Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: New York

Disgorgement Payment Is Insurable Loss Where Payment Did Not Disgorge Insured’s Own Profits, but Those of its Customers

Posted in Loss, Personal Profit/Advantage exclusion, Prior Knowledge/Warranty Exclusion
A New York trial court, applying New York law, has held that a $140 million disgorgement payment by an insured broker-dealer to the U.S. Securities and Exchange Commission constitutes insurable loss, based on evidence that the payment did not disgorge the insured’s ill-gotten gains, but rather those of its customers.  J.P. Morgan Secs. Inc. v.… Continue Reading

Judgment Creditor Not Entitled to Policy Proceeds Where Insured Defaulted Without Insurer’s Consent

Posted in Consent to settle/incur defense costs
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.… Continue Reading

“Capacity Exclusion” Bars Coverage for Counterclaim Against Law Firm

Posted in Uncategorized
The New York Supreme Court, Appellate Division, applying New York law, has held that no coverage was available under a lawyer’s professional liability policy for a counterclaim filed against the insured because of an exclusion barring coverage for claims arising out of the insured’s services and/or capacity as an officer, director, partner, or employee of… Continue Reading

“Employment-Related Wrongful Acts” Exclusion Bars Coverage for Wage Claims under D&O Policy

Posted in Uncategorized
A New York intermediate appellate court has held that an exclusion “for any employment-related Wrongful Act” unambiguously barred coverage under a D&O policy for a claim against a director for failure to pay wages and earned vacation benefits.  Hansard v. Federal Ins. Co., 2017 WL 424688 (N.Y. App. Div. Feb. 1, 2017).… Continue Reading

NY Appeals Court Holds FCRA Statutory Damages Are Covered Damages

Posted in Loss
A New York state intermediate appeals court has affirmed a lower court’s holding that statutory damages paid as part of a settlement of a Fair Credit Reporting Act (FCRA) suit are covered compensatory damages, rather than non-covered penalties under the relevant errors and omissions liability policy.  Navigators Ins. Co. v. Sterling Infosystems, Inc., 2016 WL… Continue Reading

Architect’s Prior Knowledge Bars Coverage for Professional Liability Claim

Posted in “Claim”, Notice of Claim, Prior Knowledge/Warranty Exclusion
A New York federal court has held that an architecture firm is not entitled to coverage under a claims-made professional liability policy because the insured had a reasonable expectation of liability prior to the policy’s inception date.  University of Pittsburgh v. Lexington Ins. Co., 2016 WL 7174667 (S.D.N.Y. Dec. 8, 2016).… Continue Reading

Settlement of Class Actions for Allegedly Withheld Profits Not Disgorgement

Posted in Defense Costs, Loss, Public Policy prohibition on insurance
Applying New York and Delaware law, the Superior Court of Delaware has held that a retirement benefits provider’s settlement of three class actions seeking payment of alleged profits did not constitute disgorgement and was insurable under the provider’s professional liability policies.  TIAA-CREF Individual & Institutional Servs. LLC v. Illinois Nat’l Ins. Co., 2016 WL 6534271… Continue Reading

Lead Underwriter’s Document Production Limits Scope of Following Market’s Production

Posted in Discovery Issues
Applying New York law, a federal district court in New York has held that market underwriters in a syndicate insurance program need not produce potentially responsive claim materials where such production is burdensome and duplicative of documents already produced by the lead underwriter on the program.  Certain Underwriters of Lloyd’s v. National Railroad Passenger Corp.,… Continue Reading

Late Notice Bars Recovery of Claimant’s Unsatisfied Default Judgment under New York Statute

Posted in Notice of Claim
The Northern District of Alabama, applying New York law, has held that an injured party who fails to act “reasonably diligently” in identifying a defendant’s insurer and then “expeditiously” notify the insurer of the claim, as provided in N.Y. Insurance Law § 3420(a), is not entitled to recover under an insured defendant’s E&O policy for… Continue Reading

Professional Services Exclusion Precludes Duty to Indemnify but Not Duty to Advance Defense Costs

Posted in Professional Services
Applying New York law, the United States District Court for the Southern District of New York has held that a D&O insurer was not obligated to indemnify the insured or the insured’s E&O carrier because the D&O policy’s professional services exclusion applied. Beazley Ins. Co., Inc. v. ACE American Ins. Co., No. 15-cv-5119 (S.D.N.Y. Jul.… Continue Reading

Wiley Rein Secures Favorable Outcome for Insurer in Jury Trial Related to Ponzi Scheme Coverage

Posted in Wiley Rein
On June 3, 2016, after a multi-day trial in a hotly contested case, a New York jury found that Continental Casualty Company did not unreasonably delay in seeking to rescind an accountants professional liability policy and therefore had not waived its right to rescind the policy. Wiley Rein partner Richard A. Simpson represented Continental, leading… Continue Reading

Letter Asserting that State Government “May” Bring an Enforcement Action if Insured Did Not “Voluntarily” Cease a Particular Activity Is a Claim

Posted in “Claim”
Applying New York law, the United States Court of Appeals for the Second Circuit has affirmed a ruling that a letter asserting that a state government “may” bring an enforcement action against the insured if the insured did not “voluntarily” cease a particular activity, is a claim. Weaver v. Axis Surplus Ins. Co., No. 14-4180-cv… Continue Reading