Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: California

Carve Out for Fines and Amounts Imposed by Statute Bars Coverage

Posted in Breach of Contract – coverage for amounts due pursuant to contract, exclusions
Applying California law, the United States District Court for the Central District of California has held that an insurer owed no coverage for an underlying lawsuit because the suit sought amounts that fell completely within a carveout from the definition of “damages” for fines and amounts imposed by statute.  Local Initiative Health Auth. for Los… Continue Reading

Insured Fails to Allege Bad Faith Damages When Settlement Was Funded by Another Insurer

Posted in Bad faith/duty to settle
A California federal district court has held that an insured did not suffer damages sufficient to support a bad faith claim for failure to indemnify because another excess insurer during a prior policy year had paid for the settlement.  Genesis Ins. Co. v. Magma Design Automation, Inc., No. 2017 WL 4642443 (N.D. Cal. Oct. 16,… Continue Reading

Professional Services Exclusion Bars Coverage in Connection with Pipeline Explosion

Posted in Exclusion lead-in language (Arising out of), Professional Services
A California appellate court has held that a pipeline owner’s insurer is not entitled to reimbursement of defense costs and settlement payments from the insurer for the staffing agency that supplied personnel to the pipeline because the professional services exclusion in the staffing agency’s policy unambiguously barred coverage.  Energy Ins. Mut. Ltd. v. ACE American… Continue Reading

Court Grants Summary Judgment to Insurer Based on Failure to Disclose Prior Claims in Application

Posted in Prior Knowledge/Warranty Exclusion, Rescission
A California federal district court, applying California law,  has held that an insurer was entitled to summary judgment that it had no duty to defend a suit against its insured because the insured failed to disclose a related claim in its application, and the claim therefore predated the policy period.  Kelly v. Starr Indem. &… Continue Reading

Insurer’s Allegations that Declaratory and Injunctive Relief Are Not Covered Loss Survive Motion to Dismiss

Posted in Excess insurance/exhaustion, Loss, Wrongful Act
The United States District Court for the Northern District of California has denied an insured’s motion to dismiss an umbrella insurer’s declaratory judgment action.  Great American Ins. Co. v. Quintana Homeowners Ass’n., 2017 WL 3453394 (N.D. Cal. Aug. 11, 2017).  The insurer alleged that it had no duty to defend or indemnify after exhaustion of… Continue Reading

Ninth Circuit Applies Invasion of Privacy Exclusion to Bar Coverage for TCPA Claims under D&O Policy

Posted in Uncategorized
The Court of Appeals for the Ninth Circuit, applying California law, has held that an invasion of privacy exclusion in a D&O policy barred coverage for a claim alleging violations of the Telephone Consumer Protection Act (TCPA).  Los Angeles Lakers, Inc. v. Federal Ins. Co., 2017 WL 3613340 (9th Cir. Aug. 23, 2017).… Continue Reading

An Insured’s Prior Knowledge Precludes Coverage for Other Insureds Seeking Coverage; Prior Litigation Exclusion Applies to Arbitration Demand

Posted in Prior Knowledge/Warranty Exclusion
Applying California law, the United States Court of Appeals for the Ninth Circuit has held that prior knowledge of wrongful acts that could reasonably be expected to give rise to a claim possessed by an insured who is not seeking coverage may bar coverage for other insureds under the same policy.  Woo v. Scottsdale Ins.… Continue Reading

Insurer Must Pay Defense Expenses in Appeal of Fraud Conviction

Posted in Dishonesty Exclusion
The California Court of Appeal has held that an exclusion requiring repayment to the insurer upon a “final determination” of the insured’s culpability applies only after the insured’s direct appeals have been exhausted, and therefore the insurer was obligated to pay the insured’s litigation expenses in an appeal of the underlying litigation.  Stein v. AXIS… Continue Reading

Deceptive Business Practices Exclusion Does Not Bar Coverage for Kickback Suit

Posted in Dishonesty Exclusion
The United States District Court for the Northern District of California has held that a deceptive practices exclusion contained in an errors and omissions policy issued to a real estate brokerage did not bar coverage for a suit alleging the brokerage engaged in a kickback scheme with a vendor because two causes of action asserted… Continue Reading

Insured’s Failure to Obtain Insurer’s Consent Prior to Executing Settlement Term Sheet Precludes Coverage

Posted in Consent to settle/incur defense costs
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured breached the consent-to-settle provision of its professional liability insurance policy by executing a settlement term sheet prior to seeking or obtaining the consent of its insurer and therefore was not entitled to coverage under the policy.  Onewest… Continue Reading

No Coverage for California False Claims Act Suit

Posted in Public Policy prohibition on insurance
A California federal district court has granted an errors and omissions liability insurer’s motion for summary judgment that it had no duty to defend a suit against its insured alleging violations of the California False Claims Act (CFCA), holding that the underlying suit created no potential for coverage and that there was no reasonable expectation… Continue Reading

Insured v. Insured Exclusion Bars Coverage for Claim by FDIC Receiver Against Failed Bank’s Directors and Officers

Posted in Insured v. Insured Exclusion, Regulatory Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured v. insured exclusion in a directors and officers policy, which expressly barred coverage for actions brought by a “receiver,” precluded coverage for a claim against a failed bank’s directors and officers by the Federal Deposit Insurance Corporation… Continue Reading

No “Final Adjudication” Where Parties Settled After Court Issued Opinion But Prior to Judgment

Posted in Dishonesty Exclusion
The Delaware Superior Court, purporting to apply Delaware and California law, has held that there was no “final adjudication” for purposes of triggering a conduct exclusion where the parties to the underlying action settled after the court issued an interlocutory memorandum opinion containing findings of fraud.  Arch Ins. Co. v. Murdock, 2016 WL 7414218 (Del.… Continue Reading

Professional Services Exclusion Bars Coverage for False Claims Act Suit Against Online Education Servicer

Posted in Professional Services
The United States District Court for the Northern District of California, applying California law, has held that a professional services exclusion bars coverage under a directors and officers liability policy for an online education program servicer against an action under the False Claims Act, holding that the False Claims Act allegations at issue arose out… Continue Reading

Suit for Reimbursement of Beauty School Expenses Under California Labor Law Triggers Duty to Defend Despite Wage and Hour Exclusion

Posted in Defense Costs
The United States District Court for the Southern District of California, applying California law, has held that an employment practices liability policy’s wage and hour exclusion does not apply to a claim for reimbursement of reasonable business expenses under the California Labor Code.  Hanover Ins. Co. v. Poway Acad. of Hair Design, Inc., 2016 WL… Continue Reading

Subjective Standard Applies to Rescission of E&O Policy Based on Response to Application Question

Posted in Prior Knowledge/Warranty Exclusion, Rescission
The United States District Court for the Southern District of Ohio, applying California law, has held that an errors and omissions insurer is not entitled to rescission of its policy based on an alleged misrepresentation by the insured on the application for the policy.  Maxum Indem. Co. v. Nat’l Condo & Apartment Ins. Grp., 2016… Continue Reading

Insured-versus-Insured Exclusion Deemed Ambiguous as Applied to FDIC as Receiver

Posted in Insured v. Insured Exclusion
The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an insured-versus-insured exclusion was ambiguous where the plaintiff FDIC, in its capacity as receiver, sued the directors and officers of a defunct bank.  St. Paul Mercury Ins. Co. v. Federal Deposit Ins. Corp., 2016 WL 6092400 (9th Cir. Oct.… Continue Reading

Insurer Has a Duty to Defend Lawsuits Potentially Seeking Damages Not Flowing From a Contractual Obligation

Posted in Defense Costs, Dishonesty Exclusion, Excess insurance/exhaustion, Loss
The California Court of Appeal has held that an errors and omissions insurer had a duty to defend lawsuits seeking amounts owed under contract because the lawsuits potentially sought non-contractual damages for breach of fiduciary duty and non-disclosure.  Health Net, Inc. v. Am. Int’l Spec. Ins. Co., 2016 Cal. App. Lexis 7296 (Cal. Ct. App.… Continue Reading

Insured Stated Claim for Breach of Contract and Bad Faith Against Claims Administrator

Posted in Bad Faith
Applying California law, the United States District Court for the Southern District of California has held that a policyholder stated a claim against the claims administrator for a policy because the plaintiff had pleaded a plausible factual allegation that the claims administrator issued the policy, which was sufficient to survive a motion to dismiss.  Reno… Continue Reading

Insurer that Rejected Exception from Release Language Liable for Bad Faith Failure to Settle Despite Offering Policy Limits

Posted in Bad Faith, Bad faith/duty to settle, Consent to settle/incur defense costs
A California intermediate appellate court has held that an insurer is liable for bad faith failure to settle, even though it had made a timely offer to settle for its full policy limits, where the insurer declined to agree to release terms proposed by the claimants to which the insured refused to agree. Barickman v.… Continue Reading