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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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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