Applying Pennsylvania law, the United States District Court for the Eastern District of Pennsylvania has held that a shareholder demand letter, a derivative action and a shareholder lawsuit against the insured were not “related” because the alleged conduct took place at different times and involved different individuals.  Vito v. RSUI Indem. Co., 2020 WL 424592 (E.D. Pa. Jan. 27, 2020).

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The Massachusetts Supreme Judicial Court has held that consent-to-settle clauses in professional liability policies that give the insured absolute discretion regarding settlement do not inherently conflict with the state’s unfair insurance settlement practices statute, Mass. G.L. ch. 176D § 3(9)(f).  Rawan v. Continental Casualty Company, 136 N.E.3d 327 (Mass. Dec. 16, 2019).  The case had attracted considerable attention from amici concerned about potential disruption of the professional liability insurance market in Massachusetts if such consent-to-settle clauses were deemed impermissible.

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A federal district court applying Alabama law has held that an insurer owed no defense or indemnification obligations because the employment practices at issue in an underlying discrimination action against the insured occurred prior to the policy’s retroactive date.  Elite Refreshment Servs. LLC v. Liberty Mut. Grp., Inc., 2020 WL 470289 (N.D. Ala. Jan. 29, 2020).

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In a matter of first impression, the Delaware Superior Court has adopted the “larger settlement rule” to govern allocation of settlement amounts where (i) a settlement resolves, at least in part, insured claims; (ii) the parties cannot agree as to the allocation of amounts attributable to covered versus non-covered claims; and (iii) the policy’s allocation provision does not prescribe a specific allocation method.  Arch Ins. Co. v. Murdock, No. N16C-01-104 (Del. Super. Ct. Jan. 17, 2020).

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Applying Maryland law, the Court of Special Appeals of Maryland has held that an insurer had no right to allocate a global settlement of two underlying lawsuits between covered and non-covered claims, where the damages sought in each action were identical and based on the same misconduct.  Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. The Fund for Animals, Inc., 2019 WL 7369221 (Md. Ct. Spec. App. Dec. 30, 2019).

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A Maryland federal district court has ruled that a ransomware event involved “direct physical loss of or damage to” software, data, and computer systems, thus triggering coverage under a businessowner’s insurance policy.  National Ink & Stitch, LLC v. State Auto Prop. & Cas. Ins. Co., No. SAG-18-2138 (D. Md. Jan. 23, 2020).

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The United States District Court for the Southern District of New York, applying New Jersey law, has held that an insurer was estopped from denying coverage under a retroactivity provision in an engineering firm’s professional liability policy because the insurer’s reservation of rights, which was issued three years after accepting control of the insured’s defense, was untimely and defective.  RLI Ins. Co. v. AST Eng’g Corp., 2019 WL 7114986 (S.D.N.Y. Dec. 20, 2019).

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In a win for Wiley Rein’s client, the U.S. Court of Appeals for the Second Circuit, applying Connecticut law, has held that no coverage is available for a lawsuit seeking recovery of disputed legal fees because the relief sought does not constitute covered “damages” and because the insured was not performing “legal services.”  Continental Cas. Co. v. Parnoff, 2019 WL 6999867 (2d Cir. Dec. 20, 2019).

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