Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Documents Relating to Other Insureds, Reserves, Reinsurance Communications, and Claims Handling and Underwriting Manuals Not Discoverable

Posted in Discovery Issues

In a favorable ruling for a Wiley Rein client, a Tennessee federal court has rejected an insured’s motion to compel documents and interrogatory responses relating to reserves, reinsurance communications, claims and underwriting manuals, and other claims against other insureds.  First Horizon Nat’l Corp. v. Houston Cas. Co., 2016 WL 5869580 (W.D. Tenn. Oct. 5, 2016).  Wiley Rein represents the primary carrier.

Continue Reading

Insured Lawyers’ Material Misrepresentations Warrant Rescission and Coverage also Barred by Prior Knowledge Exclusion

Posted in Prior Knowledge/Warranty Exclusion, Rescission

The United States District Court for the Northern District of Mississippi, applying Mississippi law, has granted summary judgment in favor of an insurer, holding that the insurer is entitled to rescind a lawyers professional liability policy based on the insured attorneys’ material misrepresentations in the insurance application.  Imperium Ins. Co. v. Shelton & Assocs. P.A., 2016 WL 5477635 (N.D. Miss. Sept. 29, 2016).  The court also held that, even if the policy were not rescinded, the malpractice actions against the attorneys were excluded from coverage based on the policy’s Prior Knowledge Exclusion

Continue Reading

Claim Brought by Lenders Against Officers Based on Company’s Misstated Financials Barred by Bankruptcy and Creditors Exclusion

Posted in Bankruptcy, Breach of Contract – coverage for amounts due pursuant to contract, exclusions

Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that an exclusion barring coverage for any claim brought or maintained by or on behalf of any creditor of the company precluded coverage for claims by lenders against company officers alleging that they misrepresented the financial condition of a company.  Markel Am. Ins. Co. v. Verbeek, 2016 WL 5400412 (5th Cir. Sept. 27, 2016)

Continue Reading

Absent Prejudice, Untimely Notice Does Not Preclude Coverage if Notice Provided During Renewal Policy Period

Posted in “Claim”, Notice of Claim

The Delaware Superior Court, applying Delaware law, has held that an insured’s failure to provide timely notice of a claim during the applicable claims-made policy period did not preclude coverage when the insured renews the policy and provides notice of the claim during the renewal policy period, unless the insurer can prove prejudice as a result of the untimely notice.  Medical Depot, Inc. v. RSUI Indem. Co., 2016 WL 5539879 (Del. Super. Ct. Sept. 29, 2016).

Continue Reading

Insured Not Prejudiced by Insurer’s Failure to Attend Settlement Meetings; Alaska Law Precluding Recoupment of Defense Costs Preempted by Federal Risk Retention Group Statute

Posted in Bad faith/duty to settle, Defense Costs, Estoppel

The Ninth Circuit Court of Appeals has reversed a district court’s denial of an insurer’s motion for summary judgment and held that the insurer, which was organized as a risk retention group, was entitled to reimbursement of defense costs incurred in defense of a non-covered claim because Alaska’s statutory bar against recoupment conflicts with the federal statute pursuant to which the risk retention group was formed.  Attorneys Liability Protection Society, Inc. v. Ingaldson Fitzgerald, P.C., 2016 WL 5335036 (9th Cir. 2016).  The court also rejected the policyholder’s argument that the insurer should be estopped from asserting defenses to coverage because it acted in bad faith by failing to attend settlement meetings.

Continue Reading

Coverage Not Illusory Where Coverage is Unavailable for Claims Failing to Satisfy a Claims-Made-and-Reported Policy’s Requirements

Posted in “Claim”

The United States District Court for the Southern District of Indiana has held that coverage under a claims-made-and-reported policy is not illusory where coverage is unavailable for claims that do not satisfy the policy’s claims-made, reporting, and retroactive date requirements.  Sunshine v. Gen. Star Nat’l Ins. Co., 2016 WL 5371848 (S.D. Ind. Sept. 26, 2016).

Continue Reading

No Coverage for Voluntary Remediation Because Insured Not “Legally Obligated to Pay” for Work

Posted in Breach of Contract, Loss

In a win for a Wiley Rein client, the United States District Court for the District of New Jersey, applying New Jersey law, held that no coverage was available under an errors and omissions policy for remediation work performed by an insured because the insured was not “legally obligated to pay” for the remediation.  Wyndham Constr., LLC v. Columbia Cas. Co., 2016 WL 5329585 (D.N.J. Sept. 21, 2016).  In addition, the court held that the remediation costs were not covered “damages” because they were incurred without the insurer’s consent.  Wiley Rein represented the insurer.

Continue Reading

Insufficient Notice of Potential Claim Held to Bar Coverage

Posted in Notice of Claim

The United States District Court for the Southern District of New York, applying Pennsylvania law, has held that an insured’s failure to provide sufficient notice of a potential claim during the policy period precluded coverage under its claims-made policy.  University of Pittsburgh v. Lexington Ins. Co., 2016 WL 4991622 (S.D.N.Y. Sept. 16, 2016).

Continue Reading

Certain Extrinsic Evidence Permissible for Purposes of Establishing No Duty to Defend Under Illinois Law

Posted in Defense Costs

The United States Court of Appeals for the Seventh Circuit, applying Illinois law, has held that extrinsic evidence that does not decide an “ultimate issue” in the underlying claim may be admitted in a declaratory judgment action for purposes of establishing that an insurer has no duty to defend.  Landmark Am. Ins. Co. v. Hilger, 2016 WL 5239833 (7th Cir. Sept. 22, 2016).

Continue Reading

Consent Judgment with Covenant Not to Execute Is Covered Loss

Posted in Loss

The United States District Court for the Eastern District of New York, applying New York law, has held that a consent judgment accompanied by a covenant not to execute by the claimant was covered “Loss” under a D&O insurance policy where there was no waiver of the right to pursue the insurer.  Intelligent Digital Systems, LLC v. Beazley Ins. Co., 2016 WL 5390390 (E.D.N.Y. Sept. 16, 2016).

Continue Reading