Heather Habes’ commentary was included in a Law360 article covering a New York federal court's ruling that an AIG unit isn't obligated to defend a Washington state firearms retailer accused of knowingly selling unfinished components that could be used to assemble "ghost guns." This decision underscored policyholder attorneys' concerns that commercial general liability coverage continues to narrow as insurers tally another win in a dispute over intentional conduct. Heather shares her insight on the case and what the larger implications of the decision might be.
"I think, unfortunately, this is another step in the wrong direction on these issues of intentional conduct and a lack of occurrence where a business is being sued for lawsuits and litigation that occur as a result of the company conducting its lawful business," Heather told Law360.
The idea that a company could be lawfully conducting its business, an alleged injury occurs as a result, and therefore there's a deliberate act or occurrence that takes place, constricts the CGL coverage these companies buy under the expectation that it will protect them for claims of bodily injury and property damage that result from their business, Heather said.
According to Heather, in analyzing the allegations for coverage, the maximum offense stated by the plaintiff should not be the only factor taken into consideration. Rather, the full spectrum of conduct for which the policyholder could be held liable must be considered, she said.
"The plaintiff should not be the arbiter of the insurance coverage," Heather believed. "Just because the plaintiff, who has an incentive to make these offenses seem as egregious as possible, has focused narrowly on intentional conduct doesn't mean intentional conduct has been established or that there couldn't be lesser offenses that are ultimately established."
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