Applying Maryland law, the Court of Special Appeals of Maryland has held that an insurer had no right to allocate a global settlement of two underlying lawsuits between covered and non-covered claims, where the damages sought in each action were identical and based on the same misconduct.  Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. The Fund for Animals, Inc., 2019 WL 7369221 (Md. Ct. Spec. App. Dec. 30, 2019).

Continue Reading Court Holds Insurer Cannot Allocate Settlement Between Covered and Non-Covered Claims

A Maryland federal district court has ruled that a ransomware event involved “direct physical loss of or damage to” software, data, and computer systems, thus triggering coverage under a businessowner’s insurance policy.  National Ink & Stitch, LLC v. State Auto Prop. & Cas. Ins. Co., No. SAG-18-2138 (D. Md. Jan. 23, 2020).

Continue Reading Ransomware Attack Involves “Direct Physical Loss of or Damage to” Software, Data and Computer Systems

In a win for an insurer represented by Wiley Rein, the United States District Court for the District of Maryland has held that an intra-corporate dispute between shareholders was not covered under an EPL insuring agreement because the underlying demand letter and complaint did not state a claim “for” an Employment Practices Wrongful Act, and it was not covered under a D&O insuring agreement because the claimant owned 10% or more of the outstanding shares of the insured company at the time the claim was made.  Madison Mechanical, Inc. v. Twin City Fire Ins. Co., 2019 WL 6035690 (D. Md. Nov. 14, 2019).

Continue Reading No EPL or D&O Coverage for Intra-Corporate Shareholder Dispute

In a win for Wiley Rein’s client, a Maryland federal district court has ruled that a prior knowledge exclusion contained in a policy application barred coverage for a lawsuit filed during the policy period because it arose from a demand letter received by the insured before the application was completed.  Madison Mechanical, Inc. v. Twin City Ins. Co., No. 1:17-cv-01357-GLR (D. Md. Mar. 30, 2018).

Continue Reading Prior Knowledge Exclusion in Application Bars Coverage for Undisclosed Claim that Led to Litigation

The United States District Court for the District of Maryland has held that where notice of a potential claim is not reported during the first policy period and the insured knew about, but failed to disclose, the potential claim prior to the second policy period, coverage is precluded under both policies.  James River Ins. Co. v. Brick House Title, LLC, 2017 WL 5126154 (D. Md. Nov. 6, 2017).  Furthermore, because the insured’s failure to notify the insurer of a potential claim is not a breach of contract, the insurer is not required to show prejudice under Maryland’s notice-prejudice rule for claims-made-and-reported polices.

Continue Reading No Coverage Available Where Insured Fails to Provide Notice of Potential Claim During First Policy Period and Knew About, But Failed to Disclose, Potential Claim Prior to Second Policy Period

Applying Maryland law, the United States District Court for the District of Maryland has held that an insurer was required to satisfy an underlying judgment because its insured’s failure to cooperate did not prejudice the insurer’s ability to defend.  Mora v. Lancet Indem. Risk Retention Group, Inc., 2017 WL 4618461 (D. Md. Oct. 16, 2017).

Continue Reading Insurer Was Not Prejudiced by Insured’s Failure to Cooperate

Applying Maryland law, a federal district court has held that the doctrine of res judicata barred an insured’s claims for coverage under a particular policy, where the insured’s previous efforts to bring those claims in a different proceeding and concerning a different policy failed.  The Humane Society of the United States v. Nat’l Union Fire Ins. Co. of Pittsburgh, 2017 WL 4467490 (D. Md. Oct. 6, 2017).

Continue Reading Insured’s Claims Barred by Res Judicata

A Maryland federal court has held that the federal Liability Risk Retention Act (LRRA) preempts Md. Ins. Code § 19-110, Maryland’s notice prejudice statute, in circumstances where Maryland law otherwise would govern a contract issued by a non-chartered insurer.  Mora v. Lancet Indem. Risk Retention Grp., Inc., 2017 WL 818718 (D. Md. Mar. 1, 2017).

Continue Reading Federal Liability Risk Retention Act Preempts Maryland’s Notice-Prejudice Statute for Non-Chartered Risk Retention Group

A Maryland intermediate appellate court has affirmed summary judgment in favor of an insurer, holding that a Prior Acts Exclusion applied to bar coverage for two antitrust lawsuits where the suits alleged that the insured conspired to raise prices beginning as early as 2002 and the Prior Acts Exclusion barred coverage for “Interrelated Wrongful Acts, committed, attempted, or allegedly committed or attempted in whole or in part prior to May 15, 2007.”  Cristal USA Inc. v. XL Specialty Ins. Co., 2017 WL 727795 (Md. Ct. Spec. App. Feb. 24, 2017).  The court also held that a coverage determination by the primary insurer does not bind an excess follow-form insurer, and that the excess insurer had no duty to defend the action.

Continue Reading Prior Acts Exclusion Bars Coverage for Suits Alleging Wrongful Conduct Spanning Prior Acts Date

The Maryland Court of Appeals, applying Maryland law, has held that an insurer could not show actual prejudice from late notice because it could not have impacted the outcome of the claim.  National Union Fire Ins. Co. v. The Fund for Animals, Inc., 2017 WL 383453 (Md. Jan. 27, 2017).  Although the insured sustained adverse rulings in a related case which were then given collateral estoppel effect in the underlying case, the insurer would not have had any right to direct the defense of the related proceeding.

Continue Reading No Actual Prejudice From Late Notice Where Insurer Could Not Have Altered Outcome of Claim