The Sixth Circuit Court of Appeals affirmed an order granting summary judgment in favor of the insurer in Wesco Insurance Co. v. Roderick Linton Belfance LLP, holding that the award of attorneys’ fees was a “sanction” and thus was not covered damages under the Wesco professional liability policy. This matter concerned an award of attorneys’ fees stemming from claims that were brought against schools under the Individuals with Disabilities Education Act (IDEA). The ... Keep Reading »
Federal Court Rules “Unauthorized Network Access Exclusion” Precludes Coverage for $1.3M Payment From Hacker’s Fraudulent Email
The U.S. District Court for the Eastern District of Pennsylvania ruled that an insurance policy issued by Federal Insurance Co. excluded coverage for the transmission of $1.3 million by the insured in response to an email request from a hacker purporting to be one of the insured’s business partners. The insured, Construction Financial Administration Services (CFAS), was a third-party construction funds administration company that disbursed funds for contractors whose ... Keep Reading »
Southwest Marine and General Insurance Co. v. United Specialty Insurance Co.: A Lesson in Common Limitations of Additional Insured Provisions
In Southwest Marine and General Insurance Co. v. United Specialty Insurance Co., the U.S. District Court for the Southern District of New York recently highlighted limitations in a common policy endorsement extending commercial general liability insurance to additional insureds. Hanjo Contractors Inc. subcontracted with Manhattan Steel Design to perform work on a New York building. In February 2016, Manhattan Steel employee Oscar Perez was struck and injured by a ... Keep Reading »
Florida Federal Court Derails Railway’s Coverage Suit Due to Prejudicial Two-Year Notice Delay
While Amtrak is in the business of providing on-time railway services to millions of passengers each year, the corporation’s two-year-plus delay in tendering defense to its insurer following a South Florida railway accident put it off track in a summary judgment order in the Middle District of Florida. On March 26, 2022, the federal court held that Amtrak’s notice to the insurer was not timely and that the carrier was prejudiced by the late notice. West Palm Beach Train ... Keep Reading »
Delaware Supreme Court Holds That “Related Claim” Standard Is Based on Plain Language of Policy
As we previously discussed in this blog, in June 2021 the Delaware Superior Court found in First Solar Inc. that there was no coverage under a claims-made policy for a securities action (Maverick) filed during the relevant policy period, on the grounds that the Maverick action constituted a "related claim" with respect to a class action that had been filed before the policy period commenced (Smilovits). In so holding, the court applied a "fundamentally identical" ... Keep Reading »
Eleventh Circuit Holds Tort Claimants Lack Standing to Challenge Judgment That Insurer Has No Duty to Defend
On March 29, 2022, the Eleventh Circuit Court of Appeals held that a tort claimant lacks standing to challenge a court's judgment finding that the carrier had no duty to defend the insured. A.B. was 10 years old when she was sexually abused by her parent and her parent's spouse. The spouse was ultimately indicted, pleaded guilty to two counts of human trafficking, and was sentenced to 30 years in prison per count. In her suit against the convicted human trafficker ... Keep Reading »
Fifth Circuit Concludes That Compliance With Pandemic-Related Shutdown Orders Does Not Constitute “Direct Physical Loss of or Damage to Property” Under Louisiana Law
In the recent decision in Q Clothier New Orleans LLC v. Twin City Fire Insurance Co., the Fifth Circuit Court of Appeals affirmed the dismissal of an insured’s claim for coverage under a property policy for loss arising from compliance with pandemic-related shutdown orders. In concluding that such losses did not fall within the meaning of “direct physical loss of or damage to property” in the policy’s insuring agreement under Louisiana law, the court noted that its ... Keep Reading »
Illinois Appellate Court Finds No CGL Coverage for Defective Elevator Suit
In the recent decision of Korte & Luitjohan Contractors Inc. v. Erie Insurance Exchange, the Fifth District Appellate Court of Illinois reaffirmed that, under Illinois law: (1) construction defects generally do not trigger coverage under commercial general liability insurance policies; (2) such policies generally do not cover the cost to repair construction defects or economic losses resulting from construction defects; and (3) parol evidence is irrelevant to the ... Keep Reading »
Delaware Supreme Court Affirms Appraisal Proceeding Is Not Covered Under D&O Policy
We previously discussed the Superior Court of Delaware's finding in Jarden, LLC v. Ace American Insurance Co. et. al that an appraisal proceeding was not covered under a directors and officers policy because it does not seek redress for a wrongful act." Now, the Delaware Supreme Court has adopted the lower court's opinion and order in full, agreeing with the insurers in finding that an appraisal action was not covered under the policy agreements. Case No. 273, 2021 (Del. ... 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 »
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