The United States District Court for the Southern District of New York, applying Connecticut law, has concluded that a fraud exclusion is not triggered where an insured unwittingly transferred a client’s funds to third-party fraudulent actors based on spoofed emails, because the fraudulent acts were not committed by the insured.  SS&C Techs. Holdings, Inc. v. AIG Specialty Ins. Co., No. 19-cv-7859 (S.D.N.Y. Nov. 5, 2019).

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Applying New York law, a Delaware state court has held that an insurer owed its insured a duty to defend because the factual allegations in two underlying lawsuits arguably involved the insured’s performance of “Professional Services” and no exclusion applied to otherwise bar coverage.  Steadfast Ins. Co. v. DBI Servs., LLC, 2019 WL 2613195 (Del. Super. Ct. June 24, 2019).

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The United States Court of Appeals for the Eleventh Circuit, applying Florida law, held that the fraud exclusion in a company owner’s D&O policy barred coverage because a Securities & Exchange Commission (SEC) civil action found the owner to have engaged in intentionally fraudulent conduct. Imperato v. Navigators Ins. Co., 2019 WL 2443034 (11th Cir. June 11, 2019).

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The United States District Court for the District of Colorado, applying Massachusetts law, has held that an insurer had a duty to defend an entire suit against an au pair sponsor because the negligent misrepresentation claim asserted in that suit fell within the scope of the policy’s insuring agreement and could stand independent from other claims that were excluded from coverage by a Fair Labor Standards Act (FLSA) exclusion and an intentional conduct exclusion.  Cultural Care, Inc. v. AXA Ins. Co., 2018 WL 3008686 (D. Colo. June 15, 2018).

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The United States District Court for the Southern District of Ohio, applying Ohio and New York law, has held that a jury verdict determining that an insured participated in a civil conspiracy to make false statements about competitors incorporated a finding that the statements were intentional and “dishonest” within the meaning of a professional liability policy exclusion.  Evanston Ins. Co. v. Certified Steel Stud Ass’n, 2018 WL 1562016 (S.D. Ohio Mar. 31, 2018).

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Applying California law, the United States Court of Appeals for the Ninth Circuit affirmed a federal district court decision which held that a deceptive business practices exclusion in an errors and omissions policy did not bar coverage for a suit alleging the insured real estate broker received kickbacks, because two of the causes of action did not require a finding of deception or fraud.  Hanover Ins. Co. v. Paul M. Zagaris, Inc., 2018 WL 1126670 (9th Cir. Mar. 2, 2018).

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The United States District Court for the District of New Jersey has held that allegations that a lawyer and his law firm engaged in a fraudulent insurance scheme to induce payment of personal injury protection benefits while representing clients constituted “Professional Legal Services” under the firm’s professional liability policy, triggering the duty to defend.  Arzadi v. Evanston Ins. Co., 2018 WL 747379 (D.N.J. Feb. 7, 2018).  Moreover, the court determined that the policy’s prior knowledge exclusion did not apply to preclude coverage under the circumstances.

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Applying Colorado law, the United States District Court for the District of Colorado has held that allegations of collusion to fix wages in violation of the Sherman Antitrust Act do not fall within the scope of professional liability coverage for “counseling” services because “counseling” does not include an alleged agreement to fix wages.  Colony Ins. Co. v. Expert Group Int’l Inc., 2017 WL 2131368 (D. Colo. May 17, 2017).

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Applying Illinois law, the United States Court of Appeals for the Seventh Circuit has held that an insurer who initially refused to defend its insured and waited five years to bring an action for declaratory relief was precluded from raising policy defenses to indemnity.  Title Indus. Assurance Co. v. First American Title Ins. Co., 2017 WL 1314934 (7th Cir. Apr. 10, 2017).

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