The United States Court of Appeals for the Ninth Circuit, applying California law, has held that two exclusions in a D&O policy applicable to claims by employees and for Fair Labor Standards Act violations barred coverage for a wage-and-hour class action lawsuit.  U.S. Telepacific Corp. v. U.S. Specialty Ins. Co., 2020 WL 3265238 (9th Cir. June 17, 2020).

Continue Reading EPL Exclusions in D&O Policy Barred Coverage for Wage-and-Hour Class Action

The U.S. Court of Appeals for the Ninth Circuit, applying California law, has held that a fiduciary liability policy potentially provided coverage for a complaint alleging errors in the administration of an employee benefits program.  Erickson-Hall Constr. Co. v. Hartford Fire Ins. Co., 2020 WL 1744338 (9th Cir. Apr. 8, 2020).

Continue Reading Alleged Errors In Employee Benefits Administration Potentially Trigger Fiduciary Liability Policy

The Eastern District of New York, applying New York law, has held that alleged violations of the New York Labor Law (NYLL) and the Fair Labor Standards Act (FLSA) did not constitute covered “Wrongful Acts” as defined by the applicable employment practices liability insurance policy.  Sirob Imports Inc. v. Mount Vernon Fire Ins. Co., 2020 WL 1550587 (E.D.N.Y. Mar. 31, 2020).  However, the court concluded that such allegations were ultimately covered under the policy’s Fair Labor Standards Act Sub-Limit Endorsement because the two statutes were “similar.”

Continue Reading Alleged Violations of Fair Labor Standards Act and New York Labor Law Not “Wrongful Acts” Under Employment Practices Liability Policy

The Indiana Court of Appeals, applying Indiana law, has held that a ransomware attack did not necessarily constitute a “fraudulent” act, and the corresponding loss did not fall within the scope of the computer fraud coverage part of a multi-peril commercial insurance policy.  G&G Oil Co. of Ind. v. Cont’l Western Ins. Co., 2020 WL 1528095 (Ind. Ct. App. Mar. 31, 2020).  The court rejected the argument that the ransomware attack was a fraud because it was an “unconscionable dealing” and instead found that the hacker did not “pervert the truth” or engage in deception in order to induce ransom payment.

Continue Reading No Computer Fraud Coverage for Ransomware Attack

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 United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an insured church’s D&O policy did not afford coverage for a claim against a “breakaway” congregation because the breakaway congregation was not an “insured” under the policy.  Newton Covenant Church v. Great Am. Ins. Co., 2020 WL 1815971 (1st Cir. Apr. 10, 2020). Even if the breakaway congregation were to be deemed an “insured,” the Court ruled that coverage was still unavailable because an “insured v. insured” exclusion would apply.

Continue Reading First Circuit Holds “Breakaway” Church Not an “Insured” Under Original Church’s D&O Policy

A Michigan intermediate appellate court has held that a lawsuit alleging a trustee’s undue influence with inheritance alleged a “negligent act, error or omission” within the meaning of an insuring agreement of an E&O policy.   Hanover Ins. Co. v. Lubienski, 2020 WL 1491781 (Mich. Ct. App. Mar. 24, 2020).

Continue Reading Undue Influence Suit Alleges “Negligent Act, Error or Omission” Under E&O Policy

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 it was not covered under a D&O insuring agreement because the claimant owned 10% or more of the outstanding shares of the insured company at the time the claim was made.  Madison Mechanical, Inc. v. Twin City Fire Ins. Co., 2019 WL 6035690 (D. Md. Nov. 14, 2019).

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

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
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”

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 services” under the policy.  Integrated Tech., Inc. v. Crum & Forster Specialty, 2019 WL 3759175 (Vt. Aug. 9, 2019).

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