Applying New York law, a New York state trial court granted an insurer’s motion for summary judgment where an insured sought coverage under a private company D&O policy for a settlement it had paid for fraudulent filings for state construction projects that were made after the policy’s run-off date.  WDF Inc. v. Zurich Am. Ins. Co., 2020 WL 5801072 (N.Y. Sup. Ct., N.Y. Cnty. Sept. 29, 2020).
…
Continue Reading Run-Off Endorsement Bars Coverage for “False Filings” Made in Connection with Construction Projects for State Agencies

The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an excess insurer could not second-guess the payment decisions of underlying insurers absent a showing of fraud or bad faith, or a policy provision expressly granting the insurer such rights.  Axis Reinsurance Co. v. Northrop Grumman Corp., 2020 WL 5509743 (9th Cir. Sept. 14, 2020).
…
Continue Reading Ninth Circuit: Excess Carrier Not Entitled to Challenge Payment Decisions of Underlying Carriers

The U.S. District Court for the Southern District of New York, applying New York law, has concluded that an insurer waived the right to assert a policy exclusion as a coverage defense in a declaratory judgment action after incorrectly denying coverage based on a similar, but broader, exclusion contained in an inapplicable policy.  City of New York v. Philadelphia Indem. Ins. Co., 2020 WL 5441347 (S.D.N.Y. Sept. 10, 2020).
…
Continue Reading Insurer Waived Right to Assert Policy Exclusion First Raised in Answer to Declaratory Judgment Complaint

The New York Supreme Court, Appellate Division, applying New York law, has held that an Insured v. Insured exclusion (IvI Exclusion) in a D&O policy did not bar coverage for an action brought by a creditor trust against former directors and officers (D&Os) of a bankrupt company, because the suit fell within the scope of an exception for claims brought by certain bankruptcy-related entities. Westchester Fire Ins. Co. v. Schorsch, 2020 WL 4905056 (N.Y. App. Div. Aug. 20, 2020).
…
Continue Reading Insured v. Insured Exclusion Held Not to Bar Action Brought by Creditor Trust

The United States District Court for the District of Connecticut, applying Connecticut law, has found no coverage under a director and officers liability policy for a claim alleging the fraudulent conveyance of a company because it was “related to” a claim challenging the conveyance made prior to the policy period.  See Alexbay LLC v. QBE Ins. Corp., 2020 WL 5501233 (D. Conn. Sept. 11, 2020).  The court declined to decide whether a specific litigation exclusion also barred coverage.
…
Continue Reading D&O Claim Deemed Related to Prior Suit Brought by Different Parties

A federal district court has ruled that a third-party administrator’s professional liability policy does not afford coverage for a claim against the TPA arising from an excess judgment against the TPA’s insurer-client.  American Claims Mgmt., Inc. v. Allied World Surplus Lines Ins. Co., 2020 WL 5257795 (S.D. Cal. Sept. 3, 2020).
…
Continue Reading No Coverage for TPA in Claim Arising from Extracontractual Exposure to Insurer

An Illinois appellate court has held that an underlying action involving a fee dispute was not a claim involving professional services and was not covered under a professional liability policy.  RLI Ins. Co. v. Acclaim Res. Partners, LLC, 2020 WL 5548318 (Ill. App. Ct. Sept. 16, 2020).  The court further held that the underlying action’s conclusory allegations of “professional negligence” did not trigger coverage because the allegations were unsupported by the alleged facts.
…
Continue Reading Illinois Court Holds Fee Dispute Does Not Involve Professional Services

The United States District Court for the Northern District of Texas, applying Texas law, has held that an insured’s late notice of a claim bars coverage, rejecting arguments that (i) the initial complaint did not constitute a “claim” because it did not allege a “wrongful act;” (ii) notice to the broker was sufficient; and (iii) the issuance of a renewal policy on different terms triggered the automatic extended reporting period. Vela Wood PC v. Associated Indus. Ins. Co., 2020 WL 5440496 (N.D. Tex. Sept. 10, 2020).
…
Continue Reading Texas Court Holds Late Notice Bars Coverage

In a case in which Wiley represented the insurer, the United States District Court for the Eastern District of Virginia, applying New York law, has held that three prior knowledge exclusions barred coverage under an architects and engineers professional liability policy as a matter of law where, before the policy period incepted, the insured (1) knew that a pressure vessel in a boiler system which it had serviced had exploded, causing property damage and bodily injury; (2) received three pre-suit letters from potential claimants; and (3) issued two internal litigation holds.  ChemTreat, Inc. v. Certain Underwriters at Lloyd’s of London, No. 19-cv-63 (E.D. Va. Sept. 21, 2020).
…
Continue Reading Prior Knowledge Exclusions Apply Where Insured Received Three Letters from Potential Claimants and Issued Two Litigation Holds Before Policy Incepted

A California court ruled that a forum selection provision in a Delaware company’s registration statement requiring that certain securities litigation be brought solely in federal court was enforceable.  Wong v. Restoration Robotics, Inc., Case No. 18CIV02609 (Cal. Sup. Ct., San Mateo County, Sept. 1, 2020).  The California court’s ruling could signal the beginning of a broader trend, started in Delaware, that would be helpful to securities defendants, and, in turn, to insurance carriers.
…
Continue Reading California Court Enforces Federal Forum Selection Provision For 1933 Act Claims