A Georgia federal district court has held that a fraudulent scheme using telephones to exploit a computer coding vulnerability in the insured’s system that ultimately led to a loss was not covered under a computer fraud provision in a commercial crime policy. Incomm Holdings, Inc. v. Great Am. Ins. Co., 2017 WL 1021749 (N.D. Ga. Mar. 16, 2017).
The United States District Court for the Southern District of New York, applying New York law, has held that two judgment creditors of an insured were not entitled to insurance policy proceeds where the insured had violated the terms of the policy by allowing a default judgment to be entered against it. XL Specialty Ins. Co., v. Lakian, 2017 WL 1063451 (S.D.N.Y. March 20, 2017). The court further held that the insurer had not waived its policy defenses by writing a letter to the broker informing it of the insured’s duty to defend the action, or by filing an interpleader action without naming the judgment creditors. The court also concluded that a third judgment creditor for an insured person had no rights to the policy because it had no claim under the policy at the time the interpleader action was filed, and because the policy was not property of the insured person. Wiley Rein represents the insurer.
A Maryland federal court has held that the federal Liability Risk Retention Act (LRRA) preempts Md. Ins. Code § 19-110, Maryland’s notice prejudice statute, in circumstances where Maryland law otherwise would govern a contract issued by a non-chartered insurer. Mora v. Lancet Indem. Risk Retention Grp., Inc., 2017 WL 818718 (D. Md. Mar. 1, 2017).
The United States District Court for the District of Connecticut, applying Connecticut law, has granted summary judgment in favor of an insured, holding that an underlying complaint alleged at least one act that could “possibly” fall within the policy’s definition of “wrongful acts,” triggering a duty to defend. Fernandez v. Zurich Am. Ins. Co., 2017 WL 923910 (D. Conn. March 8, 2017).
Applying Indiana law, the United States Court of Appeals for the Seventh Circuit has held that neither a company’s crime policy nor its commercial property policy provided coverage for theft of company property by a consultant who worked for the company. Telamon Corp. v. Charter Oak Fire Ins. Co., 2017 WL 942656 (7th Cir. Mar. 9, 2017).
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that a crime policy did not afford coverage for a loss caused by an insured’s initiation of wire transfers based on fraudulent email instructions. Taylor & Lieberman v. Federal Ins. Co., 2017 WL 929211 (9th Cir. Mar. 9, 2017) .
The United States District Court for the District of Connecticut has held that an insured’s untimely notice of a claim precluded coverage under a claims-made policy because it prejudiced the insurer as required by Connecticut law. Zahoruiko v. Fed. Ins. Co., 2017 WL 776645 (D. Conn. Feb. 28, 2017).
The California Court of Appeal has held that an exclusion requiring repayment to the insurer upon a “final determination” of the insured’s culpability applies only after the insured’s direct appeals have been exhausted, and therefore the insurer was obligated to pay the insured’s litigation expenses in an appeal of the underlying litigation. Stein v. AXIS Ins. Co., 2017 WL 914623 (Cal. Ct. App. Mar. 8, 2017).
A Maryland intermediate appellate court has affirmed summary judgment in favor of an insurer, holding that a Prior Acts Exclusion applied to bar coverage for two antitrust lawsuits where the suits alleged that the insured conspired to raise prices beginning as early as 2002 and the Prior Acts Exclusion barred coverage for “Interrelated Wrongful Acts, committed, attempted, or allegedly committed or attempted in whole or in part prior to May 15, 2007.” Cristal USA Inc. v. XL Specialty Ins. Co., 2017 WL 727795 (Md. Ct. Spec. App. Feb. 24, 2017). The court also held that a coverage determination by the primary insurer does not bind an excess follow-form insurer, and that the excess insurer had no duty to defend the action.
The Texas Supreme Court has held that the insured-versus-insured exclusion in a D&O policy precludes coverage for a claim asserted by the insured’s fidelity insurer, under an assignment of rights from the insured, against a former director of the insured. The court reversed the holding of the intermediate court of appeals and reinstated the trial court’s entry of summary judgment for the D&O insurer on the basis that it owed no duty to defend the former director. Great American Ins. Co. v. Primo, 2017 WL 749890 (Texas Feb. 24, 2017).