured vs. insured exclusion in the context of malfeasance claims brought by the FDIC in its capacity as a receiver. BancInsure insured Security Pacific Bank under a D&O policy containing an exclusion applicable to: 11. a Claim by, or on behalf, or at the behest of, any other Insured Person, the Company, or any successor, trustee, assignee or receiver of the Company except for: (a) a shareholder’s derivative action brought on behalf of the Company by one or more shareholders who are not Insured Persons and make a Claim without the cooperation or solicitation of any Insured Person or the Company. . . . Security Pacific ceased operations and FDIC was appointed by the State of California as the bank’s receiver. FDIC subsequently asserted claims against the former directors and officers of the bank for the alleged losses they caused to the bank. These individuals sought coverage for the FDIC claims under the BancInsure policy. BancInsure, in turn, denied coverage on the basis of the policy’s insured vs. insured exclusion. FDIC acknowledged that on its face, the exclusion applied to the claims it brought in its capacity as a received of the bank. It nevertheless contended that the exception for shareholder derivative actions should apply since its claims were similar to those asserted in shareholder derivative suits, and because the FDIC in addition to succeeding to the interests of the bank also succeeded to the interests of Security Pacific’s shareholders. The Ninth Circuit disagreed, noting that malfeasance claims such as those brought by FDIC against Security Pacific’s directors and officers “belong to the corporation – not to the shareholders – and the board of directors is primarily responsible for enforcing the corporation’s rights.” The court distinguished such a claim from a shareholder derivative suit, which it explained is a suit that can be brought only when a board of directors fails or refuses to enforce a corporation’s rights. The court reasoned that the insured vs. insured exclusion is not rendered ambiguous merely because the FDIC, in addition to succeeding to the rights of Security Pacific’s board also succeeds to the rights of its shareholders. The court found such a conclusion contrary to the plain language of the exclusion: Interpreting the shareholder-derivative-suit exception to provide coverage to the FDIC’s claims may very well read the term ‘receiver’ out of the insured-versus-insured exclusion. We think the term ‘receiver’ is clear and unambiguous and includes the FDIC in its role as receiver of Security Pacific. Add to Flipboard Magazine.
In its recent decision in Selective Ins. Co. v. Target Corp., 2016 U.S. App. LEXIS 23370 (7th Cir. Dec. 29, 2016), the United States Court of Appeals for the Seventh Circuit, applying Illinois law, had occasion to consider whether a written contract must remain in effect at the time of an accident in order to trigger coverage for an additional insured. At issue in Selective was an underlying personal injury suit brought by an individual injured at a Target store when a fitting room door came off its hinges and fell on her. The fitting rooms had been supplied to Target by Harbor Industries. Target sought coverage for the suit as an additional insured under Harbor’s general liability policy, which was issued by Selective. Selective denied the tender and brought a coverage suit against Target seeking a declaration that it had no duty to defend or indemnify. Relevant to the coverage dispute were two contracts entered into between Target and Harbor. The first, a supplier agreement, was entered into between the parties in April 2001, and stated that the agreement would be deemed incorporated into all subsequent agreements entered into between the parties. Among other things, the supplier agreement required that Harbor maintain general liability coverage under which Target would be named as an additional insured. The supplier agreement also stated that it would remain in effect until terminated. The second agreement, entered into in April 2009, was a program agreement whereby Harbor was contracted to supply fitting rooms to Target stores. Notably, the program agreement expired on July 1, 2010. The underlying accident happened on December 17, 2011 and suit was filed in May 2012. Selective argued that because the program agreement expired over a year prior to when the underlying injury happened, there was no written contract in effect that would trigger its additional insured obligations to Target. The Seventh Circuit disagreed, observing that while the program agreement had expired, the supplier agreement remained in force, and this agreement required, among other things, that Harbor maintain products/completed operations coverage for any goods or services later provided to Target. The court therefore agreed that Selective could not disclaim coverage on the basis that there was no written contract in effect. Having so concluded the court agreed that Target was entitled to additional insured status for the underlying suit, and that it was entitled to a defense and indemnification under the Selective policy. Add to Flipboard Magazine.