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.

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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!

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.

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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.

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.

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