Law360 covered Steptoe's Insurance Group's latest federal appeals court victory for AIG. On July 8, the US Court of Appeals for the Sixth Circuit ruled in favor of AIG in a commercial property dispute against policyholder Federal-Mogul.
The case stemmed from the 2001 flooding of a Federal-Mogul plant in Thailand. Because of a $30 million sublimit for losses in high hazard flood zones, AIG refused to pay approximately $40 million more claimed by Federal-Mogul. Federal-Mogul sued in the Eastern District of Michigan, contending that the high hazard provision applied only to property within a flood zone designated by governmental regulators. AIG, represented at the trial court by another firm, argued that it also applied in areas that could experience a 100 year flood. The district court granted summary judgment to the policyholder on its property damage claim, AIG appealed and brought in Steptoe. In May 2016, the Sixth Circuit agreed with AIG's interpretation of the flood provision, reversed the district court's grant of summary judgment, and remanded for factual findings under the correct interpretation of the policy.
Back at the trial court, Federal-Mogul abandoned its property damage claim, instead focused on its separate business interruption claim for lost revenue due to the flood, secured a second summary judgement, and Steptoe was again retained for the appeal to the Sixth Circuit. The court of appeals again reversed the district court, holding that the lower limit for high hazard flood zones applied to business interruption coverage not just to property damage coverage.
The Steptoe team representing AIG in this matter is led by insurance partners Mark Horning and Roger Warin, with appellate partner Michael Vatis handling the most recent oral argument.
The July 8 ruling marks the fifth consecutive victory Steptoe's Insurance Group has achieved for AIG in federal circuit courts of appeal.
The full article can be read at Law360.