Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

NY Court Rejects Disclosure-Only Shareholder Class Action Settlement

Posted in Corporate Considerations

A New York trial court has rejected a “disclosure-only” settlement in a shareholder class action, determining that the disclosures were not sufficiently beneficial to the class to support the settlement or the related plaintiffs’ fee award.  City Trading Fund v. Nye, Index No. 651668/2014 (Sup. Ct. NY County Feb. 8, 2018).

Continue Reading

Allegations of Fraudulent Scheme by Lawyer to Induce Payment of Insurance Benefits Constitutes “Professional Legal Services”

Posted in Dishonesty Exclusion, Prior Knowledge/Warranty Exclusion, Professional Services

The United States District Court for the District of New Jersey has held that allegations that a lawyer and his law firm engaged in a fraudulent insurance scheme to induce payment of personal injury protection benefits while representing clients constituted “Professional Legal Services” under the firm’s professional liability policy, triggering the duty to defend.  Arzadi v. Evanston Ins. Co., 2018 WL 747379 (D.N.J. Feb. 7, 2018).  Moreover, the court determined that the policy’s prior knowledge exclusion did not apply to preclude coverage under the circumstances.

Continue Reading

Letter Advising Insured Attorney to Put Carrier on Notice Does Not Make Subsequent Claim Foreseeable

Posted in Prior Knowledge/Warranty Exclusion

The Court of Appeals for the Sixth Circuit, applying Ohio law, has held that a letter from a former client to an insured advising him to put his insurer on notice of potential claims did not make a claim reasonably foreseeable and, as a result, did not preclude coverage for a subsequent claim.  Gonakis v. Mecmarc Cas. Ins. Co., 2018 WL 721673 (6th Cir. Feb. 6, 2018).

Continue Reading

No Coverage for Criminal Investigation Where Sealed Affidavit Identifying Insured as Target of Investigation Was Not Reported During Policy Period

Posted in “Claim”, Notice of Claim

The United States District Court for the Middle District of Florida has held that an errors and omissions policy does not provide coverage for a criminal investigation of an insured individual where the affidavit identifying the individual as a target of the investigation was not unsealed or reported to the insurer until after the policy’s reporting period had expired.  Crowley Maritime Corp. v. National Union Fire Ins. Co., 2018 WL 783606 (M.D. Fla. Feb. 8, 2018).

Continue Reading

Lack of Civil Lawsuit Precludes Duty to Defend, While Prior Knowledge Exclusion Bars Indemnity Coverage

Posted in “Claim”, Bad Faith, Prior Knowledge/Warranty Exclusion

The United States District Court for the District of New Mexico, applying New Mexico law, has held that an insurer owed no duty to defend a title and escrow agent against a demand by a title insurer because no civil proceeding had been brought against the insured.  The court also held that the insured owed no duty to indemnify due to a prior knowledge exclusion in the policy.  Aztec Abstract & Title Ins., Inc. v. Maxum Specialty Group, et al., 2018 WL 734285 (D.N.M. Feb. 6, 2018).

Continue Reading

Specific Litigation Exclusion Bars Coverage for Puerto Rico Mutual Fund Suits and Arbitrations

Posted in Related Claims and associated exclusions

In a win for Wiley Rein’s client, a Puerto Rico federal district court has held that a policy’s broadly worded specific litigation exclusion bars coverage for a series of lawsuits, regulatory investigations, and arbitrations filed against the insured because the matters all involve facts, situations, or circumstances alleged in the claims listed in the exclusion.  UBS Financial Servs. Inc. v. XL Specialty Ins. Co., No. 3:15-cv-3099 (D.P.R. Feb. 1, 2018).

Continue Reading

Securities Exclusion Bars Coverage for Claims Bearing “Incidental Relationship” to Excluded Conduct

Posted in “Claim”, Wrongful Act

Applying Texas law, a federal district court has held that a broadly-worded securities exclusion bars coverage of claims “incidental” to alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 538324 (E.D. Tex. Jan. 24, 2018).  The court further held that an exception for claims involving transactions exempt from registration under the Securities Act of 1933 did not restore coverage under the policy.

Continue Reading

Eleventh Circuit Holds Prior Acts Exclusion Does Not Apply to Claim by FDIC Against Failed Bank

Posted in Related Claims and associated exclusions, Wrongful Act

The U.S. Court of Appeals for the Eleventh Circuit has held that a prior acts exclusion in a directors and officers liability policy does not bar coverage for a lawsuit brought by the Federal Deposit Insurance Corporation (FDIC) against a failed bank, because the wrongful acts at issue occurred after the prior acts date and were not “inextricably linked” to the bank’s wrongful acts before that date.  Certain Underwriters at Lloyd’s of London v. FDIC, 2018 WL 509095 (11th Cir. Jan. 23, 2018).

Continue Reading