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A Hartford Financial Services Group Inc. unit is not obligated to defend or indemnify a tunnel-boring machine manufacturer in an arbitration proceeding, says a federal appeals court, stating the outcome might have been different had the policyholder more promptly submitted an itemization of the damages being sought.
The Solon, Ohio-based Robbins Co. leased a tunnel-boring machine to a Seattle-based consortium, JCM Northlink LLC in 2013, according to Monday’s ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Maxum Indemnity Co. v. Robbins Co.
In December 2015, an internal bearing in the machine shattered, which caused it to stop working, according to the ruling. JCM terminated its lease with Robbins and in May 2016 began arbitration against Robbins with the Paris-based International Chamber of Commerce.
Robbins said it was terminating the contract because it called for a machine “free from all latent defects in materials or workmanship” and asserted damages of at least $40.2 million, according to the ruling.
Fifteen months after JCM began arbitration, in August 2017, Robbins reported it to its insurer, Hartford unit Maxum Indemnity Co. Maxum then sought a declaratory judgment in U.S. District Court in Cleveland that it did not have a duty to defend or indemnify Robbins in the arbitration.
The District Court ruled in the insurer’s favor, which was affirmed by a unanimous three-judge appeals court panel.
JCM said it was seeking damages as a result of Robbins’ breach of contract, said the appeals court ruling. “The breach-of contract exclusion unequivocally covers JCM’s claim,” it said.
The ruling states also that “Robbins’s best opportunity to persuade the district court that Maxum had a duty to defend” was contained in the itemization Robbins obtained from JCM on Feb. 15, 2018, which was more than a month before the District Court’s ruling.
The itemization’s line items include those for tunnel “excess leak remediation” and “sink hole costs,” which are “descriptions that could indicate possible consequential property damage covered by the policy,” said the ruling.
But Robbins failed to provide the itemization to the court in time for the court to consider it, said the ruling.
“Had Robbins provided the itemization to the district court when Robbins received it the district court might have found Maxum had a duty to defend,” said the appeals court ruling.
“Here, Robbins is the victim of its own delay, and an appeals court does not exist to give it a second bite at the apple. Therefore, we decline to consider the itemization for the first time here,” the ruling said, in affirming the lower court’s decision.
A federal appeals court upheld a lower court ruling in favor of a Hartford Financial Services Group Inc. unit in July and held a caulking product company competitor’s litigation against the company cannot be considered disparagement or defamation under its coverage and that the insurer was not obligated to defend it.
A caulking product company competitor’s litigation against the company cannot be considered disparagement or defamation under its coverage, says a federal appeals court, in upholding a ruling in favor of a Hartford Financial Services Group Inc. unit that said the insurer was not obligated to defend the company.