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Legal developments affecting professional liability insurers

Category Archives: Related Claims and associated exclusions

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No Coverage for Claims Alleging Pre- and Post-Prior Acts Date Conduct

Posted in Related Claims and associated exclusions, Uncategorized
A Minnesota federal court has held that a prior acts exclusion bars coverage for claims involving wrongful acts that occurred both before and after the applicable prior acts date because the wrongful acts arose from the “same nucleus” of facts.  Tile Shop Holdings, Inc. v. Allied World Nat’l Assurance Co., 2019 WL 2357044 (D. Minn.… Continue Reading

Specific Matter Exclusion Bars Coverage for Lawsuits Involving Same Parties as Lawsuit Included in Definition of “Specific Matter”

Posted in Related Claims and associated exclusions
The United States Court of Appeals for the Ninth Circuit, applying California law, has affirmed the district court’s holding that a specific matter exclusion bars coverage for a series of lawsuits involving the same parties as a lawsuit included in the policy’s definition of “Specific Matter” in that exclusion.  Ocean Towers Hous. Corp. v. Evanston… Continue Reading

SEC Investigation Constitutes One Claim; Component Subpoenas Are Not Written Demands for Non-Monetary Relief

Posted in “Claim”, Related Claims and associated exclusions
The First Circuit, applying Massachusetts law, has held that an SEC investigation was a single claim first made when an insured received the formal order of investigation.  The court rejected the insureds’ attempt to split the investigation into various different claims based on the SEC’s subsequent subpoenas and enforcement action.  Biochemics, Inc. v. Axis Reinsurance… Continue Reading

Regulatory Warning Notices Asserting Damages Based on Same Acquisition Involve “Related Wrongful Acts”

Posted in Notice of Claim, Related Claims and associated exclusions
In a win for Wiley Rein’s client, a New York appellate court has held that a program of asset management liability insurance afforded no coverage for a UK regulatory “Warning Notice” because the notice and a previous notice issued by the same regulator to the same targets arising from the same transaction involved “Related Wrongful… Continue Reading

Two Lawsuits Based on Real Estate Broker’s Dual Representation of Buyers and Sellers in Same Transaction Arise from Same Wrongful Act

Posted in Related Claims and associated exclusions
The U.S. District Court for the Southern District of California, applying California law, held that two lawsuits against a real estate broker involving his dual representation of buyers and sellers in the same real estate transaction arose from the same wrongful act, such that the second suit was deemed a claim first made at the… Continue Reading

Maine District Court Holds Insurer Has No Duty to Defend SEC Enforcement Action Because Disgorgement Constitutes a Penalty

Posted in Related Claims and associated exclusions, Securities Litigation
In a case in which Wiley Rein represented the insurer, a federal district court in Maine has held that an insurer had no duty to defend an enforcement action brought by the Securities and Exchange Commission (SEC) under a lawyers’ professional liability policy because none of the relief sought constituted “damages” as defined in the… Continue Reading

Coverage Barred Because Causally Related Claims Deemed a Single Claim Under Earlier Policy

Posted in Related Claims and associated exclusions
Applying California law, a federal district court has held that an original and an amended complaint arising out of a series of related wrongful acts were deemed a single claim under an earlier policy, such that coverage was barred under a policy issued later.  General Ins. Co. v. INB Ins. Servs. Corp., 2019 WL 1318252… Continue Reading

Claims Based on Similar Wrongdoing Deemed “Related” Despite Geographic Differences of Class Composition

Posted in Defense Costs, Related Claims and associated exclusions
A Utah federal district court has held that claims based on similar acts of wrongdoing were barred by a prior notice exclusion despite geographic differences among the putative class definitions.  Starr Indem. & Liab. Co. v. Monavie, Inc., 2019 WL 1227930 (D. Utah Mar. 5, 2019).  The court also ruled that the insurer was entitled… Continue Reading

Non-Covered Pre-Policy Claims for Return of Fees Do Not Impact Coverage for Breach of Duty Claim During Policy Period

Posted in Related Claims and associated exclusions
Applying Michigan law, an intermediate court of appeals has held that a professional liability insurer was obligated to cover a claim for breach of duty notwithstanding its relationship to pre-policy period claims because those claims were for return of fees and therefore not covered under the policy and not required to be reported by the… Continue Reading

Specific Circumstances and Prior Notice Exclusions Bar Coverage for Trustee’s Lawsuit Against Former Directors and Officers

Posted in Exclusion lead-in language (Arising out of), Related Claims and associated exclusions, Wrongful Act
Applying California law, the United States District Court for the Northern District of California has held that coverage is precluded under a claims-made D&O policy based on two exclusions: a specific circumstances exclusion and a prior notice exclusion.  Landmark Am. Ins. Co. v. Navigators Ins. Co., 2018 WL 6591620 (N.D. Cal. Dec. 14, 2018).… Continue Reading

Fourth Circuit Affirms that All Claims Arising from Negligent Design of Two, Nearly Identical Bridges Constitute “Related Claims”

Posted in Related Claims and associated exclusions
In a win for an insurer represented by Wiley Rein, the United States Court of Appeals for the Fourth Circuit, applying North Carolina law, affirmed that all claims against an engineering firm for the negligent design of two bridges constituted “related claims,” subject to a single limit of liability.  Stewart Eng’g, Inc. v. Continental Cas. Co.,… Continue Reading

Two Class Action Lawsuits Are “Related,” Despite Different Plaintiffs and Different Time Periods

Posted in Related Claims and associated exclusions
Applying California and Virginia law, a federal district court has held that two class action lawsuits alleging similar wrongful conduct, but brought by different classes for different class periods, were nonetheless related and constituted a single claim.  Northrop Grumman Corp. v. AXIS Reinsurance Co., 2018 WL 5314918 (D. Del. Oct. 26, 2018).… Continue Reading

Securities Suits Alleging Misstatements About Financial Performance Over Same Time Period Constitute A Single Claim

Posted in Related Claims and associated exclusions
Applying Texas law, a federal district court has held that an insurer breached its policy by denying coverage for two lawsuits filed after the policy period on the basis that they were not related to an earlier lawsuit.  Nobilis Health Corp. v. Great American Ins. Co., 2018 WL 4810840 (S.D. Tex. Oct. 4, 2018).  The… Continue Reading

Ten Lawsuits Alleging Mishandling or Sale of Human Body Parts Constitute a Single “Claim”

Posted in Related Claims and associated exclusions
Applying Illinois law, a federal district court has held that ten lawsuits against an anatomical donation company for alleged mishandling and sale of human body parts are “related” and constitute a single “Claim” under a professional liability policy.  Lloyd’s Syndicate 3624 v. Biological Res. Ctr. of Ill., LLC, 2018 WL 4489589 (N.D. Ill. Sept. 19,… Continue Reading

Resident’s Three Claims Against Condo Association Spanning Multiple Years Deemed Single Claim Subject to Single Limit

Posted in Related Claims and associated exclusions, Wrongful Act
The United States District Court for the Northern District of Illinois has held that three claims brought by a resident against a condominium owners’ association for alleged discrimination and retaliation involved related wrongful acts and therefore are properly treated as a single Claim deemed first made during the claims-made policy period when the first such… Continue Reading

Prior and Pending Litigation Exclusion Does Not Apply Where Insurer Cannot Establish Facts Alleged in Later Investigation Were “Underlying” Prior Investigation

Posted in Related Claims and associated exclusions
A New York state court, applying New York law, has held that an insurer was not entitled to summary judgment based on a prior and pending litigation exclusion because the insurer could not establish that the prior investigation shared a common fact, circumstance, situation, transaction or event with the matter at issue or that any… Continue Reading

No Coverage for Lawsuit Where SEC Notices Issued Prior to Policy Period Alleged Related Investment Misconduct

Posted in Related Claims and associated exclusions
The United States Court of Appeals for the Tenth Circuit, applying Utah law, has held that no coverage exists for a lawsuit filed against an insured where an SEC investigation and proceeding conducted prior to the policy’s inception and the lawsuit both alleged a scheme of defrauding investors over a period of several years by… Continue Reading

Lawsuits Involving a “Continuing Pattern of Anticompetitive Behavior” Constitute Related Claims

Posted in Related Claims and associated exclusions, Wrongful Act
The United States Court of Appeals for the Eleventh Circuit, applying Florida law, has affirmed a district court’s holding that multiple lawsuits filed against the insured over a fifteen-year period involving a “continuing pattern of anticompetitive behavior” constitute claims “related logically, causally or in any other way.”  Health First, Inc. v. Capitol Specialty Ins. Corp.,… Continue Reading

Wells Notices and Subsequent Enforcement Action Deemed First Made at the Time when SEC Original Investigation Began

Posted in Related Claims and associated exclusions
In a win for Wiley Rein’s client, a Texas state court, applying Texas law, has held that no coverage was available for Wells notices issued and an enforcement action brought by the United States Securities and Exchange Commission (SEC) because they were related to the SEC’s original investigation, which commenced prior to the claims-made policy… Continue Reading

Insured’s Payment to Stockholders to Settle Bankruptcy Dispute Relates to Prior Notice of Circumstances

Posted in Related Claims and associated exclusions, Wrongful Act
Applying Rhode Island law, the United States District Court for the District of Rhode Island has held that an insured was entitled to coverage for a settlement because the settlement related back to a prior notice of circumstances.  Twin River Worldwide Holdings, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, 2018 WL 3640995… Continue Reading

Specific Litigation Exclusion Bars Coverage for Separate Proceeding Involving Same Conduct in Allegedly Oversupplying “Pill Mills”

Posted in Prior Knowledge/Warranty Exclusion, Related Claims and associated exclusions
An Ohio federal district court has held that a specific litigation exclusion concerning a lawsuit brought by a state attorney general alleging that the insured oversupplied “pill mills” barred coverage for a show cause order the insured later received from a federal law enforcement agency concerning some of the same alleged misconduct.  Miami-Luken, Inc. v.… Continue Reading

Four Claims Regarding Same Appraisal Methodology Are Covered but Related and Therefore Confined to One Policy Year

Posted in Bad faith/duty to settle, Prior Knowledge/Warranty Exclusion, Related Claims and associated exclusions
The United States District Court for the Northern District of Illinois, applying New York law, has held that a real estate service firm’s professional liability insurance policies cover four claims regarding the firm’s allegedly improper use of a certain appraisal methodology because neither the prior knowledge exclusion nor an exclusion regarding investment activity applied.  Cushman… Continue Reading

Amended Complaint Raising Different Legal Theory Is Not a Claim First Made at Time of Initial Complaint

Posted in Notice of Claim, Related Claims and associated exclusions
The Louisiana Court of Appeals has held that a claims-made policy affords coverage for a lawsuit filed before the policy period because an amended complaint alleging a new legal theory was filed during the policy period.  Billeaudeau v. Opelousas Gen. Hosp. Auth., 2018 WL 1835510 (La. Ct. App. Apr. 18, 2018).  The court also rejected… Continue Reading