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Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: “Claim”

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No EPL or D&O Coverage for Intra-Corporate Shareholder Dispute

Posted in “Claim”, Wrongful Act
In a win for an insurer represented by Wiley Rein, the United States District Court for the District of Maryland has held that an intra-corporate dispute between shareholders was not covered under an EPL insuring agreement because the underlying demand letter and complaint did not state a claim “for” an Employment Practices Wrongful Act, and… Continue Reading

Delaware Supreme Court Holds Trustee Action Alleging Breach of Fiduciary Duty, Unlawful Dividend, and Fraudulent Transfer Is Not a “Securities Claim”

Posted in “Claim”
The Delaware Supreme Court has held that D&O policies do not afford coverage for an underlying lawsuit asserting causes of action for breach of fiduciary duty, unlawful dividend, and fraudulent transfer because the lawsuit is not a “Securities Claim” under the policies.  In re Verizon Insurance Coverage Appeals, C.A. No. 558, 2018 (Del. Oct. 31,… Continue Reading

Insurer Could Not Assert Late Notice Defense Because Letter from Department of Labor Did Not Allege a “Fiduciary Claim” for a “Wrongful Act”

Posted in “Claim”, Notice of Claim, Wrongful Act
Applying Iowa law, a federal district court has held that an insured’s failure to give notice of a letter seeking information in connection with a government investigation did not preclude coverage for claims that later arose out of the investigation because the initial letter did not assert a “Fiduciary Claim” for a “Wrongful Act” under… Continue Reading

Insured-Versus-Insured Exclusion Does Not Bar Coverage for Derivative Claim Arising from Alleged Employment-Related Misconduct

Posted in Allocation, “Claim”, Insured v. Insured Exclusion, Loss, Related Claims and associated exclusions
A Texas intermediate appellate court, applying Texas law, has held that an insured-versus-insured (IvI) exclusion did not bar coverage for an arbitration award because the underlying dispute arose from alleged wrongful employment practices, bringing the claim within an exception to the exclusion.  Prophet Equity LP v. Twin City Fire Ins. Co., 2019 WL 3886651 (Tex.… Continue Reading

No Coverage for Criminal Investigation Where Claim Was Not Reported During Applicable Notice Period

Posted in “Claim”, Notice of Claim
The United States Court of Appeals for the Eleventh Circuit, applying Florida law, has affirmed a ruling that no coverage was available in connection with a criminal investigation where the insured failed to timely report a sealed affidavit that constituted a “claim” under the language of the policy at issue.  Crowley Maritime Corp. v. Nat’l… Continue Reading

Failure to Report EEOC Charge Precludes Coverage for Interrelated Lawsuit

Posted in “Claim”, Notice of Claim, Related Claims and associated exclusions
The United States District Court for the Eastern District of Arkansas, applying Arkansas law, has held that coverage is unavailable for a lawsuit arising out of Interrelated Wrongful Acts at issue in an EEOC charge where the insured failed to report the EEOC charge to its insurer within the claims-made policy’s reporting period.  Pine Bluff… Continue Reading

Letter to Insured Asserting Right to Patent Applications Constitutes a Claim Made Prior to D&O Policy Period

Posted in “Claim”, Notice of Claim, Related Claims and associated exclusions
In a win for Wiley Rein’s client, a California state court has held that an insurer correctly denied coverage under a D&O policy on the basis that the operative “claim” was made before the policy period.  CNEX Labs, Inc. v. Allied World Assurance Co. (U.S.), Inc., Case No. 18-CV-334461 (Cal. Super. Ct., Santa Clara Cty.… Continue Reading

SEC Investigation Constitutes One Claim; Component Subpoenas Are Not Written Demands for Non-Monetary Relief

Posted in “Claim”, Related Claims and associated exclusions
The First Circuit, applying Massachusetts law, has held that an SEC investigation was a single claim first made when an insured received the formal order of investigation.  The court rejected the insureds’ attempt to split the investigation into various different claims based on the SEC’s subsequent subpoenas and enforcement action.  Biochemics, Inc. v. Axis Reinsurance… Continue Reading

Run-Off Exclusion Precludes Coverage for OIG Subpoena

Posted in “Claim”
The United States District Court for the Eastern District of Texas, applying Texas law, has held that a government-issued subpoena constituted a “Claim” under a directors and officers liability policy, but also determined that the policy’s “run-off exclusion” barred coverage.  Ocean’s Healthcare, L.L.C. v. Illinois Union Ins. Co., 2019 WL 1437955 (E.D. Tex. March 30,… Continue Reading

Charter School’s Notice of Closure Constitutes a “Claim” First Made Before the Policy Period

Posted in “Claim”
Applying Nevada law, the United States District Court for the District of Nevada has held that an insurer did not owe coverage to its insured charter school because a “Notice of Closure” constituted a “claim” first made before the policy period.  Argent Preparatory Acad. f/k/a Silver State Charter Sch. v. Philadelphia Indem. Ins. Co., 2019… Continue Reading

SEC’s Formal Order of Investigation Constitutes “Claim” First Made Before Policy Period

Posted in “Claim”
The U.S. District Court for the District of Massachusetts has held that two liability insurers did not owe coverage for the insured’s SEC investigation defense costs because the SEC investigation was a “claim” first made before the policy period.  Jalbert v. The Zurich Servs. Corp., 2018 WL 4232905 (D. Mass. Sept. 5, 2018).  Wiley Rein… 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

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

Posted in “Claim”, Notice of Claim
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.… Continue Reading

6th Circuit Affirms No Coverage Where Insured Concealed Claim and Underlying Facts Before Giving Untimely Notice of Claim

Posted in “Claim”, Late Notice
In a case that was briefed and argued for the primary carrier by Wiley Rein at the trial court level and on appeal, the U.S. Court of Appeals for the Sixth Circuit unanimously affirmed summary judgment on behalf of the insurers where the insured bank concealed key facts concerning a government investigation until the eve… Continue Reading

Court Holds that Government-Issued Subpoena Constitutes a Claim

Posted in “Claim”, Excess insurance/exhaustion
The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a government-issued subpoena constituted a Claim under the directors and officers liability policies at issue, thus allowing a company’s coverage action to proceed against its primary and excess insurers.  Astellas US Holding, Inc. v. Starr Indem. & Liab.… Continue Reading

Pleading in Suit Between Medical Practice Partners Fails to Trigger Duty to Defend Under Employment Practices Liability Policy

Posted in “Claim”
The Ohio Court of Appeals has affirmed that an insurer owed no duty to defend under an employment practices liability policy where a lawsuit was brought by employees of the insured who were also former partners and shareholders, and the suit was premised solely on the employees’ rights as former partners and shareholders.  Orthopedic &… Continue Reading

DOJ Investigation Constitutes Seven “Claims,” But Specific Litigation and Pending-Or-Prior Litigation Exclusions Bar Coverage

Posted in “Claim”, Defense Costs
The United States Circuit Court of Appeals for the Ninth Circuit, applying California law, has held that an insurer owed no duty to reimburse the insured’s costs of responding to a governmental investigation.  Millennium Labs., Inc. v. Allied World Assurance Co., Inc., 2018 WL 1179601 (9th Cir. Mar. 7, 2018).  While the court held that… Continue Reading

Notice of Accident Constitutes Timely “Claim” Based on Insurers’ Conduct

Posted in “Claim”, Notice of Claim
The United States District Court for the Southern District of Mississippi has held that notice of an underlying accident sent to the insured’s three insurance carriers represented a timely “claim” under the claims-made general liability policies at issue in light of the insurers’ course of conduct upon receipt of the notice.  Jordan v. Maxfield &… Continue Reading

No Coverage for Criminal Investigation Where Sealed Affidavit Identifying Insured as Target of Investigation Was Not Reported During Policy Period

Posted in “Claim”, Notice of Claim
The United States District Court for the Middle District of Florida has held that an errors and omissions policy does not provide coverage for a criminal investigation of an insured individual where the affidavit identifying the individual as a target of the investigation was not unsealed or reported to the insurer until after the policy’s… Continue Reading

Lack of Civil Lawsuit Precludes Duty to Defend, While Prior Knowledge Exclusion Bars Indemnity Coverage

Posted in “Claim”, Bad Faith, Prior Knowledge/Warranty Exclusion
The United States District Court for the District of New Mexico, applying New Mexico law, has held that an insurer owed no duty to defend a title and escrow agent against a demand by a title insurer because no civil proceeding had been brought against the insured.  The court also held that the insured owed… Continue Reading