Applying Delaware law, a Delaware state court has held that a policy’s “capacity” exclusion precluded coverage for two directors because the claims filed against those directors would not have been established “but for” the directors’ alleged misconduct related to third-party investment entities the directors formed to control the insured company.   Goggin v. National Union Fire Ins. Co. of Pittsburgh, 2018 WL 62661195 (Del. Sup. Ct. Nov. 30, 2018).

Continue Reading “Capacity” Exclusion Bars Coverage for Two Directors for Claims of Wrongdoing and Fiduciary Breaches Outside Their Insured Capacity

Applying Texas law, a federal district court has held that an insurer breached its policy by denying coverage for two lawsuits filed after the policy period on the basis that they were not related to an earlier lawsuit.  Nobilis Health Corp. v. Great American Ins. Co., 2018 WL 4810840 (S.D. Tex. Oct. 4, 2018).  The court found that even if the Wrongful Acts alleged in the three lawsuits were not identical, they were at least Related Wrongful Acts, and the lawsuits therefore constituted a single claim made during the policy period.

Continue Reading Securities Suits Alleging Misstatements About Financial Performance Over Same Time Period Constitute A Single Claim

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

An Illinois appellate court has held that a trial court properly awarded judgment to an insurer because it had no duty to defend or indemnify its insured under its claims-made-and-reported policy where notice of the underlying negligence lawsuit came in more than nine months after the policy was cancelled.  Southwest Disabilities Services and Support v. ProAssurance Specialty Ins. Co., Inc., 2018 WL 3635473  (Ill. App. Ct. July 27, 2018).

Continue Reading No Duty to Defend Under Claims-Made-and-Reported Policy Where Notice of Claim Given Nine Months After Cancellation

A federal court in South Carolina has held that an insurer breached its contract with its insured by not paying the full policy limits even though its policy included an “other insurance” clause and there was another insurance policy that potentially covered the same loss.  Michelin North America, Inc. v. Federal Ins. Co., No 6:17-1599 (Nov. 7, 2017).  In so holding, the court noted that the dispute between the two insurers (only one of which was a party to the case), as to the appropriate proration of the insured’s loss has “no impact” on the insured’s right to fully recover under the one insurer’s policy.

Continue Reading Insurer Obligated to Pay Full Policy Limits on Loss Despite Potentially Concurrent Policies With Competing “Other Insurance” Clauses

The United States District Court for the Southern District of Florida has denied an insured’s request for indemnity from its insurer for the amount owed under a settlement agreement with the state of Florida over grand theft charges against the insured.  The court held that, under Florida law, the settlement does not constitute covered “Loss” because the payments were restitutionary in nature, regardless whether there was an admission of guilt or final adjudication.  Philadelphia Indem. Ins. Co., v. Sabal Ins. Group, Inc., 2017 WL 4310700 (S.D. Fla. Sept. 28, 2017).

Continue Reading No Indemnification for Insured’s “Restitutionary In Nature” Settlement Payments, Even Without Admission of Guilt or a Final Adjudication

Applying both New York and Nevada law, the United States Court of Appeals for the Second Circuit has held that an insurer correctly denied coverage under its directors and officers liability policy based on the insured v. insured exclusion.  Intelligent Digital Sys. L.L.C. et al. v. Beazley Ins. Co., 2017 WL 4127540 (2d Cir. Sept. 19, 2017).  This conclusion was reached despite arguments that the exclusion was ambiguous, or, in the alternative, that because the company’s bylaws were not followed, the claimant was not “duly elected or appointed” as a director of the company under the meaning of the Policy.

Continue Reading Second Circuit Affirms Judgment That Insured v. Insured Exclusion Bars Coverage After Jury Finds Plaintiff Was Duly Elected or Appointed as a Director

Applying Delaware law, a federal court in New York has held that where an insured waited more than a year to report a lawsuit to its insurer and during that period incurred more $3.5 million in legal fees, the insurer had no obligation to pay pre-tender defense costs, without regard to whether the insurer could show prejudice from the delay in notice.  Abrams v. RSUI Indem. Co., 2017 WL 3433108 (S.D.N.Y. Aug. 10, 2017).

Continue Reading No Coverage for $3.5 Million in Pre-Notice Defense Expenses Where Notice Was a Year Late

The United States Court of Appeals for the Eleventh Circuit has affirmed the dismissal of a breach of contract and bad faith case against two insurers based on the policies’ professional services exclusion, finding that the exclusion clearly created joint, not several, obligations.  Stettin v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2017 WL 2858768 (11th Cir. July 5, 2017).

Continue Reading Eleventh Circuit Affirms Dismissal Where Professional Services Exclusion Unambiguously Created Joint, Not Several, Obligations

The United States Court of Appeals for the Eighth Circuit, applying Minnesota law, has affirmed summary judgment in favor of an insurer, holding that the condition precedent of timely notice “as soon as practicable” was not met where the insured provided notice of a lawsuit seven months after the lawsuit was filed without offering any reasons for the delay, even though notice was provided during the claims made policy period.  Food Market Merch., Inc. v. Scottsdale Indem. Co., 2017 WL 2271363 (8th Cir. May 25, 2017).

Continue Reading Eighth Circuit Affirms That Notice Given During Policy Period but Seven Months After Complaint Filed is Not “As Soon As Practicable”