The United States District Court for the Southern District of Ohio, applying Ohio law, has held that an ERISA exclusion in two E&O policies barred coverage for a lawsuit filed by the United States Department of Labor alleging ERISA violations in connection with an employee stock ownership program (ESOP) stock purchase.  Gemini Ins. Co. v. Potts, 2020 WL 4000977 (S.D. Ohio July 15, 2020).

Continue Reading ERISA Exclusion in E&O Policies Bars Coverage for Suit Filed by the Department of Labor

Applying Pennsylvania law, the United States District Court for the Eastern District of Pennsylvania has held that no coverage is available under a professional liability policy for a lawsuit alleging human trafficking, wage and hour, and consumer protection violations because all counts rested on intentional conduct that occurred after professional services were rendered.  Hemphill v. Landmark Ins. Co., 2020 WL 3871295 (E.D. Pa. July 9, 2020).

Continue Reading No Coverage for Lawsuit Alleging Human Trafficking and Wage and Hour Violations

A New Jersey federal district court has ruled that a broad exclusion in a D&O Policy for claims arising out of services provided to third parties barred coverage for a claim arising out of an insured’s provision of services to its client, and the inclusion in the policy of narrower exclusions (for professional services and insurance company services) did not create any ambiguity.  Benecard Servs., Inc. v. Allied World Specialty Ins. Co., 2020 WL 2842570 (D.N.J. May 31, 2020).

Continue Reading D&O Policy’s “Third-Party Services” Exclusion Bars Coverage for Claim Brought by Insured’s Client

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