Insurance Coverage/Maritime March

Insurance Coverage/Maritime

Shortly after areas of New Orleans were devastated by flooding from Hurricane Katrina, the Wall Street Journal published an article that a barge owned by Lafarge North America, one of the largest suppliers of construction materials in the United States and Canada, may have caused the flooding by striking levees that were supposed to hold back the water in the Inner-Harbor Navigation Canal. Concerned that it was going to be sued for the flooding of New Orleans, Lafarge went out and retained two law firms to represent it in connection with any lawsuits that may arise from the flooding. Lafarge did not advise its insurers that it was retaining these law firms and did not seek their consent to retain the law firms. After numerous lawsuits were filed against Lafarge seeking billions of dollars in damages, they demanded that their insurers pay the legal fees of the two law firms. Brown Gavalas & Fromm commenced a declaratory judgment action against Lafarge on behalf of the primary insurer and lead excess insurer claiming that the insurers did not have to pay the legal fees of the two law firms because they were hired without the consent of the insurers. The Second Circuit agreed with our position and held that Lafarge did not have the right under the primary and excess policies to retain attorneys without the consent of the insurers. New York Marine and General Insurance Company v. Lafarge North America, Inc., 599 F.3d 102 (2d Cir. 2010)

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