Applying Wisconsin law, the United States District Court for the Eastern District of Wisconsin has held that a contract exclusion in a multi-line liability policy barred coverage for an action solely alleging breach of contract. Crum & Forster Specialty Ins. Co. v. GHD Inc., 2018 WL 3304631 (E.D. Wisc. Jul. 5, 2018). The court also held that the broad language in the exclusion did not render coverage “illusory” such that the reformation of the policy would be warranted.
In a case that was briefed and argued by Wiley Rein in the trial court and on appeal, along with Fox Rothschild LLP as Delaware local counsel, the Delaware Supreme Court held that Texas law applies to a comprehensive insurance program issued to a Texas corporation and its subsidiaries nationwide. The Travelers Indemnity Company v. CNH Industrial America, LLC, No. 420, 2017 (Del. July 16, 2018). The Court reversed a decision of the Superior Court holding that Wisconsin law applied and, as a result, that the anti-assignment provisions of the policies at issue were unenforceable. Noting that it was undisputed that the anti-assignment provisions are enforceable under Texas law, the Court reversed the nearly $14 million judgment in favor of the purported assignee of rights under the policies and directed entry of judgment for the insurer.
The U.S. Court of Appeals for the Second Circuit, applying New York law, has held that an email spoofing attack was covered under a computer fraud policy because the attack involved manipulating the insureds’ email system. Medidata Solutions Inc. v. Federal Ins. Co., No. 17-2492-cv (2d Cir. July 6, 2018)
In a case that was briefed and argued for the primary carrier by Wiley Rein at the trial court level and on appeal, the U.S. Court of Appeals for the Sixth Circuit unanimously affirmed summary judgment on behalf of the insurers where the insured bank concealed key facts concerning a government investigation until the eve of settlement, holding that the insured failed to provide timely notice of a Claim or adequate notice of a potential Claim. First Horizon Nat’l Corp. v. Houston Cas. Co., No. 17-5767/5844 (6th Cir. July 10, 2018).
Applying Connecticut law, a Connecticut state trial court has held that no coverage exists under a real estate errors and omissions policy for a lawsuit brought by property investors against two real estate professionals arising from the purported mismanagement of property investment companies. Sarfaty v. United States Liab. Ins. Co., 2018 WL 3060110 (Conn. Super. Ct. May 25, 2018).
The United States Court of Appeals for the Fifth Circuit, applying Texas law, has reversed an order granting an insurer judgment on the pleadings, holding that a breach of contract exclusion did not bar coverage for a demand received by an insured retailer from its credit card processor for indemnification and other relief arising from a payment card breach. Spec’s Family Partners, Ltd. v. Hanover Ins. Co., 2018 WL 3120794 (5th Cir. June 25, 2018).
The West Virginia Supreme Court of Appeals has reinstated a lawsuit seeking to rescind a doctor’s professional liability policy on the grounds that the insured made material misrepresentations in applying for the policy. Admiral Ins. Co. v. Fisher, 2018 WL 2688182 (W. Va. June 6, 2018). In reversing the trial court, the Supreme Court of Appeals noted that the insured omitted information concerning several patient overdose deaths in response to questions on the application for the policy.
The United States District Court for the District of Colorado, applying Massachusetts law, has held that an insurer had a duty to defend an entire suit against an au pair sponsor because the negligent misrepresentation claim asserted in that suit fell within the scope of the policy’s insuring agreement and could stand independent from other claims that were excluded from coverage by a Fair Labor Standards Act (FLSA) exclusion and an intentional conduct exclusion. Cultural Care, Inc. v. AXA Ins. Co., 2018 WL 3008686 (D. Colo. June 15, 2018).
An Illinois intermediate appellate court has held that an intentional acts exclusion precluded a duty to defend a lawsuit alleging that an insured engaged in willful misconduct. Ill. State Bar Ass’n Mut. Ins. Co. v. Leighton Legal Grp., Inc., 2018 WL 2688182 (Ill. App. Ct. May 22, 2018).
The United States District Court for the Northern District of Texas, applying Texas law, has held that the directors and officers of a corporation in receivership were entitled to advancement of defense costs despite the receiver’s objections. SEC v. Faulkner, 2018 WL 2761850 (N.D. Tex. June 6, 2018). The court declined, however, to reallocate the insurer’s prior payments based on the objections of one insured who contended he had not received a sufficient share of the policy proceeds.