Last week, legislation was introduced in the New Jersey Assembly that would require property insurers to cover business interruption losses arising from the COVID-19 pandemic suffered by small businesses (i.e., businesses with less than 100 full-time employees who work 25 or more hours per week). The bill would require coverage for any loss of business or business interruption “due to global virus transmission or pandemic” that is suffered for the duration of the State of Emergency declared by Governor Murphy on March 9, 2020. It appears that such coverage must be provided regardless of existing policy requirements (e.g., direct “physical loss” or “damage”) or potentially applicable exclusions (e.g., the “Virus or Bacteria” exclusion in many policy forms). After an initial favorable vote by the NJ Assembly Homeland Security and State Preparedness Committee, the bill was reportedly withdrawn by its sponsors, but may be amended and reintroduced in the short-term. The bill as initially drafted would provide significant relief to policyholders with small- to medium-sized businesses that may be the hardest hit in what is rapidly developing into a global economic crisis. This would certainly be welcome relief. However, that proposed relief comes with a potential backend cost to all policyholders...
As the coronavirus continues to dominate the news cycle, the actual (and anticipated) impact on business operations and business continuity has hijacked the attention of owners, managers, and C-suite executives at all levels and in all industries. Among the myriad issues to be resolved, one obvious question is the extent to which insurance coverage is available for business losses arising from this public health crisis, including reduction of business income, incurring of extra expenses, disruption of supply chains, event cancellations, and potential liability from stakeholder lawsuits. Some companies may have purchased specialized forms of insurance policies that are designed to provide specific coverage for losses suffered as a result of public health crises. However, the vast majority of companies will need to look to their traditional insurance policies – like property and directors and officers coverage – in order to obtain available insurance, if any, for these business related losses. As an initial matter, coverage for actual loss of business income and extra expense is typically part of a company’s property insurance policy and not separate, standalone coverage. Therefore, coverage for business income and related losses depends on demonstrating that these losses resulted from “physical loss” or “damage” to covered...
27 Gibbons Commercial & Criminal Litigation Department Attorneys Selected to 2020 New Jersey Super Lawyers and Rising Stars
Attorneys from the Gibbons Commercial & Criminal Litigation Department were featured in New Jersey Super Lawyers and New Jersey Super Lawyers Rising Stars, with 18 Department attorneys on the 2020 Super Lawyers list and nine on the 2020 Rising Stars list. These attorneys were listed in a wide range of categories, including Antitrust, Business Litigation, Class Action, Communications, Construction Litigation, Criminal Defense, Criminal Defense: White Collar, Insurance Coverage, and Media/Advertising. Highlights of this year’s New Jersey Super Lawyers list include the top-tier rankings earned by two Department attorneys: Top 10 Attorneys in New Jersey Lawrence S. Lustberg, Co-Chair, Commercial & Criminal Litigation Department Top 100 Attorneys in New Jersey Michael R. Griffinger, Director, Commercial & Criminal Litigation Department Lawrence S. Lustberg, Co-Chair, Commercial & Criminal Litigation Department The Gibbons attorneys listed in the 2020 issue of New Jersey Super Lawyers are: Frederick W. Alworth Guy V. Amoresano Robert C. Brady Thomas J. Cafferty Patrick C. Dunican Jr. Michael R. Griffinger Jennifer A. Hradil Bruce A. Levy Lawrence S. Lustberg Robert J. MacPherson Michael R. McDonald Brian J. McMahon Mary Frances Palisano Damian V. Santomauro Peter J. Torcicollo Thomas R. Valen Christopher Walsh John T. Wolak Those listed in the 2020...
In Glastein v. Aetna, Inc., et al., the U.S. District Court for the District of New Jersey, departing from several recent decisions in the District, denied Defendant Aetna, Inc.’s motion to dismiss a medical provider’s claim for reimbursement of insurance benefits on the ground that such claim was preempted by ERISA. Glastein, an out-of-network orthopedic surgeon, allegedly performed a medically necessary surgery for an Aetna-insured patient. Prior to the surgery, Glastein secured a written authorization for the service from Aetna. Glastein later billed Aetna $209,000, allegedly the “normal and reasonable” charges for the procedure. Aetna did not pay any portion of the charged amount. Glastein sued Aetna, alleging several state common law claims, including breach of contract, promissory estoppel, accounting, and fraudulent inducement. After removing the action from the Superior Court of New Jersey to the District of New Jersey, Aetna moved to dismiss Glastein’s complaint under Federal Rule of Civil Procedure 12(b)(6). Defendant’s sole argument for dismissal was that Plaintiff’s state-law causes of action were expressly preempted by ERISA’s “express preemption” provision, under which ERISA preempts state laws where the state law refers to an ERISA plan or has an impermissible connection with an ERISA plan. In support of...
Is a commercial policyholder able to get insurance under the terms of its computer fraud coverage (typically offered as part of a crime policy) for a fraud based upon information transmitted by email? Not according to the Fifth Circuit’s recent decision in Apache Corporation v. Great American Insurance Company, which vacated the trial court’s judgment and left the policyholder with a $2.4 million uninsured loss. While the opinion is unpublished and therefore should have limited precedential value, it highlights the importance of reviewing your company’s coverage profile in an effort to close potential gaps in insurance coverage for security breaches and other losses involving computer use.
EIFS litigation is no stranger to New Jersey. EIFS (or “exterior insulation and finish system”) – a popular, post-World War II building system that resembles stucco while simultaneously providing watertight exterior insulation – originated in Europe and migrated to American homes in the late 1960s and early 1970s. According to The New York Times, it was utilized in the construction of “countless homes built in New Jersey,” which meant that the state was deeply affected when it became evident that, installed in a certain way, EIFS trapped water behind its siding and led to crumbling wall sheathing and rampant mold. Nationwide lawsuits ensued and, while a class action settlement was eventually reached with the largest EIFS manufacturer in 2003, New Jersey courts – at every level – returned to EIFS litigation again and again.
Policyholders may still enforce an insurer’s duty to defend under a Commercial General Liability (“CGL”) policy for claims arising out of a data security breach, according to a recent Fourth Circuit decision. While the decision was issued in an unpublished opinion (a mere 18 days after oral argument), the decision represents a significant victory for policyholders seeking insurance coverage for claims arising out of data breaches resulting in the disclosure of personal information.
Attention Corporate Policyholders: Comply With All the Notice Requirements of Your Insurance Policies When Reporting a Claim or Risk Losing All Available Coverage
A recent decision by the New Jersey Supreme Court serves as a strident warning to commercial insureds to make prompt notice of claims under claims-made policies. In Templo Fuente de Vida Corp. v. National Union Fire Insurance Company of Pittsburgh, P.A., the claims-made D&O policy at issue required written notice of a claim “as soon as practicable … and … during the Policy Period.” The insured was served with an underlying complaint on February 21, 2006. It retained defense counsel and filed an answer, but did not provide notice of the claim to its insurer until August 26, 2006 — a delay of six months, yet still within the policy period. The insurer denied coverage for various reasons, including that notice was not provided “as soon as practicable.”
The risks inherent in the maintenance and storage of confidential information present an ongoing challenge to daily operations. Cyber insurance may be an appropriate mechanism to mitigate those risks. But – BUYER BEWARE – broad exclusions and other conditions in a cyber policy can hack into coverage and leave your company uninsured and exposed to significant liability for defense costs, liability payments, and regulatory damages.
New York Court of Appeals Reconsiders and Holds That an Insurer May Invoke Policy Exclusions Despite Wrongful Refusal to Defend
The New York Court of Appeals has vacated its recent decision in K2 Investment Group, LLC v. American Guarantee & Liability Insurance Co., reverting to the majority position that an insurer breaching its duty to defend an insured is not barred from relying on policy exclusions to defend a later claim for indemnification. The case originated from a related lawsuit where K2 Investment Group, LLC and ATAS Management Group, LLC (collectively, the “LLCs”) sued an attorney for legal malpractice.