Coverage And The Insured’s Violation Of A Law That Nobody Has Heard Of
The court’s decision in Parker v. Farm Bureau Property & Casualty Co., No. 15-1204 (D. Kan. Nov. 16, 2015) starts out like this: “If you have never heard of the Plant Variety Protection Act (PVPA), you are not alone.” It turns out that the owner of a farm also never heard of it either, until he sold a variety of wheat seed “to an undercover investigator who represented the holder of an exclusive license under the PVPA to sell that variety of seed.” The farm owner was sued for damages under the PVPA and sought coverage under a liability policy issued by Farm Bureau. The insurer denied “because the insurance policy excluded coverage for ‘intentional acts,’ and plaintiffs’ sale of Fuller wheat was an intentional act.” The court wasn’t convinced. Like, not even close. Following a review of the policy’s “intentional act” exclusion and Kansas law on the issue, the court held: “Parker [insured] did these acts without knowledge of an obscure federal law and without knowledge of an exclusive federal license pertaining to a particular variety of wheat. Farm Bureau cites nothing to show that a reasonable person would have expected advertising and selling wheat seed to result in injury or damage. Only with knowledge of the exclusive license would a person expect a sale to result in damage.”

Insurer Entitled To Reimbursement Of Defense Costs
I have long maintained that an insurer’s right to reimbursement of defense costs is an over-rated issue. The stars need to be perfectly aligned: a state that affords insurers the right (about half don’t); a judicial determination that there was no duty to defend (not a situation where a duty to defend existed followed by a determination of no indemnity coverage); and an insured with the resources to pay the defense costs back.

Nonetheless, the issue gets litigated, as was the case in American Economy Insurance Company v. Aspen Way Enterprises, Inc., No. 14-09 (D. Mont. Dec. 4, 2015), where the Montana federal court held that, based on two theories, the insurer was entitled to reimbursement of defense costs. "Under the theory of unjust enrichment, Aspen Way has received the benefit of representation on claims that were not covered by the policies and for which it did not pay premiums. Aspen Way’s objection does not change the fact that Aspen Way would be unjustly enriched by forcing Liberty Mutual to bear unbargained-for defense costs.” The court also held that, “[u]nder the implied contract theory, Aspen Way accepted Liberty Mutual’s reservation of rights letter by not objecting to it until nearly three years later. Under Montana law, a ‘party is not allowed to take the benefit of a contract and then later repudiate its existence.’”

Duty To Defend And Websites
In Shanze Enterprises, Inc. v. American Casualty Company of Reading, No. 15-0756 (N.D. Tex. Dec. 15, 2015), the Texas federal court held that, if it will consider web page exhibits attached to a complaint, for purposes of determining a duty to defend under the eight corners rule, it will only consider the exhibits themselves, and not the contents of the entire website. The policyholder argued that “the court must consider Baja’s entire website because, ‘[l]ike a hyperlink, [Baja’s] attachment of the website attaches the entire website,’ since ‘[n]o one truly expects a plaintiff to print out each and every page of the website and attach it to the complaint.’” The court declined do so: “The court has found no authority to support the proposition that, when ruling on the duty to defend, the court must consider an entire website when only part of the website is included in a printout that is attached as an exhibit to the complaint in the underlying lawsuit.”