The United States District Court for the Northern District of Texas, applying Texas law, has held that an insured’s late notice of a claim bars coverage, rejecting arguments that (i) the initial complaint did not constitute a “claim” because it did not allege a “wrongful act;” (ii) notice to the broker was sufficient; and (iii) the issuance of a renewal policy on different terms triggered the automatic extended reporting period. Vela Wood PC v. Associated Indus. Ins. Co., 2020 WL 5440496 (N.D. Tex. Sept. 10, 2020).

Continue Reading Texas Court Holds Late Notice Bars Coverage

A Texas court of appeals found no coverage under two excess directors and officers liability policies for an appraisal action brought by dissenting shareholders to a merger pursuant to Section 262 of the Delaware General Corporation Law.  Zale Corp. v. Berkley Ins. Co., 2020 WL 4361942 (Tex. Ct. App. July 30, 2020).  The court held that the litigation right created by the appraisal statute turns on the act of executing the merger and not on any “wrongful act” preceding the merger.  Thus, because the merger was consummated after the policy period, there was no “wrongful act” during the policy period sufficient to trigger coverage for the appraisal suits.

Continue Reading Texas Court Holds “Instrumental Act” in Appraisal Litigation is Execution of Merger

Applying Texas law, the United States District Court for the Eastern District of Texas granted an insurer’s motion to dismiss where an insured sought fiduciary liability coverage for amounts it paid to defend and indemnify the trustee for the insured company’s Stock Option Plan under an agreement between the two.  Martin Resource Mgmt. Corp. v. Fed. Ins. Corp., No. 6:20-cv-00083, 2020 WL 4550395 (E.D. Tex. Aug. 6, 2020).

Continue Reading Indemnification Demands Made by Stock Option Plan Trustee Not “Fiduciary Claims” for “Wrongful Acts”

In a win for Wiley’s client, a Texas appellate court held that a D&O policy did not cover Wells notices issued by the United States Securities and Exchange Commission (SEC) or its enforcement action because they involved the same series of related facts as the SEC’s original investigation and shareholder litigation initiated before the claims-made policy period.  UniPixel, Inc. v. XL Specialty Ins. Co., 2020 WL 1528098 (Tex. App. Mar. 31, 2020).

Continue Reading SEC Enforcement Action Deemed a Single Claim With Prior SEC Investigation and Shareholder Suits

Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that a prior knowledge condition did not relieve an insurer of its duty to defend where an underlying complaint made vague allegations of wrongdoing at an indeterminate time.  Allied World Specialty Ins. Co. v. McCathern, P.L.L.C., 2020 WL 933314 (5th Cir. Feb. 26, 2020).  The court found that the vague allegations could be construed to refer to conduct occurring after the date specified in the prior knowledge condition.

Continue Reading Vague Allegations Did Not Trigger Prior Knowledge Condition at Duty-to-Defend Stage

The United States Court of Appeals for the Fifth Circuit, applying Texas law, has held that an insurer could not deny coverage due to the insured’s failure to comply with “immaterial” conditions of notice, absent a showing of prejudice, where an insured complied with its “material” obligation to report a claim.  Landmark Am. Ins. Co. v. Lonergan Law Firm, P.L.L.C., 2020 WL 833068 (5th Cir. Feb. 19, 2020); Landmark Am. Ins. Co. v. Lonergan Law Firm, P.L.L.C., 2020 WL 3024842 (5th Cir. June 4, 2020) (denying petition for rehearing en banc and issuing substitute opinion).

Continue Reading Absent Prejudice, Breach of Notice Conditions Does Not Relieve Insurer of Coverage Obligations

A Texas intermediate appellate court, applying Texas law, has held that an insured-versus-insured (IvI) exclusion did not bar coverage for an arbitration award because the underlying dispute arose from alleged wrongful employment practices, bringing the claim within an exception to the exclusion.  Prophet Equity LP v. Twin City Fire Ins. Co., 2019 WL 3886651 (Tex. App. Aug. 19, 2019).  The court also determined that the insurer had not met its burden of proving that any portion of the arbitration award constituted uncovered loss such that an allocation should be imposed.  Id.

Continue Reading Insured-Versus-Insured Exclusion Does Not Bar Coverage for Derivative Claim Arising from Alleged Employment-Related Misconduct

Applying Texas law, a federal appellate court has held that an insured is not entitled to coverage for subsequent related claims when the insured gave late notice of the first claim.  ADI Worldlink, L.L.C.. v. RSUI Indem. Co., 2019 WL 3521815 (5th Cir. Aug. 2, 2019).

Continue Reading Fifth Circuit: Late Notice of First Claim Bars Coverage for Related Claims

Applying Texas law, the Fifth Circuit has held that a D&O policy’s securities exclusion barred coverage for a suit for misrepresentation and misconduct that arose out of a sale of equity interests.  Gleason v. Markel Am. Ins. Co., 2019 WL 3437642 at *1 (5th Cir. July 30, 2019).

Continue Reading Fifth Circuit Holds Securities Exclusion Bars Coverage for Suit Arising out of Sale of Equity Interests

Applying Texas law, a federal district court has held that an insurer owed no duty to defend or indemnify its insured because the insured’s claim supplement to a renewal application did not constitute proper notice of a claim pursuant to the terms of the claims-made-and-reported policy.  Landmark Ins. Co. v. Lonergan Law Firm, PLLC, 2019 WL 2295358 (N.D. Tex. Mar. 8, 2019).

Continue Reading Claim Supplement in Renewal Application Did Not Constitute Proper Notice under Claims-Made-and-Reported Policy