Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Defense Cost Recoupment Provisions Enforceable Under Washington Law

Posted in Defense Costs

The United States District Court for the Western District of Washington, applying Washington law, has held that no Washington state public policy prevents an insurer from enforcing a defense cost recoupment provision.  Massachusetts Bay Ins. Co. v. Walflor Indus., 2019 WL 1651659 (W.D. Wash. Apr. 17, 2019).  The court resolved the issue based on precedent and saw no need to certify the question of the enforceability of such provisions to the Washington Supreme Court as the insured urged.

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No Coverage for Claims Alleging Pre- and Post-Prior Acts Date Conduct

Posted in Related Claims and associated exclusions, Uncategorized

A Minnesota federal court has held that a prior acts exclusion bars coverage for claims involving wrongful acts that occurred both before and after the applicable prior acts date because the wrongful acts arose from the “same nucleus” of facts.  Tile Shop Holdings, Inc. v. Allied World Nat’l Assurance Co., 2019 WL 2357044 (D. Minn. June 4, 2019).

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Specific Matter Exclusion Bars Coverage for Lawsuits Involving Same Parties as Lawsuit Included in Definition of “Specific Matter”

Posted in Related Claims and associated exclusions

The United States Court of Appeals for the Ninth Circuit, applying California law, has affirmed the district court’s holding that a specific matter exclusion bars coverage for a series of lawsuits involving the same parties as a lawsuit included in the policy’s definition of “Specific Matter” in that exclusion.  Ocean Towers Hous. Corp. v. Evanston Ins. Co., 2019 WL 2484415 (9th Cir. June 14, 2019).

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SEC Investigation Constitutes One Claim; Component Subpoenas Are Not Written Demands for Non-Monetary Relief

Posted in “Claim”, Related Claims and associated exclusions

The First Circuit, applying Massachusetts law, has held that an SEC investigation was a single claim first made when an insured received the formal order of investigation.  The court rejected the insureds’ attempt to split the investigation into various different claims based on the SEC’s subsequent subpoenas and enforcement action.  Biochemics, Inc. v. Axis Reinsurance Co., 2019 WL 2223125 (1st Cir. May 23, 2019).

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5th Circ. Insights On Wrongful Conviction Insurance Coverage

Posted in Wrongful Conviction

This article was originally published in Law360 on July 10, 2019.

In a long-running insurance coverage dispute, the United States Court of Appeals for the Fifth Circuit recently issued a decision addressing trigger of coverage in the context of three wrongful convictions in Travelers Indemnity Co. v. Mitchell.

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Invasion of Privacy Exclusion Bars Coverage for Consent Judgment in TCPA Claim

Posted in Cyber Policies and Issues

A Florida federal district court has ruled that an invasion of privacy exclusion barred coverage for a lawsuit and consent judgment involving alleged violations of the Telephone Consumer Protection Act (TCPA).  See Horn v. Liberty Ins. Underwriters, Inc., No. 9:18-cv-80762 (S.D. Fla. May 30, 2019).

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Failure to Give Timely Notice of Arbitration Bars Coverage, Even Where Insured Gave Timely Notice of Related Claim

Posted in Notice of Claim

The United States District Court for the Southern District of Texas, applying Texas law, has granted an employment practices liability insurer’s motion for summary judgment in a lawsuit alleging that it wrongfully denied coverage for an arbitration award, concluding that the insured failed to provide timely notice of the arbitration to its insurer.  Stadium Motorcars, LLC v. Federal Ins. Co., 2019 WL 212111 (S.D. Tex. May 15, 2019).

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Illinois Court Holds Insured is Entitled to Independent Counsel to Defend Uncovered Punitive Damages Claim

Posted in Cooperation

An Illinois appeals court has held that an insured had the right to select independent counsel under a duty to defend policy where the insured faced a substantial, uncovered punitive damages award.  See Xtreme Prot. Servs., LLC v. Steadfast Ins. Co., 2019 WL 1976482 (Ill. App. Ct. May 3, 2019).

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Regulatory Warning Notices Asserting Damages Based on Same Acquisition Involve “Related Wrongful Acts”

Posted in Notice of Claim, Related Claims and associated exclusions

In a win for Wiley Rein’s client, a New York appellate court has held that a program of asset management liability insurance afforded no coverage for a UK regulatory “Warning Notice” because the notice and a previous notice issued by the same regulator to the same targets arising from the same transaction involved “Related Wrongful Acts” and therefore constituted a single claim first made prior to inception of the relevant policies.  Berkshire Hathaway Specialty Ins. Co. v. H.I.G. Capital, LLC, 2019 WL 2179145 (N.Y. App. Div. May 21, 2019).  In addition, the court held that the policies’ prior notice exclusion applied to bar coverage.

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Insured Entitled to Independent Counsel Where Coverage Action Turns on Facts That Could be Used to Establish Underlying Liability

Posted in Defense Costs, Prior Knowledge/Warranty Exclusion

The United States District Court for the Central District of California, applying California law, has held that an insured is entitled to independent counsel where an insurer’s coverage action turns on facts that overlap with facts that might establish an insured’s liability in the underlying lawsuit.  Aspen Am. Ins. Co. v. Ou, 2019 WL 1950293 (C.D. Cal. Mar. 14, 2019).

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