In 2015, Ocwen Financial Corp. was sued for its attempts to collect on a mortgage loan that had been discharged in bankruptcy. It tendered the defense to Zurich American Insurance Co., but Zurich asserted that two exclusions precluded coverage and sought a declaration from a federal court that it had no duty to defend the underlying complaint. The district court agreed, and the Seventh Circuit affirmed on appeal. The underlying complaint alleged that Ocwen violated ... Keep Reading »
“Specific” Means “Specific” – Florida’s Bad Faith Statute Must Be Strictly Construed
The purpose of Florida’s “bad faith” statute is to “avoid unnecessary bad faith litigation.” To that end, the statute provides a civil remedy for any person damaged by an insurer’s conduct. However, as a condition precedent to filing suit, the policyholder must provide appropriate information to the Department of Insurance and the insurer by filing and serving a civil remedy notice (CRN). The CRN must specify the policyholder’s complaint and provide the insurer with a ... Keep Reading »
Texas Federal Court Finds No Coverage Under Crime Policy for Phishing Scheme Because Insured Did Not “Hold” Diverted Funds and Suffered No Direct Loss
RealPage was the victim of a phishing scheme that resulted in the diversion of its client funds from the bank account of a third-party payment processer, Stripe Inc. In the ensuing insurance coverage litigation styled RealPage Inc. v. National Union Fire Insurance Company of Pittsburgh, the court ultimately concluded that RealPage was not entitled to coverage for its loss because RealPage did not “hold” the diverted funds and because RealPage did not suffer a direct loss ... Keep Reading »
Delaware Supreme Court Affirms Insurability of Fraud and Larger Settlement Allocation Rule
On March 3, 2021, the Supreme Court of Delaware issued a significant decision in the D&O coverage space, RSUI Indemnity Co. v. Murdock, analyzing whether fraud claims against insureds were covered under an excess D&O policy issued by RSUI Indemnity Co. to Dole Food Company Inc. The coverage dispute centered on stockholder litigation arising after David Murdock, the CEO and a director of Dole, took Dole private through a merger transaction resulting in Murdock ... Keep Reading »
New Jersey Federal Court Holds Virus Exclusion Bars Coverage for Car Dealerships’ COVID-19 Losses; Rejects Public Policy Argument Based on Pending Legislation
We previously described a proposed New Jersey bill that was introduced to the state assembly in March 2020 that would require insurers to cover business interruption losses related to the novel coronavirus pandemic. Almost a year later, the proposed bill has yet to be voted on by the legislature — and the stalled bill is causing significant roadblocks for policyholders who wish to rely on it to escape the application of virus exclusions in property insurance policies to ... Keep Reading »
New York Court Finds Securities Settlements Not Covered by D&O Policies Due to Insured Capacity and Uninsurable Loss Issues
A New York trial court recently granted summary judgment to a group of excess D&O insurers seeking a declaration that their policies do not cover settlements and consent judgments the defendants paid in connection with underlying securities actions. The decision emphasizes the insured capacity limitation in the D&O policy definition of a “wrongful act” and also reinforces that amounts paid as disgorgement are uninsurable as a matter of New York ... Keep Reading »
Target Data Breach Not Covered Under CGL Policy: Court Rejects “But-For” Theory for Loss of Use Damages Where There Was No Evidence of Value of the Use of Payment Cards
Following a 2013 data breach in which the credit and debit card information of more than 110 million customers was stolen or exposed, Target Corp. sought coverage from its CGL insurers for $74 million that it incurred in settlements with various banks (the credit and debit card issuers) for their costs in issuing new payment cards (both credit and debit cards) to the customers. In a recent decision on the parties’ cross-motions for summary judgment, the U.S. District ... Keep Reading »
New York First Department Clarifies Effect of New York Insurance Law Section 3420 on Claims-Made-and-Reported Policies
In Certain Underwriters at Lloyd's London v. Advance Transit Co., a New York appellate court provided valuable clarity into how New York Insurance Law section 3420 applies to claims-made-and-reported insurance policies. Underwriters issued a claims-made-and-reported liability policy to Advance Transit Co., effective October 30, 2016, to October 30, 2017. The policy provided that if it were renewed, Advance would have an additional 60 days after the expiration of the ... Keep Reading »
Florida Supreme Court Defines Damages Recoverable by First-Party Insureds in Actions Alleging Breach of Policy
In Citizens Property Insurance Corp. v. Manor House, LLC, the Florida Supreme Court recently answered “no” to the following question certified as a matter of “great public importance”: In a first-party breach of insurance contract action brought by an insured against its insurer, not involving suit under section 624.155, Florida Statutes, does Florida law allow the insured to recover extra-contractual, consequential damages? The case involved a dispute over property ... Keep Reading »
Florida Appellate Court Determines Faulty Workmanship Exclusion in Homeowner’s Policy Is Not Ambiguous and Thus Damage Caused by Contractor’s Conduct Is Not a Covered Loss
In Saunders v. Florida Peninsula Insurance Co., a Florida appellate court recently determined whether a faulty workmanship exclusion in a homeowner’s policy applied to a property loss caused by a contractor. The insured, Veronica Saunders, hired a contractor to install a new addition to her home, which was insured by Florida Peninsula Insurance Co. During the construction process, the contractor took off a portion of the roof and only covered the exposed area with ... Keep Reading »
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