Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: New York

Disgorgement of Profits Realized by Insured’s Customers is a Penalty, Not Insurable Loss

Posted in Loss
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.,… Continue Reading

Prior and Pending Litigation Exclusion Does Not Apply Where Insurer Cannot Establish Facts Alleged in Later Investigation Were “Underlying” Prior Investigation

Posted in Related Claims and associated exclusions
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… Continue Reading

Four Claims Regarding Same Appraisal Methodology Are Covered but Related and Therefore Confined to One Policy Year

Posted in Bad faith/duty to settle, Prior Knowledge/Warranty Exclusion, Related Claims and associated exclusions
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… Continue Reading

Civil Conspiracy Triggers Dishonesty Exclusion

Posted in Dishonesty Exclusion
The United States District Court for the Southern District of Ohio, applying Ohio and New York law, has held that a jury verdict determining that an insured participated in a civil conspiracy to make false statements about competitors incorporated a finding that the statements were intentional and “dishonest” within the meaning of a professional liability… Continue Reading

Ninth Circuit Holds Excess Policy Unambiguously Required Exhaustion of Underlying Limits by Insurers Under Either New York or California Law

Posted in Excess insurance/exhaustion
The United States Court of Appeals for the Ninth Circuit has held that a New York choice of law provision in a policy issued by an international insurer is enforceable and that, under either New York or California law, an excess policy was not triggered when the underlying policy limits were not exhausted through payments… Continue Reading

Insurer Entitled to Rescind Policy Where Insured Law Firm Made Material Misrepresentations in Application

Posted in Rescission
The United States District Court for the Southern District of New York, applying New York law, has held that an insurer was entitled to rescind a lawyers professional liability policy because the insured law firm made a material misrepresentation in its application.  Travelers Cas. & Surety Co. of Am. v. Gold, Schollar, Moshan, PLLC, 2018… Continue Reading

Unambiguous Claims-Made-and-Reported Professional Liability Policy Bars Coverage for Late Noticed Claim

Posted in Notice of Potential Claim (Timeliness)
Applying Arizona and New York law, an Arizona trial court has held that a claims-made-and-reported policy unambiguously does not apply where the insured failed to notify the insurer of a claim before the policy’s reporting deadline.  Southwest Energy Systems LLC v. Underwriters at Lloyd’s, London, Case No. 2017-015010 (Ariz. Super. Ct., Maricopa Cnty. Mar. 15,… Continue Reading

Text Messages Sent in Violation of TCPA Held to Implicate Professional Services Coverage

Posted in Loss, Professional Services
A New York federal district court, applying New York law, has held that the sending of unsolicited text message advertisements in violation of the Telephone Consumer Protection Act (TCPA) triggered professional services coverage under a Miscellaneous Professional Liability (MPL) policy.  Illinois Union Ins. Co. v. US Bus Charter & Limo, Inc., 2018 WL 1193464 (E.D.N.Y.… Continue Reading

Notice of Accident Constitutes Timely “Claim” Based on Insurers’ Conduct

Posted in “Claim”, Notice of Claim
The United States District Court for the Southern District of Mississippi has held that notice of an underlying accident sent to the insured’s three insurance carriers represented a timely “claim” under the claims-made general liability policies at issue in light of the insurers’ course of conduct upon receipt of the notice.  Jordan v. Maxfield &… Continue Reading

Eleventh Circuit Holds Prior Acts Exclusion Does Not Apply to Claim by FDIC Against Failed Bank

Posted in Related Claims and associated exclusions, Wrongful Act
The U.S. Court of Appeals for the Eleventh Circuit has held that a prior acts exclusion in a directors and officers liability policy does not bar coverage for a lawsuit brought by the Federal Deposit Insurance Corporation (FDIC) against a failed bank, because the wrongful acts at issue occurred after the prior acts date and… Continue Reading

Second Circuit Affirms Judgment That Insured v. Insured Exclusion Bars Coverage After Jury Finds Plaintiff Was Duly Elected or Appointed as a Director

Posted in Insured v. Insured Exclusion
Applying both New York and Nevada law, the United States Court of Appeals for the Second Circuit has held that an insurer correctly denied coverage under its directors and officers liability policy based on the insured v. insured exclusion.  Intelligent Digital Sys. L.L.C. et al. v. Beazley Ins. Co., 2017 WL 4127540 (2d Cir. Sept.… Continue Reading

Fee Arrangement Exclusion Bars Coverage for Claims Arising from Alleged Force-Placed Insurance Scheme

Posted in “Claim”, Personal Profit/Advantage exclusion
A New York state trial court, applying New York law, has held that a fee arrangement exclusion contained in a professional liability insurance policy precludes coverage for claims arising from an insured’s force-placed insurance business.  QBE Americas, Inc. v. Ace Am. Ins. Co., 2017 WL 4122651 (Sup. Ct., N.Y. County Sept. 18, 2017).  The court… Continue Reading

Computer Fraud Coverage Extends to Manipulation of External Email Server

Posted in Cyber Policies and Issues
The United States District Court for the Southern District of New York, applying New York law, has held that a cloud-based service provider’s loss resulting from fraudulent wire instructions is covered under a computer fraud and funds transfer fraud policy because the fraudulent email changed data in the provider’s computer system despite use of a… Continue Reading

Insurer’s Consent to Settle Not Required Following Effective Denial of Coverage

Posted in Consent to settle/incur defense costs
Applying New York law, a New York intermediate appellate court has held that insurers’ unreasonable delay in addressing an insured’s claim and their repeated insistence that several policy provisions barred coverage for the claim alleviated the insured’s obligation to seek the insurers’ consent to settle.  J.P. Morgan Securities Inc. v. Vigilant Ins. Co., 2017 WL… Continue Reading

Bermuda Insurer Required to Post Bond to Compel Arbitration Against New York Insured

Posted in Coverage Litigation - Declaratory Judgment Actions
Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has held that a Bermuda insurer must post a bond pursuant to N.Y. Ins. Law § 1213 after it filed a motion to compel arbitration.  MF Global Holdings Ltd. v. Allied World Assur. Co., Ltd., 2017 WL 2533353 (Bankr. S.D.N.Y.… Continue Reading

Disgorgement Payment Is Insurable Loss Where Payment Did Not Disgorge Insured’s Own Profits, but Those of its Customers

Posted in Loss, Personal Profit/Advantage exclusion, Prior Knowledge/Warranty Exclusion
A New York trial court, applying New York law, has held that a $140 million disgorgement payment by an insured broker-dealer to the U.S. Securities and Exchange Commission constitutes insurable loss, based on evidence that the payment did not disgorge the insured’s ill-gotten gains, but rather those of its customers.  J.P. Morgan Secs. Inc. v.… Continue Reading

Judgment Creditor Not Entitled to Policy Proceeds Where Insured Defaulted Without Insurer’s Consent

Posted in Consent to settle/incur defense costs
The United States District Court for the Southern District of New York, applying New York law, has held that two judgment creditors of an insured were not entitled to insurance policy proceeds where the insured had breached the terms of the policy by allowing a default judgment to be entered against it.  XL Specialty Ins.… Continue Reading

“Capacity Exclusion” Bars Coverage for Counterclaim Against Law Firm

Posted in Uncategorized
The New York Supreme Court, Appellate Division, applying New York law, has held that no coverage was available under a lawyer’s professional liability policy for a counterclaim filed against the insured because of an exclusion barring coverage for claims arising out of the insured’s services and/or capacity as an officer, director, partner, or employee of… Continue Reading