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 1670801 (D.S.C. Apr. 17, 2019).
The U.S. District Court for the Southern District of California, applying California law, held that two lawsuits against a real estate broker involving his dual representation of buyers and sellers in the same real estate transaction arose from the same wrongful act, such that the second suit was deemed a claim first made at the time the first suit was filed—prior to the inception of the broker’s claims-made errors and omissions policy. Martin v. QBE Ins. Corp., 2019 WL 2009874 (S.D. Cal. May 7, 2019).
In a case in which Wiley Rein represented the insurer, a federal district court in Maine has held that an insurer had no duty to defend an enforcement action brought by the Securities and Exchange Commission (SEC) under a lawyers’ professional liability policy because none of the relief sought constituted “damages” as defined in the policy. Marcus v. Allied World Ins. Co., No. 2:18-cv-253-DBH, 2019 WL 1810954, (D. Me. Apr. 23, 2019). The court held that when sought by the SEC, disgorgement is properly characterized for insurance purposes as a penalty. The court also held, however, that the policy’s investment advice exclusion did not apply to negate the insurer’s duty to defend a related securities fraud class action, but it rejected the insured’s argument that because the actions were “related claims,” the insurer’s duty to defend the securities lawsuit also obligated it to defend the SEC enforcement action.
The United States District Court for the District of Nevada, applying Nevada law, has held that the court’s prior favorable coverage determination was evidence that an insurer did not act in bad faith when refusing to defend or provide coverage under a policy. My Left Foot Children’s Therapy, LLC v. Certain Underwriters at Lloyd’s London, 2019 WL 1810956 (D. Nev. Apr. 23, 2019).
The Ninth Circuit Court of Appeals, applying California law, has ruled that a policy application did not require insureds to disclose a claim that did not assert any “wrongful acts.” Kelly v. Starr Indem. & Liab. Co., 2019 WL 1895825 (9th Cir. Apr. 29, 2019).
Applying Delaware law, a Delaware state trial court has held that insurers did not act in bad faith by denying coverage for underlying settlements when they had reasonable grounds for their position and promptly sought a declaratory judgment as to their indemnification responsibilities. Arch Ins. Co. v. Murdock., 2019 WL 1932536 (Del. Super. Ct. May 1, 2019).
The United States District Court for the Southern District of California has held that a liability insurer had no duty to defend a claim made against an insured arising out of the denial of an employee’s life insurance benefits because coverage was barred by an ERISA exclusion. By Referral Only, Inc. v. Travelers Prop. Cas. Co. of Am., 2019 WL 1559145 (S.D. Cal. Apr. 10, 2019).
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. v. Hudson Ins. Co., 2019 WL 1517568 (E.D. Cal. Apr. 8, 2019). The court also held that material misrepresentations in the labor union’s application for insurance voided the policy.
The United States District Court for the Eastern District of Texas, applying Texas law, has held that a government-issued subpoena constituted a “Claim” under a directors and officers liability policy, but also determined that the policy’s “run-off exclusion” barred coverage. Ocean’s Healthcare, L.L.C. v. Illinois Union Ins. Co., 2019 WL 1437955 (E.D. Tex. March 30, 2019).
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.