Many D&O insurance policies contain specific prior litigation exclusions precluding coverage for claims made during the policy year related to proceedings commenced prior to the policy inception. A question that can arise is the issue of what type of prior proceedings or actions triggers this exclusion. The Second Circuit recently considered whether a Maryland attorney general’s office’s letter threatening that it “may” bring an enforcement action triggered an exclusion precluding coverage for a claim “involving” any prior “demand, suit or other proceeding.” In a March 7, 2016 summary order (here), the appellate court, applying New York law, affirmed the district court’s ruling that the AG’s prior letter was a “demand,” and therefore that the policy unambiguously precluded coverage for the insured’s defense fees incurred in a later U.S. Department of Justice action.
Continue Reading D&O Insurance: Regulator’s Previous Threat to File Action Triggers Prior Litigation Exclusion
D&O Insurance: Subsequent Claim Interrelated With Prior Lawsuit Not Covered Under Policy in Force at Time of Later Claim
In a December 30, 2015 unpublished per curiam opinion, the Fourth Circuit affirmed the district court’s holding that a 2010 lawsuit filed to enforce a judgment was interrelated with the 2006 lawsuit in which the judgment had been entered, and therefore because the later was deemed first made at the time of the earlier lawsuit, the later suit was not covered under the management liability insurance policy in force when the later lawsuit was filed. The Fourth Circuit’s analysis is interesting in light of other recent appellate case law decisions interpreting D&O insurance policy’s interrelatedness provisions. A copy of the Fourth Circuit’s opinion can be found here.
Continue Reading D&O Insurance: Subsequent Claim Interrelated With Prior Lawsuit Not Covered Under Policy in Force at Time of Later Claim
D&O Insurance: Two Federal Appellate Courts Issue Rulings Confirming Carriers’ Coverage Denials
When I started out as a law firm associate doing D&O insurance coverage work more than three decades ago, there was virtually no interpretive case law available. Legal research in connection with D&O insurance tended to be a meagre, frustrating process. Things have changed so much in the interim that now we can have two appellate decisions from two different federal circuit courts on D&O insurance issues in just a single day. On October 21, 2015, both the Second and Fifth Circuits issued D&O insurance coverage rulings, in both cases finding that the there was no coverage under the D&O insurance policies involved for the matters in dispute.
The Second Circuit’s October 21, 2015 summary order in Nomura Holding America, Inc. v. Federal Insurance Company can be found here. The Fifth Circuit’s October 21, 2015 opinion in Martin Resource Management Corporation v. Axis Insurance Company can be found here. I discuss the two appellate decisions below.
Continue Reading D&O Insurance: Two Federal Appellate Courts Issue Rulings Confirming Carriers’ Coverage Denials
Management Liability Insurance: If a Qui Tam Action is a Claim, When is it “First Made”?
The federal False Claims Act imposes liability on those who defraud the government. The law also allows third-parties to bring so-called qui tam actions in the form liability claims under the Act; if the qui tam actions are successful, the third-party can receive a portion of the recovery. When a third-party files a qui tam
Professional Liability Insurance: Two Policies But No Coverage Due to Untimely Notice
In a January 9, 2015 opinion (here), the Eighth Circuit, applying Missouri law, held that there was no coverage under either of two successive professional liability insurance policies issued by the same insurer for a claim against its insured, LSi-Lowry Systems, because the claim was first made before the inception of the second
D&O Insurance: No Coverage for Enforcement Action Because Claim First Made When SEC Subpoena Served Before Policy Inception
A recurring D&O insurance coverage issue involves the question of whether or not a subpoena constitutes a claim, as I have noted on prior posts (for example, here). When this issue comes up, the dispute is usually over whether or not there is coverage under the policy for the costs of responding to the
D&O Insurance: Subsequent Lawsuit to Enforce Judgment Held Interrelated with Prior Adversary Action
The question of whether or not a subsequent claim is interrelated with a prior claim — and therefore deemed first made at the time the earlier claim was filed – is a recurring D&O insurance coverage issue. If the later claim is to be deemed first made at the time of the prior lawsuit, then
D&O Insurance: Prior and Pending Litigation Exclusion Bars Coverage for Lawsuit Filed Years Before But Served During the Current Policy Period
Under which claims made D&O insurance policy is there coverage for a claim that was filed under seal years ago but not served on the policyholder until the policy period of the current policy? If you find the answer “no policy” as unsatisfying as I do, read on. In a September 15, 2014 opinion (
D&O Insurance: Though Specific Litigation Exclusion Does Not Apply, Subsequent Suits Related to Prior Claim Not Covered
As the litigation wave arrived following the global financial crisis, many financial institutions were hit with multiple suits that arrived piecemeal and over time. For D&O insurance coverage purposes, these lawsuits were filed across multiple policy periods. A recurring question as the subprime litigation has worked its way through the system is whether the various
D&O Insurance: Because Policy Clauses Conflict, D&O Insurer Must Cover Interrelated Claims
My beat here at The D&O Diary requires me to read many insurance coverage decisions. I am well accustomed to the idea that the court opinions can be varied lot. But every now and then I run across a decision that is a real head-scratcher. A July 16, 2013 decision out of a Texas intermediate