Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Specific Litigation Exclusion Bars Coverage When Claim Arises “At Least in Part” From Excluded Litigation

Posted in Related Claims and associated exclusions

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).

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Insurer Need Not Demonstrate Prejudice from Late Notice Under Claims Made and Reported Policy

Posted in Notice of Claim

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.

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No E&O Coverage Where Insured Failed to Report Claim During Policy Period When It Was First Made

Posted in “Claim”, Notice of Claim

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).

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Eleventh Circuit Affirms Dismissal Where Professional Services Exclusion Unambiguously Created Joint, Not Several, Obligations

Posted in Professional Services

The United States Court of Appeals for the Eleventh Circuit has affirmed the dismissal of a breach of contract and bad faith case against two insurers based on the policies’ professional services exclusion, finding that the exclusion clearly created joint, not several, obligations.  Stettin v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2017 WL 2858768 (11th Cir. July 5, 2017).

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Insured vs. Insured Exclusion Bars Coverage for Claim Brought by Insured and Officers Against Another Officer

Posted in Insured v. Insured Exclusion

The Superior Court of New Jersey, Appellate Division, applying New Jersey law, has held that an insured vs. insured exclusion bars coverage under a directors and officers liability policy for counterclaims brought against an officer by the company and fellow officers.  Abboud v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2017 WL 2665133 (N.J. Super. Ct. App. Div. June 21, 2017).

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Insured Versus Insured Exclusion Bars Coverage for Claim by Liquidating Trust

Posted in Bankruptcy, Insured v. Insured Exclusion

The United States Court of Appeals for the Sixth Circuit, applying Michigan law, has held that an insured vs. insured exclusion bars coverage for a claim against an insured company’s former officers assigned during bankruptcy to a liquidating trust. Indian Harbor Ins. Co. v. Zucker, 2017 WL 2641085 (6th Cir. June 20, 2017).

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Duty to Defend Does Not Extend to Prosecution of Affirmative Counterclaims

Posted in Defense Costs

The Supreme Judicial Court of Massachusetts has held that under a duty to defend policy, “the insurer’s duty to defend does not require it to prosecute affirmative counterclaims on behalf of its insured.”  Mount Vernon Fire Ins. Co. v. Visionaid, Inc., 2017 WL 2703949 (Mass. June 22, 2017). Continue Reading

Insurer’s Consent to Settle Not Required Following Effective Denial of Coverage

Posted in Consent to settle/incur defense costs

Applying New York law, a New York intermediate appellate court has held that insurers’ unreasonable delay in addressing an insured’s claim and their repeated insistence that several policy provisions barred coverage for the claim alleviated the insured’s obligation to seek the insurers’ consent to settle.  J.P. Morgan Securities Inc. v. Vigilant Ins. Co., 2017 WL 2744405 (N.Y. App. Div. June 27, 2017).

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Separate Lawsuits Part of a Single Claim First Made Prior to Policy Period

Posted in “Claim”, Related Claims and associated exclusions

The United States District Court for the District of Colorado, applying Colorado law, has held that two lawsuits were connected by the “single scheme” of a contractor to interfere with a government contract for a surveillance camera system.  Ciber, Inc. v. Ace Am. Ins. Co., 2017 WL 2537092 (D. Colo. June 9, 2017).  The district court further held that, because the lawsuits were connected, they were part of a single claim first made prior to the inception of a claims-made professional liability policy.  As a result, there was no coverage under the policy.

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“Non-Specific,” “Boiler-Plate” Notice of Potential Claim Insufficient as a Matter of Law

Posted in “Claim”, Notice of Claim

In a significant victory for Wiley Rein’s client, a Tennessee federal court has held that an insured’s “general, boiler-plate . . . broad, [and] non-specific” notice that purported to give notice of a potential claim was untimely and insufficient to provide notice of an actual claim made during the policy period and omitted from the notice.  First Horizon Nat’l Corp. v. Houston Cas. Co., No. 15-cv-2235-SHL-dkv (W.D. Tenn. June 23, 2017).  In so ruling, the court held that an email that “stated [a] settlement offer of $610 million and requested a counterproposal from” the insured was a written demand for monetary relief, and thus a “Claim,” that should have been reported to the insurers.  Wiley Rein represents the primary carrier and argued the motions before the district court.

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