A California federal district court has ruled that an insurer could rescind a professional liability policy because its insured failed to disclose a customer dispute and potential claim in its application for coverage. Scottsdale Indem. Co. v. Sun Coast Gen. Ins. Agency, 2020 WL 8569410 (C.D. Cal. Dec. 21, 2020).
Continue Reading Insurer Entitled to Rescind Policy Due to Insured’s Failure to Disclose Contract Dispute and Potential Claim on Application
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.
Continue Reading Negligent Misrepresentation Claim Not Barred By Exclusion for Dishonest Conduct
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).
Continue Reading Consumer Protection Claims Not Barred By Antitrust Exclusion
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).
Continue Reading Lawsuits Concerning Same Housing Development Project Are Related Claims
The United States District Court for the Central District of California, applying California law, has ruled that an insurer could rescind a policy issued after a homeowners association falsely claimed in its application that it had not had any claims against it in the prior five years. Atain Specialty Ins. Co. v. Lake Lindero Homeowners Ass’n, 2020 WL 7416169 (C.D. Cal. Nov. 25, 2020). The Court concluded that the information withheld was material to the insurer’s decision whether to issue the policy.
Continue Reading Insurer Entitled to Rescind Due to Misrepresentations on Application
Applying California law, the Ninth Circuit held that an excess insurer may challenge the allocation of an underlying settlement that resolves both an underlying claim against an insured and the insured’s coverage dispute with the primary insurer. Scottsdale Ins. Co. v. Certain Underwriters at Lloyds., 2020 WL 7419261 (9th Cir. Dec. 18, 2020). The court further held that a primary insurer is not entitled to equitable contribution from an excess carrier if the excess carrier was not notified of the underlying claim until after the primary insurer denied coverage.
Continue Reading Ninth Circuit Holds that Excess Carrier May Challenge Allocation of Primary Carrier’s Settlement that Resolves Both the Underlying Claim and a Coverage Dispute
The United States Court of Appeals for the Ninth Circuit, applying California law, affirmed a district court opinion finding no coverage under a directors and officers liability policy for a lawsuit brought against the insured pursuant to the California False Claims Act (“CFCA”) on the basis that coverage was barred by a contract exclusion. Office Depot, Inc. v. AIG Specialty Ins. Co., Case No. 19-55819 (9th Cir. Nov. 13, 2020). A summary of the district court opinion is available here.
Continue Reading Ninth Circuit Affirms Contract Exclusion Bars Coverage for False Claims Act Lawsuit
The United States District Court for the Northern District of California has held that, in an action to rescind a professional liability policy, a triable issue of fact existed regarding whether an insured misrepresented or concealed information in connection with obtaining insurance where the insured did not have express notice of the clients’ dissatisfaction with his services and it was not otherwise obvious that a claim might be filed against him when he applied for the policy. Am. Alternative Ins. Corp. v. Warner, 2020 WL 6204924 (N.D. Cal. Oct. 22, 2020). In denying the insurer’s motion for summary judgment, the court noted that evidence of an increase in premiums is sufficient to establish materiality under California law.
Continue Reading Whether Insured Misrepresented or Concealed Information in Application is a Fact Issue for Trial
Applying California law, the United States Court of Appeals for the Ninth Circuit has held that a letter proposing an informal settlement received before the policy period constituted a claim, such that no coverage was available for subsequent related lawsuits. Pac. Coast Surgical Ctr., L.P. v. Scottsdale Ins. Co., 2020 WL 5870257 (9th Cir. Oct. 2, 2020).
Continue Reading Pre-Policy Settlement Letter Deemed a “Claim,” Barring Coverage for Related Lawsuits
A California federal court has held that a complaint alleging that a law firm was providing services in a non-legal capacity nonetheless triggered a duty to defend the firm under a lawyers’ professional liability policy, where the complaint also described legal-related services provided by the insured. Associated Indus. Ins. Co. v. Bloom, 2020 WL 5802949 (C.D. Cal. July 29, 2020).
Continue Reading Despite Allegation that Law Firm Was Not Providing “Legal Advice,” Complaint Triggers Duty to Defend Under Lawyers’ Professional Liability Policy