NASHVILLE, Tenn. — A federal judge in Tennessee on March 31 held that a professional liability insurer has failed to demonstrate that policy exclusions apply to bar coverage for arbitration awards for breach of contract claims, attorney fees or arbitration costs entered against a franchisor insured, denying the insurer’s motion for summary judgment (For Senior Help, LLC v. Westchester Fire Insurance Company, No. 19-cv-00126, M.D. Tenn., 2020 U.S. Dist. LEXIS 56057).
HOUSTON — A Texas appeals panel on March 31 held that an insured’s losses associated with the U.S. Securities and Exchange Commission’s notices and enforcement action are subject to a directors and officers liability insurer’s “Interrelated Claims” condition and, therefore, do not fall under the scope of coverage, affirming a lower court’s ruling in favor of the insurer (Uni-Pixel, Inc., et al. v. XL Specialty Insurance Company, No. 14-18-00828, Texas App., 14th Dist., 2020 Tex. App. LEXIS 2646).
INDIANAPOLIS — An Indiana appeals court panel on March 31 affirmed a lower court’s ruling that a ransomware attack against an insured did not trigger computer fraud coverage under its commercial insurance policy, finding that although the hijacker's conduct was illegal, there was no deception in the hijacker's bitcoin ransom demands (G&G Oil Co. of Indiana v. Continental Western Insurance Company, No. 19A-PL-1498, Ind. App., 2020 Ind. App. LEXIS 126).
RIVERSIDE, Calif. — An insurer on March 14 filed suit in a federal court in California seeking a declaration that its policy’s “invasion of privacy” exclusion bars directors, officers and organization liability insurance coverage for an underlying putative class action alleging that the insured violated the Telephone Consumer Protection Act (TCPA) and state law (Atlantic Specialty Insurance Company v. HOSOPO Corporation, No. 20-00545, C.D. Calif.).
CINCINNATI — The Sixth Circuit U.S. Court of Appeals on March 30 reversed a federal court’s ruling in favor of insurers in their declaratory judgment lawsuit disputing coverage for an underlying malicious prosecution suit brought against their mutual insured by a man exonerated for a murder charge, finding that his injuries were caused by malicious prosecution and were continuous during the relevant coverage period (St. Paul Guardian Insurance Company, et al. v. City of Newport, Ky., et al., No. 19-5948, 6th Cir.).
CHICAGO — A group of restaurant and movie theater owners and operators claim in a March 27 complaint filed in Illinois federal court that their insurer breached its contracts and acted in bad faith in denying the insureds’ claims for business interruption losses sustained as a result of the state-ordered shutdown of nonessential businesses in Illinois in the wake of the coronavirus pandemic (Big Onion Tavern Group LLC et al., v. Society Insurance Inc., No. 20-2005, N.D. Ill.).
ATLANTA — The 11th Circuit U.S. Court of Appeals on March 30 affirmed a lower court’s ruling that a commercial general liability insurance policy’s “amusement devices” exclusion bars coverage for an underlying negligence lawsuit brought against the insured, finding that the lower court properly found that the exclusion is unambiguous (Princeton Excess and Surplus Lines Insurance Company v. Hub City Enterprises, Inc., et al., No. 19-14193, 11th Cir., 2020 U.S. App. LEXIS 9744).
DURANT, Okla. — Choctaw Nation of Oklahoma is one of two Native American Indian tribes to sue its insurers on March 24 in an Oklahoma court, arguing that they are responsible for its losses and expenses related to the COVID-19 infection and coronavirus pandemic that has allegedly damaged its property and prevented it from being used for its intended purpose (Choctaw Nation Department of Commerce v. Lexington Insurance Co., et al., No. 20-35, Okla. Dist., Bryan Co.).
By Scott M. Seaman and Judith A. Selby
NAPA, Calif. — Owners, operators and managers of two Napa Valley, Calif., restaurants on March 25 sued their insurers in a California superior court, seeking a declaration that their insurance policy provides coverage for any current and future civil authority closures of Napa County restaurants because of physical loss or damage from the coronavirus and provides business income coverage in the event that coronavirus has caused a loss or damage at their restaurants (French Laundry Partners, LP, et al. v. Hartford Fire Insurance Company, et al., Calif. Super., Napa Co.).
CINCINNATI — No coverage is owed for a son’s exposure to secondhand smoke as a result of his father’s smoking because the father intended to smoke in front of the son, the Sixth Circuit U.S. Court of Appeals said March 27, noting that there was there was no occurrence as required for coverage to exist under the policies at issue (Liberty Mutual Insurance Co., et al. v. Estate of Hugo Bobzien Jr., et al., No. 19-5457, 6th Cir., 2020 U.S. App. LEXIS 9654).
ADA, Okla. — The Chickasaw Nation Department of Commerce on March 24 sued its insurers in Oklahoma court, seeking a declaration that its insurance policies cover its losses and expenses that are related to the coronavirus pandemic and COVID-19 infection (Chickasaw Nation Department of Commerce v. Lexington Insurance Co., et al., No. 20-35, Okla. Dist., Pontotoc Co.).
HOUSTON — A Texas appeals panel on March 26 affirmed a lower court’s ruling that an insurer owes no coverage for an underlying $87,598 default judgment entered against its hospital insured in an employment discrimination lawsuit because the hospital failed to timely report the claim (Junious R. Valentine v. Federal Insurance Company, No. 14-18-00438, Texas App., 14th Dist., 2020 Tex. App. LEXIS 2537).
DETROIT — A Michigan appeals panel on March 24 held that a lower court erred in holding that underlying allegations against a lawyer insured did not, as a matter of law, come under a professional liability insurance policy’s definition of a “wrongful act,” reversing and remanding the court’s ruling in favor of the insurer (Hanover Insurance Company, Inc. v. Paul M. Lubienski, No. 346942, Mich. App., 2020 Mich. App. LEXIS 2286).
RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on March 24 affirmed a lower federal court’s finding that a lawyers professional liability insurance policy’s negligent supervision exclusion bars coverage for a $1,382,653 judgment arising from an attorney insured’s breach of fiduciary duty as a trustee for his management of trust assets (ALPS Property & Casualty Insurance Co., et al v. Ivan L. Higgerson Sr., et al., No. 18-2245, 4th Cir.).
WILMINGTON, Del. — Three insurers and a merged company recently briefed the Delaware Supreme Court about whether a judgment awarding dissenting shareholders additional funds from the company’s merger constituted a securities action sufficient to activate its insurance policies (In re Solera Insurance Coverage Appeals, Nos. 413,2019, 418,2019, Del. Sup.).
DANBURY, Conn. — The owner of a Falcon 10 jet airplane in a March 11 complaint tells a Connecticut court that its insurer breached their contract, acted in bad faith and violated Connecticut Unfair Trade Practices Act (CUTPA) when it denied coverage for the aircraft that was allegedly damaged after it was seized by the U.S. government in connection with a drug trafficking criminal investigation (Maule Group, LLC v. Great American Insurance Group, Conn. Super., Danbury).
CHICAGO — A federal judge in Illinois on March 22 denied an insurer’s motion to intervene in a mother’s lawsuit alleging 16 wrongful death and survival claims against a national sorority, local sorority chapters and individual sorority members who allegedly hazed her suicidal daughter or failed to protect her from hazing, finding that the insurer fails to identify a claim or defense for which it seeks intervention (Felicia Hankins v. Alpha Kappa Alpha Sorority, Inc., et al., No. 19-00147, N.D. Ill., 2020 U.S. Dist. LEXIS 49099).
SAN FRANCISCO — A federal judge in California on March 4 dismissed with prejudice insureds’ claims alleging that their homeowners insurer’s undervaluation of insurance policy values was negligent, fraudulent and the product of a conspiracy with the developers of two software programs that were used to determine their initial insurance policy value and the cost to rebuild or repair their property following wildfire damage (Brian Sheahan, et al. v. State Farm General Insurance Company, et al., No. 18-cv-06186, N.D. Calif., 2020 U.S. Dist. LEXIS 37590).
CHICAGO — An Illinois appeals panel on March 20 affirmed a lower court’s ruling that an insurer has a duty to defend its insured against claims that it violated the Biometric Information Privacy Act, further affirming the lower court’s finding that the insured is not entitled to bad faith damages (West Bend Mutual Insurance Company v. Krishna Schaumburg Tan, Inc., et al., No. 19-1834, Ill. App., 1st Dist., 6th Div., 2020 Ill. App. LEXIS 179).