Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Exclusion Bars Coverage for Fraudulent Instruction Loss when Employee with Authority to Initiate Wire Transfer Enters Fraudulent Account Information

Posted in Cyber Policies and Issues

The U.S. Court of Appeals for the Ninth Circuit has held that an exclusion for loss “resulting directly or indirectly from the input of Electronic Data by a natural person having the authority to enter the Insured’s Computer System” barred coverage under a Computer Fraud insuring clause for a business email compromise/fraudulent instruction scheme.  Aqua Star (USA) Corp. v. Travelers Cas. & Sur. Co. of Am., No. 16-35614 (9th Cir. Apr. 17, 2018).

Continue Reading

No Coverage Under Claims Made and Reported Policy for Claim Reported After Policy Expiration

Posted in Notice of Claim

A Virginia federal court, applying Virginia law, has held that an insurer was entitled to summary judgment that no coverage was available under its claims made and reported policy for a claim noticed to it after the policy expired.  Gateway Residences at Exch., LLC v. Illinois Union Ins. Co., 2018 WL 1629107 (E.D. Va. Apr. 3, 2018).

Continue Reading

No Legal Fees for M&A Objector Where Transaction Resulted in Loss of Standing to Object

Posted in Corporate Considerations

The Delaware Chancery Court has dismissed an action brought by three plaintiffs’ law firms seeking legal fees in connection with merger litigation that was initially successful, but which ultimately failed on appeal when the transaction closed and the objector lost standing.  Bragar Eagel & Squire, PC, et al. v. Kinder Morgan Energy Partners, LP, et al., C.A. No. 2017-0841-JTL (Del. Ch. Apr. 9, 2018).  The court determined that principles of res judicata required that it reject the firms’ subsequent action to recover fees and that, even if that were not the case, the firms’ prior efforts had not produced a “cognizable benefit” for the objecting plaintiff sufficient to justify a fee award.

Continue Reading

Excess Insurer Standing in Shoes of Insured for Equitable Subrogation Claim against Primary Insurer Must Prove Bad Faith

Posted in Bad faith/duty to settle

A Colorado appeals court has held that Colorado law does not recognize an independent equitable subrogation claim by an excess insurer against a primary insurer to recover a settlement paid by the excess insurer.  Preferred Prof’l Ins. Co. v. The Doctors Co., 2018 WL 1633269 (Colo. App. Apr. 5, 2018).  Rather, an excess insurer’s rights under such circumstances are derivative of the insured’s rights under the insurance policy, and therefore the excess insurer must prove that the primary insurer acted in bad faith by refusing to settle.

Continue Reading

D&O Coverage Available for Executive Sued in Insured Capacity, But Not for Insured Entity

Posted in Uncategorized

Applying Hawaii law, the U.S. District Court for the District of Hawaii has held that, while an executive was entitled to coverage because he was sued in his insured capacity, the insured entity was not covered because the underlying lawsuit did not fall within the D&O policy’s definition of “Securities Action.”  Maui Land & Pineapple Co., Inc. v. Liberty Ins. Underwriters Inc., 2018 WL 1613777 (D. Haw. Apr. 3, 2018).

Continue Reading

Fifth Circuit Holds That Fortuity Doctrine Precludes Coverage for Claim That Pre-Dated Policy

Posted in Uncategorized

Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that the fortuity doctrine precludes coverage for a suit filed against an attorney before his lawyers professional liability coverage incepted because the loss occurred or was ongoing at the time the policy was issued.  Wesco Ins. Co. v. Layton, 2018 WL 1472937 (5th Cir. Mar. 26, 2018).

Continue Reading

Ninth Circuit Holds Excess Policy Unambiguously Required Exhaustion of Underlying Limits by Insurers Under Either New York or California Law

Posted in Excess insurance/exhaustion

The United States Court of Appeals for the Ninth Circuit has held that a New York choice of law provision in a policy issued by an international insurer is enforceable and that, under either New York or California law, an excess policy was not triggered when the underlying policy limits were not exhausted through payments by the underlying insurers.  Cooper v. Certain Underwriters at Lloyd’s, 2018 WL 1548208 (Mar. 30, 2018).

Continue Reading

No Coverage for Underlying Lawsuits Due to Insured’s Failure to Provide Notice as Soon as Practicable

Posted in Notice of Claim

The United States District Court for the Northern District of Georgia, applying Georgia law, has held that there is no coverage for multiple lawsuits under employment practices liability insurance policies where the insured failed to comply with the policies’ notice requirements.  Nat’l Cas. Co. v. Fulton Cnty., Ga., 2018 WL 1523089 (N.D. Ga. Mar. 28, 2018).

Continue Reading

Insurer Entitled to Coverage Litigation Attorneys’ Fees Under Arizona Statute

Posted in Coverage Litigation - Declaratory Judgment Actions

An Arizona federal district court has held that an insurer is entitled to an award of approximately $1.1 million in attorneys’ fees incurred in successful coverage litigation with an insured.  11333, Inc. v. Certain Underwriters at Lloyd’s, London, 2018 WL 1570236 (D. Ariz. Mar. 30, 2018).

Continue Reading

Prior Knowledge Exclusion in Application Bars Coverage for Undisclosed Claim that Led to Litigation

Posted in Prior Knowledge/Warranty Exclusion

In a win for Wiley Rein’s client, a Maryland federal district court has ruled that a prior knowledge exclusion contained in a policy application barred coverage for a lawsuit filed during the policy period because it arose from a demand letter received by the insured before the application was completed.  Madison Mechanical, Inc. v. Twin City Ins. Co., No. 1:17-cv-01357-GLR (D. Md. Mar. 30, 2018).

Continue Reading