The Illinois Court of Appeals, applying Illinois law, has held that multiple lawsuits filed against a school district arising out of an employee’s alleged sexual abuse of children constitute a “single Claim” first made before the claims-made liability policy incepted.  Freeburg Cmty. Consol. Sch. Dist. No. 70 v. Country Mut. Ins. Co., 2021 WL 1337333 (Ill. Ct. App. Apr. 8, 2021).  The court also held that the insurer was permitted to consider extrinsic evidence beyond the “eight corners” of the policy and the complaint in determining coverage.

Continue Reading Multiple Lawsuits Arising Out of Employee’s Alleged Sexual Abuse of Multiple Children are “Single Claim” Under Claims-Made Policy

Applying California law, the United States Court of Appeals for the Ninth Circuit has held that a fiduciary liability policy’s Prior and Pending Proceeding Exclusion did not bar coverage for litigation concerning implementation of a settlement agreement resolving a prior lawsuit because the two actions did not “arise out of the same facts or circumstances.”  San Joaquin County Employees’ Ret. Ass’n v. Travelers’ Cas. & Sur. Co., 2021 WL 1310665 (9th Cir. Apr. 8, 2021).  Further, an Inadequate Funding Exclusion did not apply because the loss did not arise out of insufficient funding of the benefit plan as a whole.

Continue Reading Coverage for Suit Arising from Settlement of Previous Litigation Not Barred by Prior and Pending Proceeding Exclusion

The United States Court of Appeals for the Seventh Circuit, applying Illinois law, has held that common-law tort claims regarding errant faxes arose out of the Telephone Consumer Protection Act (TCPA) so as to trigger an exclusion in the relevant insurance policy.  Mesa Labs., Inc. v. Fed. Ins. Co., 2021 WL 1538230 (7th Cir. Apr. 20, 2021).  The Court held that because the tort claims arose out of the same conduct as the statutory claims, which were clearly barred by the exclusion, the exclusion applied to the entire underlying lawsuit, and there was no duty to defend.

Continue Reading Common-Law Claims Associated with Unsolicited Faxes Held to be “Arising Out of” Violation of the TCPA

Applying Montana law, the Ninth Circuit Court of Appeals has held that a claim made during one claims-made policy period but not noticed until a second policy period was not covered under either policy. Capitol Specialty Ins. Corp. v. Big Sky Diagnostic Imaging, Inc., 2021 WL 1564349 (9th Cir. Apr. 21, 2021).  The court also ruled that the notice-prejudice rule does not apply to claims-made-and-reported policies when the claim is reported after the policy period.

Continue Reading Ninth Circuit Holds Notice-Prejudice Rule Inapplicable to Claims-Made-And-Reported Policies

The United States District Court for the Southern District of New York has held that an insurer has a duty to defend its insured’s subsidiary in a class action lawsuit that alleges wrongful conduct that occurred prior to the parent’s acquisition of the subsidiary, rejecting the insurer’s argument that the policies’ “Related Acts” definition precluded coverage. Great Am. Ins. Co. v. AIG Specialty Ins. Co., 2021 WL 1268450 (S.D.N.Y. Apr. 6, 2021).
Continue Reading Wrongful Acts Alleged in Class Action Based on Corporate Policy Are Not “Related Acts”

The Montana Supreme Court has held that there was no coverage under a lawyers professional liability policy for a client’s malpractice claim because the lawyer knew of and failed to disclose, prior to the insured law firm’s procurement of the policy, the sanctions and default judgment that were the bases of the client’s claim.  ALPS Prop. & Cas. Ins. Co. v. Keller, Reynolds, Drake, Johnson & Gillespie P.C., 2021 WL 688561 (Mont. Feb. 23, 2021).  The court also held that there was no coverage under the policy’s “innocent insured” provision, and that the common law “innocent insured” and “reasonable expectations” doctrines did not preserve coverage for other members of the insured firm.

Continue Reading Prior Knowledge Provisions Barred Coverage for Malpractice Claim Based on Pre-Policy Sanctions and Default Judgment

Applying New York law, the United States District Court for the Southern District of New York has held that an SEC investigation of the insured company did not constitute a “Securities Claim,” where the term expressly excluded investigations.  Hertz Global Holdings, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 2021 WL 1198802 (S.D.N.Y. Mar. 30, 2021).  The court likewise held that the investigation did not constitute a “Claim” against Insured Persons, notwithstanding cooperation of former executives in the investigation.

Continue Reading SEC Investigation of Company Not a “Claim” or “Securities Claim”

The United States District Court for the District of Delaware, applying Delaware law, has held that lawsuits alleging breaches of fiduciary duty did not constitute “Securities Claims” under a D&O policy.  Calamos Asset Mgt., Inc. v. Travelers Cas. & Surety Co. of Am., 2021 WL 663056 (D. Del. Feb. 19, 2021).

Continue Reading Alleged Breach of Fiduciary Duty Not a “Securities Claim”

Applying the law of Mississippi, a federal district court held that coverage was unavailable under a claims-made policy for an underlying lawsuit because the lawsuit, which was filed after the expiration of the policy period, did not allege that the insured had provided legal services “for others” as required by the policy.  Blackburn Law Firm, PLLC v. Allied World Ins. Co., 2021 WL 817882 (N.D. Miss. Mar. 3, 2021).

Continue Reading Lawsuit Filed After Expiration of Policy Period for Lawyer’s Negligent Drafting of His Own Trust Agreement Not Covered Under Claims-Made Professional Liability Policy