Applying California Law, the United States District Court for the Southern District of California has held that an insurer must pay defense costs contemporaneously, even where the policy’s advancement provision merely requires payment “prior to final disposition of a claim,” because the insured became legally liable for defense costs as they were incurred.  Renovate Am., Inc. v. Lloyd’s Syndicate 1458, 2019 WL 6716735 (S.D. Cal. Dec. 10, 2019).  The court further held that the insured was excused from obtaining the insurer’s prior written consent regarding defense arrangements given the insurer’s seven-month delay in responding to the insured’s initial notice.

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Applying California law, a federal district court has rejected an insured law firm’s argument that the terms “may” and “might” as used in connection with an application question regarding knowledge of potential claims are ambiguous and unenforceable.   Am. Alternative Ins. Corp. v. Warner, 2019 WL 6493945 (N.D. Cal. Dec. 3, 2019).

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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).

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The United States District Court for the Central District of California has held that California Insurance Code Section 533.5 precludes a duty to defend any claim brought by the California Attorney General under the Unfair Competition Law or False Advertising Law for the recovery of a fine, penalty, or restitution.  Adir Int’l, LLC v. Starr Indem. & Liab. Co., 2019 WL 4462613 (C.D. Cal. Sept. 10, 2019).

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Applying California law, a federal district court has held that a wage and hour endorsement limited the coverage available for two class action lawsuits to $25,000 in defense costs.  Houston Cas. Co v. Great American Chicken Corp., Inc., 2019 WL 3886484 (C.D. Cal. Aug. 12, 2019).

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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.”

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Applying California law, the United States Court of Appeals for the Sixth Circuit has held that an insurer properly denied coverage under consecutive claims-made-and-reported policies based on the insured’s failure to provide timely notice of a claim and the insured’s failure to disclose the pending claim in its application for coverage.  US HF Cellular Commc’ns., LLC v. Scottsdale Ins. Co., 2019 WL 2323802 (6th Cir. May 31, 2019).

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The United States District Court for the Central District of California, applying California law, has held that there is no coverage for a False Claims Act settlement where the insured company’s alleged wrongful acts took place outside the policy period and were independently barred from coverage by a contract exclusion, prior acts exclusion and regulatory exclusion. Office Depot Inc. v. AIG Specialty Insurance Co. No. 2:15-cv-02416 (C.D. Cal. June 21, 2019).

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