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).

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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.

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The Court of Appeals of Wisconsin has held that the “location endorsement” in a professional liability policy precluded coverage for a medical negligence claim where the insured’s liability was “connected with” professional services performed outside the covered territory.  Paynter v. ProAssurance Wisconsin Ins. Co., 2019 WL 4018339 (Wis. Ct. App. Aug. 27, 2019).

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The United States District Court for the District of Massachusetts, applying Massachusetts law, has held that a claim asserted against a law firm alleging the failure to transfer client files to former attorneys of the firm constituted a failure to render “Legal Services” as defined by a professional liability policy.  Governo v. Allied World Ins. Co., 2019 WL 4034810 (D. Mass. Aug. 27, 2019).  The court previously denied a motion to dismiss the case, which is described here.

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The Supreme Court of Vermont has held there is no coverage for breach of contract and intentional torts under an errors and omissions (E&O) liability policy, where all counts of the complaint rested on allegations that the insured used misrepresentations and falsehoods to undermine a competitor, which did not fall within the definition of “professional services” under the policy.  Integrated Tech., Inc. v. Crum & Forster Specialty, 2019 WL 3759175 (Vt. Aug. 9, 2019).

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The United States District Court for the Northern District of Illinois, applying Illinois law, has held that there is no coverage under a professional liability policy where the claim arose out of the same set of facts upon which a separate lawsuit against the insured was filed before the policy incepted.  Arch Ins. Co. v. PCH Healthcare Holdings, 2019 WL 3554062 (N.D. Ill. Aug. 5, 2019).  The court further held that the plain language of an exclusion for “healthcare services” precluded coverage for the claim.

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Applying New York law, a Delaware state court has held that an insurer owed its insured a duty to defend because the factual allegations in two underlying lawsuits arguably involved the insured’s performance of “Professional Services” and no exclusion applied to otherwise bar coverage.  Steadfast Ins. Co. v. DBI Servs., LLC, 2019 WL 2613195 (Del. Super. Ct. June 24, 2019).

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The United States District Court for the District of South Carolina, applying South Carolina law, has denied a professional liability insurer’s motion to dismiss, holding that the insured’s alleged conduct could fall within the policy’s definition of “Wrongful Act,” thus giving rise to a duty to defend.  Harriman v. Associated Indus. Ins. Co., 2019 WL 1670801 (D.S.C. Apr. 17, 2019).

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