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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.
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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).
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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). 
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Continue Reading Despite Allegation that Law Firm Was Not Providing “Legal Advice,” Complaint Triggers Duty to Defend Under Lawyers’ Professional Liability Policy

The United States Court of Appeals for the Ninth Circuit, applying California law, has held that an excess insurer could not second-guess the payment decisions of underlying insurers absent a showing of fraud or bad faith, or a policy provision expressly granting the insurer such rights.  Axis Reinsurance Co. v. Northrop Grumman Corp., 2020 WL 5509743 (9th Cir. Sept. 14, 2020).
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Continue Reading Ninth Circuit: Excess Carrier Not Entitled to Challenge Payment Decisions of Underlying Carriers

A federal district court has ruled that a third-party administrator’s professional liability policy does not afford coverage for a claim against the TPA arising from an excess judgment against the TPA’s insurer-client.  American Claims Mgmt., Inc. v. Allied World Surplus Lines Ins. Co., 2020 WL 5257795 (S.D. Cal. Sept. 3, 2020).
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Continue Reading No Coverage for TPA in Claim Arising from Extracontractual Exposure to Insurer

A California court ruled that a forum selection provision in a Delaware company’s registration statement requiring that certain securities litigation be brought solely in federal court was enforceable.  Wong v. Restoration Robotics, Inc., Case No. 18CIV02609 (Cal. Sup. Ct., San Mateo County, Sept. 1, 2020).  The California court’s ruling could signal the beginning of a broader trend, started in Delaware, that would be helpful to securities defendants, and, in turn, to insurance carriers.
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Continue Reading California Court Enforces Federal Forum Selection Provision For 1933 Act Claims

Applying California law, a federal district court has held that a request for payment of overdue legal fees does not constitute a claim for purposes of a D&O policy. Domokos v. Scottsdale Ins. Co., Case No. 5:20-cv-00366 (N.D. Cal. July 16, 2020). The court also held that the policy’s prior acts, breach of contract, and creditor claims exclusions did not bar coverage.
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Continue Reading Pre-Policy Email Demanding Payment of Overdue Legal Fees is Not a Claim

The United States Court of Appeals for the Ninth Circuit, applying California law, has held that two exclusions in a D&O policy applicable to claims by employees and for Fair Labor Standards Act violations barred coverage for a wage-and-hour class action lawsuit.  U.S. Telepacific Corp. v. U.S. Specialty Ins. Co., 2020 WL 3265238 (9th Cir. June 17, 2020).
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Continue Reading EPL Exclusions in D&O Policy Barred Coverage for Wage-and-Hour Class Action

The U.S. Court of Appeals for the Ninth Circuit, applying California law, affirmed a district court’s ruling that an insurer did not act in bad faith by failing to defend its insureds and settle a claim where there was a “genuine issue” as to the insurer’s liability.  Sharp v. Evanston Ins. Co., 2020 WL 2569694 (9th Cir. May 21, 2020).  However, the court concluded that the insurer’s denial of coverage was incorrect because various policy exclusions requiring malice and California Insurance Code Section 533 did not apply to bar coverage for the insureds’ alleged negligent mishandling of fiduciary funds.
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Continue Reading Ninth Circuit Holds That Alleged Misappropriation of Client Funds Triggers E&O Coverage, But No Bad Faith Where Insurer’s Denial Was Reasonable