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Legal developments affecting professional liability insurers

Category Archives: Insured v. Insured Exclusion

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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.… Continue Reading

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).… Continue Reading

Insurer Not Estopped from Asserting Policy Defenses Where Insured Had Duty to Defend; Insured-v.-Insured Exclusion Does Not Bar Coverage for Claims by Former Shareholders

Posted in “Claim”, Insured v. Insured Exclusion, Related Claims and associated exclusions
An Illinois federal court, applying Illinois law, has held that an insurer who declined to advance defense costs was not estopped from asserting policy defenses in a coverage action later filed by the policyholder corporation.  Vita Food Prods., Inc. v. Navigators Ins. Co., 2017 WL 2404981 (N.D. Ill. June 2, 2017).  The court also held… Continue Reading

Insured-Versus-Insured Exclusion Bars Coverage for Claim Against Former Director That Insured Assigned to Its Fidelity Insurer

Posted in Insured v. Insured Exclusion
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… Continue Reading

Court-Appointed Receiver Acts “On Behalf Of” Court, Barring Application of Insured v. Insured Exclusion

Posted in Insured v. Insured Exclusion, Public Policy prohibition on insurance
The United States District Court for the District of Rhode Island, applying Rhode Island law, has held that an insured v. insured exclusion in a directors and officers liability insurance policy does not apply to a court-appointed receiver because the receiver acts as an agent of the court under Rhode Island law, rather than on… Continue Reading

Insured v. Insured Exclusion Bars Coverage for Claim by FDIC Receiver Against Failed Bank’s Directors and Officers

Posted in Insured v. Insured Exclusion, Regulatory Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured v. insured exclusion in a directors and officers policy, which expressly barred coverage for actions brought by a “receiver,” precluded coverage for a claim against a failed bank’s directors and officers by the Federal Deposit Insurance Corporation… Continue Reading

Insured v. Insured Exclusion Bars Coverage for Shareholders’ Suit Spearheaded by Former Director

Posted in Insured v. Insured Exclusion
Applying Minnesota law, the United States Court of Appeals for the Eighth Circuit has held that a policy’s insured versus insured exclusion bars coverage for a suit filed against the insured company by a former director and two other shareholders regarding share value.  Jerry’s Enterprises, Inc. v. U.S. Specialty Ins. Co., 2017 WL 104468 (8th… Continue Reading

Insured-versus-Insured Exclusion Deemed Ambiguous as Applied to FDIC as Receiver

Posted in Insured v. Insured Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured-versus-insured exclusion was ambiguous where the plaintiff FDIC, in its capacity as receiver, sued the directors and officers of a defunct bank.  St. Paul Mercury Ins. Co. v. Federal Deposit Ins. Corp., 2016 WL 6092400 (9th Cir. Oct.… Continue Reading

Capacity Issues, Personal Profit Exclusion, and Insured v. Insured Exclusion Do Not Preclude Duty to Defend

Posted in Insured v. Insured Exclusion, Personal Profit/Advantage exclusion
A federal appellate court, applying Utah law, has held that an insured v. insured exclusion did not preclude a duty to defend where one insured entity had changed its name and disaffiliated from the other insured entity. Church Mut. Ins. Co. v. Ma’afu, 2016 WL 3997212 (10th Cir. July 21, 2016). The court also held… Continue Reading

Insured v. Insured Exclusion, Allocation Do Not Apply to Related Claims

Posted in Allocation, Collusion, Insured v. Insured Exclusion
A Delaware trial court has affirmed its ruling that an Insured v. Insured exclusion does not apply to a shareholder derivative demand brought by a director of the company because the demand constitutes a single Claim with an earlier demand made by the same individual before he became a director. Ameritrans Capital Corp. v. XL… Continue Reading

Insured Failed to Show Claim Fell Within Exception to Insured v. Insured Exclusion

Posted in Insured v. Insured Exclusion
Applying Arizona law, the United States Court of Appeals for the Ninth Circuit has affirmed the dismissal of a coverage action brought by an insured on the grounds that the insured failed to demonstrate the applicability of an exception to the Insured v. Insured exclusion in a D&O liability policy. AMERCO v. National Union Fire… Continue Reading

Fifth Circuit Reverses: Insured v. Insured Exclusion Does Not Apply To Indemnity Claim

Posted in Insured v. Insured Exclusion
Applying Louisiana law, the United States Court of Appeals for the Fifth Circuit has reversed a summary judgment ruling in favor of an insurer, holding that a CGL policy’s insured v. insured exclusion does not apply where the suit between the insureds was for indemnification, and not for property damage. Kinsale Ins. Co. v. Georgia-Pacific,… Continue Reading

Court Holds Shareholder Litigation and Adversary Proceeding Arising From Same Merger Are Separate Claims

Posted in Insured v. Insured Exclusion, Related Claims and associated exclusions
A New York intermediate appellate court, applying New York law, has held that a shareholder class action complaint concerning the price of a merger and a bankruptcy adversary proceeding against an insured’s directors and officers concerning the same merger are separate claims. Am. Cas. Co. of Reading, Pa. v. Gelb, 2015 WL 3497863 (N.Y. App.… Continue Reading

Insurer Not Liable for Bad Faith in Absence of Special Relationship with Insured or Unreasonable Denial of Coverage

Posted in Bad faith/duty to settle, Insured v. Insured Exclusion
Applying Oregon law that allows bad faith tort claims “only if the insurer is subject to a standard of care that is independent of the insurance policy itself,” an Oregon federal court has granted summary judgment to an insurer, holding that there was no special relationship between the insurer and the insured where the insurer… Continue Reading

Neither “Insured v. Insured” Exclusion nor “Investment Loss Carve-Out” Bars Coverage for Receiver’s Action Against Bank’s Former Directors and Officers

Posted in Insured v. Insured Exclusion, Loss
Applying Iowa law, a federal district court has held that neither a D&O policy’s “insured v. insured” exclusion nor its “investment loss carve-out” provision barred coverage for an action brought by a receiver against a bank’s former directors and officers for losses resulting from the purchase of high-risk securities.  Progressive Cas. Ins. Co. v. FDIC,… Continue Reading

Montana Supreme Court Holds That Where Policy Is “Potentially Implicated,” There Is No Need to Examine Terms of Policy and Underlying Complaint

Posted in Insured v. Insured Exclusion
Applying Montana law, the Montana Supreme Court has held that an insurer breached its duty to defend where the insurer was on notice that a policy was “potentially implicated” and “unjustifiably” refused to provide a defense.  Tidyman’s Mgmt. Svcs. Inc. v. Davis, 2014 WL 3778481 (Mont. Aug. 1, 2014).  In so doing, the court declined… Continue Reading

Insurer Is Not Estopped from Raising New Coverage Defenses When It Reserves Its Right to Rely on Other Policy Terms

Posted in Insured v. Insured Exclusion
Applying Nebraska law, the Nebraska Supreme Court has held that an insurer is not estopped from raising new coverage defenses where it repeatedly reserves its right to rely on other policy terms, conditions, and exclusions, and does not assume the defense of the underlying lawsuit.  Breci v. St. Paul Mercury Ins. Co., 2014 WL 3686856… Continue Reading