Upholding a “law most favorable” provision with respect to the insurability of ill-gotten gains, the Delaware Superior Court has concluded that Delaware law, rather than New York law, applies to a coverage dispute regarding coverage for settlement amounts allegedly constituting ill-gotten gains. Sycamore Partners Mgmt., L.P. v. Endurance Am. Ins. Co., 2021 WL 761639 (Del. Super. Ct. Feb. 26, 2021). Because such amounts are insurable as a matter of Delaware public policy, the amounts at issue constituted covered Loss.
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Continue Reading Under “Law Most Favorable” Provision, Delaware Law Applies and Does Not Prohibit Coverage for Settlement of Alleged Ill-Gotten Gains

The United States District Court for the Northern District of California, applying California law, has held that a dishonesty exclusion in a D&O policy did not bar coverage for an underlying lawsuit alleging a company president’s negligent misrepresentation in inducing investments.  Scottsdale Ins. Co. v. Fineman, 2021 WL 411360 (N.D. Cal. Feb. 5, 2021).  The court also held that an unconfirmed arbitration award is not a “final judgment” that can trigger the exclusion.
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Continue Reading Negligent Misrepresentation Claim Not Barred By Exclusion for Dishonest Conduct

Judge Paul Wallace of the Delaware Superior Court has held that a bump-up provision did not operate to preclude coverage for a settlement of a Section 14(a) cause of action.  Northrop Grumman Innovation Sys., Inc. v. Zurich Am. Ins. Co., 2021 WL 347015 (Del. Super. Ct. Feb. 2, 2021).  The court also held that a prior acts exclusion contained in a different set of D&O policies did not preclude coverage for Section 10(b) claims asserted in the same lawsuit.
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Continue Reading Coverage for Stockholder Suits Not Barred By Prior Acts Exclusion or Bump-Up Provision

The United States District Court for the Central District of California, applying California law, has held that antitrust exclusions in two D&O policies did not bar coverage for a class action against an insured sports equipment manufacturer asserting violations of consumer protection laws.  James River Ins. Co. v. Rawlings Sporting Goods Co., 2021 WL 346418 (C.D. Cal. Jan. 25, 2021).
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Continue Reading Consumer Protection Claims Not Barred By Antitrust Exclusion

In a win for Wiley’s client, the United States District Court for the District of Massachusetts, applying Massachusetts law, granted the insurer’s motion to dismiss, finding that business losses related to the COVID-19 pandemic could not trigger coverage under a commercial property insurance policy.  SAS Int’l, Ltd. v. General Star Indem. Co., No. 20-11864-RGS (D. Mass. Feb. 19, 2021).  Specifically, the court held that the insured failed to allege “direct physical loss of or damage to” property.  Notably, it was the first federal court in Massachusetts to render a substantive decision on the issue, which has led to more than fifteen hundred similar coverage actions in Massachusetts and states nationwide.
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Continue Reading Pandemic-Related Losses Not “Direct Physical Loss of or Damage to Property” And Do Not Trigger Coverage Under Commercial Property Policy

The United States District Court for the Northern District of Illinois, applying Illinois law, has held that a professional liability insurer had no duty to defend or indemnify an employee of its insured realty management company where the underlying allegations were based on the employee’s alleged intentional conduct in circumventing an estate plan.  Those Certain Underwriters at Lloyd’s, London, Severally Subscribing to Policy No. MPL-0000343-01 v. Karris, 2021 WL 493038 (N.D. Ill. Feb. 10, 2021).
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Continue Reading No Coverage for Lawsuit Alleging Intentional Conduct to Circumvent Estate Plan

A new presidential administration always brings changes that impact a broad spectrum of industries.  And the Biden Administration figures to be no exception.  There have been numerous thoughtful articles about how President Biden’s administration could reshape federal agencies’ priorities and impact various industries.  One such article, by my Wiley colleague Duane Pozza, focuses on the FTC.  Duane identified five areas that a Biden FTC is likely to prioritize.  Duane’s whole article is interesting in its own right, but one point jumps out that will almost certainly impact the D&O insurance world—an increase in seeking individual liability for directors and officers.
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Continue Reading Changes at the FTC Could Increase D&O Exposure

The California Court of Appeal, applying California law, has held that two lawsuits arising from work performed by the same insured engineering firm on a housing development constitute related claims under the firm’s professional liability policies, and were thus subject to a single policy limit.  D.R. Horton Los Angeles Holding Co. v. Certain Underwriters at Lloyd’s London Subscribing to Policy No. 146/LDUSA0700832, 2020 WL 7417409 (Cal. Ct. App. Dec. 18, 2020).
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Continue Reading Lawsuits Concerning Same Housing Development Project Are Related Claims

The Missouri Court of Appeals, applying Missouri law, has held that multiple acts of negligence committed by a lawyer while representing a married couple in a lawsuit are related acts or omissions constituting a single claim under the law office’s professional liability policy, and thus were subject to a single limit of liability.  Stacy v. Bar Plan Mut. Ins. Co., 2021 WL 243515 (Mo. Ct. App. Jan. 26, 2021).  The court also held that the insurer was not estopped from asserting the limits of liability when it failed to send reservation of rights or denial of coverage letters relating to its single-claim position.
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Continue Reading Lawyer’s Multiple Acts of Negligence Constitute A Single Claim

The United States District Court for the Southern District of Florida, applying Maryland law, has held that the professional services and managed care activity exclusions in a D&O policy did not bar coverage for a lawsuit against the insured healthcare facility where the underlying complaint included allegations concerning the insured’s business decisions.  Atlantic Healthcare v. Argonaut Ins. Co., 2021 WL 266281 (S.D. Fla. Jan. 27, 2021).  The court also held the prior acts exclusion inapplicable because some of the underlying claims were not premised on any alleged wrongful act that took place before the exclusion’s cut-off date.
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Continue Reading Professional Services Exclusion Does Not Bar Coverage for Lawsuit Alleging “Business Decisions” of Healthcare Facility