Jonathan L. Schwartz — a partner in the firm’s Global Insurance Services Practice Group — commented for Law360 on two upcoming insurance issues facing the Wisconsin Supreme Court: whether damages tied to wildfires constitute multiple occurrences in Secura Insurance vs. Ray Duerr Logging LLC, and whether the appeals court improperly identified a trigger of an insurer’s duty to defend in Grigg v. Aarrowcast Inc.
Secura Insurance vs. Ray Duerr Logging LLC
Secura Insurance vs. Ray Duerr Logging LLC involves Wisconsin’s “Germann Road Fire,” a logging-related blaze that damaged 7,442 acres across multiple properties in May 2013. The central question for the court to decide will be whether the spread of the fire constituted “separate occurrences.” In other contexts, the Wisconsin Supreme Court has held that insurances companies must cover damages incurred from multiple occurrences, but as Jonathan sees it, there may be a different argument to make in the event of wildfire. “The trouble with these multiple ‘occurrences’ cases is that it is hard to compare cases in one context with another,” he told Law360. “The nature of fire spread is distinct from, say, the nature of asbestosis or the leaching of pollutants.”
Grigg v. Aarrowcast Inc.
The Wisconsin Supreme Court will also rule on whether an insurer’s duty to defend under a directors and officers (D&O) liability policy could be triggered if a suit contains allegations that deal with an insured’s conduct as a company’s executive — even if the suit does not explicitly allege wrongdoing on behalf of the defendant in his or her capacity as an executive.
This was the case in Grigg v. Aarrowcast Inc.: IOP Cast Iron Holdings LLC bought the company Aarrowcast via a stock purchase agreement with the defendant Grigg and the company’s other shareholders, and, following the discovery of a significant decline in Aarrowcast’s business, the IOP brought litigation accusing Grigg of making false representations and warranties. IOP brought suit against Grigg in his capacity as shareholder, leading the insurer Hudson to deny Grigg’s request for coverage, given that Aarrowcast’s D&O policy only covered claims for wrongful acts committed by a person acting in their capacity as a director or officer of the company. However, the Wisconsin Court of Appeals’ issued an opinion that the insurer Hudson’s duty to defend was triggered because IOP’s suit contained allegations that dealt with Grigg’s conduct as Aarrowcast’s CEO.
Jonathan commented to Law360 that the appeals court in Grigg improperly redrafted IOP’s complaint to find a potential “unpled claim” falling within the scope of Hudson’s D&O policy. “The Court of Appeals seemed concerned with the extraneous allegations about Grigg’s role as an executive, but that defies the maxim that a court is not supposed to redraft a complaint in the policyholder’s favor when analyzing coverage,” he said.