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Michael Ponzo joined Merlin Law Group in 2018 and focuses his practice on representing first party commercial and residential property insurance claim disputes and bad faith insurance litigation. Michael represents policyholders who are forced to litigate against their insurance producer or insurance company, when they fail to meet their obligations to the policy holder or simply place their interests first.

Many of the homeowner policies we review exclude water damage resulting from, “continuous or repeated seepage or leakage of water or stream, or the presence of condensation of humidity, moisture or vapor which occurs over a period of weeks, months or years.” Courts have interpreted this clause to exclude water damage that occurs over 14 days. But what happens when you have a situation where there is significant water damage caused in the first thirteen days? Aren’t coverage clauses interpreted broadly so as to afford the greatest protection to the insured, while exclusion clauses interpreted narrowly?
Continue Reading The “Continuous or Repeated Seepage or Leakage of Water” Exclusion

In Tarakanov v. Lexington Insurance Company,1 the United States District Court Northern District of California dismissed the insureds’ suit, which included claims for breach of contract and breach of the covenant of good faith, among other claims. The fundamental dispute revolved around whether Lexington breached the insurance policy when it refused to pay Extra Replacement Cost Coverage before the insureds’ completed rebuilding the property. Did Lexington have a contractual obligation to pay what the court described as a “hypothetical claim?”
Continue Reading Denying a Hypothetical Claim for Extra Replacement Cost Coverage Does Not Result in a Breach of Contract

Frequently, we are faced with questions from policyholders or public adjusters regarding the interpretation of insurance coverage under a policy. Usually, these questions arise when the insurance company has limited or denied coverage. While these opposing interpretations are sometimes resolved without litigation, sometimes the insured’s and insurer’s positions become intransigent, and the next step requires the assistance of the court. The interpretation of whether a policy provides coverage is a question of law.
Continue Reading Declaratory Judgments and Interpreting Policy Language

Many insurance policies have a one-year suit limitation clause, which precludes the policyholder from suing for breach of contract after the one-year period has passed.1 In West Beach Condominium v. Commonwealth Insurance Company (“West Beach”),2 the Court of Appeals of Washington was asked whether under Washington Law an insurance policy one-year suit limitation clause barred extra-contractual claims under the Insurance Fair Conduct Act (“IFCA”)3 or Consumer Protection Act (“CPA”).4 The appellate court concluded the one-year suit applicable to breach of contract claims did not bar extra-contractual claims under IFCA or CPA.
Continue Reading Under Washington Law Does A Policy One Year Suit Limitation Clause for Breach of Contract Claims Prevent Extracontractual Claims Under the CPA or IFCA?

In a recent deposition in an insurance producer malpractice case, the producer was asked about the purpose of co-insurance and how our insured would be impacted under the provision if the building was underinsured. Unfortunately, the producer was unable to explain how the co-insurance provision worked or how the insured could be penalized. This prompted me to think maybe it’s time for a property co-insurance refresher.
Continue Reading Has Your Agent Explained the Impact of a Property Coinsurance Provision?

While the timeframe to file a legal action is generally defined under the Statute of Limitations, in some states an insurance policy can contractually establish a shorter period to file a legal action. In a recent California case, Keller v. Federal Insurance Company,1 the Ninth Circuit upheld a Legal Action Against Us clause, finding the homeowners waited too long to file a lawsuit.
Continue Reading Legal Action Against Us Clause

Federal courts are courts of limited jurisdiction, possessing only that power authorized by Article III of the United States Constitution and statutes enacted by Congress. Under 28 U.S.C. § 1332, federal district courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 … and is between … citizens of different States.” Whereas the Constitution contemplates minimal diversity, § 1332 requires complete diversity—no plaintiff may be a citizen of the same state as any defendant.1 For purposes of diversity jurisdiction, a corporation is a citizen of both the state where it is incorporated and the state where its “nerve center” (typically its headquarters) is located.2
Continue Reading Reciprocal Insurance Companies

In 2017, the Arizona Supreme Court changed the scope and limits of discovery to “any non-privileged matter that is relevant to any party’ claim or defense and proportional to the needs of the case.”1 Starting in July 2018, Arizona Rule of Civil Procedure 26.2, will take effect. Rule 26.2 has been significantly changed, adopting a “Three-Tiered” system of civil case management to make discovery occur in a manner consistent with Rule 26.1(b)(1)—proportional discovery.
Continue Reading Changes in the Arizona Rules of Civil Procedure Will Impact Your Case