The U.S. District Court for the Western District of Pennsylvania, applying Pennsylvania law, has held that a professional liability insurance policy’s outside business exclusion precluded coverage for an underlying lawsuit arising out of an insured attorney’s alleged use of privileged information to benefit his own business interests. Westport Ins. Co. v. Hippo Fleming & Pertile Law Offices, 2018 WL 4705780 (W.D. Pa. Oct 1, 2018).
Applying Massachusetts law, a federal district court has held that an insurer owed a duty to defend based on allegations regarding a law firm’s failures to notify clients of an attorney’s departure and to transfer client materials. Governo v. Allied World Ins. Co., 2018 WL4685566 (D. Mass. Sept. 28, 2018). In reaching this determination, the court determined the alleged conduct satisfied the policy’s definition of “Legal Services Wrongful Acts.”
Applying Texas law, a federal district court has held that an insurer breached its policy by denying coverage for two lawsuits filed after the policy period on the basis that they were not related to an earlier lawsuit. Nobilis Health Corp. v. Great American Ins. Co., 2018 WL 4810840 (S.D. Tex. Oct. 4, 2018). The court found that even if the Wrongful Acts alleged in the three lawsuits were not identical, they were at least Related Wrongful Acts, and the lawsuits therefore constituted a single claim made during the policy period.
The United States District Court for the Northern District of Alabama has held that alleged constitutional due process violations under 42 U.S.C. § 1983 do not constitute professional services “caused by the negligence” of an insured. Madison County v. Evanston Ins. Co., 2018 WL 4680213 (N.D. Ala. Sept. 28, 2018).
A Florida federal district court has ruled that a claim asserting that an insured’s negligent data security practices led to a payment card breach did not trigger personal injury coverage under a CGL policy. See St. Paul Fire & Marine Ins. Co. v. Rosen Millennium, Inc., No. 6:17-cv-540-Orl-41GJK (M.D. Fla. Sept. 28, 2018). The court reasoned that because the hacker’s conduct, not the insured’s omissions, led to the breach, the insured did not make known any private information. The alleged damages therefore did not “result from [the insured’s] business activities” but instead arose from the third-party hacker’s criminal conduct.
A New York appellate court has held that a $140 million disgorgement payment by an insured broker-dealer to the U.S. Securities and Exchange Commission does not constitute insurable loss even though the payment did not disgorge the insured’s own ill-gotten gains, but rather those of its customers. J.P. Morgan Secs. Inc. v. Vigilant Ins. Co., 2018 WL 4494692 (N.Y. App. Div. Sept. 20, 2018).
The United States District Court for the Northern District of Ohio has held that a bodily injury exclusion did not preclude coverage for a wrongful death suit, reasoning that the death did not cause the alleged wrongful conduct and therefore did not “arise out of” it. Clarendon Nat’l Ins. Co. v. Lexington Ins. Co., 312 F. Supp. 3d 639 (N.D. Ohio 2018). The court also held that the assault at issue was not “discovered” for purposes of triggering coverage until the underlying claimants learned of the alleged wrongful conduct at issue.
Applying Illinois law, a federal district court has held that ten lawsuits against an anatomical donation company for alleged mishandling and sale of human body parts are “related” and constitute a single “Claim” under a professional liability policy. Lloyd’s Syndicate 3624 v. Biological Res. Ctr. of Ill., LLC, 2018 WL 4489589 (N.D. Ill. Sept. 19, 2018).
The United States District Court for the Northern District of Illinois has held that three claims brought by a resident against a condominium owners’ association for alleged discrimination and retaliation involved related wrongful acts and therefore are properly treated as a single Claim deemed first made during the claims-made policy period when the first such claim was asserted. Great Am. Ins. Co. v. State Parkway Condo. Ass’n et al., 2018 WL 433623 (N.D. Ill. Sept. 11, 2018).
A New York state court, applying New York law, has held that an insurer was not entitled to summary judgment based on a prior and pending litigation exclusion because the insurer could not establish that the prior investigation shared a common fact, circumstance, situation, transaction or event with the matter at issue or that any such commonality was “underlying” the prior investigation. Freedom Specialty Ins. Co. v. Platinum Mtmg. (NY), LLC, 2018 WL 4334216 (N.Y. Sup. Ct., N.Y. Cty. Sept. 10, 2018). The court instead entered judgment for the insureds.