Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: California

Assault and Battery Exclusion Bars Coverage for Negligence Action Arising from Stabbing at Concert

Posted in Assault & Battery Exclusion
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… Continue Reading

No Duty to Defend Claims Brought by California Attorney General Under Unfair Competition or False Advertising Laws

Posted in Duty to Defend, Right to Reimbursement
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… Continue Reading

California Court Holds that “Wage and Hour Law” Limitations on Coverage Unambiguously Applied to Labor Code Violations

Posted in Defense Costs, Exclusions, Wage and Hour Coverage
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).… Continue Reading

Letter to Insured Asserting Right to Patent Applications Constitutes a Claim Made Prior to D&O Policy Period

Posted in “Claim”, Notice of Claim, Related Claims and associated exclusions
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.… Continue Reading

No Coverage Because of Late Notice and Undisclosed Prior Knowledge of Claim

Posted in Notice of Claim, Prior Knowledge/Warranty Exclusion
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.,… Continue Reading

Three Separate Policy Exclusions and Wrongful Acts Outside the Policy Period Bar Coverage for California False Claims Act Lawsuit

Posted in Breach of Contract, Related Claims and associated exclusions, Wrongful Act
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… Continue Reading

Insurer Lacked Conclusive Evidence of Insured’s Involvement to Trigger I v. I Exclusion; Insured’s Compromise of Favorable Judgment to Settle Multiple Suits Not a “Loss”

Posted in Allocation, Insured v. Insured Exclusion, Loss, Notice of Claim
The United States District Court for the Central District of California, applying California law, has held that an insurer lacked adequate information to deny coverage under an insured vs. insured exclusion in a D&O policy.  MJC Supply, LLC v. Scottsdale Ins. Co., 2019 WL 2372279 (C.D. Cal. June 4, 2019).  The court also held that… Continue Reading

Specific Matter Exclusion Bars Coverage for Lawsuits Involving Same Parties as Lawsuit Included in Definition of “Specific Matter”

Posted in Related Claims and associated exclusions
The United States Court of Appeals for the Ninth Circuit, applying California law, has affirmed the district court’s holding that a specific matter exclusion bars coverage for a series of lawsuits involving the same parties as a lawsuit included in the policy’s definition of “Specific Matter” in that exclusion.  Ocean Towers Hous. Corp. v. Evanston… Continue Reading

Insured Entitled to Independent Counsel Where Coverage Action Turns on Facts That Could be Used to Establish Underlying Liability

Posted in Defense Costs, Prior Knowledge/Warranty Exclusion
The United States District Court for the Central District of California, applying California law, has held that an insured is entitled to independent counsel where an insurer’s coverage action turns on facts that overlap with facts that might establish an insured’s liability in the underlying lawsuit.  Aspen Am. Ins. Co. v. Ou, 2019 WL 1950293… Continue Reading

Two Lawsuits Based on Real Estate Broker’s Dual Representation of Buyers and Sellers in Same Transaction Arise from Same Wrongful Act

Posted in Related Claims and associated exclusions
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… Continue Reading

ERISA Exclusion Bars Coverage for Claims Arising From Denial of Employee’s Insurance Benefits

Posted in Professional Services
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.… Continue Reading

No Coverage for Wage and Hour Claims Under Labor Professional Liability Policy

Posted in Rescission, Wrongful Act
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.… Continue Reading

Warranty Exclusion Bars Coverage Where Start-Up Made Material Misrepresentations in Application about Potential Acquisitions

Posted in Rescission
The U.S. District Court for the Central District of California, applying California law, held that a warranty exclusion barred coverage where a start-up company made material misrepresentations regarding contemplated acquisitions in its policy application.  Scottsdale Ins. Co. v. CSC Agility Platform, Inc., 2019 WL 1452910 (C.D. Cal. Feb. 4, 2019).  The court further held that… Continue Reading

Contract Exclusion Bars Coverage for Demand for Cost-Overrun Payment

Posted in Breach of Contract, Defense Costs, Wrongful Act
The United States District Court for the Eastern District of California, applying California law, has held that no coverage is available for a demand for payment in excess of agreed purchase orders based on an exclusion barring coverage for loss “as a result of” a claim “for any actual or alleged obligation under . .… Continue Reading

Coverage Barred Because Causally Related Claims Deemed a Single Claim Under Earlier Policy

Posted in Related Claims and associated exclusions
Applying California law, a federal district court has held that an original and an amended complaint arising out of a series of related wrongful acts were deemed a single claim under an earlier policy, such that coverage was barred under a policy issued later.  General Ins. Co. v. INB Ins. Servs. Corp., 2019 WL 1318252… Continue Reading

Claims Arising out of Insured’s Contractual Obligation to Provide Employee Benefits Plans Are Not Because of a Wrongful Act

Posted in Breach of Contract, Wrongful Act
The U.S. District Court for the Southern District of California, applying California law, has held that neither fiduciary nor employment benefits liability coverage applied to claims seeking benefits under an insured company’s employee benefits plan because the company’s liability arose, not from negligent acts or breaches of fiduciary duty, but from its contractual obligation to… Continue Reading

Ninth Circuit Holds Section 533 and Financial Services Exclusion Do Not Bar Coverage for Alleged Mortgage Modification Scam

Posted in Professional Services, Public Policy prohibition on insurance
The Ninth Circuit, applying California law, has held that an insurer improperly failed to defend its insured in connection with a lawsuit alleging that the insured engaged in an ongoing mortgage modification fraud scheme, because one count in the lawsuit did not require willful conduct and therefore was not necessarily uninsurable under California Insurance Code… Continue Reading

No Coverage for Whistleblower Action or Subpoena Noticed to Insurer After End of Policy Reporting Period

Posted in Notice of Claim
The United States District Court for the Central District of California, applying California law, has held that coverage is unavailable for a whistleblower action and subpoena noticed after the end of the reporting period of a claims-made policy.  PAMC, Ltd. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2019 WL 666726 (C.D. Cal. Feb.… Continue Reading

Fact Disputes Preclude Summary Judgment Over Insurer’s Failure to Provide Immediate Defense

Posted in Defense Costs
The United States District Court for the Central District of California, applying California law, has held that an insurer was not entitled to summary judgment in full, finding that triable issues of fact remained regarding the insurer’s alleged failure to provide an immediate defense to the insured corporation and to assign separate counsel for an… Continue Reading

Specific Circumstances and Prior Notice Exclusions Bar Coverage for Trustee’s Lawsuit Against Former Directors and Officers

Posted in Exclusion lead-in language (Arising out of), Related Claims and associated exclusions, Wrongful Act
Applying California law, the United States District Court for the Northern District of California has held that coverage is precluded under a claims-made D&O policy based on two exclusions: a specific circumstances exclusion and a prior notice exclusion.  Landmark Am. Ins. Co. v. Navigators Ins. Co., 2018 WL 6591620 (N.D. Cal. Dec. 14, 2018).… Continue Reading

Corporate Coverage Considerations: California Appellate Court Confirms Enforceability of Delaware Forum Selection Bylaws

Posted in Corporate Considerations
In an issue of first impression in California, a California appellate court has rejected a shareholder plaintiff’s effort to avoid enforcement of a Delaware company’s forum selection bylaw, despite the shareholder’s arguments that the bylaw was inconsistent with California law and was otherwise unreasonable given the manner and timing of its adoption.  Drulias v. 1st… Continue Reading

Excess Insurer Not Bound by Primary Insurer’s Payment of Uninsurable Disgorgement Settlement

Posted in Excess insurance/exhaustion, Loss
Applying California law, the United States District Court for the Central District of California has held that a follow-form excess insurer was not bound by the primary insurer’s decision to pay a settlement because the settlement constituted uninsurable disgorgement that did not trigger the excess insurer’s policy.  Axis Reinsurance Co. v. Northrop Grumman Corp., No.… Continue Reading

Two Class Action Lawsuits Are “Related,” Despite Different Plaintiffs and Different Time Periods

Posted in Related Claims and associated exclusions
Applying California and Virginia law, a federal district court has held that two class action lawsuits alleging similar wrongful conduct, but brought by different classes for different class periods, were nonetheless related and constituted a single claim.  Northrop Grumman Corp. v. AXIS Reinsurance Co., 2018 WL 5314918 (D. Del. Oct. 26, 2018).… Continue Reading