CLM National: January 2019

Washington, D.C.’s attorney general files suit against Facebook, West Virginia’s Supreme Court taking shape after tumultuous year, and, in the state of Washington, a key case clarifies insurers’ duties when multiple claimants are likely to exhaust policy limits.

Washington

Court Clarifies Insurers’ Duties When There Are Multiple Claimants

In Singh v. Zurich Am. Ins. Co., Division 1 of the Court of Appeals clarified an insurer’s duties in cases with multiple claimants that would likely exhaust policy limits. In Singh, an accident, caused in part by an employee of Joginder Singh, led to one death and at least one claim of personal injury. Defense counsel appointed by Singh’s insurer, Zurich, recognized a policy-limits settlement for the wrongful death matter would leave the insured undefended against other claims, and proposed Zurich allow Singh to contribute $1,000 toward a policy-limits settlement offer, thereby holding some policy amount in reserve. Zurich declined, offered the full policy limits for the wrongful death matter, and later denied defense for the personal-injury suit. Singh sued Zurich. The court held an insurer could face a bad faith claim if it does not hold some limits in reserve to preserve defense duty if it believes a policy-limits settlement to one claimant would leave the insured exposed to defense costs for other claims.—From CLM Member Kevin Clonts

California

New Inspection Requirements Under “Balcony Bill”

The “Balcony Bill” (SB 721) was signed into law on Sept. 17 and imposes new inspection requirements for building owners with respect to decks and balconies. The bill arose largely out of an outcry following the 2015 balcony collapse in Berkeley, which left six young people dead and seven injured. Buildings containing three or more multi-family dwelling units are covered by the Balcony Bill. However, due to push back from the common interest development community, condominiums are generally excluded. Condominium conversions sold after Jan. 1, 2019, though, must comply with the new inspection requirements. The bill covers all “exterior elevated elements,” which is broadly defined to include balconies, decks, porches, stairways, walkways, and other elevated entry structures. The owner of an affected building must ensure the first inspection is completed before Jan. 1, 2025. Subsequent inspections are required every six years. Inspectors must issue reports, and failure to make timely repairs can result in hefty fines.—From CLM Member Brenda Radmacher

West Virginia

Supreme Court Settles into Permanent Justices

The West Virginia Supreme Court endured a tumultuous 2018 in which two of its justices were convicted on federal fraud charges and all five were impeached by the House under the auspices of “maladministration” of its budget. The Senate acquitted now Chief Justice Beth Walker, the proceedings against Justice Workman were dismissed on procedural grounds, and three justices resigned. Gov. Jim Justice appointed Tim Armstead, former speaker of the West Virginia House, and Evan Jenkins, former U.S. Congressman, to two of the seats. In November, they were elected to fill the two and six years, respectively, remaining in those terms. On Dec. 13, Gov. Justice appointed longtime and well-respected Circuit Judge John Hutchinson to fill the final open seat. Justices Armstead and Hutchinson may run for full 12-year terms in May 2020 in a non-partisan, statewide election.—From West Virginia Chapter President Robert “Booter” Ryan

Washington, D.C.

Facebook Hit with  AG Lawsuit

After a year of responding to mounting privacy concerns, Facebook now faces a lawsuit from Washington, D.C. Attorney General Karl A. Racine. The lawsuit concerns alleged violations of the District’s Consumer Protections Procedures Act. As an example of one violation, the lawsuit mentions a personality quiz from a third-party Facebook app that was used to collect user data, which was then sold to Cambridge Analytica and used to help presidential campaigns target voters based on personality traits. Specifically, the lawsuit alleges Facebook misled users about the security of their data; failed to properly monitor third-party apps’ use of data; made it difficult for users to control data settings for apps; failed to disclose the Cambridge Analytica breach to consumers for more than two years; failed to ensure users’ improperly obtained data was deleted; and failed to inform consumers that some companies could override data-privacy settings. The lawsuit was filed in Washington, D.C. Superior Court.—From Managing Editor Phil Gusman

Florida

OIR to Insurers: Pay Michael Claims Promptly

An Office of Insurance Regulation memorandum to property and casualty insurers doing business in Florida is calling on carriers to pick up the pace with respect to paying Hurricane Michael claims. “According to data filed with the Florida Office of Insurance Regulation, more than 90,000 claims have been closed,” states the memo. “However, there are more than 42,000 claims that remain open.” Insurance Commissioner David Altmaier reminded insurers that undisputed amounts of partial or full benefits owed under first-party property insurance policies must be paid within 90 days after an insurer receives notice of a residential property insurance claim, determines the amounts of partial or full benefits, and agrees to coverage. He adds that insurers may consider adding claims and customer service resources to meet the needs of Florida Panhandle homeowners impacted by the storm.—From Managing Editor Phil Gusman

Maryland

Marriott Breach Could Cost Between $200 Million and $600 Million

Direct cyber incident losses for a breach suffered by Marriott will likely total between $200 million and $600 million, according to catastrophe modeler AIR Worldwide. Bethesda, Maryland-based Marriott received an alert in September regarding an attempt to access Starwood guest information. Marriott later discovered that there had been unauthorized access to that network since 2014. AIR says its loss estimates are based on Marriott’s statement that around 500 million records were stolen. Scott Stransky, assistant vice president and director of emerging risk modeling, says even though a breach of this magnitude has not previously happened to a hotel chain, its models show that events like this are not improbable. “There are more than 300 simulated events in our model that cause higher losses for U.S.-based hotels,” Stransky says.—From Managing Editor Phil Gusman