Payne & Fears LLP offers a full range of business and litigation services to its clients in three primary practice groups: Labor and Employment, Business Litigation, and Insurance Coverage. Across these practice areas, we represent all types of clients, from multi-national corporations to emerging tech startups to individual insurance policyholders.
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Payne & Fears Hits Another Home Run for Policyholder in Coverage Dispute
Payne & Fears’ insurance team partners Nate Cazier and Jared De Jong continued their winning streak on behalf of Rawlings Sporting Goods Co. in its dispute with Starr Indemnity & Liability Co. regarding coverage for an underlying class action lawsuit.
After months of litigation, culminating in summary judgment in favor of Rawlings, Payne & Fears secured payment for all of Rawlings’ unpaid legal fees and invoices, plus interest, and an agreement by Starr to fully defend and indemnify Rawlings through the resolution of the class action, all without Rawlings releasing any of its rights or claims against Starr. As a result, Rawlings was able to dismiss its coverage action without prejudice and turn its undivided attention to defeating the underlying litigation.
“We’re excited to recover all of the unpaid and future litigation costs, which are well into the seven figures,” Nate Cazier said. “What really makes this special is that we were able to maneuver the case in a way where our client was made whole without sacrificing any of its rights or claims in the process.”
“This arrangement may not seem extraordinary, but insurers often require policyholders to release all of their claims (past, present, and potential) before they will issue payment,” Jared De Jong said. “This deal gives our client an additional level of comfort knowing that it can immediately resume litigation if Starr starts playing games with its coverage.”
And Payne & Fears is still on deck, ready to go to bat for Rawlings in case it does.
At Payne & Fears’ Urging, Illinois Federal Court Dismisses Hostile Coverage Action
Payne & Fears (P&F) achieved another significant victory this week on behalf of a national homebuilder by securing the dismissal of a coverage action filed by its subcontractor and insurer in a hostile forum.
The client-homebuilder’s subcontractor’s liability insurer agreed to defend the client-homebuilder as an additional insured against a construction defect lawsuit pending Texas. The subcontractor filed a declaratory judgment action against its insurer in Illinois seeking a ruling that its insurer had no duty to defend the client-homebuilder in the Texas lawsuit. Unlike Texas law, under Illinois law property damage from defective construction is not a covered “occurrence” under general liability policies. The insurer brought the client-homebuilder into the Illinois action as a third-party defendant. P&F filed a motion to dismiss the entire Illinois action because (1) Illinois courts lack personal jurisdiction over the client-homebuilder and (2) the client-homebuilder was a necessary party to the action without whom the case could not continue.
The U.S. District Court for the Northern District of Illinois granted P&F’s motion (L&W Supply Corp. v. Alabaster Ins. Co., et al. N.D. Ill. Case No. 1:20-cv-03265 (March 18, 2021 Memorandum Opinion and Order)) and dismissed the action. The court found that the insurer had not met its prima facie burden of establishing the court’s personal jurisdiction over the client-homebuilder and that the client-homebuilder was a necessary party to the action because the relief requested by the subcontractor could not be obtained without affecting the client-homebuilder’s rights to insurance coverage.
Scott Thomas and Sarah Odia briefed the successful motion.
This case illustrates an important strategic issue that insureds ignore at their peril: Insureds need to be aware of jurisdictional and choice-of-law considerations when sued by their insurers so they can avoid what could be an unfortunate result if they do not challenge jurisdiction and they end up litigating coverage in a state (like Illinois) whose coverage laws are unfavorable to insureds. Although choice-of- law issues were not decided in this case, the forum in which your coverage action is litigated could have a significant impact on the outcome.
