The (Usually) Not-So-Difficult Question: Should a Policyholder Ask To Recuse a Federal Judge?

Ian Dankelman | Property Insurance Coverage Law Blog | October 12, 2019

To avoid the appearance of impropriety, the federal judiciary ensures that every case is assigned to impartial judicial officers. Absent a unique circumstance,1 all cases are assigned to a judge based on a random-draw system. Thus, there is usually no way for litigants to know which judge will preside over the action. Most districts also require the parties to file corporate disclosure forms and certify that the parties are aware of no judicial conflicts. Judges often proactively screen themselves from certain cases where parties are represented by former colleagues or law clerks.

Despite these steps, recusal issues regularly arise. Rather than serving as point of contention, federal judges want litigants to inform them of any potential conflict that they may have over presiding over the case—especially early in the litigation. Like their state counterparts, federal judges jealously guard their institution’s reputation and screen themselves from cases when their integrity might be reasonably questioned.

Indeed, there are five circumstances that statute requires a federal judge to recuse automatically:2

(1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding;

(2) Where in private practice he served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it;

(3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy;

(4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding;

(5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person:

(i) Is a party to the proceeding, or an officer, director, or trustee of a party;
(ii) Is acting as a lawyer in the proceeding;
(iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding;
(iv) Is to the judge’s knowledge likely to be a material witness in the proceeding.

Indeed, for these circumstances, the parties cannot waive their right for the judge’s recusal. The judge and parties have no choice: the presiding judge must recuse.

When a federal judge issues a tough ruling, it is important for policyholders to recognize that the ruling itself is not a basis to seek a new judge to preside over the case. Instead, absent a circumstance requiring mandatory recusal, seeking recusal is only appropriate in cases in which the judge’s “impartiality might reasonably be questioned.”3 The test is whether an “objective, disinterested, lay observer fully informed of the facts underlying the grounds on which recusal was sought would entertain a significant doubt about the judge’s impartiality.”4 A judge has a duty to preside over the assigned case, and should not recuse based on “unsupported, irrational, or tenuous allegations.”5 Quite simply, a difficult or even unfair ruling is not enough to ask a judge to recuse. Only when the public might reasonably question the judge’s ability to proceed impartially can a policyholder even consider the option to seek recusal.

Last year, Chief Justice John Roberts wrote that our nation had “an extraordinary group of dedicated judges doing their level best to do equal right to those appearing before them.” How true. Policyholders—and their attorneys— are extremely fortunate to have a dedicated, fair, and impartial judiciary presiding over their complex cases.
1 For instance, (1) the division’s administrative judge or the district’s chief judge might order the clerk to transfer several factually similar cases to one judge for judicial efficiency interests; and, (2) the multidistrict litigation panel might order consolidation of certain cases for a single judge to enter all pretrial orders before sending the cases to the original judge for trial.
2 28 U.S.C. § 455.
3 28 U.S.C. § 455(a).
4 Parker v. Connors Steel Co., 855 F.2d 1510, 1524 (11th Cir. 1988).
5 Giles v. Garwood, 853 F.2d 876, 878 (11th Cir. 1988) (per curiam).

What Is the California FAIR Plan?

Daniel Veroff | Property Insurance Coverage Law Blog | October 11, 2019

Californians have many questions after being non-renewed by their insurance companies and unable to find another company that will insure their properties. The losses from recent wildfires have caused carriers to scale back, and some have completely ceased writing insurance in several California regions.

The California FAIR Plan remains the only option for many of these Californians. So, what is the FAIR Plan?

“FAIR” stands for Fair Access to Insurance Requirements. The FAIR Plan is an insurance pool that was established in the 1960s to assure the availability of basic property insurance for those who cannot get insurance on the standard market.

This is not a taxpayer subsidized insurance pool. All California licensed property insurers are required to be part of the FAIR Plan as a condition of doing business in this state. Thus, each insurance company operating in California backs the FAIR Plan, ensuring strong liquidity in the event of disaster, and each insurer participates in the gains and losses of FAIR Plan policies.

FAIR Plan policies are truly basic. They provide much less coverage than a standard market insurance policy. As a result, insureds need to be aware that they are getting much less than they would from a standard market policy.

Brokers must accurately explain the coverage to their customers and make it clear that FAIR Plan coverage is not the same or similar to the customer’s non-renewed standard market policy. Not doing so could be a devastating mistake sure to result in a lawsuit if a loss occurs.

The FAIR Plan Association itself sees this huge potential for insureds to be misled and is proactively trying to educate the public. According to insurance broker and expert witness Karl Susman:1

It is clear to me that the FAIR Plan Association is deeply concerned about consumers procuring insufficient insurance for their homes. They continue to send out numerous bulletins to policyholders with information ranging from brief summaries on what the FAIR Plan policy does and does not cover.

In order to help educate consumers as well, we’ve compiled and distilled some of key information on the FAIR Plan’s website. According to their site, the standard FAIR Plan homeowners policy covers damage and loss from specific perils only, including fire, smoke, explosion, and lightning.2 This differs from most standard market policies which provide coverage against all risks of loss not otherwise excluded. For an additional price, consumers can add coverage for wind, hail, and vandalism. The FAIR Plan homeowners policy does not cover water damage or theft, and it does not provide liability insurance. For those coverages, consumers can purchase an additional Difference in Condition (“DIC”) Policy from private insurers.

Another limiting factor, the base level FAIR Plan homeowners policy provides coverage for the main dwelling, but no sperate coverage limit for other structures like a standard market policy will. Instead, a small portion of the dwelling insurance limits, (10%), can be applied to other structures on the property. An insured would have to purchase additional coverages for those other structures, like a granny unit or barn.

The base FAIR Plan homeowners policy does cover losses to personal property and some landscaping. But ordinance and law and debris removal coverage must be purchased separately. There is no separate coverage available for alternative living expenses, but an insured can use a small portion of the dwelling limits for that purpose, again 10%.

The FAIR Plan also has a maximum limit of the amount of insurance available under homeowners policies. Dwelling limits cannot exceed $1.5 million, which will be enough for some insureds, but not many others in high-risk areas like Malibu or certain areas of Northern California. Homeowners can also select from a range of deductibles between $100 and $10,000 to save money on their premiums.

Commercial buildings can also be insured through FAIR Plan. These policies protect against more perils than the FAIR Plan homeowners policy. The coverage limits for commercial property policies cannot exceed $3 million for structures and $1.5 million for any other limits, except contents personal property, which can be insured for up to $5 million under certain circumstances.

Businessowners can also buy a FAIR Plan policy. These policies include more coverages than just structure coverage, such as business liability, business income, and extra expense coverage. These may have to be purchased for an additional cost if desired. The maximum limits available for a structure under these policies is $2 million; $1 million for business personal property; and $300,000/$600,000 for business liability insurance.

Brokers should be very careful to explain the full details when selling FAIR Plan policies, even if the policy itself spells out its limitations clearly. Policyholders are often ignorant of the extent of their coverage and rely on their brokers to explain it to them. Brokers may be held liable for misrepresenting the scope of coverage or failing to explain how the FAIR Plan is different than the standard market policy their customer is used to having.

Our attorneys are here to help you with your insurance issues in California.
2 See, generally,

3D Printing Innovations Enhance Building Safety

Mahmut Ekenel and Melissa Sanchez | Construction Executive | July 28, 2019

The mention of 3D printing alone is enough to get people excited, often conjuring images of a desktop console that can download and create three dimensional objects such as prototypes, or mechanical parts. And yet, in recent years the technology has given way to a slight impatience, as people begin to wonder how and when it will have a direct impact on both their lifestyles and their businesses.

The construction industry has been quick to take advantage of these innovations, and the effects are tangible, especially regarding building safety. The 3D construction technology allows for several key advantages in terms of faster construction times, uncompromised quality of construction and lower costs—allowing for affordable dwellings to be quickly built for people in need. 

These advantages also lead to safety improvements during the building process. The ability to accelerate construction time without requiring an increase in labor results in a fewer construction-related workplace injuries and a reduction in material waste, making it an environmentally friendly construction method as well.

ICC-Evaluation Service (ICC-ES), a subsidiary of the International Code Council (ICC) which develops model codes and standards (i.e. International Building Code, International Residential Code) and delivers a wide array of building safety services, has taken the lead on developing acceptance criteria to address building code compliance of 3D printed construction. Currently, 3D construction technology is not within the provisions of the International Building Code (IBC) or International Residential Code (IRC). The acceptance criteria introduces new compliance measures for interior and exterior 3D printed concrete walls (with and without structural steel reinforcement), load-bearing and non-load-bearing walls, and shear walls in one-story, single-unit, residential dwellings. The 3D walls are constructed by printing two outer layers of 3D concrete and then filling the core with 3D concrete to form a solid wall.

This technology is expected to undergo significant advancements in the coming years. In Dubai, for example, new regulations require that by 2025, every building must be constructed with 25 percent of its material derived from 3D construction.


3D printing is hardly the only innovation to improve building safety in recent years. High-performance fire-resistant coating applications, drones that monitor construction and observe post-disaster building damage, code enforcement at modular construction factories and technologies that mitigate water penetration are just a few examples of the industry’s rapid progress.

These innovations save lives and prevent injuries—not only for the people who end up living in these buildings but for the people who design and construct them.  Plus, these advances help individuals and governments spend money more efficiently and sustainably. This, in turn, goes a long way toward providing safe and secure buildings for all communities, domestic and global.

Professor Stempel’s Expert Testimony for Insurer Excluded

Tred R. Eyerly | Insurance Law Hawaii | August 14, 2019

    The court denied Daubert motions for several experts with the exception of Professor Stempel’s expert testimony opining that the insurer did not act in bad faith Adell Plastics, Inc. v. Mt. Hawley Ins. Co., 2019 U.S. Dist. LEXIS 102942 (D. Md. June 19, 2019).

    A fire demolished several buildings at Adell’s facility. Adell was insured under a commercial property policy issued by Mt. Hawley. Mt. Hawley sued Adell, seeking a declaration that it owed no coverage, and requesting recoupment of a substantial advance payment. Adell filed a counterclaim, alleging that Mt. Hawley had breached the policy and had acted with a lack of good faith. Before the court were several pretrial motions, including motions to exclude testimony of eight expert witnesses.

    The court denied Adell’s motion to exclude several experts to be called by Mt. Hawley. The accountant’s testimony was relevant. Adell had to prove damages on its breach of contract claim, and the accountant’s testimony would aid the jury in evaluating Adell’s documentation and calculating documented damages. Mt. Hawley’s fire safety expert investigated the Adell fire. Mt. Hawley had shown that his expert opinion would be sufficiently reliable for admissibility. Further, three fire protection engineers offered by Mt. Hawley and two fire protection engineers to be called by Adell were allowed to testify. Each expert based his investigation and conclusions on the standards of fire investigation as set out in the NEPA Guide for Fire and Explosion Investigations. This was a fire insurance case, and fire protection engineers would be allowed to testify and illuminate the circumstances of the fire. 

    Regarding Adell’s motion to exclude Professor Stempel, the court found this testimony was irrelevant. Stempel’s report described the law and made various legal conclusions. A legal conclusion was not likely to assist the jury because the court would provide all necessary legal conclusions in the form of jury instructions. Here, Stempel wanted to tell the jury what result to reach on the lack of good faith issue. The legal conclusions on an ultimate issue for trial predominated Stempel’s report. Therefore, Adell’s motion to exclude his testimony was granted. 

Insurer Not Entitled to Summary Judgment on Construction Defect, Bad Faith Claims

Tred R. Eyerly | Insurance Law Hawaii | August 12, 2019

    The federal district court denied the insurer’s motion for summary judgment seeking to establish there was no coverage for construction defect claims and for bad faith. Country Mut. Ins. Co. v. AAA Constr. LLC, 2019 U.S. Dist. LEXIS 115935 (W.D. Okla. July 12, 2019).

    Jeffrey and Tammy Shaver entered two contracts with AAA Construction for the construction of a garage and of a barn on their property. After construction was completed, the Shavers sued AAA Construction for building the garage over two high-pressure gas pipelines and the utility easements associated with them. They alleged AAA Construction was negligent for constructing over a working utility line. AAA Construction’s insurer, Country Mutual Insurance Company (CMIC) denied coverage because the alleged faulty workmanship of AAA Construction did not constitute an “occurrence” under the policy. 

    CMIC sued AAA Construction for a declaratory judgment that it had no duty to defend or indemnify. CMIC moved for summary judgment. 

    The court denied the motion. A jury could find AAA Construction was negligent or engaged in other nonintentional conduct by failing to ascertain the location of the easement, meaning the possibility of coverage existed. Therefore, CMIC had a duty to defend.

    CMIC also argued that numerous exclusions were applicable to deny coverage. The court disagreed and found none of the raised exclusions applied. 

    Finally, the motion was denied regarding AAA Construction’s counterclaim for bad faith. Among other arguments, CMIC submitted it had not acted in bad faith by failing to to an adequate investigation. The court found the factual record on this issue was sparse. The record contained sufficient facts, however, upon which a reasonable juror could find the investigation conducted by CMIC was not reasonable.