The Indiana Court of Appeals, applying Indiana law, has held that a ransomware attack did not necessarily constitute a “fraudulent” act, and the corresponding loss did not fall within the scope of the computer fraud coverage part of a multi-peril commercial insurance policy.  G&G Oil Co. of Ind. v. Cont’l Western Ins. Co., 2020 WL 1528095 (Ind. Ct. App. Mar. 31, 2020).  The court rejected the argument that the ransomware attack was a fraud because it was an “unconscionable dealing” and instead found that the hacker did not “pervert the truth” or engage in deception in order to induce ransom payment.

Continue Reading No Computer Fraud Coverage for Ransomware Attack

The United States District Court for the Middle District of Tennessee, applying Tennessee law, has held that a fraud exclusion in a professional liability policy did not bar coverage for a breach of contract claim arising out of a franchise agreement.  For Senior Help, LLC v. Westchester Fire Ins. Co., 2020 WL 1532292 (M.D. Tenn. Mar. 31, 2020).  The court determined that the separately awarded damages for the breach were based on the insured’s failure to meet contractual obligations, regardless of the insured’s otherwise fraudulent conduct.

Continue Reading Breach of Contract Claim Not Barred By Fraud Exclusion

The United States District Court for the District of North Dakota, applying North Dakota law, has held that a commingling exclusion precluded coverage for an insured’s controller’s theft of funds under the property management company’s errors and omissions policy.  Campbell Prop. Mgmt., LLC v. Lloyd’s Syndicate 3624, 2020 WL 1846985 (D.N.D. Apr. 10, 2020).

Continue Reading E&O Coverage for Embezzlement Precluded by Commingling Exclusion

The Pennsylvania Superior Court has held that two men who held senior management roles at a hotel and used their positions to cause the hotel to make payments to a fake company that they created were performing “Professional Services” within the meaning of a professional liability policy while doing so.  Gemini Ins. Co. v. Meyer Jabara Hotels LLC, 2020 WL 1649888 (Pa. Super. Ct. Apr. 3, 2020).  Because the policy excluded coverage for losses arising out of criminal acts committed by employees while rendering Professional Services, the court held that no coverage was available.

Continue Reading Wire Fraud and Money Laundering Can Be “Professional Services” Triggering Criminal Acts Exclusion

The United States District Court for the District of Hawaii, applying Hawaii law, has held that a claims-made policy did not provide coverage for damages awarded in a final judgment for an underlying lawsuit because the claims in that lawsuit were first made prior to the policy period.  Greenspon v. AIG Specialty Ins. Co., 2020 WL 1917333 (D. Haw. Apr. 20, 2020).

Continue Reading No Coverage for Judgment Premised on Same Facts Asserted in Suit Filed Prior to Policy Period

The United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an insured church’s D&O policy did not afford coverage for a claim against a “breakaway” congregation because the breakaway congregation was not an “insured” under the policy.  Newton Covenant Church v. Great Am. Ins. Co., 2020 WL 1815971 (1st Cir. Apr. 10, 2020). Even if the breakaway congregation were to be deemed an “insured,” the Court ruled that coverage was still unavailable because an “insured v. insured” exclusion would apply.

Continue Reading First Circuit Holds “Breakaway” Church Not an “Insured” Under Original Church’s D&O Policy

Applying New York law, the United States District Court for the Southern District of New York has held that an EPL insurer need not reimburse a CGL insurer for a settlement and defense costs incurred in connection with two lawsuits alleging sexual harassment, discrimination, and assault, concluding that the policy’s criminal act exclusion barred coverage because the suits both arose from alleged sexual assault.  Hamilton Specialty Ins. Co. v. Kinsale Ins. Co., 2020 WL 1876358 (S.D.N.Y Apr. 15, 2020).

Continue Reading Criminal Act Exclusion Bars EPL Coverage for Sexual Harassment, Discrimination, and Assault Suits

Applying Illinois law, a federal district court has held that an insurer had no duty to defend or indemnify an insured for a lawsuit that derived in part from facts or circumstances that were the subject of an EEOC charge filed during a prior policy period.  U.S. Specialty Ins. Co. v. Village of Melrose Park, 2020 WL 1923076 (N.D. Ill. April 21, 2020).

Continue Reading No Duty to Defend or Indemnify Lawsuit Overlapping With Prior EEOC Charge

The United States District Court for the Southern District of West Virginia, applying West Virginia law, has held that claims against a surgery center arising out of medical procedures performed by a doctor while patients were anesthetized, primarily related to alleged sexual abuse, were “related claims” subject to a single limit of liability pursuant to a sexual misconduct endorsement.  Allied World Surplus Lines Ins. Co. v. Day Surgery Ltd. Liab. Co., 2020 WL 1545881 (S.D. W. Va.) (Mar. 31, 2020).  However, the court held that the surgery center’s excess policy, which did not contain a sexual misconduct endorsement, did not cover claims arising solely out of sexual abuse.

Continue Reading Claims Arising Out of Alleged Sexual Abuse by Doctor are “Related Claims” Subject to Single Limit of Liability Under Sexual Misconduct Endorsement

The United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, has held that an insurer was not entitled to summary judgment voiding a medical malpractice liability policy, finding that triable issues of fact remained about whether an insured could have anticipated litigation stemming from past medical procedures at the time it completed its policy application.  MDAdvantage Ins. Co. of N.J. v. Hasiuk, 2020 WL 1531817 (E.D. Pa. Mar. 31, 2020).

Continue Reading Issues of Fact Halt Insurer’s Attempt to Rescind Malpractice Policy