Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Tag Archives: Texas

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

Posted in Allocation, “Claim”, Insured v. Insured Exclusion, Loss, Related Claims and associated exclusions
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.… Continue Reading

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

Posted in Notice of Claim
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… Continue Reading

Failure to Give Timely Notice of Arbitration Bars Coverage, Even Where Insured Gave Timely Notice of Related Claim

Posted in Notice of Claim
The United States District Court for the Southern District of Texas, applying Texas law, has granted an employment practices liability insurer’s motion for summary judgment in a lawsuit alleging that it wrongfully denied coverage for an arbitration award, concluding that the insured failed to provide timely notice of the arbitration to its insurer.  Stadium Motorcars,… Continue Reading

Run-Off Exclusion Precludes Coverage for OIG Subpoena

Posted in “Claim”
The United States District Court for the Eastern District of Texas, applying Texas law, has held that a government-issued subpoena constituted a “Claim” under a directors and officers liability policy, but also determined that the policy’s “run-off exclusion” barred coverage.  Ocean’s Healthcare, L.L.C. v. Illinois Union Ins. Co., 2019 WL 1437955 (E.D. Tex. March 30,… Continue Reading

Contract Exclusion Precludes Coverage for Breach of Health Management Service Provider Agreement

Posted in Breach of Contract
A Texas federal district court, applying Texas law, has held that a contract exclusion in an errors and omissions policy precluded coverage for a suit alleging that the insured breached a contract and committed related misconduct in connection with a contract for providing health management services to a client.  Conifer Health Solutions, LLC v. QBE… Continue Reading

Securities Suits Alleging Misstatements About Financial Performance Over Same Time Period Constitute A Single Claim

Posted in Related Claims and associated exclusions
Applying Texas law, a federal district court has held that an insurer breached its policy by denying coverage for two lawsuits filed after the policy period on the basis that they were not related to an earlier lawsuit.  Nobilis Health Corp. v. Great American Ins. Co., 2018 WL 4810840 (S.D. Tex. Oct. 4, 2018).  The… Continue Reading

Court Denies Reconsideration of Holding that Securities Exclusion Bars Coverage for Claims Involving Misrepresentations Made During Sale of Securities

Posted in Wrongful Act
Applying Texas law, a federal district court has denied a motion for reconsideration of its prior ruling that a securities exclusion barred coverage for claims involving alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 3819928 (E.D. Tex. Aug. 10, 2018).  The court rejected the insured’s… Continue Reading

Wells Notices and Subsequent Enforcement Action Deemed First Made at the Time when SEC Original Investigation Began

Posted in Related Claims and associated exclusions
In a win for Wiley Rein’s client, a Texas state court, applying Texas law, has held that no coverage was available for Wells notices issued and an enforcement action brought by the United States Securities and Exchange Commission (SEC) because they were related to the SEC’s original investigation, which commenced prior to the claims-made policy… Continue Reading

Delaware Supreme Court Holds Texas Law Applies to Comprehensive Insurance Program Issued to a Texas Corporation and Its Subsidiaries

Posted in Uncategorized
In a case that was briefed and argued by Wiley Rein in the trial court and on appeal, along with Fox Rothschild LLP as Delaware local counsel, the Delaware Supreme Court held that Texas law applies to a comprehensive insurance program issued to a Texas corporation and its subsidiaries nationwide.  The Travelers Indemnity Company v.… Continue Reading

Contract Exclusion Does Not Bar Defense Obligation for Alleged Payment Card Breach

Posted in Breach of Contract – coverage for amounts due pursuant to contract, exclusions, Cyber Policies and Issues
The United States Court of Appeals for the Fifth Circuit, applying Texas law, has reversed an order granting an insurer judgment on the pleadings, holding that a breach of contract exclusion did not bar coverage for a demand received by an insured retailer from its credit card processor for indemnification and other relief arising from… Continue Reading

Insureds Entitled to Advancement of Defense Costs But Not Equitable Reallocation of Policy Proceeds

Posted in Defense Costs
The United States District Court for the Northern District of Texas, applying Texas law, has held that the directors and officers of a corporation in receivership were entitled to advancement of defense costs despite the receiver’s objections.  SEC v. Faulkner, 2018 WL 2761850 (N.D. Tex. June 6, 2018).  The court declined, however, to reallocate the… Continue Reading

Application Exclusion Does Not Apply When Misstatements Were Not “But For” Cause of Claim

Posted in Rescission
The United States District Court for the Southern District of Texas has held that an exclusion contained in the application incorporated into the policy barring coverage for claims “based upon, arising out of or in connection with” misstatements in the application did not apply because the misstatements at issue, regarding a change in the insured’s… Continue Reading

Securities Exclusion Bars Coverage for Claims Bearing “Incidental Relationship” to Excluded Conduct

Posted in “Claim”, Wrongful Act
Applying Texas law, a federal district court has held that a broadly-worded securities exclusion bars coverage of claims “incidental” to alleged misrepresentations made in connection with the sale of securities.  Gleason v. Markel Am. Ins. Co., 2018 WL 538324 (E.D. Tex. Jan. 24, 2018).  The court further held that an exception for claims involving transactions… Continue Reading

Pre-Trial Settlement and Assignment of Rights Unenforceable Against Insurer with No Duty to Defend

Posted in Public Policy prohibition on insurance
Applying Texas law, the United States Court of Appeals for the Seventh Circuit has held that public policy prohibits enforcement of a settlement arrangement in which an insurer with no duty to defend played no role in the settlement, the plaintiff promised to seek damages only from the insurer, and the insured defendant admits liability,… Continue Reading

Texas Court Holds Disgorgement Amounts Uninsurable as a Matter of Law

Posted in Loss, Personal Profit/Advantage exclusion
The United States District Court for the Southern District of Texas, applying Texas law, and adopting the recommendation of a magistrate judge, has held that reimbursement of excessive executive compensation constitutes disgorgement and is therefore uninsurable as a matter of law under a directors and officers policy.  Twin City Fire Ins. Co. v. Oceaneering Int’l,… Continue Reading

Insured-Versus-Insured Exclusion Bars Coverage for Claim Against Former Director That Insured Assigned to Its Fidelity Insurer

Posted in Insured v. Insured Exclusion
The Texas Supreme Court has held that the insured-versus-insured exclusion in a D&O policy precludes coverage for a claim asserted by the insured’s fidelity insurer, under an assignment of rights from the insured, against a former director of the insured.  The court reversed the holding of the intermediate court of appeals and reinstated the trial… Continue Reading

Fifth Circuit Holds that Prior Knowledge Exclusion is Unduly Broad

Posted in Bad faith/duty to settle, Prior Knowledge/Warranty Exclusion, Wrongful Act
The United States Court of Appeals for the Fifth Circuit, applying Texas law, has held that the prior knowledge exclusion contained in a lawyers professional liability policy was unduly broad as written and would be construed to apply to wrongful acts reasonably likely to lead to a malpractice claim.  OneBeacon Ins. Co. v. T. Wade… Continue Reading

Computer Fraud Provision of Crime Policy Does Not Cover Loss from Business Email Compromise and Social Engineering Scheme

Posted in Cyber Policies and Issues
Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that a business email compromise loss involving social engineering did not “result[] directly from the use of any computer to fraudulently cause a transfer” and thus did not trigger Computer Fraud coverage under a commercial crime insurance policy.  Apache Corp.… Continue Reading

Claim Brought by Lenders Against Officers Based on Company’s Misstated Financials Barred by Bankruptcy and Creditors Exclusion

Posted in Bankruptcy, Breach of Contract – coverage for amounts due pursuant to contract, exclusions
Applying Texas law, the United States Court of Appeals for the Fifth Circuit has held that an exclusion barring coverage for any claim brought or maintained by or on behalf of any creditor of the company precluded coverage for claims by lenders against company officers alleging that they misrepresented the financial condition of a company. … Continue Reading