Executive Summary Blog

Legal developments affecting professional liability insurers

The United States District Court for the Northern District of Ohio has held that a bodily injury exclusion did not preclude coverage for a wrongful death suit, reasoning that the death did not cause the alleged wrongful conduct and therefore did not “arise out of” it.  Clarendon Nat’l Ins. Co. v. Lexington Ins. Co., 312 F. Supp. 3d 639 (N.D. Ohio 2018).  The court also held that the assault at issue was not “discovered”…
Applying Illinois law, a federal district court has held that ten lawsuits against an anatomical donation company for alleged mishandling and sale of human body parts are “related” and constitute a single “Claim” under a professional liability policy.  Lloyd’s Syndicate 3624 v. Biological Res. Ctr. of Ill., LLC, 2018 WL 4489589 (N.D. Ill. Sept. 19, 2018).…
The United States District Court for the Northern District of Illinois has held that three claims brought by a resident against a condominium owners’ association for alleged discrimination and retaliation involved related wrongful acts and therefore are properly treated as a single Claim deemed first made during the claims-made policy period when the first such claim was asserted. Great Am. Ins. Co. v. State Parkway Condo. Ass’n et al., 2018 WL 433623 (N.D. Ill. Sept.
A New York state court, applying New York law, has held that an insurer was not entitled to summary judgment based on a prior and pending litigation exclusion because the insurer could not establish that the prior investigation shared a common fact, circumstance, situation, transaction or event with the matter at issue or that any such commonality was “underlying” the prior investigation.  Freedom Specialty Ins. Co. v. Platinum Mtmg. (NY), LLC, 2018 WL 4334216 (N.Y.
Applying Louisiana law, a Louisiana court of appeals has held that a contractual liability exclusion in a directors and officers liability policy precluded coverage for an insured’s alleged tortious conduct on the basis that the torts would not have occurred “but for” an alleged breach of contract by the insured.  Perniciaro v. McInnis, 2018 WL 4403981 (La. Ct. App. Sept. 7, 2018).…
The United States Court of Appeals for the Tenth Circuit, applying Utah law, has held that no coverage exists for a lawsuit filed against an insured where an SEC investigation and proceeding conducted prior to the policy’s inception and the lawsuit both alleged a scheme of defrauding investors over a period of several years by means of “related” misconduct under the policy’s Interrelated Wrongful Acts provision.  Morden v. XL Specialty Ins., 2018 WL 4292227 (10th…
In a win for Wiley Rein’s client, a federal district court applying Connecticut law has held that an insurer has no duty to defend or indemnify an attorney in a lawsuit that arose out of a fee dispute and did not seek any covered relief.  Continental Cas. Co. v. Parnoff, 2018 WL 4356746 (D. Conn. Sept. 12, 2018).…
The U.S. District Court for the District of Massachusetts has held that two liability insurers did not owe coverage for the insured’s SEC investigation defense costs because the SEC investigation was a “claim” first made before the policy period.  Jalbert v. The Zurich Servs. Corp., 2018 WL 4232905 (D. Mass. Sept. 5, 2018).  Wiley Rein represented one of the prevailing carriers.…
The Supreme Court of Montana has held that a Montana statute allowing insurers to “prevent a recovery” under an insurance policy in certain circumstances, including when the insured made misrepresentations or omissions in its application, does not provide a right to rescind the policy ab initio.  ALPS Prop. & Cas. Ins. Co. v. McLean & McLean, PLLP, 2018 WL 3737950 (Mont. Aug. 7, 2018).  The court also held that an innocent insured attorney had…
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 argument that an exception to the exclusion restored coverage, concluding that the insured failed to fully brief the argument…