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The Montana Supreme Court has held that there was no coverage under a lawyers professional liability policy for a client’s malpractice claim because the lawyer knew of and failed to disclose, prior to the insured law firm’s procurement of the policy, the sanctions and default judgment that were the bases of the client’s claim.  ALPS Prop. & Cas. Ins. Co. v. Keller, Reynolds, Drake, Johnson & Gillespie P.C., 2021 WL 688561 (Mont. Feb. 23, 2021).  The court also held that there was no coverage under the policy’s “innocent insured” provision, and that the common law “innocent insured” and “reasonable expectations” doctrines did not preserve coverage for other members of the insured firm.

Continue Reading Prior Knowledge Provisions Barred Coverage for Malpractice Claim Based on Pre-Policy Sanctions and Default Judgment

The United States District Court for the District of Delaware, applying Delaware law, has held that lawsuits alleging breaches of fiduciary duty did not constitute “Securities Claims” under a D&O policy.  Calamos Asset Mgt., Inc. v. Travelers Cas. & Surety Co. of Am., 2021 WL 663056 (D. Del. Feb. 19, 2021).

Continue Reading Alleged Breach of Fiduciary Duty Not a “Securities Claim”

The United States District Court for the District of Columbia, applying District of Columbia law, has held that there is no coverage for three lawsuits filed against an insured company because the lawsuits related to an email demand previously received by the company which it failed to report during the applicable claims made and reported policy period.  The court further held in the alternative that, even if the email was not a “claim,” the company failed to provide notice of the lawsuits under the subsequent policy as soon as practicable and the insurer was entitled to deny coverage under the later policy, without showing prejudice.  Zurich Am. Ins. Co. v. UIP Cos., 2021 WL 602901 (D.D.C. Feb. 16, 2021).

Continue Reading No Coverage for Three Lawsuits Related to Email Not Timely Noticed; No Showing of Prejudice Required Where Notice Not As Soon As Practicable

A California federal district court has ruled that an insurer could rescind a professional liability policy because its insured failed to disclose a customer dispute and potential claim in its application for coverage.  Scottsdale Indem. Co. v. Sun Coast Gen. Ins. Agency, 2020 WL 8569410 (C.D. Cal. Dec. 21, 2020).

Continue Reading Insurer Entitled to Rescind Policy Due to Insured’s Failure to Disclose Contract Dispute and Potential Claim on Application

The United States District Court for the Northern District of California, applying California law, has held that a dishonesty exclusion in a D&O policy did not bar coverage for an underlying lawsuit alleging a company president’s negligent misrepresentation in inducing investments.  Scottsdale Ins. Co. v. Fineman, 2021 WL 411360 (N.D. Cal. Feb. 5, 2021).  The court also held that an unconfirmed arbitration award is not a “final judgment” that can trigger the exclusion.

Continue Reading Negligent Misrepresentation Claim Not Barred By Exclusion for Dishonest Conduct

Judge Paul Wallace of the Delaware Superior Court has held that a bump-up provision did not operate to preclude coverage for a settlement of a Section 14(a) cause of action.  Northrop Grumman Innovation Sys., Inc. v. Zurich Am. Ins. Co., 2021 WL 347015 (Del. Super. Ct. Feb. 2, 2021).  The court also held that a prior acts exclusion contained in a different set of D&O policies did not preclude coverage for Section 10(b) claims asserted in the same lawsuit.

Continue Reading Coverage for Stockholder Suits Not Barred By Prior Acts Exclusion or Bump-Up Provision

The United States District Court for the Central District of California, applying California law, has held that antitrust exclusions in two D&O policies did not bar coverage for a class action against an insured sports equipment manufacturer asserting violations of consumer protection laws.  James River Ins. Co. v. Rawlings Sporting Goods Co., 2021 WL 346418 (C.D. Cal. Jan. 25, 2021).

Continue Reading Consumer Protection Claims Not Barred By Antitrust Exclusion

The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a professional liability insurer had no duty to defend or indemnify an employee of its insured realty management company where the underlying allegations were based on the employee’s alleged intentional conduct in circumventing an estate plan.  Those Certain Underwriters at Lloyd’s, London, Severally Subscribing to Policy No. MPL-0000343-01 v. Karris, 2021 WL 493038 (N.D. Ill. Feb. 10, 2021).

Continue Reading No Coverage for Lawsuit Alleging Intentional Conduct to Circumvent Estate Plan

The California Court of Appeal, applying California law, has held that two lawsuits arising from work performed by the same insured engineering firm on a housing development constitute related claims under the firm’s professional liability policies, and were thus subject to a single policy limit.  D.R. Horton Los Angeles Holding Co. v. Certain Underwriters at Lloyd’s London Subscribing to Policy No. 146/LDUSA0700832, 2020 WL 7417409 (Cal. Ct. App. Dec. 18, 2020).

Continue Reading Lawsuits Concerning Same Housing Development Project Are Related Claims

The Missouri Court of Appeals, applying Missouri law, has held that multiple acts of negligence committed by a lawyer while representing a married couple in a lawsuit are related acts or omissions constituting a single claim under the law office’s professional liability policy, and thus were subject to a single limit of liability.  Stacy v. Bar Plan Mut. Ins. Co., 2021 WL 243515 (Mo. Ct. App. Jan. 26, 2021).  The court also held that the insurer was not estopped from asserting the limits of liability when it failed to send reservation of rights or denial of coverage letters relating to its single-claim position.

Continue Reading Lawyer’s Multiple Acts of Negligence Constitute A Single Claim