Advisors and advocates, we’ve got you covered

Albert Alikin and Nicholas Directo obtained the dismissal of their client, an insurance carrier, in Nevada federal court in a lawsuit brought by the client’s insured seeking benefits under an occupational accident medical expense policy. The insured filed suit against the client alleging breach of contract and bad faith after the client denied the insured’s insurance claim seeking coverage for medical expenses resulting from a work-related accident that occurred over three years before the insured gave the client notice of the accident or his claim for benefits under the policy. The client’s policy contains a “sunset” provision which states that no claim is “considered valid and collectible unless full details of such claim are presented to” the client within three years of the date of the accident from which the claim arises. FMG filed a motion for judgment on the pleadings on the basis that the policy’s “sunset” provision is strictly enforceable because, unlike the usual “notice” provision in an insurance policy that requires a showing of prejudice to be enforceable, the “sunset” provision provides an explicit time limitation for the insured to tender a claim. FMG also argued that the policy’s “suit against us” provision barred the insured’s lawsuit. After a spirited debate on the issues between counsel, we convinced the insured’s counsel to dismiss our client with prejudice in lieu of opposing our motion and showing their “cards” to the other defendant carriers.

Shawn Bingham and Eric Retter prevailed on a motion for summary judgment in the United State District Court for the Northern District of Georgia before Judge Totenberg. The matter involved a first-party property insurance case in which the plaintiff claimed extensive damages to her basement after a water heater leak. The policy contained a “Suits Against Us” provision that required the insured to file suit within two years as a condition precedent to coverage, yet Plaintiff did not file suit within this time frame.

The Court granted summary judgment to FMG’s client finding that Plaintiff had failed to satisfy a condition precedent to recovery under the insurance policy and that the Georgia Supreme Court’s Emergency Order extending statutes of limitations because of the pandemic did not apply to contractual limitations periods. The Court further found that the Plaintiff’s failure to meet this condition precedent barred her tort claims against the insurer as well. The case is Debra D. Piper v. USAA Casualty Insurance Company, United States District Court for the Northern District of Georgia, Civil Action Number 1:20-cv-3516-AT.

Phil Savrin and Shawn Bingham successfully represented Allied Insurance Company of America (a Nationwide entity) in resisting a claim by a restaurant (Henry’s Louisiana Grill) seeking coverage for business income lost after it suspended its operations after the COVID-19 outbreak. The central question, which had not been decided previously under Georgia law, was whether the closure of the restaurant following an executive order by the Georgia governor resulted in a “direct physical loss” of the property. The appeals court agreed that the term “direct physical loss” under Georgia law requires a physical to the property that is “tangible or concrete.” Here, at most, the governor’s order caused “intangible” harm as “it did not destroy, ruin, or even damage any part of the restaurant.” The appeals court noted that its reasoning is in line with “every federal and state appellate court” that applied the same policy language in the COVID-19 context.

Freeman Mathis & Gary LLP recently obtained a seven figure plus settlement on behalf of an insurer client in connection with a Negligence and Breach of Contract action against one of the Insurer’s Binding Agents. The Binding Agent was authorized to bind and write contracts of insurance for certain classes and lines of business and types of risks on behalf of the Insurer, including excess/umbrella coverage. The insurer retained FMG to file an action against the Binding Agent for improperly underwriting, processing, handling, and billing a request for umbrella/excess coverage and issuing an insurance policy that failed to include language limiting coverage to that which was requested and paid for by the insured.

In April 2014, the Binding Agent was approached by an insurance broker seeking a competitive quote with respect to an application for Umbrella/Excess Insurance for a transportation client (the “Insured”). Through aggressive discovery requests and detailed deposition questioning, we were able to elicit documentary evidence and testimony showing the broker indisputably sought umbrella/excess coverage for only eleven specific vehicles owned or operated by the Insured. However, throughout the underwriting process, including the quoting process, the binding process, and the policy issuing process, the Binding Agent negligently failed to include appropriate language to limit the subject policy to the eleven specific vehicles set forth on the vehicle list provided by the Insured.

Indeed, we obtained damaging testimony from the Binding Agent’s Underwriter that he could have included a Designated Operations Limitation provision into the policy, which would have limited the policy’s coverage to the intended eleven vehicles. Rather than include the Designated Operations Limitation, the Underwriter included a Follow Form provision, which incorporated the coverage from the underlying policy, which in this case, covered the Insured’s entire fleet of over 140 vehicles. The Binding Agent’s cumulative failures ultimately resulted in the issuance of a policy covering many more vehicles – over 140 vehicles – then the eleven specified by the Insured, even though the Binding Agent only assessed the Insured a premium for eleven vehicles and billed the insured for eleven vehicles.

Compounding the Binding Agent’s failures further, during the underwriting process, and before the insurance policy was issued by the Binding Agent, a vehicle operated by the Insured was involved in a serious accident resulting in several individuals being significantly injured and three others killed. Although the Binding Agent was aware the vehicle involved in the accident was not designated by the Insured as one of the eleven for which the Insured sought excess coverage, the Binding Agent failed to bring this to the attention of the Insurer for over two years.

As a result of the Binding Agent’s negligence, the Insurer was required to provide insurance coverage to the Insured for the losses arising out of the aforementioned fatal accident, and for the compensatory damages in the litigation filed as a result of the accident. When the Insurer demanded reimbursement from the Binding Agent, after tendering the policy limits of the Umbrella/Excess Insurance policy to the injured plaintiffs and the estates of the deceased plaintiffs, for the costs incurred as a result of the Binding Agent’s errors, the Binding Agent rejected the demand, causing the Insurer to seek redress through litigation.

At the Settlement Conference in federal court, facing the plethora of facts we elicited in discovery showing its failures in underwriting the subject policy, the Binding Agent acknowledged its errors and omissions, and agreed to offer a significant portion of the damages sought in order to resolve the matter.

Paul Piantino, Partner and Chair of the Newark Office and Zachary Danner, Senior Counsel from the Cherry Hill Office, handled the litigation for FMG.

FMG attorneys, Chad Weaver and Elizabeth Lowery, obtained a favorable result for a prominent life insurance company after a three week FINRA arbitration. The matter involved a FINRA claim filed by two registered representative claimants against their former broker-dealer. The claimant’s alleged that the former broker-dealer had (i) wrongfully terminated them, (ii) wrongfully interfered with their brokerage business, and (iii) the reasons for their termination provided on their Forms U5 were defamatory. A few years later, three FINRA Arbitrators issued an award denying the majority of their claims as well as the majority of their alleged damages. The claimants then amended their claim and sought $11.6 million in compensatory damages, plus costs, attorney’s fees, punitive damages, and injunctive relief. After a failed mediation, the parties participated in another FINRA arbitration, in which Chad Weaver and Elizabeth Lowery vigorously cross examined the claimants, as well as their expert, which led to the claimants reducing their alleged compensatory damages to $7 million. The award issued by the FINRA arbitrators denied one of the claimant’s claims entirely and provided the remaining claimant with an award of $61,274, an amount significantly less than the millions originally sought.

Summary Judgment awarded to client Scottsdale Insurance Company

Mallory Ball and Philip Savrin secured summary judgment for the insurer on the insured’s first-party property damage claim to a commercial building allegedly related to storm damage. The Court granted summary judgment based on the insured’s failure to comply with the notice requirement under the Policy which is a condition precedent to coverage. The Court also found that Plaintiff’s excuse for delay in notice was not justified.