Paloma Resources v. Axis Insurance Shows How “The” Can Be the Genuine Article in a Policyholder Defense
It’s said that an ant can carry fifty times its own weight. That’s nothing. A recent decision out of the U.S. Court of Appeals for the Fifth Circuit provides a compelling reminder to policyholders and their counsel: Even the smallest word in an insurance policy—and even the placement of a punctuation mark —can carry tremendous weight . In fact, it can alter the meaning of an entire insurance policy. In Paloma Resources, L.L.C. v. Axis Insurance Co. , the court vacated summary judgment in favor of the insurer based on the placement of a single word— “the” —in an exclusion clause. The decision reaffirms the bedrock principle in insurance policy interpretation that where a policy purports to bar coverage for an insured’s claim, it must do so in an unambiguous and clear manner . When a policy exclusion is unclear, courts will construe the provision in favor of coverage for the policyholder. Paloma’s Claim: A Trade Secrets Lawsuit, a Settlement and a Denial of Coverage In 2017,...