The United States Court of Appeals for the Ninth Circuit, applying California law, has held that two exclusions in a D&O policy applicable to claims by employees and for Fair Labor Standards Act violations barred coverage for a wage-and-hour class action lawsuit. U.S. Telepacific Corp. v. U.S. Specialty Ins. Co., 2020 WL 3265238 (9th Cir. June 17, 2020).
Continue Reading EPL Exclusions in D&O Policy Barred Coverage for Wage-and-Hour Class Action
The U.S. Court of Appeals for the Ninth Circuit, applying California law, has held that a fiduciary liability policy potentially provided coverage for a complaint alleging errors in the administration of an employee benefits program. Erickson-Hall Constr. Co. v. Hartford Fire Ins. Co., 2020 WL 1744338 (9th Cir. Apr. 8, 2020).
Continue Reading Alleged Errors In Employee Benefits Administration Potentially Trigger Fiduciary Liability Policy
The Indiana Court of Appeals, applying Indiana law, has held that a ransomware attack did not necessarily constitute a “fraudulent” act, and the corresponding loss did not fall within the scope of the computer fraud coverage part of a multi-peril commercial insurance policy. G&G Oil Co. of Ind. v. Cont’l Western Ins. Co., 2020 WL 1528095 (Ind. Ct. App. Mar. 31, 2020). The court rejected the argument that the ransomware attack was a fraud because it was an “unconscionable dealing” and instead found that the hacker did not “pervert the truth” or engage in deception in order to induce ransom payment.
Continue Reading No Computer Fraud Coverage for Ransomware Attack
An Illinois intermediate appellate court, applying Illinois law, has held that an insurer must defend an attorney against a malpractice claim seeking damages for alleged negligence in the amount of fees paid to the attorney, concluding that the “legal fees” exclusion in the policy did not apply because the injury suffered by the claimant was not a consequence of the lawyer’s fees. Illinois State Bar Ass’n Mut. Ins. Co. v. Canulli, No. 1-19-0142 (Ill. App. Ct. March 13, 2020).
Continue Reading Insurer Must Defend Legal Malpractice Claim for Damages in the Amount of Fees Paid, Despite Carve Out of “Legal Fees” from Definition of “Damages”
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).
Continue Reading No Coverage for Lawsuit Seeking Recovery of Disputed Legal Fees
Applying California Law, the United States District Court for the Southern District of California has held that an insurer must pay defense costs contemporaneously, even where the policy’s advancement provision merely requires payment “prior to final disposition of a claim,” because the insured became legally liable for defense costs as they were incurred. Renovate Am., Inc. v. Lloyd’s Syndicate 1458, 2019 WL 6716735 (S.D. Cal. Dec. 10, 2019). The court further held that the insured was excused from obtaining the insurer’s prior written consent regarding defense arrangements given the insurer’s seven-month delay in responding to the insured’s initial notice.
Continue Reading Insurer Must Advance Defense Costs as Incurred and Cannot Enforce Policy’s Defense Arrangement Consent Provision
The United States District Court for the District of Hawaii, applying Hawaii law, held that an insurer was not obligated to defend an insured law
Continue Reading Civil Contempt Proceeding Inherently Seeks Non-Covered “Sanctions”
The United States District Court for the Eastern District of Arkansas has held that no coverage exists under an errors and omissions policy for claims
Continue Reading CEO’s Abuse of Position is Not “Professional Services” and Negligence Claim for Return of Monies Does Not Seek “Damages”
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 after the policy period. EMSI Acquisition, Inc. v. RSUI Indem. Co., 2019 WL 4511948 (3d Cir. Sept. 19, 2019). The court also rejected the insurer’s argument that the insured’s settlement with the acquiring company did not constitute “Loss” under the policy.
Continue Reading Third Circuit Finds Major Shareholder Exclusion Ambiguous as Applied to Company Acquiring All of Insured’s Stock after Policy Period
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. App. Aug. 19, 2019). The court also determined that the insurer had not met its burden of proving that any portion of the arbitration award constituted uncovered loss such that an allocation should be imposed. Id.
Continue Reading Insured-Versus-Insured Exclusion Does Not Bar Coverage for Derivative Claim Arising from Alleged Employment-Related Misconduct