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Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Insured v. Insured Exclusion

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Third Circuit Finds Major Shareholder Exclusion Ambiguous as Applied to Company Acquiring All of Insured’s Stock after Policy Period

Posted in Insured v. Insured Exclusion, Loss
The United States Court of Appeals for the Third Circuit, applying Delaware law, has held that a D&O policy’s Major Shareholder Exclusion, barring claims brought against the insured entity by a company owning five percent or more of the entity, was ambiguous as applied to a company acquiring one hundred percent of the insured’s stock… 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

Breakaway Church Not an “Insured” Under Original Church’s D&O Policy

Posted in Insured v. Insured Exclusion, Insured-identity
A federal district court in Massachusetts has held that an insurer properly denied coverage for a claim against an insured church brought by another church that had broken away from the original entity because the breakaway church was not an “insured” under the original church’s policy.  Newton Covenant Church, et al. v. Great Am. Ins.… Continue Reading

Insured Bears Burden of Establishing that Exception to Insured Versus Insured Exclusion Applies

Posted in Insured v. Insured Exclusion
The United States District Court for the Northern District of Illinois, applying Oklahoma law, has held that the insured bears the burden of demonstrating that an exception to an otherwise applicable exclusion applies to restore coverage.  World Water Works Holdings, Inc. v. Continental Cas. Co., 2019 WL 2576560 (N.D. Ill. June 24, 2019).… Continue Reading

Insurer Lacked Conclusive Evidence of Insured’s Involvement to Trigger I v. I Exclusion; Insured’s Compromise of Favorable Judgment to Settle Multiple Suits Not a “Loss”

Posted in Allocation, Insured v. Insured Exclusion, Loss, Notice of Claim
The United States District Court for the Central District of California, applying California law, has held that an insurer lacked adequate information to deny coverage under an insured vs. insured exclusion in a D&O policy.  MJC Supply, LLC v. Scottsdale Ins. Co., 2019 WL 2372279 (C.D. Cal. June 4, 2019).  The court also held that… Continue Reading

Law Firm Entitled to Coverage for Claim Alleging Failure to Transfer Client Materials and to Notify Clients of Departing Attorneys

Posted in Insured v. Insured Exclusion, Wrongful Act
Applying Massachusetts law, a federal district court has held that an insurer owed a duty to defend based on allegations regarding a law firm’s failures to notify clients of an attorney’s departure and to transfer client materials.  Governo v. Allied World Ins. Co., 2018 WL4685566 (D. Mass. Sept. 28, 2018).  In reaching this determination, the… Continue Reading

Second Circuit Affirms Judgment That Insured v. Insured Exclusion Bars Coverage After Jury Finds Plaintiff Was Duly Elected or Appointed as a Director

Posted in Insured v. Insured Exclusion
Applying both New York and Nevada law, the United States Court of Appeals for the Second Circuit has held that an insurer correctly denied coverage under its directors and officers liability policy based on the insured v. insured exclusion.  Intelligent Digital Sys. L.L.C. et al. v. Beazley Ins. Co., 2017 WL 4127540 (2d Cir. Sept.… Continue Reading

Insured vs. Insured Exclusion Bars Coverage for Claim Brought by Insured and Officers Against Another Officer

Posted in Insured v. Insured Exclusion
The Superior Court of New Jersey, Appellate Division, applying New Jersey law, has held that an insured vs. insured exclusion bars coverage under a directors and officers liability policy for counterclaims brought against an officer by the company and fellow officers.  Abboud v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2017 WL 2665133 (N.J.… Continue Reading

Insured Versus Insured Exclusion Bars Coverage for Claim by Liquidating Trust

Posted in Bankruptcy, Insured v. Insured Exclusion
The United States Court of Appeals for the Sixth Circuit, applying Michigan law, has held that an insured vs. insured exclusion bars coverage for a claim against an insured company’s former officers assigned during bankruptcy to a liquidating trust. Indian Harbor Ins. Co. v. Zucker, 2017 WL 2641085 (6th Cir. June 20, 2017).… Continue Reading

Insurer Not Estopped from Asserting Policy Defenses Where Insured Had Duty to Defend; Insured-v.-Insured Exclusion Does Not Bar Coverage for Claims by Former Shareholders

Posted in “Claim”, Insured v. Insured Exclusion, Related Claims and associated exclusions
An Illinois federal court, applying Illinois law, has held that an insurer who declined to advance defense costs was not estopped from asserting policy defenses in a coverage action later filed by the policyholder corporation.  Vita Food Prods., Inc. v. Navigators Ins. Co., 2017 WL 2404981 (N.D. Ill. June 2, 2017).  The court also held… Continue Reading

Insured-Versus-Insured Exclusion Bars Coverage for Claim Against Former Director That Insured Assigned to Its Fidelity Insurer

Posted in Insured v. Insured Exclusion
The Texas Supreme Court has held that the insured-versus-insured exclusion in a D&O policy precludes coverage for a claim asserted by the insured’s fidelity insurer, under an assignment of rights from the insured, against a former director of the insured.  The court reversed the holding of the intermediate court of appeals and reinstated the trial… Continue Reading

Court-Appointed Receiver Acts “On Behalf Of” Court, Barring Application of Insured v. Insured Exclusion

Posted in Insured v. Insured Exclusion, Public Policy prohibition on insurance
The United States District Court for the District of Rhode Island, applying Rhode Island law, has held that an insured v. insured exclusion in a directors and officers liability insurance policy does not apply to a court-appointed receiver because the receiver acts as an agent of the court under Rhode Island law, rather than on… Continue Reading

Insured v. Insured Exclusion Bars Coverage for Claim by FDIC Receiver Against Failed Bank’s Directors and Officers

Posted in Insured v. Insured Exclusion, Regulatory Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured v. insured exclusion in a directors and officers policy, which expressly barred coverage for actions brought by a “receiver,” precluded coverage for a claim against a failed bank’s directors and officers by the Federal Deposit Insurance Corporation… Continue Reading

Insured v. Insured Exclusion Bars Coverage for Shareholders’ Suit Spearheaded by Former Director

Posted in Insured v. Insured Exclusion
Applying Minnesota law, the United States Court of Appeals for the Eighth Circuit has held that a policy’s insured versus insured exclusion bars coverage for a suit filed against the insured company by a former director and two other shareholders regarding share value.  Jerry’s Enterprises, Inc. v. U.S. Specialty Ins. Co., 2017 WL 104468 (8th… Continue Reading

Insured-versus-Insured Exclusion Deemed Ambiguous as Applied to FDIC as Receiver

Posted in Insured v. Insured Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured-versus-insured exclusion was ambiguous where the plaintiff FDIC, in its capacity as receiver, sued the directors and officers of a defunct bank.  St. Paul Mercury Ins. Co. v. Federal Deposit Ins. Corp., 2016 WL 6092400 (9th Cir. Oct.… Continue Reading

Capacity Issues, Personal Profit Exclusion, and Insured v. Insured Exclusion Do Not Preclude Duty to Defend

Posted in Insured v. Insured Exclusion, Personal Profit/Advantage exclusion
A federal appellate court, applying Utah law, has held that an insured v. insured exclusion did not preclude a duty to defend where one insured entity had changed its name and disaffiliated from the other insured entity. Church Mut. Ins. Co. v. Ma’afu, 2016 WL 3997212 (10th Cir. July 21, 2016). The court also held… Continue Reading

Insured v. Insured Exclusion, Allocation Do Not Apply to Related Claims

Posted in Allocation, Collusion, Insured v. Insured Exclusion
A Delaware trial court has affirmed its ruling that an Insured v. Insured exclusion does not apply to a shareholder derivative demand brought by a director of the company because the demand constitutes a single Claim with an earlier demand made by the same individual before he became a director. Ameritrans Capital Corp. v. XL… Continue Reading

Insured Failed to Show Claim Fell Within Exception to Insured v. Insured Exclusion

Posted in Insured v. Insured Exclusion
Applying Arizona law, the United States Court of Appeals for the Ninth Circuit has affirmed the dismissal of a coverage action brought by an insured on the grounds that the insured failed to demonstrate the applicability of an exception to the Insured v. Insured exclusion in a D&O liability policy. AMERCO v. National Union Fire… Continue Reading

Fifth Circuit Reverses: Insured v. Insured Exclusion Does Not Apply To Indemnity Claim

Posted in Insured v. Insured Exclusion
Applying Louisiana law, the United States Court of Appeals for the Fifth Circuit has reversed a summary judgment ruling in favor of an insurer, holding that a CGL policy’s insured v. insured exclusion does not apply where the suit between the insureds was for indemnification, and not for property damage. Kinsale Ins. Co. v. Georgia-Pacific,… Continue Reading