A recent coverage decision by the Delaware Superior Court in Motive Technologies, Inc. v. Associated Industries Insurance Company shows that examining the full timeline of allegations in a lawsuit can defeat policy exclusions barring coverage for litigation arising out of past events.
Underlying the coverage dispute was a lawsuit between two companies in the business of fleet management technology, Samsara, Inc., and Motive Technologies, Inc. Samsara accused Motive Technologies of intellectual property theft and commissioning false studies to disparage Samsara’s services.
Motive Technologies procured primary and excess cyber liability policies that included “Media Wrongful Acts” coverage applicable to some of Samsara’s claims. However, these policies also incorporated exclusions for “Prior Claims and Knowledge” as well as “Prior and Pending Litigation,” which barred coverage for claims arising from known circumstances and demands made before an August 12, 2023, “Continuity Date.” Because Samsara’s complaint allegations included events described in demand letters sent to Motive Technologies before the “Continuity Date,” the primary and excess liability insurers denied coverage based on these exclusions. But critically for Motive Technologies’ insurance claim, Samsara’s suit also included new allegations, not mentioned in its prior demand letters, regarding a 2023 study comparing certain safety features of the companies’ products.
The inclusion of new allegations required the insurers to defend Motive Technologies. Under New York law applicable to the policies, the insurers had a duty to defend Motive Technologies against Samsara’s suit unless the suit’s allegations were “solely and entirely” within the scope of an exclusion. Because the allegations concerning the new study did not fall within the scope of the exclusions, the insurers were obliged to fund Motive Technologies’ defense. This case highlights the importance for policyholders of considering all of the allegations in a lawsuit with particular attention to the alleged timing and casting a critical eye on insurers’ efforts to lump the full scope of claims within the confines of an exclusion.