The United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an insured church’s D&O policy did not afford coverage for a claim against a “breakaway” congregation because the breakaway congregation was not an “insured” under the policy.  Newton Covenant Church v. Great Am. Ins. Co., 2020 WL 1815971 (1st Cir. Apr. 10, 2020). Even if the breakaway congregation were to be deemed an “insured,” the Court ruled that coverage was still unavailable because an “insured v. insured” exclusion would apply.

Continue Reading First Circuit Holds “Breakaway” Church Not an “Insured” Under Original Church’s D&O Policy

The United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an SEC investigation of the insured company constituted a claim “first made” when the SEC’s formal order of investigation issued.  Jalbert v. Zurich Servs. Corp., No. 18-2244, 2020 WL 1322787 (1st Cir. March 20, 2020).  As a result, two excess insurers whose policies incepted after the formal order entered did not owe coverage.  Wiley represented one of the prevailing carriers.

Continue Reading SEC Investigation Is a Claim First Made When Formal Order of Investigation Issues

The Massachusetts Supreme Judicial Court has held that consent-to-settle clauses in professional liability policies that give the insured absolute discretion regarding settlement do not inherently conflict with the state’s unfair insurance settlement practices statute, Mass. G.L. ch. 176D § 3(9)(f).  Rawan v. Continental Casualty Company, 136 N.E.3d 327 (Mass. Dec. 16, 2019).  The case had attracted considerable attention from amici concerned about potential disruption of the professional liability insurance market in Massachusetts if such consent-to-settle clauses were deemed impermissible.

Continue Reading Massachusetts SJC: E&O Insurers May Allow Insureds to Veto Settlement, But Settlement-Related Duties to Claimants Remain

The United States District Court for the District of Massachusetts, applying Massachusetts law, has held that a claim asserted against a law firm alleging the failure to transfer client files to former attorneys of the firm constituted a failure to render “Legal Services” as defined by a professional liability policy.  Governo v. Allied World Ins. Co., 2019 WL 4034810 (D. Mass. Aug. 27, 2019).  The court previously denied a motion to dismiss the case, which is described here.

Continue Reading Claim Against Law Firm Alleging Failure to Transfer Client Files Satisfies Policy’s Definition of “Legal Services”

A federal district court in Massachusetts has held that an insurer properly denied coverage for a claim against an insured church brought by another church that had broken away from the original entity because the breakaway church was not an “insured” under the original church’s policy.  Newton Covenant Church, et al. v. Great Am. Ins. Co., 2019 WL 3464705 (D. Mass. Jul. 31, 2019).

Continue Reading Breakaway Church Not an “Insured” Under Original Church’s D&O Policy

The United States Bankruptcy Court for the District of Massachusetts has held that a third party claimant’s breach of contract claim could proceed against an insurance broker where the third party’s claims against the insured were known to the broker before the broker procured additional insurance that effectively reduced the amount of coverage available.  In re GlassHouse Techs., 2019 WL 2477430 (Bankr. D. Mass. May 31, 2019).

Continue Reading Third Party’s Breach of Contract Claim Against Broker Survives Motion to Dismiss

The First Circuit, applying Massachusetts law, has held that an SEC investigation was a single claim first made when an insured received the formal order of investigation.  The court rejected the insureds’ attempt to split the investigation into various different claims based on the SEC’s subsequent subpoenas and enforcement action.  Biochemics, Inc. v. Axis Reinsurance Co., 2019 WL 2223125 (1st Cir. May 23, 2019).

Continue Reading SEC Investigation Constitutes One Claim; Component Subpoenas Are Not Written Demands for Non-Monetary Relief

The United States Court of Appeals for the First Circuit, applying Massachusetts law, has affirmed the district court’s holding that a professional services exclusion in a real estate advisory fund’s D&O policy did not excuse the duty to defend a lawsuit brought by an investor in the fund because the allegations at issue were ambiguous as to the insured’s alleged misconduct aside from investing in the properties at issue.  Scottsdale Ins. Co. v. Byrne, No. 18-1526, 2019 WL 211420 (1st Cir. Jan. 16, 2019).  The court likewise concluded that an ERISA exclusion did not apply because the complaint contained a count for negligence that did not reference ERISA-like fiduciary duties.  Finally, the court concluded that a conduct exclusion did not limit the insurer’s indemnity obligations because the default judgment against the insured encompassed both improper gains and losses resulting from negligence.

Continue Reading Professional Services and ERISA Exclusions Do Not Bar Coverage for Mismanagement Lawsuit Brought by Pension Fund Against Real Estate Advisory Fund

Applying Massachusetts law, a federal district court has held that an insurer owed a duty to defend based on allegations regarding a law firm’s failures to notify clients of an attorney’s departure and to transfer client materials.  Governo v. Allied World Ins. Co., 2018 WL4685566 (D. Mass. Sept. 28, 2018).  In reaching this determination, the court determined the alleged conduct satisfied the policy’s definition of “Legal Services Wrongful Acts.”

Continue Reading Law Firm Entitled to Coverage for Claim Alleging Failure to Transfer Client Materials and to Notify Clients of Departing Attorneys

The U.S. District Court for the District of Massachusetts has held that two liability insurers did not owe coverage for the insured’s SEC investigation defense costs because the SEC investigation was a “claim” first made before the policy period.  Jalbert v. The Zurich Servs. Corp., 2018 WL 4232905 (D. Mass. Sept. 5, 2018).  Wiley Rein represented one of the prevailing carriers.

Continue Reading SEC’s Formal Order of Investigation Constitutes “Claim” First Made Before Policy Period