Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Connecticut Supreme Court Answers Certified Question in Favor of Insurance Adjuster, Holding That Continuing Course of Conduct Doctrine Did Not Toll Statute of Repose

Posted in Uncategorized

In a win for Wiley Rein’s client, the Connecticut Supreme Court has held that the continuing course of conduct doctrine could not save the untimely claims of an insurer brought against an insurance adjuster.  See Essex Ins. Co. v. William Kramer & Associates, LLC, Case No. SC 20130 (Conn. Apr. 16, 2019).  On a certified question from the United States Court of Appeals for the Second Circuit, the Supreme Court held that the doctrine did not toll the applicable three-year statute of repose because the adjuster’s duties to the insurer ended when the adjuster closed its file more than six years before the insurer’s lawsuit.

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Warranty Exclusion Bars Coverage Where Start-Up Made Material Misrepresentations in Application about Potential Acquisitions

Posted in Rescission

The U.S. District Court for the Central District of California, applying California law, held that a warranty exclusion barred coverage where a start-up company made material misrepresentations regarding contemplated acquisitions in its policy application.  Scottsdale Ins. Co. v. CSC Agility Platform, Inc., 2019 WL 1452910 (C.D. Cal. Feb. 4, 2019).  The court further held that the insurer did not waive its right to enforce the warranty exclusion, nor was it estopped from doing so.

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Contract Exclusion Bars Coverage for Demand for Cost-Overrun Payment

Posted in Breach of Contract, Defense Costs, Wrongful Act

The United States District Court for the Eastern District of California, applying California law, has held that no coverage is available for a demand for payment in excess of agreed purchase orders based on an exclusion barring coverage for loss “as a result of” a claim “for any actual or alleged obligation under . . . any oral or written contract or agreement.”  Cross Check Servs., LLC v. Old Republic Ins. Co., 2019 WL 1429336 (E.D. Cal. Mar. 29, 2019).

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Excess Carrier Not Entitled to Compel Production of Insured’s Settlement Agreement with Underlying Carriers

Posted in Cooperation, Excess insurance/exhaustion

Applying Illinois law, a federal district court has held that a cooperation clause in an excess insurer’s policy did not entitle the excess insurer to compel production of the insured’s settlement agreement with a primary carrier.  Homeland Ins. Co. of N.Y. v. Health Care Serv. Corp., 2019 WL 1499300 (N.D. Ill. Apr. 3, 2019).

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Coverage Barred Because Causally Related Claims Deemed a Single Claim Under Earlier Policy

Posted in Related Claims and associated exclusions

Applying California law, a federal district court has held that an original and an amended complaint arising out of a series of related wrongful acts were deemed a single claim under an earlier policy, such that coverage was barred under a policy issued later.  General Ins. Co. v. INB Ins. Servs. Corp., 2019 WL 1318252 (N.D. Cal. Mar. 22, 2019).

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Options Trading Exclusion Unambiguously Bars Coverage for Investor Claims

Posted in Exclusion lead-in language (Arising out of), Exclusions

The United States District Court for the District of Utah has held that an errors and omissions policy’s “options trading” exclusion applied to bar coverage for claims resulting from an insured investment company’s high-risk trade.  Allegis Invest. Servs., LLC v. Arthur Gallagher & Co., 2019 WL 1002364 (D. Utah Mar. 1, 2019).

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Claims Based on Similar Wrongdoing Deemed “Related” Despite Geographic Differences of Class Composition

Posted in Defense Costs, Related Claims and associated exclusions

A Utah federal district court has held that claims based on similar acts of wrongdoing were barred by a prior notice exclusion despite geographic differences among the putative class definitions.  Starr Indem. & Liab. Co. v. Monavie, Inc., 2019 WL 1227930 (D. Utah Mar. 5, 2019).  The court also ruled that the insurer was entitled to recoup defense costs incurred in connection with the non-covered claims.

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Charter School’s Notice of Closure Constitutes a “Claim” First Made Before the Policy Period

Posted in “Claim”

Applying Nevada law, the United States District Court for the District of Nevada has held that an insurer did not owe coverage to its insured charter school because a “Notice of Closure” constituted a “claim” first made before the policy period.  Argent Preparatory Acad. f/k/a Silver State Charter Sch. v. Philadelphia Indem. Ins. Co., 2019 WL 1049384 (D. Nev. Mar. 4, 2019).

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Specific Entity Exclusion Bars Coverage of Timely-Noticed Lawsuit

Posted in Notice of Claim

Applying New Jersey law, a federal district court has held that a specific entity exclusion in a claims-made policy barred coverage for a lawsuit filed against the excluded entity.  JP Morgan Chase Bank, N.A. v. Scottsdale Ins. Co., 2019 WL 959698 (D.N.J. Feb. 27, 2019).  The court also held that the insured complied with the policy’s notice provisions.

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Non-Covered Pre-Policy Claims for Return of Fees Do Not Impact Coverage for Breach of Duty Claim During Policy Period

Posted in Related Claims and associated exclusions

Applying Michigan law, an intermediate court of appeals has held that a professional liability insurer was obligated to cover a claim for breach of duty notwithstanding its relationship to pre-policy period claims because those claims were for return of fees and therefore not covered under the policy and not required to be reported by the insured.  Illinois Nat’l Ins. Co. v. AlixPartners LLP, 2019 WL 939018 (Mich. Ct. App. Feb. 26, 2019).

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