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Applying Pennsylvania law, the United States District Court for the Eastern District of Pennsylvania has held that a shareholder demand letter, a derivative action and a shareholder lawsuit against the insured were not “related” because the alleged conduct took place at different times and involved different individuals.  Vito v. RSUI Indem. Co., 2020 WL 424592 (E.D. Pa. Jan. 27, 2020).

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In a win for Wiley Rein’s client, the United States District Court for the Eastern District of California applied an assault and battery exclusion to bar coverage for a negligence action arising from a stabbing that occurred at a concert promoted by the insured.  Certain Underwriters at Lloyd’s of London Subscribing to Policy No. EH7713140 v WorldOne Presents, LLC, 2019 WL 4747708 (E.D. Cal. Sept. 30, 2019).

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A federal district court in Massachusetts has held that an insurer properly denied coverage for a claim against an insured church brought by another church that had broken away from the original entity because the breakaway church was not an “insured” under the original church’s policy.  Newton Covenant Church, et al. v. Great Am. Ins. Co., 2019 WL 3464705 (D. Mass. Jul. 31, 2019).

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Applying California law, the United States Court of Appeals for the Sixth Circuit has held that an insurer properly denied coverage under consecutive claims-made-and-reported policies based on the insured’s failure to provide timely notice of a claim and the insured’s failure to disclose the pending claim in its application for coverage.  US HF Cellular Commc’ns., LLC v. Scottsdale Ins. Co., 2019 WL 2323802 (6th Cir. May 31, 2019).

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In a case in which Wiley Rein represented the insurer, a federal district court in Maine has held that an insurer had no duty to defend an enforcement action brought by the Securities and Exchange Commission (SEC) under a lawyers’ professional liability policy because none of the relief sought constituted “damages” as defined in the policy.  Marcus v. Allied World Ins. Co., No. 2:18-cv-253-DBH, 2019 WL 1810954, (D. Me. Apr. 23, 2019).  The court held that when sought by the SEC, disgorgement is properly characterized for insurance purposes as a penalty.  The court also held, however, that the policy’s investment advice exclusion did not apply to negate the insurer’s duty to defend a related securities fraud class action, but it rejected the insured’s argument that because the actions were “related claims,” the insurer’s duty to defend the securities lawsuit also obligated it to defend the SEC enforcement action.

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The Ninth Circuit, applying California law, has held that an insurer improperly failed to defend its insured in connection with a lawsuit alleging that the insured engaged in an ongoing mortgage modification fraud scheme, because one count in the lawsuit did not require willful conduct and therefore was not necessarily uninsurable under California Insurance Code § 533. First One Lending Corp. v. Hartford Casualty Ins. Co., 2017 WL 1018305 (9th Cir. Mar. 5, 2019). The court further held that a financial services exclusion did not completely bar coverage because at least some allegations bore an “insufficient causal nexus with financial services,” thus triggering the insurer’s duty to defend.

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A Nebraska state court has held that the “professional services” exclusion in the insured municipality’s CGL policy barred coverage for the wrongful conviction and civil rights actions brought against the municipality because its deputy sheriffs and psychologist performed “professional services” when they investigated the underlying crime. Gage County, Neb. v. Employers Mut. Cas. Co., No. CI 17-1822, (Neb. Dist. Ct., Lancaster County, Nov. 1, 2018).

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