Applying Texas law, a federal appellate court has held that an insured is not entitled to coverage for subsequent related claims when the insured gave late notice of the first claim. ADI Worldlink, L.L.C.. v. RSUI Indem. Co., 2019 WL 3521815 (5th Cir. Aug. 2, 2019).
The Court of Appeals of Wisconsin has held that the “location endorsement” in a professional liability policy precluded coverage for a medical negligence claim where the insured’s liability was “connected with” professional services performed outside the covered territory. Paynter v. ProAssurance Wisconsin Ins. Co., 2019 WL 4018339 (Wis. Ct. App. Aug. 27, 2019).
The United States District Court for the District of Massachusetts, applying Massachusetts law, has held that a claim asserted against a law firm alleging the failure to transfer client files to former attorneys of the firm constituted a failure to render “Legal Services” as defined by a professional liability policy. Governo v. Allied World Ins. Co., 2019 WL 4034810 (D. Mass. Aug. 27, 2019). The court previously denied a motion to dismiss the case, which is described here.
A federal district court in Massachusetts has held that an insurer properly denied coverage for a claim against an insured church brought by another church that had broken away from the original entity because the breakaway church was not an “insured” under the original church’s policy. Newton Covenant Church, et al. v. Great Am. Ins. Co., 2019 WL 3464705 (D. Mass. Jul. 31, 2019).
The United States District Court for the Eastern District of Arkansas, applying Arkansas law, has held that coverage is unavailable for a lawsuit arising out of Interrelated Wrongful Acts at issue in an EEOC charge where the insured failed to report the EEOC charge to its insurer within the claims-made policy’s reporting period. Pine Bluff Sch. Dist. v. ACE Am. Ins. Co., 2019 WL 3074011 (E.D. Ark. July 12, 2019). The court also held that the insurer was not barred from denying coverage based on waiver or estoppel after it first provided a defense under a reservation of rights.
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).
The United States District Court for the Northern District of Illinois, applying Illinois law, has held that there is no coverage under a professional liability policy where the claim arose out of the same set of facts upon which a separate lawsuit against the insured was filed before the policy incepted. Arch Ins. Co. v. PCH Healthcare Holdings, 2019 WL 3554062 (N.D. Ill. Aug. 5, 2019). The court further held that the plain language of an exclusion for “healthcare services” precluded coverage for the claim.
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 policy’s profit exclusion applied; and (2) the claw back claim did not arise out of a “Wrongful Act.” Desai v. Navigators Ins. Co., 2019 WL 3068398 (M.D. Fla. July 12, 2019).
In a win for Wiley Rein’s client, a California state court has held that an insurer correctly denied coverage under a D&O policy on the basis that the operative “claim” was made before the policy period. CNEX Labs, Inc. v. Allied World Assurance Co. (U.S.), Inc., Case No. 18-CV-334461 (Cal. Super. Ct., Santa Clara Cty. Jul. 17, 2019). The court found that a letter the insured received before the policy period “clearly suggested a lawsuit” against the insured and, in any event, the insured had also signed a standstill agreement before the policy’s inception, which separately constituted a “claim.”
Applying Texas law, the Fifth Circuit has held that a D&O policy’s securities exclusion barred coverage for a suit for misrepresentation and misconduct that arose out of a sale of equity interests. Gleason v. Markel Am. Ins. Co., 2019 WL 3437642 at *1 (5th Cir. July 30, 2019).