Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Allocation

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Insurer Lacked Conclusive Evidence of Insured’s Involvement to Trigger I v. I Exclusion; Insured’s Compromise of Favorable Judgment to Settle Multiple Suits Not a “Loss”

Posted in Allocation, Insured v. Insured Exclusion, Loss, Notice of Claim
The United States District Court for the Central District of California, applying California law, has held that an insurer lacked adequate information to deny coverage under an insured vs. insured exclusion in a D&O policy.  MJC Supply, LLC v. Scottsdale Ins. Co., 2019 WL 2372279 (C.D. Cal. June 4, 2019).  The court also held that… Continue Reading

Professional Services and ERISA Exclusions Do Not Bar Coverage for Mismanagement Lawsuit Brought by Pension Fund Against Real Estate Advisory Fund

Posted in Allocation, Personal Profit/Advantage exclusion, Professional Services
The United States Court of Appeals for the First Circuit, applying Massachusetts law, has affirmed the district court’s holding that a professional services exclusion in a real estate advisory fund’s D&O policy did not excuse the duty to defend a lawsuit brought by an investor in the fund because the allegations at issue were ambiguous… Continue Reading

Alleged 42 U.S.C. § 1983 Violations Not Professional Services Caused by “Negligence”

Posted in Allocation, Bad faith/duty to settle, Other Insurance, Professional Services, Subrogation
The United States District Court for the Northern District of Alabama has held that alleged constitutional due process violations under 42 U.S.C. § 1983 do not constitute professional services “caused by the negligence” of an insured.  Madison County v. Evanston Ins. Co., 2018 WL 4680213 (N.D. Ala. Sept. 28, 2018).… Continue Reading

Stockholder Demand Letter for Legal Expenses for Stockholder Dispute Constitutes Covered Claim for Wrongful Act

Posted in Allocation, “Claim”, Notice of Claim, Wrongful Act
The United States District Court for the District of Rhode Island has concluded that a stockholder demand letter for legal expenses in connection with a dispute regarding the rights of different classes of stockholders constitutes a covered claim for a wrongful act.  Twin River Worldwide Holdings, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh,… Continue Reading

Computer Fraud Claim Triggers Insurer’s Duty to Pay Defense Costs Despite “Gravamen” of Litigation Involving Excluded Misappropriation Claims

Posted in Allocation
The Superior Court of the State of Delaware, applying Delaware and Kansas law, has held that an insurer owed a duty to pay defense costs under a directors and officers liability policy for a lawsuit primarily alleging the misappropriation of trade secrets, despite a misappropriation exclusion, on the basis that the underlying complaint asserted a… Continue Reading

Personal Profit Exclusion Does Not Relieve Insurer of Duty to Advance Defense Costs for Other Pending Causes of Action

Posted in Allocation, “Claim”, Defense Costs, Personal Profit/Advantage exclusion
Applying Montana law, the United States District Court for the District of Montana has held that a D&O policy’s personal profit exclusion, which was implicated by a finding of conversion against an insured director, did not relieve the insurer of the duty to advance defense costs for the other remaining causes of action against the… Continue Reading

Insured v. Insured Exclusion, Allocation Do Not Apply to Related Claims

Posted in Allocation, Collusion, Insured v. Insured Exclusion
A Delaware trial court has affirmed its ruling that an Insured v. Insured exclusion does not apply to a shareholder derivative demand brought by a director of the company because the demand constitutes a single Claim with an earlier demand made by the same individual before he became a director. Ameritrans Capital Corp. v. XL… Continue Reading

Claim for Trademark-Infringing Telephone Scam Not Interrelated with Claim for Internet Scam

Posted in Allocation, Cooperation, Other: Trademark Exclusion, Related Claims and associated exclusions
The United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, has held that a telephone marketing scam and an internet false advertising scam were not interrelated wrongful acts precluding coverage because the conduct behind the alleged wrongful acts was different. Connect America Holdings, LLC v. Arch Ins. Co., 2016 WL 1254073… Continue Reading

Court Holds Insurer Can Allocate Settlements

Posted in Allocation, Bad faith/duty to settle, Breach of Contract – coverage for amounts due pursuant to contract, exclusions, Loss
A federal district court in Pennsylvania has upheld an insurer’s right to allocate settlements between covered and non-covered amounts and affirmed the insurer’s substantive allocation of two settlements. United Nat’l Ins. Co. v. Indian Harbor Ins. Co., No. 14-6425 (E.D. Pa.). Wiley Rein represented the insurer.… Continue Reading

Insurer’s Recoupment Claim Still Alive After Appellate Court Rejects Dismissal Based on Waiver

Posted in Allocation, Consent to settle/incur defense costs, Notice of Claim
The United States Court of Appeals for the Eleventh Circuit, applying Georgia law, has reversed the dismissal of an insurer’s complaint for recoupment of amounts it paid to settle a claim against its insured, holding that the district court erred in relying on factual conclusions that did not flow inevitably from the insurer’s complaint in… Continue Reading

Duty to Defend Does Not Encompass Affirmative Claims

Posted in Allocation, Defense Costs
Applying Texas law, a federal district court has held that a professional liability insurer’s duty to defend an insured attorney against a former client’s claims does not encompass fees and costs incurred by the attorney in prosecuting an affirmative fee claim against the client.  Charla G. Aldous, P.C. v. Darwin Nat’l Assurance Co., 2015 WL… Continue Reading

Contract Exclusion Does Not Bar Coverage for Intentional Misrepresentations During Pre-Contract Negotiations

Posted in Allocation, Bad faith/duty to settle, Breach of Contract – coverage for amounts due pursuant to contract, exclusions, Dishonesty Exclusion
The United States District Court for the District of Rhode Island, applying Rhode Island law, has held that a contract exclusion did not bar coverage for a jury verdict holding in part that the insured’s intentional misrepresentations had induced the claimant to enter into a disputed contract.  TranSched Sys. Ltd. v. Fed. Ins. Co., 2014… Continue Reading

Excess Carrier’s Unrestricted Payment to Primary Carrier Creates Doubt as to Whether Primary Policy Was Exhausted

Posted in Allocation, Excess insurance/exhaustion
The United States Court of Appeals for the Tenth Circuit, applying Texas law, has held that an excess carrier for one policy period could not seek contribution from the excess carrier for a second policy period because the first period’s excess carrier could not prove that the second period’s primary layer was exhausted.  Scottsdale Ins.… Continue Reading

District Court Holds Damages for Negligence and Breach of Contract Are “Indivisible”

Posted in Allocation, Breach of Contract – coverage for amounts due pursuant to contract, exclusions, Wrongful Act
The United States District Court for the District of Rhode Island, applying Rhode Island law, has held that a jury’s finding of negligence and breach of duty against an insured constituted a “Wrongful Act” under a D&O policy’s entity E&O endorsement.  Bank of Rhode Island v. Progressive Cas. Ins. Co., 2014 WL 1931906 (D.R.I. May… Continue Reading