Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that a prior knowledge condition did not relieve an insurer of its duty to defend where an underlying complaint made vague allegations of wrongdoing at an indeterminate time.  Allied World Specialty Ins. Co. v. McCathern, P.L.L.C., 2020 WL 933314 (5th Cir. Feb. 26, 2020).  The court found that the vague allegations could be construed to refer to conduct occurring after the date specified in the prior knowledge condition.

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The United States Court of Appeals for the Ninth Circuit, applying Washington law, has held that a district court erred in concluding that a demand letter and suit alleging the same wrongful act constituted a “single claim” where the applicable professional liability policy lacked a related claims provision.  Nat’l Union Fire Ins. Co. v. Zillow, Inc., 2020 WL 774366 (9th Cir. Feb. 18, 2020).  The court of appeals declined, however, to find that the absence of a related claims provision resolved the coverage issue and remanded for consideration of extrinsic evidence to determine the parties’ intent.

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The United States Court of Appeals for the Fifth Circuit, applying Texas law, has held that an insurer could not deny coverage due to the insured’s failure to comply with “immaterial” conditions of notice, absent a showing of prejudice, where an insured complied with its “material” obligation to report a claim.  Landmark Am. Ins. Co. v. Lonergan Law Firm, P.L.L.C., 2020 WL 833068 (5th Cir. Feb. 19, 2020).

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Applying New York law, the United States District Court for the Southern District of New York has held that, because a subpoena duces tecum previously issued to the insured by a post-judgment creditor of a non-insured entity was not a “Claim” against the insured, the subpoena and a later-filed lawsuit against the insured could not qualify as “Related Claims” deemed first made when the subpoena was issued. Protective Specialty Ins. Co. v. Castle Title Ins. Agency, Inc., 2020 WL 550700 (S.D.N.Y. Feb. 3, 2020). The court also held that the “warranty exclusion” in the application for the policy (in which the insured warranted that it was “not aware of any incident or circumstance which may result in a claim”) did not bar coverage for the lawsuit, even though the insured failed to disclose the subpoena in the application.

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Applying Michigan law, a federal district court has held that common law causes of action for fraud and negligent misrepresentation are not “based on or arising out of actual or alleged violations” of ERISA or securities laws merely because they arise out of the same factual scenario.  Great Am. Fidelity Ins. Co. v. Stout Risius Ross, Inc., 2020 WL 601784 (E.D. Mich. Feb. 7, 2020).

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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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