Breach of Contract – coverage for amounts due pursuant to contract, exclusions

The United States Court of Appeals for the Seventh Circuit has affirmed a ruling holding that an underlying action alleging only breach of contract did not allege a negligent act, error, or omission required to trigger coverage under the policy at issue. Hartford Cas. Ins. Co. v. Karlin, Fleisher & Falkenberg, LLC, 2016 WL 2849449 (7th Cir. May 16, 2016).
Continue Reading Seventh Circuit: A Breach of Contract is Not a “Negligent Act”

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 Court Holds Insurer Can Allocate Settlements

The United States Court of Appeals for the Eleventh Circuit has held that coverage was precluded for a negligence claim because the claim arose out of the insured’s contractual liability and was thus barred by the contractual liability exclusion contained in the D&O policy. Bond Safeguard Ins. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2015 WL 5781002 (11th Cir. Oct. 5, 2015). In so holding, the court held that there was a sufficient causal connection between the negligence claim and the insured’s contractual liability to enforce the unambiguous terms of the exclusion.
Continue Reading Contractual Liability Exclusion Bars Coverage for Negligence Claim

An Illinois federal court has held that an underlying complaint alleging breach of contract did not allege injury arising out of “any negligent act, error or omission” necessary to trigger employee benefits liability coverage, citing the “well-recognized line of demarcation between negligent acts and breaches of contract.” Hartford Cas. Ins. Co. v. Karlin, Fleisher & Falkenberg, LLC, 2015 WL 5766110 (N.D. Ill. Sept. 30, 2015).
Continue Reading A Breach of Contract is not a “Negligent Act”

The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a contract exclusion barred coverage for a claim against an insured city by the operator of a minor league baseball team which asserted it was a third-party beneficiary to the contract for the construction of a stadium in the city. OneBeacon Am. Ins. Co. v. City of Zion, 2015 WL 4572654 (N.D. Ill. July 29, 2015). However, the court held that the insurer did have a duty to defend the city’s mayor and economic development director because the claims against them were not wholly precluded by the contract exclusion or by the policy’s profit, advantage or remuneration or criminal acts exclusions.
Continue Reading Contract Exclusion Bars Coverage for City but Not Individual Officials

Applying New Jersey law, the United States Court of Appeals for the Third Circuit has held that a contractual liability exclusion precludes coverage for a claim seeking to recover under contracts for foreign exchange transactions regardless whether the contracts in fact are valid.  PNY Techs. Inc., v. Twin City Fire Ins. Co., 2015 WL 3622933 (3d Cir. June 11, 2015)
Continue Reading Contractual Liability Exclusion Bars Coverage for Insureds’ Alleged Liability under Contract, Regardless Whether Contracts Are Actually Valid

The United States District Court for the Central District of California, applying California law, has held that a breach of contract exclusion bars coverage for fraud claims against an insured advertising agency. Axis Ins. Co. v. Inter/Media Time Buying Corp., 2015 WL 3609300 (C.D. Cal. June 8, 2015).
Continue Reading Contract Exclusion Bars Coverage for Fraud Claims Arising Out of Advertising Services Contract

Applying Illinois law, an Illinois federal district court has granted an insurer’s motion to dismiss a coverage action where unambiguous unpaid compensation and breach of contract exclusions precluded coverage for allegations that the policyholder wrongfully withheld compensation owed to an independent contractor. Altom Transp., Inc. v. Westchester Fire Ins. Co., 2015 WL 2399126 (N.D. Ill. May 18, 2015).
Continue Reading Unpaid Compensation and Breach of Contract Exclusions Bar Coverage for Independent Contractor’s Suit

Applying California law, the United States District Court for the Northern District of California has granted an insured’s motion to stay in part, holding that certain of an insurer’s coverage defenses should be stayed pending resolution of underlying litigation where those coverage defenses turn on facts to be litigated in the underlying litigation. Ironshore Spec. Ins. Co. v. 23andMe, Inc., 2015 WL 2265900 (N.D. Cal. May 14, 2015). The court denied the insured’s motion to stay with respect to the applicability of the policy’s contract exclusion, finding that the issue could be decided based upon the underlying pleadings and was not controlled by the determination of fact issues in the underlying litigation.
Continue Reading Court Stays Litigation of Certain Coverage Defenses, Allows Others To Proceed Pending Resolution of Underlying Litigation

A federal district court in Oregon has held that damages awarded against an insured for breach of contract and negligence in connection with its performance under a software development contract constituted “loss” under an E&O policy but were excluded from coverage by the policy’s warranty exclusion.  Travelers Prop. Cas. Co. of Am. v. ServerLogic Corp., 2015 WL 920419 (D. Or. Mar. 3, 2015).
Continue Reading Contract-Related Breach and Negligence Damages Constitute “Loss;” Coverage Precluded by Warranty Exclusion