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In a case in which Wiley represented the insurer, the United States District Court for the Eastern District of Virginia, applying New York law, has held that three prior knowledge exclusions barred coverage under an architects and engineers professional liability policy as a matter of law where, before the policy period incepted, the insured (1) knew that a pressure vessel in a boiler system which it had serviced had exploded, causing property damage and bodily injury; (2) received three pre-suit letters from potential claimants; and (3) issued two internal litigation holds.  ChemTreat, Inc. v. Certain Underwriters at Lloyd’s of London, No. 19-cv-63 (E.D. Va. Sept. 21, 2020).
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Continue Reading Prior Knowledge Exclusions Apply Where Insured Received Three Letters from Potential Claimants and Issued Two Litigation Holds Before Policy Incepted

The U.S. District Court for the Southern District of New York, applying New York law, has held that no coverage is available for related claims reported to the insurer after the end of the policy period in which the first claim was made.  Berkley Assurance Co. v. Hunt Constr. Group, Inc., 2020 WL 3000399 (S.D.N.Y. June 4, 2020).
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Continue Reading No Coverage for Related Claims Reported After Policy Period During Which Claim Was First Made

The Eastern District of New York, applying New York law, has held that alleged violations of the New York Labor Law (NYLL) and the Fair Labor Standards Act (FLSA) did not constitute covered “Wrongful Acts” as defined by the applicable employment practices liability insurance policy.  Sirob Imports Inc. v. Mount Vernon Fire Ins. Co., 2020 WL 1550587 (E.D.N.Y. Mar. 31, 2020).  However, the court concluded that such allegations were ultimately covered under the policy’s Fair Labor Standards Act Sub-Limit Endorsement because the two statutes were “similar.”
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Continue Reading Alleged Violations of Fair Labor Standards Act and New York Labor Law Not “Wrongful Acts” Under Employment Practices Liability Policy

Applying New York law, a federal district court has held that an insurer has a duty to defend and provide independent counsel to an insured realtor for claims involving intentional acts and repayment of commissions. Great Am. Ins. Co. v. Houlihan Lawrence, Inc., 2020 WL 1487294 (S.D.N.Y. Mar. 7, 2020).  The court also held that, because the underlying case was still pending, the question of whether the insurer had a duty to indemnify was premature.
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Continue Reading Insurer Required to Defend and Provide Independent Counsel for Potentially Covered Claims

Applying New York law, the United States District Court for the Southern District of New York has held that, because a subpoena duces tecum previously issued to the insured by a post-judgment creditor of a non-insured entity was not a “Claim” against the insured, the subpoena and a later-filed lawsuit against the insured could not qualify as “Related Claims” deemed first made when the subpoena was issued. Protective Specialty Ins. Co. v. Castle Title Ins. Agency, Inc., 2020 WL 550700 (S.D.N.Y. Feb. 3, 2020). The court also held that the “warranty exclusion” in the application for the policy (in which the insured warranted that it was “not aware of any incident or circumstance which may result in a claim”) did not bar coverage for the lawsuit, even though the insured failed to disclose the subpoena in the application.
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Continue Reading Subpoena Not a ‘Claim’ When Issued in Litigation Not Involving Insured’s Professional Services

The Delaware Supreme Court has held that D&O policies do not afford coverage for an underlying lawsuit asserting causes of action for breach of fiduciary…
Continue Reading Delaware Supreme Court Holds Trustee Action Alleging Breach of Fiduciary Duty, Unlawful Dividend, and Fraudulent Transfer Is Not a “Securities Claim”

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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Continue Reading Insurer Did Not Breach Any Duty to Insured Where Payment of Defense Costs Exhausted Policy Limit

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

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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Continue Reading Insurer Must Defend Insured in Claim Alleging Use of Counterfeit Materials Because “Professional Services” Definition Was Ambiguous and No Exclusion Barred Coverage

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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Continue Reading Warranty Precludes Coverage for SEC Action Under Excess Policy