Scheef & Stone is delighted to announce LaDawn Nandrasy’s victory in the Fifth Circuit Court of Appeals in a coverage lawsuit between her client, the policyholder, and its insurer.
In a published opinion, the Fifth Circuit held that the district court’s ruling in favor of the insurer on its duty to indemnify the policyholder for potential liability in an underlying lawsuit was premature and incorrect.
The underlying lawsuit involved claims by eight plaintiffs in South Carolina against the policyholder, an online car auction company. The plaintiffs alleged that the company’s vehicles had leaked pollutants, contaminating ponds and streams on their properties. While the underlying suit was still pending, the district court in the insurer’s coverage action granted the insurer summary judgment on both the duty to defend and the duty to indemnify, based on pollution exclusions in the policies. In reaching its indemnity holding, the court reasoned that because the insurer had no duty to defend, “it follows that it has no duty to indemnify.” The Fifth Circuit reversed this holding.
The Court found “faulty,” the assumption that the duty to indemnify cannot exist where there is no duty to defend. The Court clarified that “the facts adduced at trial might differ from the allegations, and thus, a duty to indemnify could be shown notwithstanding the absence of a duty to defend.”
The Court further concluded that the underlying lawsuit’s settlement while the coverage ruling was pending on appeal did not alter the analysis. “[W]hether and to what extent the settlement amount is covered by [the insurer’s] policies,” the Court explained, “will take place on remand in this coverage litigation.” Accordingly, the insurer ultimately may be required to reimburse the policyholder for payments the policyholder made in settlement of the underlying lawsuit.
Amy Elizabeth Stewart, Managing Principal of Amy Stewart PC, joined LaDawn as co-counsel for the policyholder. The firm congratulates the entire team for their diligent efforts and successful outcome of the appeal.
This legal victory has garnered attention from prominent legal publications, including Texas Lawyer, Law360, Property Casualty 360, Attorney at Law Magazine, the Global Legal Chronicle, and others. For detailed coverage of the case, readers may access the articles through the respective websites (logins required).