In the following guest post, Francis Kean takes a look at the potential impact on COVID 19-related claims of standard D&O insurance policy exclusions. Francis is a Partner, Financial Lines, at McGill and Partners. A version of this article previously was published as a McGill client alert. I would like to thank Francis for allowing me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.
In a June 6, 2016 opinion (here), Middle District of Florida Judge Sheri Polster Chappell, applying Florida law, held that subsequent claims filed in 2011 and 2012 were interrelated with claims first made in 2008, and therefore deemed made at the time of the initial claim. Because the initial claim was filed before the relevant policy incepted, there is, Judge Chappell concluded, no coverage for the claims under the relevant policy.
In reaching these conclusions, Judge Chappell rejected the policyholder’s argument that the policy’s related claim provision conflicted with the policy’s prior and pending litigation provision (which had a May 2003 date), and therefore should be construed against the insurer and disregarded in light of the prior and pending litigation date. Judge Chappell’s opinion quite sensibly and correctly rejects arguments that other courts (applying different jurisdiction’s law) have accepted, as discussed below. A July 22, 2016 post on the Wiley Rein law firm’s Executive Summary Blog about Judge Chappell’s opinion can be found here.
Continue Reading D&O Insurance: Prior and Pending Litigation Provisions Do Not Undercut Interrelated Claims Provision
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