A Washington federal court has held that an insured’s failure to provide notice of a demand letter to its insurer during the policy period in which the letter was received precludes coverage under a claims-made and reported policy for a related lawsuit filed during a subsequent policy period. National Union Fire Ins. Co. v. Zillow, Inc., 2017 WL 1354147 (W.D. Wash. Apr. 13, 2017).
In a win for Wiley Rein’s client, the United States District Court for the District of New Jersey has held that, even though the insured provided notice of circumstances that might lead to a claim, an excess insurer properly denied coverage because the insured failed to notify the excess insurer of the actual claim and a subsequent settlement offer. Kennedy Uni. Hosp. v. Darwin Nat’l Assurance Co., No. 16-2494 (D.N.J. Apr. 7, 2017). The court also held that the excess insurer was not barred by estoppel or waiver from denying coverage.
An Illinois intermediate appellate court has held that excess insurance policies requiring “actual payment” by an underlying insurer for exhaustion purposes were not triggered where the insurer “pledged” its policy as collateral and agreed to advance defense costs until its policy was exhausted but did not make “actual payment” in legal currency. Ritchie v. Arch Specialty Ins. Co., No. 1-16-0413, 2017 IL App (1st) 160413-U (Ill. App. Ct. Mar. 31, 2017).
The United States District Court for the District of West Virginia, applying West Virginia law, has held that lack of prior knowledge of a claim constitutes a condition precedent to coverage under an accountant’s professional liability policy. Camico Mutual Ins. Co. v. Hess, Stewart & Campbell P.L.L.C., 2017 WL 926770 (S.D. W. Va. Mar. 8, 2017). In so holding, the court found that the insurer was not estopped from declining coverage based on an insured’s prior knowledge of a claim despite issuance of a prior reservation of rights letter that only reserved the insurer’s right to raise “all policy provisions and defenses.”
The Supreme Court of Utah has affirmed summary judgment in favor of an insurer, holding that language regarding the scope of coverage under a real estate brokerage company’s insurance policy encompassed only services performed for compensation through a traditional real estate commission. Compton v. Houston Cas. Co., 2017 WL 1101816 (Utah Mar. 23, 2017).
The Supreme Court of Appeals of West Virginia has held that a consent judgment did not bind a general liability insurer because the insurer was not a party to the lawsuit and did not expressly agree to the judgment. Penn-America Ins. Co. v. Osborne, 2017 WL 878716 (W. Va. March 1, 2017).
The United States Court of Appeals for the Fifth Circuit, applying Mississippi law, has held that policies providing that defense costs erode policy limits are enforceable as written and do not offend public policy. Federal Ins. Co. v. Singing River Health Sys., 2017 WL 816235 (5th Cir. Mar. 1, 2017). The court further held that the policy’s Employee Benefits Law Exclusion barred coverage for a broad set of claims including those based on the federal and state constitutions and statutes.
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 breached 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).