Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: California

Ninth Circuit Holds Excess Policy Unambiguously Required Exhaustion of Underlying Limits by Insurers Under Either New York or California Law

Posted in Excess insurance/exhaustion
The United States Court of Appeals for the Ninth Circuit has held that a New York choice of law provision in a policy issued by an international insurer is enforceable and that, under either New York or California law, an excess policy was not triggered when the underlying policy limits were not exhausted through payments… Continue Reading

Regulatory Action Sublimit Unambiguously Applies to State Disciplinary Proceeding Against Life Insurance Agent

Posted in Regulatory Exclusion
Applying California law, a federal district court has held that a disciplinary proceeding initiated by a state insurance department against an insured life insurance agent is unambiguously subject to a regulatory action sublimit of liability.  Cerf v. Cont’l Cas. Co., Case No. 17-cv-07993-DSF-SS (C.D. Cal. Mar. 13, 2018).  Wiley Rein represented the insurer in this… Continue Reading

DOJ Investigation Constitutes Seven “Claims,” But Specific Litigation and Pending-Or-Prior Litigation Exclusions Bar Coverage

Posted in “Claim”, Defense Costs
The United States Circuit Court of Appeals for the Ninth Circuit, applying California law, has held that an insurer owed no duty to reimburse the insured’s costs of responding to a governmental investigation.  Millennium Labs., Inc. v. Allied World Assurance Co., Inc., 2018 WL 1179601 (9th Cir. Mar. 7, 2018).  While the court held that… Continue Reading

Ninth Circuit: Deceptive Business Practices Exclusion Does Not Bar Coverage for Kickback Suit

Posted in Dishonesty Exclusion
Applying California law, the United States Court of Appeals for the Ninth Circuit affirmed a federal district court decision which held that a deceptive business practices exclusion in an errors and omissions policy did not bar coverage for a suit alleging the insured real estate broker received kickbacks, because two of the causes of action… Continue Reading

Ninth Circuit Affirms Allegations of Discrimination and Harassment Triggered Duty to Defend Class Action for California Labor Code Violations

Posted in Wrongful Act
The United States Court of Appeals for the Ninth Circuit has held that an employment practices liability insurer had a duty to defend a class action complaint alleging various California Labor Code violations based on the presence of potentially covered allegations of discrimination and harassment.  PHP Ins. Serv., Inc. et al. v. Greenwich Ins. Co.,… Continue Reading

Insurer May Rescind Policy Where Insured Failed to Disclose Pending Investigation

Posted in Rescission
Applying California law, the United States Court of Appeals for the Ninth Circuit has held that an insurer was entitled to rescind a directors and officers liability insurance policy where the insured failed to disclose a pending investigation in response to an application question.  Western World Ins. Co. v. Professional Collection Consultants, 2018 WL 259309… Continue Reading

Prior Knowledge Condition Bars Coverage Where Insured was Warned of Negligence Claim Before Policy Incepted

Posted in Prior Knowledge/Warranty Exclusion
The California Court of Appeal has held that a prior knowledge condition barred coverage for a claim brought against an insured because the insured was warned prior to the policy’s inception that it would face a claim for professional negligence.  Admiral Ins. Co. v. Superior Court, 2017 WL 5590076 (Cal. Ct. App. Nov. 21, 2017).… Continue Reading

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