The United States Court of Appeals for the Third Circuit, applying Pennsylvania law, has held that a single lawsuit alleging three causes of action and up to eight discrete wrongful acts constituted a single claim under a professional liability insurance policy. Westport Ins. Corp. v. Mylonas, 2017 WL 3327798 (3d Cir. Aug. 4, 2017).
A Michigan federal district court has held that a fraudulent instruction loss caused by a social engineering scheme did not constitute a “direct loss” that was “directly caused by computer fraud” and therefore did not trigger computer fraud coverage under a commercial crime policy. American Tooling Ctr., Inc. v. Travelers Cas. & Sur. Co. of Am., 2017 WL 3263356 (E.D. Mich. Aug. 1, 2017).
The United States District Court for the Eastern District of Kentucky, applying Kentucky law, has held that an insurer’s duty to defend under a medical professional liability policy ended when the insurer tendered policy limits to the insured, despite the ongoing lawsuit against the insured. Mt. Hawley Ins. Co. v. MESA Med. Grp., PLLC, 2017 WL 3082662 (E.D. Ky. July 19, 2017).
An Illinois intermediate appellate court, applying Illinois law, has held that a renewal insurance policy may only be rescinded based on material misrepresentations made in the renewal application, and not based on misrepresentations made in applications for prior policies. Ill. State Bar Ass’n Mut. Ins. Co. v. Rex Carr Law Firm, 2017 IL App (4th) 160365-U (Ill. App. Ct. June 27, 2017). The court also held that application of the policy’s prior knowledge provision depended on the insured law firm’s subjective expectation of whether the relevant circumstance might lead to a claim.
The United States District Court for the Southern District of New York, applying New York law, has held that a cloud-based service provider’s loss resulting from fraudulent wire instructions is covered under a computer fraud and funds transfer fraud policy because the fraudulent email changed data in the provider’s computer system despite use of a third-party external email service. Medidata Solutions, Inc. v. Federal Ins. Co., No. 15-CV-907 (S.D.N.Y. July 21, 2017). The court also held that the fraud precluded any finding that coverage was excluded based on the provider’s knowledge or consent to the wire transfer.
A Wisconsin intermediate appellate court has held that coverage was unavailable for a claim reported after the termination date of an extended reporting period purchased by the policyholder. Sheffield v. Darwin Nat. Assur. Co., 2017 WL 3149792 (Wisc. Ct. App. July 25, 2017).
In response to the Delaware Supreme Court’s question in connection with remand, the Delaware Chancery Court has suggested reevaluation of its prior willingness to dismiss subsequent derivative litigation where an earlier derivative action has been dismissed due to demand futility. In re Wal-Mart Stores, Inc. Delaware Derivative Litigation, C.A. No. 7455-CB (consol.), supp. op. (Del. Ch. July 25, 2017). Where the court previously would dismiss subsequent efforts to re-litigate demand failure, the new approach suggested by the Chancery Court provides that an earlier action should not be given preclusive effect if it failed to survive a motion to dismiss pursuant to Delaware Chancery Court Rule 23.1, the Delaware analog to Federal Rule of Civil Procedure 23.1.
An Illinois district court, applying Delaware law, has held that a specific litigation exclusion in a company’s directors and officers insurance policy bars coverage for a claim arising “at least in part” from the litigation referenced in the exclusion. RSUI Indem. Co. v. Worldwide Wagering, Inc, 2017 WL 3023748 (N.D. Ill. Jul. 17, 2017).
The United States Court of Appeals for the Sixth Circuit, applying Ohio law, has held that an insurer does not need to show prejudice resulting from late notice under a claims made and reported policy in order to deny coverage. McCarty v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa, 2017 WL 2781561 (6th Cir. June 27, 2017). The court also held that an insurer does not have actual or constructive notice of a claim from a public court docket.
The Appellate Court of Illinois, applying Illinois law, has held that an insurer has no duty to defend or indemnify an insurance agent under an errors and omissions liability policy where the agent failed to provide notice of the claim during the policy period in which the claim was first made. James River Ins. Co. v. Timcal, Inc., 2017 WL 2852812 (Ill. App. June 30, 2017).