Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Wrongful Act

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No EPL or D&O Coverage for Intra-Corporate Shareholder Dispute

Posted in “Claim”, Wrongful Act
In a win for an insurer represented by Wiley Rein, the United States District Court for the District of Maryland has held that an intra-corporate dispute between shareholders was not covered under an EPL insuring agreement because the underlying demand letter and complaint did not state a claim “for” an Employment Practices Wrongful Act, and… Continue Reading

Insurer Could Not Assert Late Notice Defense Because Letter from Department of Labor Did Not Allege a “Fiduciary Claim” for a “Wrongful Act”

Posted in “Claim”, Notice of Claim, Wrongful Act
Applying Iowa law, a federal district court has held that an insured’s failure to give notice of a letter seeking information in connection with a government investigation did not preclude coverage for claims that later arose out of the investigation because the initial letter did not assert a “Fiduciary Claim” for a “Wrongful Act” under… Continue Reading

No E&O Coverage for Breach of Contract and Intentional Torts

Posted in Breach of Contract, Professional Services, Wrongful Act
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… Continue Reading

No Coverage for Receiver’s Claw Back Claim Against D&O Because Profit Exclusion Applied and Claim Did Not Arise Out of a “Wrongful Act”

Posted in Personal Profit/Advantage exclusion, Wrongful Act
The U.S. District Court for the Middle District of Florida, applying Florida law, held that a directors and officers liability insurance policy did not provide coverage for a claim asserted by a receiver seeking the return of bonus and other compensation amounts paid to a former director and officer of the company because (1) the… Continue Reading

Three Separate Policy Exclusions and Wrongful Acts Outside the Policy Period Bar Coverage for California False Claims Act Lawsuit

Posted in Breach of Contract, Related Claims and associated exclusions, Wrongful Act
The United States District Court for the Central District of California, applying California law, has held that there is no coverage for a False Claims Act settlement where the insured company’s alleged wrongful acts took place outside the policy period and were independently barred from coverage by a contract exclusion, prior acts exclusion and regulatory… Continue Reading

Eleventh Circuit Applies Securities Exclusion Broadly

Posted in Wrongful Act
The U.S. Court of Appeals for the Eleventh Circuit, applying Florida law, has held that a securities exclusion in a private company directors and officers insurance policy broadly barred coverage for all claims in an underlying lawsuit brought by former shareholders of an insured company arising out of the sale of their shares.  Colorado Boxed… Continue Reading

Duty to Defend Triggered Given “Possibility” of Wrongful Act

Posted in Professional Services, Wrongful Act
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… Continue Reading

No Coverage for Wage and Hour Claims Under Labor Professional Liability Policy

Posted in Rescission, Wrongful Act
Applying California law, a federal district court has held that an insurer was not obligated to cover a labor union’s defense costs and damages in a lawsuit brought by a former employee because the alleged wage and hour violations were not “wrongful employment practices” or “wrongful acts” under the policy.  United Farm Workers of Am.… Continue Reading

Contract Exclusion Bars Coverage for Demand for Cost-Overrun Payment

Posted in Breach of Contract, Defense Costs, Wrongful Act
The United States District Court for the Eastern District of California, applying California law, has held that no coverage is available for a demand for payment in excess of agreed purchase orders based on an exclusion barring coverage for loss “as a result of” a claim “for any actual or alleged obligation under . .… Continue Reading

Claims Arising out of Insured’s Contractual Obligation to Provide Employee Benefits Plans Are Not Because of a Wrongful Act

Posted in Breach of Contract, Wrongful Act
The U.S. District Court for the Southern District of California, applying California law, has held that neither fiduciary nor employment benefits liability coverage applied to claims seeking benefits under an insured company’s employee benefits plan because the company’s liability arose, not from negligent acts or breaches of fiduciary duty, but from its contractual obligation to… Continue Reading

Seventh Circuit Holds that Actual Wrongful Act Must be Established to Trigger Prior Knowledge Exclusion

Posted in Prior Knowledge/Warranty Exclusion, Wrongful Act
The United States Court of Appeals for the Seventh Circuit, applying Indiana law, has revived a coverage dispute over whether a medical malpractice insurer’s professional liability insurer must cover the malpractice insurer’s post-verdict excess settlement of an underlying wrongful death claim, finding that factual questions remain as to whether the malpractice insurer’s refusal to settle… 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

Law Firm Entitled to Coverage for Claim Alleging Failure to Transfer Client Materials and to Notify Clients of Departing Attorneys

Posted in Insured v. Insured Exclusion, Wrongful Act
Applying Massachusetts law, a federal district court has held that an insurer owed a duty to defend based on allegations regarding a law firm’s failures to notify clients of an attorney’s departure and to transfer client materials.  Governo v. Allied World Ins. Co., 2018 WL4685566 (D. Mass. Sept. 28, 2018).  In reaching this determination, the… 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

Court Denies Reconsideration of Holding that Securities Exclusion Bars Coverage for Claims Involving Misrepresentations Made During Sale of Securities

Posted in Wrongful Act
Applying Texas law, a federal district court has denied a motion for reconsideration of its prior ruling that a securities exclusion barred coverage for claims involving alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 3819928 (E.D. Tex. Aug. 10, 2018).  The court rejected the insured’s… 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

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

Stockholder Demand Letter for Legal Expenses for Stockholder Dispute Constitutes Covered Claim for Wrongful Act

Posted in Allocation, “Claim”, Notice of Claim, Wrongful Act
The United States District Court for the District of Rhode Island has concluded that a stockholder demand letter for legal expenses in connection with a dispute regarding the rights of different classes of stockholders constitutes a covered claim for a wrongful act.  Twin River Worldwide Holdings, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh,… Continue Reading

Court Holds Prior Litigation and Event Exclusion Does Not Apply

Posted in Prior Knowledge/Warranty Exclusion, Related Claims and associated exclusions, Wrongful Act
The United States District Court for the Southern District of Indiana has held that a prior litigation and event exclusion in a directors and officers liability policy did not bar coverage for a shareholder suit against the insured.  Emmis Commc’n Corp. v. Illinois Nat’l Ins. Co., 2018 WL 1410191 (S.D. Ind. Mar. 21, 2018).  The… 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

Securities Exclusion Bars Coverage for Claims Bearing “Incidental Relationship” to Excluded Conduct

Posted in “Claim”, Wrongful Act
Applying Texas law, a federal district court has held that a broadly-worded securities exclusion bars coverage of claims “incidental” to alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 538324 (E.D. Tex. Jan. 24, 2018).  The court further held that an exception for claims involving transactions… Continue Reading

Eleventh Circuit Holds Prior Acts Exclusion Does Not Apply to Claim by FDIC Against Failed Bank

Posted in Related Claims and associated exclusions, Wrongful Act
The U.S. Court of Appeals for the Eleventh Circuit has held that a prior acts exclusion in a directors and officers liability policy does not bar coverage for a lawsuit brought by the Federal Deposit Insurance Corporation (FDIC) against a failed bank, because the wrongful acts at issue occurred after the prior acts date and… Continue Reading

Lawsuit Filed by Company Against Former Officer Does Not Trigger Employment Practices Liability Coverage

Posted in Defense Costs, Notice of Claim, Wrongful Act
The United States District Court for the District of Oklahoma has held that a lawsuit filed by a company against its former president did not implicate its policy’s Employment Practices Liability coverage because the lawsuit was not filed by or on behalf of an employee, as required by the policy.  Statton v. Allied World Specialty… Continue Reading