A Florida federal court has held that a set of claims must be deemed first made at the time of the first such related claim in 2008, prior to the relevant policy period, notwithstanding the fact that a prior and pending litigation exclusion in the policies only excluded coverage for lawsuits brought prior to 2003. RSUI Indem. Co. v. Attorney’s Title Ins. Fund, Inc., No. 2:13-cv-00670-SPC-CM (M.D. Fla. June 6, 2016).
A title insurer sued a group of property sellers to recover money that it had to pay as the title insurer for fraudulently sold property. One of the sellers asserted a counterclaim for slander of title and other tort claims. The seller amended its counterclaim two times in the litigation. The seller moved to amend a third time to add a malicious prosecution claim arising out of the same facts, but the court denied the motion. The seller subsequently filed a separate malicious prosecution action, which was consolidated with the prior lawsuit.
The title insurer held a D&O policy, and tendered the amended counterclaim under a policy issued in 2011 and the malicious prosecution action under a policy issued in 2012. Pursuant to the “Related Claims” clause of the policies, the D&O insurer took the position that both claims were deemed first made at the time of originally-filed counterclaim in 2008. The insured argued that the suits were not deemed related and that coverage should be available under both policies.
In the ensuing coverage litigation, the court granted summary judgment to the D&O insurer, holding that coverage was not available under either policy because the claims were deemed first made in the 2008 policy period. The insured argued that the prior and pending litigation exclusion, which barred coverage for suits pending prior to 2003, somehow caused an “ambiguity as to why the parties would modify the Prior and Pending Litigation Exclusion to include those same claims.” The court held that there was no such ambiguity and that the claims were deemed made at the time of the first such related claim in 2008. First, the court stated that “adding a strict temporal limitation to an exclusion’s applicability does not, and cannot, create coverage.” Second, the court noted that the two provisions were fundamentally different as the “Related Claims” provision “confines coverage to those claims that are first made during the respective policy periods and unrelated to any previously made claim,” while the prior/pending litigation exclusion “provides a strict deadline for when a claim related to preexisting litigation is automatically excluded from coverage.”