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The United States District Court for the Western District of New York, applying New York law, held that an insurer did not owe a fiduciary duty to its insured when the insured was represented by independent defense counsel, nor did the insurer breach its contractual duties to its insured in paying defense costs, which ultimately exhausted the policy limit.  Korn v. Federal Ins. Co., 2019 WL 4277187 (W.D.N.Y. Sept 10, 2019).
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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).
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Applying New York law, a Delaware state court has held that an insurer owed its insured a duty to defend because the factual allegations in two underlying lawsuits arguably involved the insured’s performance of “Professional Services” and no exclusion applied to otherwise bar coverage.  Steadfast Ins. Co. v. DBI Servs., LLC, 2019 WL 2613195 (Del. Super. Ct. June 24, 2019).
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The United States Court of Appeals for the Second Circuit, applying New York law, has held that a warranty executed before the inception of an excess directors and officers liability policy precluded coverage for a Securities and Exchange Commission (SEC) action because the insured knew of the SEC’s “escalating” investigation before the warranty was signed.  Patriarch Partners, LLC v. AXIS Ins. Co., 2018 WL 6431024 (2d Cir. Dec. 6, 2018).
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A New York appellate court has held that a $140 million disgorgement payment by an insured broker-dealer to the U.S. Securities and Exchange Commission does not constitute insurable loss even though the payment did not disgorge the insured’s own ill-gotten gains, but rather those of its customers.  J.P. Morgan Secs. Inc. v. Vigilant Ins. Co., 2018 WL 4494692 (N.Y. App. Div. Sept. 20, 2018).
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A New York state court, applying New York law, has held that an insurer was not entitled to summary judgment based on a prior and pending litigation exclusion because the insurer could not establish that the prior investigation shared a common fact, circumstance, situation, transaction or event with the matter at issue or that any such commonality was “underlying” the prior investigation.  Freedom Specialty Ins. Co. v. Platinum Mtmg. (NY), LLC, 2018 WL 4334216 (N.Y. Sup. Ct., N.Y. Cty. Sept. 10, 2018).  The court instead entered judgment for the insureds.
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The United States District Court for the Northern District of Illinois, applying New York law, has held that a real estate service firm’s professional liability insurance policies cover four claims regarding the firm’s allegedly improper use of a certain appraisal methodology because neither the prior knowledge exclusion nor an exclusion regarding investment activity applied.  Cushman & Wakefield, Inc. v. Illinois Nat’l Ins. Co., 2018 WL 1898339 (Apr. 20, 2018).  In doing so, the court determined that the four claims were related and thus all properly treated under the same policy period and, therefore, the primary insurer for that policy period is entitled to recoup all amounts paid in excess of its limit for that policy.  The court also granted summary judgment for the first excess insurer on the insured’s bad faith claim.
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