Applying Nevada law, the United States District Court for the District of Nevada has held that an insurer did not owe coverage to its insured charter school because a “Notice of Closure” constituted a “claim” first made before the policy period. Argent Preparatory Acad. f/k/a Silver State Charter Sch. v. Philadelphia Indem. Ins. Co., 2019 WL 1049384 (D. Nev. Mar. 4, 2019).
Specific Entity Exclusion Bars Coverage of Timely-Noticed Lawsuit
Posted in Notice of ClaimApplying New Jersey law, a federal district court has held that a specific entity exclusion in a claims-made policy barred coverage for a lawsuit filed against the excluded entity. JP Morgan Chase Bank, N.A. v. Scottsdale Ins. Co., 2019 WL 959698 (D.N.J. Feb. 27, 2019). The court also held that the insured complied with the policy’s notice provisions.
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 exclusionsApplying 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 insured. Illinois Nat’l Ins. Co. v. AlixPartners LLP, 2019 WL 939018 (Mich. Ct. App. Feb. 26, 2019).
Insured’s Subjective Belief Regarding Likelihood of Being Sued Irrelevant to Prior Knowledge Analysis Under Pennsylvania Law
Posted in Prior Knowledge/Warranty ExclusionThe United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, found that an attorney “knew or should have known” he might get sued for (allegedly) botching a settlement term sheet where a worker’s compensation review board publicly criticized his handling of the settlement, even though his client did not appear angry at the time. Zavodnick, Zavodnick & Lasky, LLC v. Nat’l Liab. & Fire Ins. Co., 2019 WL 1003157 (E.D. Pa. Mar. 1, 2019). Because the insured attorney knew the relevant facts before his professional liability policy incepted, the district court granted the insurer’s motion for summary judgment that there was no coverage.
Fourth Circuit Holds Virginia Statute Imposing Deadline to Deny Coverage Does Not Apply to Claim Reported Outside Policy Period
Posted in Notice of ClaimApplying Virginia law, the United States Court of Appeals for the Fourth Circuit has held that a Virginia statute imposing a forty-five day deadline for a coverage denial based on an insured’s breach of a liability policy does not apply to a denial based on a claim reported outside the policy period under a claims made and reported policy. See Gateway Residences at Exchange, LLC v. Illinois Union Ins. Co., 2019 WL 963238 (4th Cir. Feb. 28, 2019).
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 ActThe 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 provide employees with benefit plans. Erickson-Hall Constr. Co. v. Scottsdale Ins. Co., 2019 WL 719204 (S.D. Cal. Feb. 20, 2019).
No Duty to Defend or Indemnify Due to Securities Exclusion, Consumer Protection Law Exclusion, and Investment Performance Exclusion, but Insurer Cannot Recoup Defense Costs
Posted in Defense CostsApplying Wisconsin law, a federal district court has held that an insurer owed no duty to defend or indemnify its insureds because exclusions for claims arising from violations of securities laws or consumer protection laws, and from the failure of investments to perform as desired, barred coverage. Hanover Ins. Co. v. BMOC, Inc., 2019 WL 949215 (W. D. Wis. Feb. 27, 2019).
Ninth Circuit Holds Section 533 and Financial Services Exclusion Do Not Bar Coverage for Alleged Mortgage Modification Scam
Posted in Professional Services, Public Policy prohibition on insuranceThe Ninth Circuit, applying California law, has held that an insurer improperly failed to defend its insured in connection with a lawsuit alleging that the insured engaged in an ongoing mortgage modification fraud scheme, because one count in the lawsuit did not require willful conduct and therefore was not necessarily uninsurable under California Insurance Code § 533. First One Lending Corp. v. Hartford Casualty Ins. Co., 2017 WL 1018305 (9th Cir. Mar. 5, 2019). The court further held that a financial services exclusion did not completely bar coverage because at least some allegations bore an “insufficient causal nexus with financial services,” thus triggering the insurer’s duty to defend.
No Coverage for Whistleblower Action or Subpoena Noticed to Insurer After End of Policy Reporting Period
Posted in Notice of ClaimThe United States District Court for the Central District of California, applying California law, has held that coverage is unavailable for a whistleblower action and subpoena noticed after the end of the reporting period of a claims-made policy. PAMC, Ltd. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2019 WL 666726 (C.D. Cal. Feb. 12, 2019).
Court Holds Under Colorado Law Insurer is Entitled to Reimbursement of Settlement Payment From Insured
Posted in Bad faith/duty to settleApplying Colorado law, the United States District Court for the District of Colorado has held that a medical professional liability insurer was entitled to reimbursement of a settlement payment made on behalf of an insured to settle a dispute with a former patient. Evanston Ins. Co. v. Aminokit Labs., Inc., 2019 WL 479204 (D. Colo. Feb. 7, 2019).