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Circuit Court reverses insurance case

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The 7th Circuit Court of Appeals reversed summary judgment for an insurer on the issue of whether the commercial general liability policy covered faulty subcontractor work, citing a similar case recently ruled on by the Indiana Supreme Court. The Circuit Court also dealt with an issue surrounding umbrella policies for the first time.

In Trinity Homes LLC and Beazer Homes Investments LLC v. Ohio Casualty Insurance Co. and Cincinnati Insurance Co., No. 09-3613, the homebuilders appealed summary judgment in favor of Ohio Casualty and Cincinnati Insurance on its suit that the insurers breached their contracts by not providing coverage after builders incurred significant liability related to defective work done by subcontractors. Ohio Casualty, a primary insurer, claimed its policy didn’t cover subcontractor work. Cincinnati, which provided an umbrella policy, argued its coverage wasn’t triggered because all of the builders’ underlying policies were not unavailable as required by the policy.

The builders settled with all its other commercial general liability insurers, which resulted in those insurers paying at least 75 percent of the relevant policy limit. This would functionally exhaust the CGL policy. The builders would make up the difference.  

The 7th Circuit reversed summary judgment in favor of Ohio Casualty, citing Sheehan Construction Co. v. Continental Cas. Co., 935 N.E.2d 160 (Ind. 2010). In Sheehan, the Supreme Court clarified a standard CGL policy does cover damage to a home’s structure resulting from defective subcontractor work unless the subcontractor work was intentionally faulty. They left the application of any exclusions or limitations in the policy, as well as any other state law doctrines, for the District Court on remand.

The judges then moved on to the claim against Cincinnati. They looked at whether the settlement between the other insurers was sufficient to exhaust the CGL’s policy coverage under the umbrella policy. They disagreed that the umbrella policy clearly required exhaustion, finding the terms of the policy to be ambiguous.

Cincinnati argued that other courts dealing with similar umbrella policies have held that the policies require a full payout before it’s exhausted. But Cincinnati’s policy didn’t include clear language that stated the coverage wasn’t triggered absent a payment of the full CGL policy limit by the insurer, as the insurers involved in the cases Cincinnati cited had included.

Other Circuit Courts have held that exhaustion of a primary policy could be accomplished by a settlement agreement where the primary insurer paid some of the limit and the insurer paid the remainder.

“Although Indiana law controls, there is no reason to suspect that it would differ from these analogous holdings,” wrote Judge Michael Kanne. “Our construction of the ambiguity in Cincinnati’s policy is also reinforced by Indiana public policy favoring out-of-court settlement. Cincinnati’s reading of the policy would deter parties who have both CGL and excess insurance from settling with their CGL insurers.”

The judges also declined to reach the question of whether any exclusions or limitations in Cincinnati’s policy apply to the builders’ claim, leaving that for the District Court on remand.
 

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  1. Call it unauthorized law if you must, a regulatory wrong, but it was fraud and theft well beyond that, a seeming crime! "In three specific cases, the hearing officer found that Westerfield did little to no work for her clients but only issued a partial refund or no refund at all." That is theft by deception, folks. "In its decision to suspend Westerfield, the Supreme Court noted that she already had a long disciplinary history dating back to 1996 and had previously been suspended in 2004 and indefinitely suspended in 2005. She was reinstated in 2009 after finally giving the commission a response to the grievance for which she was suspended in 2004." WOW -- was the Indiana Supreme Court complicit in her fraud? Talk about being on notice of a real bad actor .... "Further, the justices noted that during her testimony, Westerfield was “disingenuous and evasive” about her relationship with Tope and attempted to distance herself from him. They also wrote that other aggravating factors existed in Westerfield’s case, such as her lack of remorse." WOW, and yet she only got 18 months on the bench, and if she shows up and cries for them in a year and a half, and pays money to JLAP for group therapy ... back in to ride roughshod over hapless clients (or are they "marks") once again! Aint Hoosier lawyering a great money making adventure!!! Just live for the bucks, even if filthy lucre, and come out a-ok. ME on the other hand??? Lifetime banishment for blowing the whistle on unconstitutional governance. Yes, had I ripped off clients or had ANY disciplinary history for doing that I would have fared better, most likely, as that it would have revealed me motivated by Mammon and not Faith. Check it out if you doubt my reading of this, compare and contrast the above 18 months with my lifetime banishment from court, see appendix for Bar Examiners report which the ISC adopted without substantive review: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS

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