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Legal developments affecting professional liability insurers

Category Archives: Professional Services

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Claim Arising from Sale of Dental Practice Does Not Involve Professional Services

Posted in Professional Services
An Illinois federal district court has held that a claim alleging that a dentist overstated the value of his dental practice to increase the practice’s sale price is not a claim for “professional services” under the dentist’s professional liability policy.  Medical Protective Co. v. Fabricius, 2018 WL 2561009 (N.D. Ill. June 4, 2018).… Continue Reading

Faulty Workmanship Exclusion in Professional Liability Policy Bars Coverage for Faulty Design and Construction

Posted in Professional Services
The United States District Court for the District of Colorado, applying Colorado law, has held that an arbitration award for faulty design and construction was potentially recoverable as “damages” under a professional liability policy, but coverage was ultimately precluded by an unambiguous and broad “Faulty Workmanship” exclusion.  Rockhill Ins. Co. v. CFI-Global Fisheries Mgmt., 2018… Continue Reading

Tax Advice Was Not “Professional Services” Under Life Insurance Agents E&O Policy

Posted in Professional Services
A California intermediate court of appeals, applying California law, has held that a life insurance agents E&O policy did not cover a suit by a financial advisor’s clients regarding advice provided to the clients to limit their tax liability.  Lindsey Fin., Inc. v. Am. Auto. Ins. Co., 2018 WL 2111979 (Cal. Ct. App. May 8,… Continue Reading

Alleged Sexual Abuse by Teacher Not Covered as “Educational Employment Activities”

Posted in Professional Services
Applying Virginia law, the United States District Court for the Western District of Virginia has held that an educators professional liability insurance policy did not afford coverage for a lawsuit against an insured school teacher accused of sexually abusing a student.  Horace Mann Ins. Co. v. Barney, 2018 WL 1733989 (W.D. Va. Apr. 10, 2018). … Continue Reading

Text Messages Sent in Violation of TCPA Held to Implicate Professional Services Coverage

Posted in Loss, Professional Services
A New York federal district court, applying New York law, has held that the sending of unsolicited text message advertisements in violation of the Telephone Consumer Protection Act (TCPA) triggered professional services coverage under a Miscellaneous Professional Liability (MPL) policy.  Illinois Union Ins. Co. v. US Bus Charter & Limo, Inc., 2018 WL 1193464 (E.D.N.Y.… Continue Reading

Court Holds Insurance Exclusion Bars Coverage for Lawsuit Arising Out Of Lapse in Client’s Insurance Policy

Posted in Professional Services, Wrongful Act
The United States District Court for the District of New Jersey has held that an exclusion in a professional liability policy applicable to claims arising out of the failure to effect or maintain any insurance precludes coverage for defense costs incurred in an action against an insured on the basis that the action arose out… Continue Reading

Allegations of Fraudulent Scheme by Lawyer to Induce Payment of Insurance Benefits Constitutes “Professional Legal Services”

Posted in Dishonesty Exclusion, Prior Knowledge/Warranty Exclusion, Professional Services
The United States District Court for the District of New Jersey has held that allegations that a lawyer and his law firm engaged in a fraudulent insurance scheme to induce payment of personal injury protection benefits while representing clients constituted “Professional Legal Services” under the firm’s professional liability policy, triggering the duty to defend.  Arzadi… Continue Reading

Breach of Fiduciary Duty Claim Against Lawyer Acting as Both Escrow Agent and Attorney for Counterparty Triggers Duty to Defend Notwithstanding Business Enterprise Exclusion

Posted in Professional Services
The Illinois Intermediate Appellate Court, applying Iowa law, has affirmed that a professional liability insurer must provide a defense for an attorney who allegedly mishandled funds that he was holding in escrow related to the plaintiff’s transaction with another company for which the attorney was vice president and legal counsel. Willey v. Minn. Lawyers Mutual… Continue Reading

Professional Services Exclusion Bars Coverage in Connection with Pipeline Explosion

Posted in Exclusion lead-in language (Arising out of), Professional Services
A California appellate court has held that a pipeline owner’s insurer is not entitled to reimbursement of defense costs and settlement payments from the insurer for the staffing agency that supplied personnel to the pipeline because the professional services exclusion in the staffing agency’s policy unambiguously barred coverage.  Energy Ins. Mut. Ltd. v. ACE American… Continue Reading

Eleventh Circuit Affirms Dismissal Where Professional Services Exclusion Unambiguously Created Joint, Not Several, Obligations

Posted in Professional Services
The United States Court of Appeals for the Eleventh Circuit has affirmed the dismissal of a breach of contract and bad faith case against two insurers based on the policies’ professional services exclusion, finding that the exclusion clearly created joint, not several, obligations.  Stettin v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2017 WL… Continue Reading

Allegations Concerning Wage Fixing in Violation of the Sherman Act Do Not Fall Within Professional Liability Coverage for “Counseling” Services

Posted in Dishonesty Exclusion, Personal Profit/Advantage exclusion, Professional Services
Applying Colorado law, the United States District Court for the District of Colorado has held that allegations of collusion to fix wages in violation of the Sherman Antitrust Act do not fall within the scope of professional liability coverage for “counseling” services because “counseling” does not include an alleged agreement to fix wages.  Colony Ins.… Continue Reading

Attorney’s Prior Knowledge Bars Coverage for Client’s Malpractice Claim

Posted in Prior Knowledge/Warranty Exclusion, Professional Services
The United States District Court for the Northern District of Ohio, applying Ohio law, has granted summary judgment in favor of an insurer, holding that an insured attorney could reasonably have expected a claim where he received a letter addressed to multiple parties indicating that the attorney’s former client was represented by new counsel, who… Continue Reading

No Coverage for Accountant’s Solicitation of Investment in Entity He Partially Owned

Posted in Professional Services
In a win for Wiley Rein’s client, the United States Court of Appeals for the Ninth Circuit, applying Arizona law, has held no indemnity coverage was available under an accountants E&O policy because the insured was not providing “professional services” when soliciting an investment in an entity in which the accountant held a personal stake.… Continue Reading

Explicit Allegation of Acts Arising from Professional Services Required to Trigger E&O Policy

Posted in Professional Services
Applying Illinois law, the United States Court of Appeals for the Seventh Circuit has held that a lawsuit that mentioned that the insured provided professional services to the claimant, but did not directly assert that any of the wrongdoing in the complaint arose from those services, was not a covered claim under a real estate… Continue Reading

No Coverage Under E&O Policy for Real Estate Transaction Involving Payment of Undisclosed Fee

Posted in Professional Services
The Supreme Court of Utah has affirmed summary judgment in favor of an insurer, holding that language regarding the scope of coverage under a real estate brokerage company’s insurance policy encompassed only services performed for compensation through a traditional real estate commission.  Compton v. Houston Cas. Co., 2017 WL 1101816 (Utah Mar. 23, 2017).… Continue Reading

Insurer Had Duty to Defend Where at Least One Allegation “Possibly” Constituted a Wrongful Act

Posted in Professional Services
The United States District Court for the District of Connecticut, applying Connecticut law, has granted summary judgment in favor of an insured, holding that an underlying complaint alleged at least one act that could “possibly” fall within the policy’s definition of “wrongful acts,” triggering a duty to defend.  Fernandez v. Zurich Am. Ins. Co., 2017… Continue Reading

Professional Services Exclusion Bars Coverage for False Claims Act Suit Against Online Education Servicer

Posted in Professional Services
The United States District Court for the Northern District of California, applying California law, has held that a professional services exclusion bars coverage under a directors and officers liability policy for an online education program servicer against an action under the False Claims Act, holding that the False Claims Act allegations at issue arose out… Continue Reading

Sixth Circuit Enforces 24-Month Contractual Limitations Period In Bond; Employee’s Knowledge Bars Coverage for Company Under E&O Policy

Posted in Professional Services, Wrongful Act
The United States Court of Appeals for the Sixth Circuit, applying Michigan law, has held that an insured securities broker-dealer’s failure to bring legal proceedings within the 24-month period specified by its financial institution fidelity bond precluded coverage for losses resulting from an employee’s embezzlement scheme.  Hantz Fin. Servs., Inc. v. Am. Int’l Specialty Lines… Continue Reading

In Absence of Alleged Malpractice, No Professional Liability Coverage Available

Posted in Professional Services
In a win for an insurer represented by Wiley Rein, the United States Court of Appeals for the Fifth Circuit, applying Louisiana law, has held that a lawyers professional liability policy afforded no coverage for a suit alleging no act or omission by the insured in providing legal services.  Edwards v. Continental Cas. Co., 2016… Continue Reading

Professional Services Exclusion Precludes Duty to Indemnify but Not Duty to Advance Defense Costs

Posted in Professional Services
Applying New York law, the United States District Court for the Southern District of New York has held that a D&O insurer was not obligated to indemnify the insured or the insured’s E&O carrier because the D&O policy’s professional services exclusion applied. Beazley Ins. Co., Inc. v. ACE American Ins. Co., No. 15-cv-5119 (S.D.N.Y. Jul.… Continue Reading

Business Enterprise Exclusion Bars Coverage for Trustee Sued in His Capacity as a Director or Officer of Businesses Affiliated with Trusts

Posted in Professional Services
The Supreme Court of Wisconsin has held that a professional liability policy issued to an insured for his conduct as a trustee of two trusts afforded no coverage for a series of claims arising out of the trustee’s alleged conduct as a director or officer of businesses owned by the trusts. Marks v. Houston Cas.… Continue Reading