The Eleventh Circuit Court of Appeals, in M&M Sisters LLC v. Scottsdale Insurance Co., affirmed the district court’s dismissal of an insured’s third amended complaint against its insurance carrier for failure to state a claim for relief without further leave to amend. The plaintiffs, M&M Sisters LLC and its two owners Bertha Garcia and Maria Mendez, purchased a commercial general liability policy from the defendant, Scottsdale Insurance Co., covering an ... Keep Reading »
Exclusions/Exceptions
Fifth Circuit Leans on Well-Established Contractual Interpretation Doctrine to Preclude Coverage Under General Liability Policy
To paraphrase Justice Oliver Wendell Holmes Jr., a case “which appeals to the feelings and distorts the judgment” makes bad law. In the face of exceptionally tragic circumstances, however, the Fifth Circuit Court of Appeals resisted the urge to let its emotions carry the day. In Scottsdale Insurance Co. v. Discovering Me Academy LLC, the court instead adhered to well-established principles of Texas contract law to preclude coverage under a policy issued by ... Keep Reading »
Sixth Circuit Finds Unregistered Security Exclusion Bars Professional Liability Claim
In Saoud v. Everest Indemnity Insurance Co., the Sixth Circuit Court of Appeals held that an “unregistered security exclusion” barred coverage for various underlying lawsuits under a professional liability policy. The policyholder, William Saoud, was in the business of selling insurance-related products, such as annuities, life insurance, and long-term health care products. In 2017 and 2018, Saoud sold some of his clients an investment product called the 1 Global ... Keep Reading »
Louisiana Supreme Court Finds “Assault and Battery Exclusion” Barred Coverage for Kidnapping at Insured’s Motel
In granting summary judgment to the insurer and finding no duty to defend, Louisiana’s highest court reversed a trial court’s ruling on the basis of the “clear and unambiguous” assault and battery exclusion in a commercial general liability policy. Kazan tragically arose from a kidnapping and subsequent homicide of a guest of the insured — a motel operating in Alexandria, Louisiana. As the victim was attempting to retrieve something from her vehicle, another motel ... Keep Reading »
Delaware Superior Court Applies “Meaningful Linkage” Test for D&O Related Acts Analysis
In Options Clearing Corp. v. U.S. Specialty Insurance Co., the Delaware Superior Court addressed the scope of related or interrelated wrongful acts policy language in connection with SEC investigations and enforcement actions involving the insured, Options Clearing Corp. (OCC). According to the opinion, OCC is a registered U.S. clearing agency and derivatives clearing organization, which provides clearing and settlement services to 18 exchanges. OCC is the sole ... Keep Reading »
Eleventh Circuit Finds Employer’s Liability Exclusion Ambiguous Under Alabama Law
The Eleventh Circuit Court of Appeals affirmed a decision that an insurer had a duty to defend its insureds under a commercial general liability policy in an action arising out of a catastrophic explosion at a pyrotechnics plant that killed two individuals and injured another, holding an "employer's liability exclusion" was ambiguous under Alabama law and thus must be construed in favor of coverage. The exclusion provided: "This insurance does not apply to any claim, ... Keep Reading »
“Belt and Suspenders” Don’t Need Zip: Federal New York Court Rejects Timeliness Obligation for Optional Disclaimer
In Adirondack Insurance Exchange v. Banagos, the Eastern District of New York held that an insurer is not required to send a disclaimer letter where a loss does not fall within the scope of the insuring agreement and voluntarily sending a disclaimer letter, including one that discusses exclusions, does not create the obligation to send it in a timely manner. At issue in the case was a homeowners insurance policy that Adirondack Insurance Exchange issued in favor of ... Keep Reading »
Sixth Circuit Affirms Ruling That Knowledge Exclusion Barred Coverage for Listeria Contamination Loss, Finds Green Bean Farmer Forfeited “Ambiguity” Argument
Invoking the legal equivalent of "you snooze, you lose," the Sixth Circuit Court of Appeals found a farmer slept on its right to argue on appeal that an exclusion in its insurance policy was ambiguous. The decision, Arbre Farms Corp. v. Great American E&S Insurance Co., affirmed a district court ruling that the farmer was not entitled to coverage under its product recall policy based on a prior knowledge exclusion. Arbre Farms grows and sells vegetables. In 2019, ... Keep Reading »
10th Circuit Finds No Coverage Under All-Risk Policy for Building Damage Caused by Soil Collapse Triggered by Burst Water Pipe
In Naabani Twin Stars, LLC v. St. Paul Fire & Marine Insurance Co., the Tenth Circuit Court of Appeals held that St. Paul Fire and Marine Insurance Co. has no duty to cover damage that occurred when a building’s underlying soil collapsed, but not the building itself, due to a burst water pipe under an adjacent parking lot. In July 2016, a waterline under a parking lot, near a building owned by Naabani Twin Stars LLC and Twin Stars Limited, ruptured. Two ... Keep Reading »
Fifth Circuit Finds Coverage for Untimely Fraudulent Wire Instruction Claim Is Not Barred Under D&O Policy
The Fifth Circuit Court of Appeals recently reversed a ruling that a directors and officers liability policy provided no coverage for an insured financial services firm that fell for a scam involving a fraudulent direction to wire $1 million from one of its customer’s accounts. After the customer threatened to file a negligence suit against the financial services firm, the firm submitted a claim for coverage under its D&O policy. The insurer declined to defend the ... Keep Reading »
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