The United States District Court for the District of North Dakota, applying North Dakota law, has held that a commingling exclusion precluded coverage for an insured’s controller’s theft of funds under the property management company’s errors and omissions policy. Campbell Prop. Mgmt., LLC v. Lloyd’s Syndicate 3624, 2020 WL 1846985 (D.N.D. Apr. 10, 2020).
Continue Reading E&O Coverage for Embezzlement Precluded by Commingling Exclusion
The Pennsylvania Superior Court has held that two men who held senior management roles at a hotel and used their positions to cause the hotel to make payments to a fake company that they created were performing “Professional Services” within the meaning of a professional liability policy while doing so. Gemini Ins. Co. v. Meyer Jabara Hotels LLC, 2020 WL 1649888 (Pa. Super. Ct. Apr. 3, 2020). Because the policy excluded coverage for losses arising out of criminal acts committed by employees while rendering Professional Services, the court held that no coverage was available.
Continue Reading Wire Fraud and Money Laundering Can Be “Professional Services” Triggering Criminal Acts Exclusion
Applying North Carolina law, the United States District Court for the Eastern District of North Carolina has held that an insurer did not breach its D&O policy by denying coverage for (i) a putative class action complaint that did not name the insured company; (ii) a subpoena duces tecum served on the insured in connection with the class action that did not satisfy the policy’s definition of “Claim;” (iii) a settlement that the insured was not required to participate in and to which the insurer did not consent; and (iv) a written indemnification demand implicating the policy’s contractual liability exclusion. Trialcard Inc. v. Travelers Cas. & Surety Co. of Am., 2020 WL 1609483 (E.D.N.C. Apr. 1, 2020). The court further held that any “Claim” asserted against the insured would otherwise be barred by the policy’s professional services exclusion.
Continue Reading Suit Against “Doe” Defendant is Not a “Claim”
The Fourth Circuit, applying Virginia law, has held that a negligent supervision exclusion in a lawyers’ professional liability policy bars coverage for a lawyer’s mismanagement of trust assets when acting as a trustee. ALPS Prop. & Cas. Ins. Co. v. Higgerson, 2020 WL 1487836 (4th Cir. Mar. 24, 2020).
Continue Reading Negligent Services Exclusion Bars Coverage for Lawyer’s Actions as Trustee
On remand from the Tenth Circuit, the United States District Court for the District of Colorado, applying Colorado law, has held that an insurer failed to satisfy its burden of proof on allocation where it neglected to ensure that an arbitration award was sufficiently detailed. Rockhill Ins. Co. v. CFI-Global Fisheries Mgmt., 2020 WL 996882 (D. Colo. Mar. 2, 2020). As a result, the District Court entered judgment against the insurer for the full amount of the arbitration award.
Continue Reading Insurer’s Failure to Obtain Allocation in Arbitration Award Results in Coverage for Full Award
The Fifth Circuit, applying Louisiana law, has held that coverage was unavailable for an $11.7 million settlement with the government because the settlement did not relate to “professional services” provided by the insured to its “client.” IberiaBank Corp. v. Illinois Union Ins. Co., 2020 WL 1284958 (5th Cir. Mar. 18, 2020).
Continue Reading No Coverage for Underlying Settlement with Government Because Government Was Not Insured’s “Client”
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.
Continue Reading Subpoena Not a ‘Claim’ When Issued in Litigation Not Involving Insured’s Professional Services
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).
Continue Reading Coverage for Common Law Causes of Action Not Barred Under ERISA/Securities Law Exclusion
The Nebraska Supreme Court, applying Nebraska law, held that professional services exclusions in three interrelated policies did not apply to the acts of law enforcement. Gage Cty. v. Emp’rs Mut. Cas. Co., 937 N.W.2d 863 (Jan. 31, 2020).
Continue Reading Nebraska Supreme Court Rules Professional Services Exclusion Not Applicable to Law Enforcement
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