U.S. Court of Appeals for the Fifth Circuit
In National Union Fire Ins. Co. of Pittsburgh PA v. Puget Plastics Corp., 2011 WL 5984751 (5th Cir. (Tex.) Nov. 28, 2011), the U.S. Court of Appeals for the Fifth Circuit, applying an objective standard, held that there was no "occurrence" under a commercial umbrella liability policy when an insured's deliberate actions were "highly probable" to result in the damages alleged.
The insured, Puget Plastics, manufactured 5,000 plastic water chambers for use in another manufacturer's tankless water heaters. The plastic was made by DuPont. About 800 of the plastic water chambers ruptured due to Puget Plastic's knowing disregard of DuPont's recommended temperature guidelines for the plastic. The tankless water heater manufacturer prevailed against Puget Plastics in an underlying action alleging violations of the Texas Deceptive Trade Practices Act (DTPA). Puget Plastics sought coverage for the damages under its commercial umbrella liability policy issued by National Union. National Union denied coverage on the grounds that there was no occurrence because the jury in the underlying action found that Puget had knowingly violated the DTPA by molding the water chambers at a lower melt temperature than that recommended by DuPont. A coverage action ensued.
Please see full article below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.