In 2017, FedEx faced a series of class action lawsuits resulting from the alleged “unmasking” of customers’ credit card numbers on receipts in violation of the Fair and Accurate Credit Transactions Act (FACTA). FedEx submitted a claim to Continental Casualty Company for defense of the FACTA actions under a policy covering FedEx against certain “Professional Services Liability” claims. Continental denied the claim, and FedEx bore approximately $2.3 million in costs ... Keep Reading »
Professional Liability
Eleventh Circuit Explicitly Adopts Distinction Following Hoover to Confirm That Coverage Cannot Be Created Through Waiver or Estoppel
On July 30, 2020, the Eleventh Circuit Court of Appeals in AEGIS Electric & Gas International Services Ltd. v. ECI Management LLC reversed the trial court's grant of summary judgment in favor of an insurer, AEGIS Electric & Gas International Services Ltd. In that case, AEGIS issued a real estate services professional liability policy to ECI Management LLC. Subsequently, ECI was named as a defendant in a putative class action in which the plaintiff alleged that ... Keep Reading »
New York Federal Court Finds Insured’s Failure to Provide Notice of Subpoena Did Not Bar Coverage for Later Lawsuit
Applying New York law, the U.S. District Court for the Southern District of New York held that because a subpoena duces tecum previously issued to the insured by a post-judgment creditor of a non-insured entity was not a "claim" against the insured, the subpoena and a later-filed lawsuit against the insured could not qualify as "related claims" deemed first made when the subpoena was issued. The court also held that the "warranty exclusion" in the application for the ... Keep Reading »
Massachusetts High Court Upholds Consent-to-Settle Provision, Protecting Insurer Who Did Not Have the “Final Say”
The Supreme Judicial Court of Massachusetts recently heard an appeal regarding a particularly obstinate insured, ruling that recognition of a consent-to-settle provision does not in and of itself violate an insurer’s duties under Massachusetts’ claim settlement practices statute. Specifically, in Rawan v. Continental Casualty Co., the court held that Continental was not in violation of Massachusetts General Laws chapter 176D, section 3(9)(f), which mandates that an ... Keep Reading »
Related Decisions: Three Recent Cases Emphasize Breadth of “Related Wrongful Acts”
Third-party liability policies often include aggregation clauses. As the name suggests, these clauses aggregate "related claims" or "interrelated wrongful acts" into one claim or occurrence. This provides the parties with certainty as to when a claim was "first made" or when an occurrence "first occurred." These clauses often lead to litigation, with carriers and policyholders asserting narrow or broad readings of the language, depending on the desired result. A trio ... Keep Reading »
Professional Services Exclusion Precludes Coverage for False Claims Act Suit
It is not unusual for a directors and officers liability policy to have an exclusion for professional services. A such, a question often arises regarding whether the claimed wrongful conduct involved the rendering or failure to render professional services in a particular context. In HotChalk, Inc. v. Scottsdale Ins. Co., No. 16-17287 (9th Cir. June 4, 2018), the Ninth Circuit found that coverage was precluded for a False Claims Act suit because the insured’s ... Keep Reading »
Defining ‘Logical Connection’: NC Federal Court Tackles ‘Related Claims’
Insurance carriers and policyholders often argue about the scope of policy provisions. Generally, policyholders take an expansive view of insuring agreements, while carriers often construe them more narrowly. But not all coverage arguments follow these familiar lines. Take, for instance, the “related claims” debate. Most third-party liability policies contain aggregation language. Such policies deem “related claims” to be a single claim “first made” when the first ... Keep Reading »
None Of Your Business: Eleventh Circuit Enters A Gray Area For Contract Liability Exclusions
Businesses have responsibilities; they buy liability insurance to cover losses that arise if they fail to perform them all. Businesses also “assume” responsibilities under contracts; those responsibilities are typically excluded from coverage. Sometimes the two kinds of responsibility overlap. Last month, in Payroll Management, Inc. v. Lexington Ins. Co., No. 15-10314 (11th Cir. March 1, 2016), the U.S. Court of Appeals rejected an insured’s attempt to exploit that ... Keep Reading »
Accidentally On Purpose: Washington Court Finds Coverage For Contempt Of Court Based On “Misunderstanding”
Professional liability policies cover claims based on the insured’s alleged negligent acts, errors or omissions, and not claims for “sanctions or penalties” for “willful” professional misconduct. But the insurer’s duty to defend is very broad. Recently, a debtor in a bankruptcy proceeding filed a motion against the attorney for a judgment creditor, seeking to have her held in civil contempt for an allegedly “willful” violation of a discharge injunction. In Gauthier v. ... Keep Reading »
Playing With Fire: No Liability Coverage For Tax Preparers Who Took Deductions for Illegal Tax Shelters
“Gimme Shelter” is one of the greatest of a lot of great Rolling Stones songs (made greater by Merry Clayton’s gut-wrenching contribution). And, of course, “Gimme Shelter” is a cliché often trotted out in discussions of tax shelters. We’re not going to do that here. Instead, Financial Strategy Group, PLC v. Continental Casualty Co., Case No. 14-6296 (6th Cir. Aug. 4, 2015), puts us in mind of that other great Stones song, “You Can’t Always Get What You Want.” Because ... Keep Reading »