The Delaware Supreme Court has held that D&O policies do not afford coverage for an underlying lawsuit asserting causes of action for breach of fiduciary duty, unlawful dividend, and fraudulent transfer because the lawsuit is not a “Securities Claim” under the policies. In re Verizon Insurance Coverage Appeals, C.A. No. 558, 2018 (Del. Oct. 31, 2019). The Supreme Court reversed the trial court opinion in favor of the insured and directed entry of summary judgment for the insurers.
Applying Georgia law, a federal district court denied cross-motions for summary judgment regarding cooperation and prior knowledge, sending both issues to the jury. Lloyd’s of London Syndicate No. 2623 v. Navicent Health Inc., 2019 WL 4889269 (M.D. Ga. Oct. 3, 2019). However, the court granted the insurer’s motion for summary judgment on the insured’s bad faith claim, concluding that the coverage disputes were “close” and therefore the insurer’s denial of coverage was neither frivolous nor unfounded.
The United States District Court for the Eastern District of Arkansas has held that no coverage exists under an errors and omissions policy for claims arising out of the misappropriation and conversion of funds by an insured’s chief executive officer. Kerr v. Gotham Ins. Co., 2019 WL 5268625 (E.D. Ark. Oct. 17, 2019). The court held that the CEO’s conduct did not constitute the rendering of professional services and that the damages, despite arising from a negligence claim, represented the return of money to which the insured was not entitled, therefore falling outside the policy’s coverage.
The United States District Court for Nevada, applying Nevada law, has held that an insurer had no duty to defend or indemnify in a wrongful death suit where a plea agreement in a related criminal action satisfied the willful violation of statute exclusion in a doctor’s professional liability policy. Nat’l Fire & Marine Ins. Co. v. Holper, 2019 WL 4979717 (D. Nev. Oct. 8, 2019).
The United States District Court for the District of Kansas, applying Kansas law, has held that an excess E&O policy was not triggered where coverage under a potentially responsive D&O policy had not yet been resolved. Bedivere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc., 2019 WL 4752051 (D. Kan. Sept. 30, 2019). The court further held that the excess insurer alleged sufficient facts to state a claim for relief for breach of the excess policy’s cooperation clause due to the insured’s refusal to provide documents requested for purposes of “coverage investigation” and assessment of “potential liability.”
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 the terms of the policy. Telligen, Inc. v. Atlantic Specialty Ins. Co., 2019 WL 4804646 (S.D. Iowa Aug. 2, 2019).
The United States Court of Appeals for the Third Circuit, applying Delaware law, has held that a D&O policy’s Major Shareholder Exclusion, barring claims brought against the insured entity by a company owning five percent or more of the entity, was ambiguous as applied to a company acquiring one hundred percent of the insured’s stock after the policy period. EMSI Acquisition, Inc. v. RSUI Indem. Co., 2019 WL 4511948 (3d Cir. Sept. 19, 2019). The court also rejected the insurer’s argument that the insured’s settlement with the acquiring company did not constitute “Loss” under the policy.
A Texas intermediate appellate court, applying Texas law, has held that an insured-versus-insured (IvI) exclusion did not bar coverage for an arbitration award because the underlying dispute arose from alleged wrongful employment practices, bringing the claim within an exception to the exclusion. Prophet Equity LP v. Twin City Fire Ins. Co., 2019 WL 3886651 (Tex. App. Aug. 19, 2019). The court also determined that the insurer had not met its burden of proving that any portion of the arbitration award constituted uncovered loss such that an allocation should be imposed. Id.
Applying Wisconsin law, the United States Court of Appeals for the Seventh Circuit has held that a breach of contract exclusion did not apply to bar coverage for a claim because it had the effect of rendering the insured’s errors and omissions professional liability coverage illusory. Crum & Forster Specialty Ins. Co. v. DVO, Inc., 2019 WL 4594229 (7th Cir. Sept. 23, 2019).
In a win for Wiley Rein’s client, the United States District Court for the Eastern District of California applied an assault and battery exclusion to bar coverage for a negligence action arising from a stabbing that occurred at a concert promoted by the insured. Certain Underwriters at Lloyd’s of London Subscribing to Policy No. EH7713140 v WorldOne Presents, LLC, 2019 WL 4747708 (E.D. Cal. Sept. 30, 2019).