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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Applying Illinois law, a federal district court has held that a policy’s sexual misconduct exclusion did not apply to preclude coverage for an underlying lawsuit against a school district involving a student’s acts of sexual misconduct, where the applicability of the exclusion in that context was not “clear and free from doubt.”  Netherlands Ins. Co. v. Macomb Cmty. Unit Sch. Dist., 2019 WL 5417144 (C.D. Ill. Aug 6, 2019).

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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. June 4, 2019).

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In a win for Wiley Rein’s client, the Connecticut Supreme Court has held that the continuing course of conduct doctrine could not save the untimely claims of an insurer brought against an insurance adjuster.  See Essex Ins. Co. v. William Kramer & Associates, LLC, Case No. SC 20130 (Conn. Apr. 16, 2019).  On a certified question from the United States Court of Appeals for the Second Circuit, the Supreme Court held that the doctrine did not toll the applicable three-year statute of repose because the adjuster’s duties to the insurer ended when the adjuster closed its file more than six years before the insurer’s lawsuit.

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Applying Delaware law, a Delaware state court has held that a policy’s “capacity” exclusion precluded coverage for two directors because the claims filed against those directors would not have been established “but for” the directors’ alleged misconduct related to third-party investment entities the directors formed to control the insured company.   Goggin v. National Union Fire Ins. Co. of Pittsburgh, 2018 WL 62661195 (Del. Sup. Ct. Nov. 30, 2018).

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In a case that was briefed and argued by Wiley Rein in the trial court and on appeal, along with Fox Rothschild LLP as Delaware local counsel, the Delaware Supreme Court held that Texas law applies to a comprehensive insurance program issued to a Texas corporation and its subsidiaries nationwide.  The Travelers Indemnity Company v. CNH Industrial America, LLC, No. 420, 2017 (Del. July 16, 2018).  The Court reversed a decision of the Superior Court holding that Wisconsin law applied and, as a result, that the anti-assignment provisions of the policies at issue were unenforceable.  Noting that it was undisputed that the anti-assignment provisions are enforceable under Texas law, the Court reversed the nearly $14 million judgment in favor of the purported assignee of rights under the policies and directed entry of judgment for the insurer.

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Applying Hawaii law, the U.S. District Court for the District of Hawaii has held that, while an executive was entitled to coverage because he was sued in his insured capacity, the insured entity was not covered because the underlying lawsuit did not fall within the D&O policy’s definition of “Securities Action.”  Maui Land & Pineapple Co., Inc. v. Liberty Ins. Underwriters Inc., 2018 WL 1613777 (D. Haw. Apr. 3, 2018).

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Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that the fortuity doctrine precludes coverage for a suit filed against an attorney before his lawyers professional liability coverage incepted because the loss occurred or was ongoing at the time the policy was issued.  Wesco Ins. Co. v. Layton, 2018 WL 1472937 (5th Cir. Mar. 26, 2018).

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