Mealey's Emerging Insurance Disputes

  • February 23, 2017

    9th Circuit Reverses, Remands Excess Coverage Suit Over Racial Discrimination Claim

    PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on Feb. 21 reversed and remanded a lower federal court’s ruling in a dispute over excess coverage for a settlement demand in an underlying racial discrimination lawsuit against the city of Montebello, Calif. (Security National Insurance Co. v. City of Montebello, Nos. 15-56199 and 15-56263, 9th Cir., 2017 U.S. App. LEXIS 2965).

  • February 22, 2017

    Panel: Professional Liability Insurer Did Not Breach Policy By Refusing Defense

    ATLANTA — The 11th Circuit U.S. Court of Appeals on Feb. 14 affirmed a lower federal court’s finding that a professional liability insurer has no duty to defend its law firm insured against an underlying contempt motion that sought only sanctions and nonpecuniary relief (Jones, Foster, Johnston & Stubbs v. ProSight-Syndicate 1110 at Lloyd's, No. 15-12399, 11th Cir., 2017 U.S. App. LEXIS 2550).

  • February 22, 2017

    Insureds: 7 Claims Alleged ‘Advertising Injury’ Triggering Insurer’s Duty To Defend

    NEW ORLEANS — Insureds recently asked the Fifth Circuit U.S. Court of Appeals to reverse a lower federal court’s finding that a commercial general liability insurer has no duty to defend them against underlying copyright claims brought by an adult entertainment company, arguing that the underlying complaint triggered the insurer’s duty to defend by stating a claim for “advertising injury” (St. Paul Fire and Marine Insurance Co. v. Giganews Inc., et al., 16-50914, 5th Cir.).

  • February 21, 2017

    Judge: Suit Arises Out Of Exclusion For ‘Insufficiency In The Amount Of Proceeds’

    BALTIMORE — A Maryland federal judge on Feb. 17 found that coverage for an underlying lawsuit alleging that an insured was negligent in the provision of settlement services for the sale of a home is barred by a professional liability insurance policy’s exclusion for “insufficiency in the amount of the proceeds” (Resource Real Estate Services, LLC v. Evanston Insurance Co., No. 16-168, D. Md., 2017 U.S. Dist. LEXIS 22920).

  • February 15, 2017

    New York Justice: Insured Failed To Raise Fact Issue As To Vandalism, No Coverage

    NEW YORK — A New York justice on Jan. 20 granted a property insurer’s motion for summary judgment in a coverage dispute arising from the insured’s demolished building, finding that the insured failed to provide any evidence that the neighboring contractors acted with malice while the policy was in effect (Forty East Broadway v. Charter Oak Fire Ins. Co. et. al., No. 601072/09, N.Y. Sup., New York Co., 2017 N.Y. Misc. LEXIS 221).

  • February 15, 2017

    Judge: Claims Alleging Wrongful Antitrust, Monopolizing Conduct Are Related

    ORLANDO, Fla. — Judgment was entered in favor of insurers on Feb. 15, one day after a Florida federal judge found that there is no further coverage owed to insureds for lawsuits alleging that they have intentionally engaged in wrongful antitrust and monopolizing conduct in an effort to dominate the health care service industry (Health First Inc., et al. v. Capitol Specialty Insurance Corporation, et al., No. 15-718, M.D. Fla., 2017 U.S. Dist. LEXIS 20320).

  • February 14, 2017

    Federal Judge: ERISA Stock Ownership Plan Cannot Seek Recovery Under Crime Policy

    HOUSTON — A federal judge in Texas on Feb. 9 held that a third-party holding corporate stock cannot seek coverage under an insurance policy’s plain language that limits coverage to “direct” losses when a corporate officer committed fraud that caused the devaluation of the corporation’s stock (HC4, Inc. Employee Stock Ownership Plan v. Travelers Casualty and Surety Company of America, No. 16-00090, S.D. Texas, 2017 U.S. Dist. LEXIS 19605).

  • February 14, 2017

    Judge Rejects Insurers’ Motion For Leave To Appeal Temporary Restraining Order

    NEW YORK — A federal judge in New York on Feb. 9 denied as moot errors and omissions insurers’ motion for leave to appeal a temporary restraining order (TRO) issued in a bankruptcy court in a coverage dispute with their insured MF Global Holdings Ltd. (MFGH) (MF Global Holdings Ltd., et al. v. Allied World Assurance Co. Ltd., et al., Nos. 17-106 and 17-113, S.D. N.Y., 2017 U.S. Dist. LEXIS 19328).

  • February 10, 2017

    Federal Judge Refuses To Dismiss Insurers’ Claim Under Defend Trade Secrets Act

    TRENTON, N.J. — A New Jersey federal judge on Feb. 7 refused to dismiss insurers’ federal claims under the Defend Trade Secrets Act of 2016 (DTSA) and the Computer Fraud and Abuse Act (CFAA) in their lawsuit alleging that the defendant competitors "willfully and maliciously" targeted and solicited at least 15 of their employees for employment (Chubb INA Holdings Inc. [f/k/a The Chubb Corporation], et al. v. Michael Chang, et al., No. 16-2354, D. N.J., 2017 U.S. Dist. LEXIS 16744).

  • February 9, 2017

    Judge Refuses To Dismiss Professional Liability Dispute, Cites Factual Questions

    NEWARK, N.J. — A New Jersey federal judge on Jan. 30 denied a lawyers professional liability insurer’s motion to dismiss an insured's lawsuit seeking defense and indemnification for an underlying legal malpractice action (Nagel Rice, LLP v. Allied World Insurance Co., No. 16-3888, D. N.J.).

  • February 8, 2017

    Judge: Fraud Exclusion Permits Insurer To Pursue Coverage Suit Against Insured

    WILMINGTON, Del. — A Delaware judge on Jan. 30 found that an insurance policy’s fraud exclusion unambiguously permits the insurer to pursue a coverage action against its insured to determine its financial responsibilities to the insured, denying the insured’s motion for summary judgment as to two of the insurer’s counterclaims in a dispute arising from claims that the insured violated the False Claims Act (FCA) (Gallup Inc. v. Greenwich Insurance Co., No. N14C-02-136FWW, Del. Super., 2017 Del. Super. LEXIS 46).

  • February 8, 2017

    Counterclaims Did Not Allege Advertising Injury, 10th Circuit Affirms

    ATLANTA — The 10th Circuit U.S. Court of Appeals on Feb. 8 found that underlying counterclaims against an insured failed to assert facts that constituted an "advertising injury" under general liability and excess insurance policies, affirming a lower federal court’s finding that the insurer did not have a duty to defend its insured (IVFMD Florida, Inc. v. Allied Property & Casualty Insurance Co., No. 16-15127, 11th Cir., 2017 U.S. App. LEXIS 2218).

  • February 8, 2017

    Judge Enters Default Judgment Against Lawyer In Professional Liability Dispute

    NEWARK, N.J. — A New Jersey federal judge on Feb. 3 granted a lawyers professional liability insurer’s motion for a default judgment against its attorney insured, finding that the insured knowingly made material misrepresentations on his insurance applications and that the insurer will also suffer prejudice if the default is denied (Liberty Insurance Underwriters, Inc. v. James H. Wolfe, III, et al., No. 16-2353, D. N.J., 2017 U.S. Dist. LEXIS 16295).

  • February 6, 2017

    Insureds Sufficiently Pleaded Claims Against Broker, Panel Says In Reversal

    LOS ANGELES — A California appeals panel on Feb. 1 found that insureds have sufficiently pleaded claims for fraud, negligent misrepresentation, negligence and breach of contract against a surplus line insurance broker, reversing a lower court (A Plus Fabrics, Inc., et al. v. Yates & Associates Insurance Services, et al., No. B260767, Calif. App., 2nd Dist., Div. 3, 2017 Cal. App. Unpub. LEXIS 728).

  • February 6, 2017

    Majority: Court Erred In Finding Professional Liability Policy Was Ambiguous

    NEW ORLEANS — A majority of the Louisiana Supreme Court on Feb. 3 reversed and remanded an appeals court’s finding that a police professional liability insurance policy was ambiguous in a dispute over a deputy sheriff’s injury allegedly caused by a defective chair (Jackie Doucet, et al. v. Darwin Select Insurance Co., et al., No. 2016-1989, La. Sup., 2017 La. LEXIS 271).

  • February 3, 2017

    Yahoo Sues Insurer Over Coverage Of Email Scanning Suits

    SAN JOSE, Calif. — On Jan. 31, Yahoo! Inc. sued its commercial general liability (CGL) provider in California federal court, alleging breach of contract and bad faith related to the insurer’s decision not to defend or indemnify the internet firm in four class actions alleging privacy violations in certain email-scanning practices (Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 5:17-cv-00489, N.D. Calif.).

  • February 3, 2017

    Complaint Fails To Allege Personal, Advertising Injury, Federal Judge Rules

    CHICAGO — In granting an insurer’s motion for summary judgment, California federal judge on Feb. 2 held that underlying claims that an insured violated the Uniform Trade Secrets Act, intentionally inferred with contractual relations and prospective business advantage and engaged in unfair competition and civil conspiracy fail to trigger an insurance policy’s “personal and advertising injury” coverage (Sentinel Insurance Co. v. Yorktown Industries Inc., No. 14-4212, N.D. Ill., 2017 U.S. Dist. LEXIS 14439).

  • February 3, 2017

    Capacity Exclusion Bars Professional Liability Coverage, New York Panel Affirms

    NEW YORK — A New York appeals panel on Feb. 2 affirmed a lower court’s ruling in favor of a lawyers professional liability insurer in a dispute over coverage for underlying counterclaims against an insured for repudiation of a consulting agreement and legal malpractice (Law Offices of Zachary R. Greenhill P.C., et al. v. Liberty Insurance Underwriters, Inc., et al., No. 650414/14, N.Y. Sup., App. Div., 1st Dept., 2017 NY Slip Op 00727).

  • February 3, 2017

    New York Panel: Insurer Does Not Owe Insured Directors, Officers Liability Coverage

    BROOKLYN, N.Y. — A New York appeals panel on Feb. 1 found that an insurer has no duty to defend its insured under an insurance policy’s directors and officers liability and entity liability coverage section, reversing a lower court’s ruling against the insurer (Thomas C. Hansard, Jr. v Federal Insurance Co., No. 2014-09639, N.Y. Sup., App. Div., 2nd Dept., 2017 N.Y. App. Div. LEXIS 629).

  • February 2, 2017

    Judge: Bermuda Insurers Violated Doctrine By Filing Suit Without Obtaining Leave

    NEW YORK — A federal bankruptcy judge in New York on Jan. 31 held that errors and omissions insurers violated the Barton doctrine by filing proceedings against MF Global Holdings Ltd. (MFGH) in Bermuda without obtaining leave from the bankruptcy court (In re:  Mf Global Holdings Ltd., et al., Chapter 11, No. 11-15059, S.D. N.Y. Bkcy., 2017 Bankr. LEXIS 251).