Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: Massachusetts

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

Posted in Insured v. Insured Exclusion, Insured-identity
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.… Continue Reading

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

Posted in Broker Duty to Claimant
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… Continue Reading

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

Posted in “Claim”, Related Claims and associated exclusions
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… Continue Reading

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

Posted in Allocation, Personal Profit/Advantage exclusion, Professional Services
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… Continue Reading

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

Posted in Insured v. Insured Exclusion, Wrongful Act
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… Continue Reading

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

Posted in “Claim”
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… Continue Reading

Insurer Obligated to Defend Entire Suit Where Covered Claim Could Stand Independent of Non-Covered Claims

Posted in Dishonesty Exclusion
The United States District Court for the District of Colorado, applying Massachusetts law, has held that an insurer had a duty to defend an entire suit against an au pair sponsor because the negligent misrepresentation claim asserted in that suit fell within the scope of the policy’s insuring agreement and could stand independent from other… Continue Reading

Insured’s Non-Covered Counterclaim Does Not Create Conflict Entitling It to Select Independent Counsel

Posted in Defense Costs
The United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an employment practices liability insurer was not obligated to pay for independent counsel based on the insured’s prosecution of a counterclaim that was not covered under the policy.  Mount Vernon Fire Ins. Co. v. VisionAid, Inc., 2017 WL 5476323… Continue Reading

Court Declines to Hold Broker Accountable for Insured’s Failure to Report Known Claims in Application

Posted in Notice of Claim
A Massachusetts federal court has held that, absent special circumstances, an insurance broker does not owe a fiduciary duty of care to its client and therefore is entitled to accept its clients’ representation that all known claims had been reported in its application and has no duty to investigate whether potential claims were not reported. … Continue Reading

No Coverage Available for Employment-Related Claims Under Policy D&O and EPL Coverage Sections

Posted in Loss
The United States District Court for the District of Massachusetts has held that coverage is unavailable for a complaint alleging violations of the California Labor Code and the California Business and Professions Code because the complaint did not constitute an employment claim as defined by the Policy’s EPL Coverage Section and triggered an exclusion in… Continue Reading

Negligent Misrepresentation Claim Alleges Wrongful Act Despite Contract-Based Damages

Posted in Personal Profit/Advantage exclusion, Wrongful Act
A Massachusetts intermediate appellate court has held that a claim for negligent misrepresentation alleged a Wrongful Act, even though the alleged damages were based on contractual services. Winbrook Comm. Servs., Inc. v. U.S. Liability Ins. Co., 2016 WL 3245059 (Mass. App. Ct. June 14, 2016). Additionally, the court held that the creation of an opportunity… Continue Reading

Competitor’s Claims That Broker Engaged in Unfair Business Practices Involve Professional Services and Are Not Precluded by the “Unfair Competition of Any Type” Exclusion

Posted in Professional Services
Applying Massachusetts law, the United States Court of Appeals for the First Circuit has held that unfair business practices claims brought against an insured insurance broker by a competitor involved professional services within the scope of its professional liability policy and that an exclusion for “unfair competition of any type” did not apply because the… Continue Reading

Insurer Not Estopped from Denying Coverage for Failing to Send Second Coverage Letter

Posted in Bad faith/duty to settle, Estoppel
Applying Massachusetts law, the United States District Court for the District of Massachusetts has held that an insurer is not estopped from denying coverage for a subsequent claim when it already issued a coverage letter for litigation based on the same facts and involving the same coverage issues. American Guar. & Liab. Ins. Co. v.… Continue Reading