Kerman’s Korner: It’s All Greek to Me

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A recent trip to Europe reminded Jeremy of some words of wisdom he once received about good communication and always considering your audience. https://plusblog.org/2017/10/09/kermans-korner-its-all-greek-to-me/

If you want to catch up on prior episodes of Kerman’s Korner, please visit https://plusblog.org/author/jkerman.

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.

Equifax Breach: Summary, Status and Significance

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By: Celeste King

What Happened: On September 17, 2017, Equifax, one of the “big three” credit bureaus, announced that a data breach exposed confidential information for about 143 million individuals in the U.S., Canada and the U.K.   Equifax discovered the breach weeks earlier on July 29, 2017.  The data disclosed includes names, addresses, dates of birth, social security numbers, credit card and driver license numbers.  Equifax claims the intruders exploited a vulnerability in its software program called Apache Struts starting in May 2017.

Within days of the announcement, Equifax was named in dozens of class actions and in investigations by the FTC, CFPB, Department of Justice, state and municipal governments.  Equifax’s stock dropped 35% within a week of the announcement.  Equifax fired its CEO, CISO and CSO. Two congressional hearings will seek testimony by Equifax executives.

Is the Equifax Breach Different? Many consumers and businesses are numb to massive data breaches.  It seems that “the largest breach ever” occurs regularly.  So is the Equifax different from other massive breaches?  In several respects, yes.  What pushes Equifax to a new level is the combination of the breach size and the type of data involved.  Almost every adult in the country with a credit history is affected.  A name, DOB and social security number are considered the “trinity” of personal identifiers.  In particular, a stolen social security number may have life-long consequences.  It cannot be changed like a credit card and can be used to open a bank account, take out loans, obtain health care and file fraudulent tax returns.

Unlike retailers, Equifax does not have “customers” whose loyalty is at risk.  The consumer cannot control which credit bureau a bank or landlord uses to check credit history. Equifax’s business is collecting consumer data, and anyone with a credit history eventually becomes the Equifax product.  Some critics say this explains Equifax’s indifference to the breach – reporting delays, requiring consent to arbitration before confirming a consumer’s involvement, charging for credit freezes and repeatedly posting a bad link for consumers on its social media account.

Another significant aspect of the Equifax breach is the aggregation of losses across cyber and non-cyber policies.  The publicity has focused on the risks to consumers.  But what has received less attention is the number of business products that Equifax provides.  Equifax offers data products to 12 industries, ranging from automotive to staffing.  For example, many employers use the Equifax wage and employment verification system.   Equifax provides a bankruptcy alert that informs a business client if a commercial business has filed for bankruptcy.  Equifax uses consumer data to marketing targets for insurers, retailers, restaurants, credit unions and small banks.  Governments rely on Equifax’s data for security clearances.  All these businesses may incur costs to verify the integrity of Equifax’s data.  Companies that provided consumer data to Equifax may be accused of negligently entrusting sensitive data to a company with deficient risk management practices.

Click here for PDF.

TEXAS LEGISLATURE PASSES HB 1774 (UPDATE)

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By: Kristine M. Sorenson & David E. Walker

House Bill 1774 was signed into law by Governor Greg Abbott on May 26, 2017 and becomes effective on September 1, 2017.  The new law has three sections.  The first section pertains to pre-suit notice requirements and settlement negotiations.  The second section pertains to the amount of interest owed on weather-related property claims that are not promptly paid. The third section creates a new subchapter of the Texas Insurance Code, § 542A, which applies to weather-related property claims.

FOR HURRICANE HARVEY:

This law does not apply to flood insurance policies administered by FEMA under the National Flood Insurance Program.  The Fifth Circuit has held that federal law preempts state claims arising from the handling of flood insurance claims, including claims brought under the Texas Insurance Code.  Wright v. Allstate Ins. Co., 415 F.3d 384, 390 (5th Cir. 2005).

Highlights of the new law can be found in our client alert.

Click here for client alert.

Kerman’s Korner: With Guest Speaker Cassie Jones!

01315661As promised, Kerman’s Korner returns with a guest speaker: Cassie Jones from Walker Wilcox Matousek!

In this episode, Cassie shares a story about her first mediation when she was a young lawyer and the importance of trusting in your own judgment, even when the going gets tough.  Hear Cassie’s story here: https://plusblog.org/2017/08/15/kermans-korner-trust-your-own-effort-with-cassie-jones/

If you want to catch up on prior episodes of Kerman’s Korner, please visit https://plusblog.org/author/jkerman.

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.

Florida Courts Clarify When Insurers Will Be Liable For Insured’s Attorneys’ Fees in Coverage Litigation

Johnson v. Omega Ins. Co.

200 So.3d 1207 (Fla. 2016)

W&J Group Enterprises, Inc. v. Houston Specialty Ins. Co.

— Fed.Appx. — (2017), 2017 WL 1279045, 11th Cir., April 6, 2017

 

On September 29, 2016, the Florida Supreme Court issued a decision clarifying Fla. Stat. Ann. § 627.428, which provides that an insured may recover attorney’s fees incurred as a result of recovering on a valid claim for insurance benefits.  The decision clarified what an insured must demonstrate in order to recover its attorney’s fees in a coverage dispute with an insurer.

The case of Johnson v. Omega Insurance Company, 200 So.3d 1207 (Fla. 2016), involved damage to an insured residence that the insured claimed was caused by a sinkhole.  The insurer retained an expert who opined that the damage was caused by excluded factors, including volumetric changes of clay-based soil, concrete shrinkage, and defective construction processes.  Based on this expert report, the insurer denied coverage.

The insured retained her own expert who opined that the property damage was caused by a sinkhole, a covered peril under the policy.  The insurer rejected this expert report, maintained its denial, and the insured filed suit.  After suit was filed, the insurer eventually retained a different engineering firm.  This firm concurred with the insured’s expert that the loss was caused by a sinkhole.  After receipt of this report, the insurer accepted coverage and agreed to issue payments for repair of the covered property damage.  The insurer also acknowledged its coverage obligation when it filed its answer to the insured’s complaint.

The insured then filed a motion for confession of judgment and sought recovery of her attorney’s fees and expert costs.  The trial court granted the motion and awarded the insured her attorney’s fees and costs, pursuant to Fla. Stat. Ann. § 627.428.

The insurer appealed and the Fifth District Court of Appeals reversed the trial court reasoning that an award of attorney’s fees pursuant to Fla. Stat. Ann. § 627.428 requires a showing of bad faith by the insurer.  The Court of Appeals based its decision on the statute’s language that an insured may recover its attorney’s fees if an insurer “wrongfully” denies the claim.

The Florida Supreme Court disagreed with the Court of Appeals and reinstated the trial court’s award of attorney’s fees.  In reaching this decision, the Johnson Court rejected the determination that an award of fees pursuant to Fla. Stat. Ann. § 627.428 is only permissible upon a showing of bad faith conduct.  Instead, the Johnson Court reiterated that if an insurer loses a dispute with its insured, then the insured is always entitled to recover its attorney’s fees, relying upon the prior decision in Ivey v. Allstate Ins. Co., 774 So.2d 679 (Fla. 2000).

On April 6, 2017, the 11th Circuit Court of Appeals further clarified when an insurer will be held responsible for the attorney’s fees of its insured in W&J Group Enterprises, Inc. v. Houston Specialty Ins. Co., — Fed.Appx. —, 2017 WL 1279045.  In W&J, an insurer had brought a declaratory judgment action to determine its coverage obligations in a liability claim against its insured.  While the declaratory judgment action was pending, the insurer settled the underlying tort action with the claimant for $653,000.  The insurer paid $650,000 of this settlement, with the insured funding the remaining $3,000.

The insurer then voluntarily dismissed its declaratory judgment action and the insured moved for recovery of its attorney’s fees pursuant to Fla. Stat. Ann. § 627.428.  The district court denied the motion based on the insured’s contribution to the settlement.

The 11th Circuit reversed the district court’s decision and awarded the insured its attorney’s fees pursuant to Fla. Stat. Ann. § 627.428.  In reaching this decision, the 11th Circuit relied on Wollard v. Lloyd’s & Cos. Of Lloyd’s, 439 So.2d 217 (Fla. 1983), which determined that this statute applies to provide an insured attorney’s fees when the insured and the insurer settle an action before judgment is entered.  The Florida Supreme Court reasoned in Wollard that when an insurer settles a disputed claim, it has declined to defend its position in the pending suit, thus warranting an imposition of attorney’s fees under the statute.

The 11th Circuit rejected the insurer’s arguments that attorney’s fees were not recoverable because the insured contributed to the settlement.  The insurer argued that Florida courts had previously determined that attorney’s fees under Fla. Stat. Ann. § 627.428 are triggered by the insurer’s unilateral decision to enter a settlement and dismiss a declaratory judgment action.  Mercury Ins. Co. of Fla. v. Cooper, 919 So.2d 491 (Fla. Dist. Ct. App. 2005).  The 11th Circuit interpreted the term “unilateral” in Cooper to refer to a circumstance where the insurer settles a third-party claim without also reaching an agreement with its insured about the payment of attorney’s fees.

The W&J Court determined that the award of attorney’s fees to the insured was consistent with Florida’s jurisprudence interpreting Fla. Stat. Ann. § 627.428.  It further held that the Insured’s contribution of less than 2% of the total settlement amount did not distinguish this case from other Florida decisions holding that the insured was entitled to recover its attorney’s fees.

The Johnson and W&J cases demonstrate that an insurer involved in a coverage dispute with its insured in Florida will likely have to pay its insured’s attorney’s fees if it does not prevail in the action or resolve its insured’s attorney’s fees in any settlement agreement.  An insurer wishing to settle with a liability claimant while it has an ongoing coverage action with its insured should consider engaging in global settlement negotiations to resolve any issue with its insured’s attorney’s fees.  Failure to do so may result in unanticipated exposure.

Click here for PDF.

Kerman’s Korner: How Much Data is Too Much Data?

01315661For the first ever Kerman’s Korner Quick Hit, Jeremy focuses in on the world of data breaches and cyber liability. Highlighting a story about a data transfer gone awry, Jeremy suggests a helpful tip for companies big and small that collect customer and employee data.

Click here to listen to the audio on the PLUS Blog.

If you enjoy this episode of Kerman’s Korner, please visit https://plusblog.org/author/jkerman/ for prior episodes.

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.

Kerman’s Korner: A Little Critical Thinking Goes a Long Way.

01315661Kerman’s Korner is back, with Jeremy sharing a story about how some critical thinking made him realize what the real issue was in an insurance coverage claim.

Click here to listen to the audio on the PLUS Blog.

If you enjoy this episode of Kerman’s Korner, please visit https://plusblog.org/author/jkerman/ for prior episodes.

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.

“Recent Developments Affecting Professionals’, Officers’, and Directors’ Liability Insurance” published in Volume 52-2 (Winter 2017)

WWM attorneys William Bila, Eric Blanchard, Nick Hamblen, Jeremy Kerman, and Kevin Mikulanenic recently co-authored the “Directors and Officers Liability” section in the article “Recent Developments Affecting Professionals’, Officers’, and Directors’ Liability Insurance” published in Volume 52-2 (Winter 2017) of the American Bar Association’s Tort Trial & Insurance Practice Law Journal.  Copyright © 2017 American Bar Association. All Rights Reserved. Printed in the USA.  The article can be found here:  “Recent Developments Affecting Professionals’, Officers’, and Directors’ Liability Insurance” published in Volume 52-2 (Winter 2017)

The article focuses on several hot-button issues in D&O liability, including interpretation and enforcement of professional services exclusions; cyber disclosure and liability obligations; M&A challenges, and coverage for government investigations.

Kerman’s Korner: The Blueprint for an Unsolved Mystery

01315661When faced with a case involving an unsolved murder, Jeremy discusses how he and the team at Walker Wilcox Matousek came up with an innovative solution when there was no guidance from prior case law. 

Click here to listen to the audio on the PLUS Blog.

 

For previous episodes of Kerman’s Korner, please visit: https://plusblog.org/author/jkerman/

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.

Kerman’s Korner: Sometimes Being Different is Being Right

01315661Kerman’s Korner returns for the new year with Jeremy discussing an arbitration that required some outside-the-box thinking, and how he learned that sometimes it’s the things you DON’T do that make all the difference.

Click here to listen to the audio on the PLUS Blog.

 

Walker Wilcox Matousek LLP is pleased to announce Kerman’s Korner, an audio-blog that will feature a series of story-driven, tips, thoughts, and lessons that Jeremy Kerman and the team at WWM have learned over the years.  The firm hopes that this will be a unique, informative, and entertaining way for us to facilitate discussion and debate on some of the recurring and emerging issues that we all face as we work on our various claims and cases together.