NCFB v. Lanier Law Group: Much Activity, But No Progress for “Coverage B” Insurance Law

Susan, a white woman with dark brown hair, wears a white blouse and burgundy jacket.By Susan H. Boyles

The North Carolina Supreme Court recently missed an opportunity to write a meaty opinion on insurance policies’ “Coverage B” provisions that insurance practitioners regularly debate. In North Carolina Farm Bureau Mut. Ins. Co. v. Lanier Law Group, P.A., 277 N.C. App. 605, 861 S.E.2d 565 (2021), aff’d per curiam, __ N.C. __, 898 S.E.2d 279 (2024) (“Lanier”), the parties ably teed up multiple issues of first impression involving Coverage B of an excess business liability policy. However, instead of addressing the issues head-on, the Court voted 3-3 to affirm an unsatisfying ruling from the Court of Appeals based on a single exclusion, thereby setting no precedent and giving no guidance for future disputes involving Coverage B.

The central question in Lanier was whether a law firm’s excess business policy liability obligated an insurer to defend against allegations that the firm violated the Driver’s Privacy Protection Act of 1994, 18 U.S.C., § 2721 et seq. (“DPPA”). Lanier Law Group (“LLG”), a firm focused on plaintiffs’ personal injury cases, was one of many firms in the state that culled accident reports and used the information they collected to contact potential clients (i.e., accident victims) about legal services through direct mail. In 2016, LLG and other firms were named as defendants in a putative class-action lawsuit in the Middle District of North Carolina. Garey v. James S. Farrin, Case No. 1:16-cv-00542-LCB-JLW (“Garey”). The Garey plaintiffs alleged that the law firm defendants obtained and used their “protected personal information” without their consent. Fundamental to the plaintiffs’ claims was the allegation that LLG “knowingly” violated the statute. The Garey complaint was replete with allegations that LLG “knowingly obtained, disclosed and used Plaintiffs’ personal information from a motor vehicle record” in violation of the DPPA. Lanier, 277 N.C. App. at 606-07, 861 S.E.2d at 566-67.

Read more

Insurance Law Section Annual CLE: Friday, January 26, 2024

ByNikki, a Black woman with black hair, wears a pale pink blouse and a black jacket. Nikki Feliciano 

The Insurance Law Section’s annual CLE is almost here! The CLE is scheduled for January 26, 2024, at the Bar Center in Cary, North Carolina. The six-hour CLE will cover interesting insurance topics such as uninsured/underinsured motorist coverage, a stimulated mock mediation addressing insurance topics, and an interactive mental health segment. The Insurance Law Section appreciates its CLE Committee and the hard work and time invested by the Committee to develop a great CLE for us. For those who are unable to attend the CLE in person, a remote option will be provided. If you have not registered yet, we hope you register today!

In conjunction with the CLE, the Insurance Law Section is encouraging all of its members to attend the Annual Meeting on January 25, 2024, at the Bar Center in Cary and for members and nonmembers to enjoy a networking event after the Annual Meeting. The networking event will also be held at the Bar Center, with food and drinks provided for all attendees. The Insurance Law Section will invite the CLE speakers to join us for the networking event so that attendees can also have an opportunity to meet and engage with the speakers. We hope everyone will attend the Annual Meeting and the networking event!

We strongly encourage in-person attendance for the Annual Meeting and CLE, as we recapture the comradery that we enjoyed pre-covid. Sign-up today!

Insurance Law Section Annual Meeting and CLE – January 26-27, 2023

By Nikki Feliciano

The North Carolina Bar Association’s Insurance Law Section is pleased to announce its upcoming CLE program, “The Continued Exploration of Insurance Law, Coverage, and Litigation Issues,” which is scheduled for Friday, January 27, 2023. Attendees will be able to attend the CLE in person at the Bar Center in Cary or via live Webcast. Please mark your calendars and plan to attend.

During the CLE, speakers will explore a number of topics in the area of insurance law. The program will unpack coverage and litigation issues, including resolution of property insurance claims, stacking in uninsured and underinsured motorist claims, and key considerations in cybersecurity. The always popular “Top 10 Insurance Law Decisions” will return, along with a discussion of continuing issues arising from COVID-related losses. Finally, the program reviews Radiator Specialty Company v. Arrowood Indemnity Company and its impact on coverage triggers, coverage allocation across multiple policies and policy exhaustion.

Before the CLE, on Thursday, January 26, 2023, the Insurance Law Section will have its annual meeting for members of the Insurance Law Section and will host a social networking event. The networking event will be open to all, including speakers and attendees.

The Insurance Law Section looks forward to seeing everyone on January 26 and 27. Mark your calendars!

A Welcome Message from the 2022 Insurance Law Section Chair

By Brian Beverly Brian Beverly is a Black man with a shaved head and a short brown beard and mustache. He has brown eyes. He is wearing a blue shirt and black tie with a white pattern and a black jacket.

Greetings NCBA Insurance Law Section members!

I have the privilege of chairing the section this year.

I’m hopeful that together, we can achieve my goals to learn from each other, spread that knowledge across all practice types, and find time for some fellowship. There are plenty of opportunities to participate. Read more

Duty to Defend in North Carolina – Recent Cases

By Alan Ruley

The duty to defend is a threshold question in nearly every insurance coverage matter.  Several recent decisions from federal and state courts in North Carolina contain excellent discussions and analysis of that duty. They are summarized below.

1. Craige v. Geico, No. 1:19-cv-408, 2020 WL 6946937 (M.D.N.C. November 25, 2020, Judge Schroeder). 

This case is a primer on the duty to defend in North Carolina.  In Craige, Judge Schroeder held that because the insurers had unjustifiably refused to defend their insured in the underlying lawsuit, they were responsible to pay a judgment against the insured, up to their policy limits.

Read more

Duty to Defend Triggered by Extrinsic Evidence

By Bill Lipscomb

A U.S. District Court decision issued on Nov. 25, 2020, is a good illustration of the rule that if a Complaint implicates the possibility of coverage, the insurer’s duty to defend cannot be eliminated by extrinsic evidence that demonstrates no coverage, and if it is determined that the insurer’s refusal to defend was unjustified, it will be obligated to pay the underlying judgment. In Craige v. Gov’t Employees Ins. Co., 1:19-cv-408 (M.D.N.C. 2020), two insurers refused to defend based on their investigation that the defendant driver did not qualify as an insured of the policies because he was not a resident of the named insureds’ household. The Court ruled that the insurers are now liable for the underlying judgment against the driver because the Complaint and available evidence put the insurers on notice of a possibility of coverage.

Read more

COVID-19 Litigation Kicks off in North Carolina

By Susan Boyles

And so it begins . . . one of the first coronavirus insurance coverage cases in N.C. was filed recently in Guilford County Superior Court. Not surprisingly, the plaintiffs are restaurants that were forced to close or curtail their services due to Gov. Cooper’s stay-at-home order that went into effect in mid-March. Most of the allegations are more legal arguments than facts (read full complaint here), but plaintiffs recognize that one of the issues is whether the government-mandated closings caused “direct physical loss,” which is alleged to be undefined in the policies at issue. There is apparently a “virus” exclusion in some of the policies, but plaintiffs argue that the actual cause of their losses was public fear, commotion, and/or government action. Plaintiffs further contend the court should find coverage for their lost business revenue because they paid premiums for that coverage.

As with most litigation, there will be no quick answers from the Court. I predict we’ll see a decision on a summary judgment motion in about 12-18 months, and then an appeal after that.  It’s one to keep an eye on.

Do I Have Business Insurance for Coronavirus Losses?

By Susan Boyles

The coronavirus has turned all of our lives upside down in the past two weeks. Who would have dreamed that we would be required to work from home, courts would be operating on a drastically reduced schedule, the NCAA Tournament and the Summer Olympics would be cancelled, and toilet paper would become more valuable than most stocks? (I don’t even want to look at my 401K plan right now!)

While we are waiting for the world to go back to “normal,” I have been pondering what all of this disruption means for insurance claims. Initially, there may be little increased claims activity as businesses focus on how to react to the ever-changing economic climate and try to keep their employees healthy. However, after the threat of the virus is diminished and business stabilizes, many companies will step back and gauge the real impact on their bottom line and ask the question: “Do I have insurance to cover this?” The answer is “maybe,” based on the type of policies purchased before the virus and the terms of each policy. However, if you’re trying to find coverage, here are some places to look:

Read more

Fight Hunger, Help Others in the COVID-19 Pandemic – Participate in the Legal Feeding Frenzy and Support Your Local Food Bank!

Michele Livingstone

Will Quick

By Michele Livingstone and Will Quick

We are in unprecedented times with COVID-19 (Coronavirus).  It is now more important than ever that we help our neighbors and those who are not as fortunate. I am confident that each of you is doing your part.

Even in the best of times, however, over 1.5 Million North Carolinians struggle with hunger—of those, nearly half a million are children. With public schools and many religious and nonprofit organizations that traditionally serve the food insecure in our communities being closed for indefinite periods, and government leaders calling for social distancing to help limit the spread of Coronavirus, that need is never more pressing than now.

Read more

N.C. Supreme Court Gives Green Light for Insurers to Depreciate Labor Costs

By Susan Boyles

Accardi v. Hartford Underwriters Ins. Co., ___ N.C. __ , No. 42A19 (Feb. 28, 2020)

The North Carolina Supreme Court nixed a putative class-action lawsuit against a property insurer and validated the insurer’s untested practice of depreciating labor costs under actual cash value (“ACV”) policies. A unanimous Court held that an insurance policy provision allowing a deduction for depreciation of labor costs for roof repairs applied to all repairs to the dwelling. Although the amount at issue for the individual plaintiff was only $169.30, the decision has far-reaching implications for the adjustment of first-party property damage claims.

Accardi v. Hartford Underwriting Insurance Company arose out of a hailstorm claim in which plaintiff-homeowner Thomas Accardi sustained damage to his roof, siding and garage. Accardi had a homeowner’s policy with Hartford that required Hartford to pay plaintiff the ACV of the damaged property until repairs were completed. If the property were repaired and the repairs cost more than the ACV, then Hartford was required to reimburse Plaintiff for the full amount of the repair costs, minus the deductible.

Read more