Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Bodily Injury Exclusion Inapplicable to Wrongful Death Suit

Posted in Bodily Injury Exclusion, Other Insurance

The United States District Court for the Northern District of Ohio has held that a bodily injury exclusion did not preclude coverage for a wrongful death suit, reasoning that the death did not cause the alleged wrongful conduct and therefore did not “arise out of” it.  Clarendon Nat’l Ins. Co. v. Lexington Ins. Co., 312 F. Supp. 3d 639 (N.D. Ohio 2018).  The court also held that the assault at issue was not “discovered” for purposes of triggering coverage until the underlying claimants learned of the alleged wrongful conduct at issue.

Continue Reading

Ten Lawsuits Alleging Mishandling or Sale of Human Body Parts Constitute a Single “Claim”

Posted in Related Claims and associated exclusions

Applying Illinois law, a federal district court has held that ten lawsuits against an anatomical donation company for alleged mishandling and sale of human body parts are “related” and constitute a single “Claim” under a professional liability policy.  Lloyd’s Syndicate 3624 v. Biological Res. Ctr. of Ill., LLC, 2018 WL 4489589 (N.D. Ill. Sept. 19, 2018).

Continue Reading

Resident’s Three Claims Against Condo Association Spanning Multiple Years Deemed Single Claim Subject to Single Limit

Posted in Related Claims and associated exclusions, Wrongful Act

The United States District Court for the Northern District of Illinois has held that three claims brought by a resident against a condominium owners’ association for alleged discrimination and retaliation involved related wrongful acts and therefore are properly treated as a single Claim deemed first made during the claims-made policy period when the first such claim was asserted. Great Am. Ins. Co. v. State Parkway Condo. Ass’n et al., 2018 WL 433623 (N.D. Ill. Sept. 11, 2018).

Continue Reading

Prior and Pending Litigation Exclusion Does Not Apply Where Insurer Cannot Establish Facts Alleged in Later Investigation Were “Underlying” Prior Investigation

Posted in Related Claims and associated exclusions

A New York state court, applying New York law, has held that an insurer was not entitled to summary judgment based on a prior and pending litigation exclusion because the insurer could not establish that the prior investigation shared a common fact, circumstance, situation, transaction or event with the matter at issue or that any such commonality was “underlying” the prior investigation.  Freedom Specialty Ins. Co. v. Platinum Mtmg. (NY), LLC, 2018 WL 4334216 (N.Y. Sup. Ct., N.Y. Cty. Sept. 10, 2018).  The court instead entered judgment for the insureds.

Continue Reading

Contract Exclusion Bars Coverage for Negligence Claims Arising From Insured’s Alleged Breach of Contract

Posted in Breach of Contract – coverage for amounts due pursuant to contract, exclusions

Applying Louisiana law, a Louisiana court of appeals has held that a contractual liability exclusion in a directors and officers liability policy precluded coverage for an insured’s alleged tortious conduct on the basis that the torts would not have occurred “but for” an alleged breach of contract by the insured.  Perniciaro v. McInnis, 2018 WL 4403981 (La. Ct. App. Sept. 7, 2018).

Continue Reading

No Coverage for Lawsuit Where SEC Notices Issued Prior to Policy Period Alleged Related Investment Misconduct

Posted in Related Claims and associated exclusions

The United States Court of Appeals for the Tenth Circuit, applying Utah law, has held that no coverage exists for a lawsuit filed against an insured where an SEC investigation and proceeding conducted prior to the policy’s inception and the lawsuit both alleged a scheme of defrauding investors over a period of several years by means of “related” misconduct under the policy’s Interrelated Wrongful Acts provision.  Morden v. XL Specialty Ins., 2018 WL 4292227 (10th Cir. Sept. 10, 2018). Continue Reading

Lawsuit Arising Out of Attorney-Client Fee Dispute Did Not Seek “Damages”

Posted in Loss

In a win for Wiley Rein’s client, a federal district court applying Connecticut law has held that an insurer has no duty to defend or indemnify an attorney in a lawsuit that arose out of a fee dispute and did not seek any covered relief.  Continental Cas. Co. v. Parnoff, 2018 WL 4356746 (D. Conn. Sept. 12, 2018).

Continue Reading

SEC’s Formal Order of Investigation Constitutes “Claim” First Made Before Policy Period

Posted in “Claim”

The U.S. District Court for the District of Massachusetts has held that two liability insurers did not owe coverage for the insured’s SEC investigation defense costs because the SEC investigation was a “claim” first made before the policy period.  Jalbert v. The Zurich Servs. Corp., 2018 WL 4232905 (D. Mass. Sept. 5, 2018).  Wiley Rein represented one of the prevailing carriers.

Continue Reading

Montana Supreme Court Holds Insurer Does Not Have Statutory Right to Rescind Lawyers’ Professional Liability Policy

Posted in Rescission

The Supreme Court of Montana has held that a Montana statute allowing insurers to “prevent a recovery” under an insurance policy in certain circumstances, including when the insured made misrepresentations or omissions in its application, does not provide a right to rescind the policy ab initioALPS Prop. & Cas. Ins. Co. v. McLean & McLean, PLLP, 2018 WL 3737950 (Mont. Aug. 7, 2018).  The court also held that an innocent insured attorney had a reasonable expectation of retaining attorney malpractice insurance by purchasing an extended reporting period endorsement.

Continue Reading

Court Denies Reconsideration of Holding that Securities Exclusion Bars Coverage for Claims Involving Misrepresentations Made During Sale of Securities

Posted in Wrongful Act

Applying Texas law, a federal district court has denied a motion for reconsideration of its prior ruling that a securities exclusion barred coverage for claims involving alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 3819928 (E.D. Tex. Aug. 10, 2018).  The court rejected the insured’s argument that an exception to the exclusion restored coverage, concluding that the insured failed to fully brief the argument in the earlier summary judgment motion.

Continue Reading