Executive Summary: 2003

December 2003

• I v. I Exclusion Does Not Bar Coverage for Claims Brought by Liquidator against Trustees of Company
• Court Applies “Deliberate Acts” and “Law Enforcement” Exclusions in Municipal Policy
• North Dakota Supreme Court Upholds Agreement by Policyholder to Assign Claim against Insurer to Underlying Plaintiff
• Bankruptcy Court Stays Litigation of Rescission Action against Adelphia Directors and Officers
• Northern District of Illinois Rules I v. I Exclusion Bars Claim
• “Bodily Injury” and “Assault and Battery” Exclusions Held Inapplicable to Claims against School Board After Teacher Molested Student
• Former Subsidiary Has Right to Enforce ADR Clause in Policy
• Under Choice of Law Analysis, Law of State Where Contract Was Negotiated and Premiums Paid Applies
• Ninth Circuit Holds Renewal Constitutes Separate and Distinct Policy
• “Stop Loss” Policy Not Claims-Made Policy; Notice Prejudice Rule Applies
• Extended Reporting Period Available Even Where Policy Is Renewed
• Insurer May Recoup Defense Costs Absent Duty to Defend; Reservation of Rights Preserves Right to Recoup Costs

November 2003

• WRF Attorney Authors “Professional Liability Chapter” in Holmes’ Appleman on Insurance
• Notice to Insurer and Payment to Broker Sufficient to Exercise Right to Extended Reporting Period
• Under New Jersey Law, “Reasonable Expectations” of the Parties May Operate to Void Policy Language
• No Coverage for Directors and Officers of Insured Entity Where Conduct “Inextricably Intertwined” with Conduct on Behalf of Non-Insured Entity
• Court Upholds Application of Retroactive Date In Claims-Made Policy
• Insurer Has Duty to Defend Title Company Against Allegations of Excessive Fees for Closing Costs
• No Coverage for Claim Filed after Cancellation of Claims-Made Policy
• Sexual Misconduct Exclusion Bars Coverage for Sexual Harassment by Chiropractor
• Federal Court in Texas Holds No Breach of Stowers Duty; Prejudgment Interest Is “Damages”

October 2003

• No Rescission Where Attorneys Unaware of Employee’s $2.7 Million Embezzlement Scheme
• E&O Policy Affords Coverage to Benefits Company for Acts Involving Its Own Employees
• Court Determines That Claim Made before Bankrupt Law Firm Dissolved
• Court Addresses Differing Retentions in Separate Coverage Parts
• Intentional Acts Exclusion Precludes Coverage
• Case or Controversy Exists When Insurer Sues Directors Indemnified by Policyholder Company
• Vehicle Exclusion Inapplicable Where Infant Left in Van
• WRF Attorney Authors “Professional Liability Chapter” in Holmes’ Appleman on Insurance

September 2003

• Federal District Court Holds Prior Acts Exclusion Inapplicable; Invokes Related Claims Exclusion
• Insurer Had Duty to Defend, But Not to Indemnify, Dentist for Sexual Misconduct Claim
• Law Firm and Three Attorneys Entitled to Independent Counsel of Their Own Choosing in Legal Malpractice Case
• Excess Insurer Has No Obligation to Share in Cost of Defense
• Illinois Appellate Court Applies Breach of Fiduciary Duty and Intentional Fraud Exclusions
• Cost of Repurchasing Securities That Were Unlawfully Sold Is Not “Loss” or “Damages”
• Kansas Supreme Court Holds That Limited Retroactive Coverage in Excess Limits Endorsement Does Not Violate Public Policy
• Proceeds of Adelphia’s D&O Policies Are Not Property of the Bankruptcy Estate; Rescission Action Not Subject to Automatic Stay
• Claims against Debtor’s Former Officers Brought by Litigation Trustee Barred by Insured v. Insured Exclusion
• Policy Issued to Law Firm Void as to Two Partners Engaged in Conduct Not Disclosed in Application and as to the Firm, But Not as to “Innocent” Partner
• Wisconsin Court Applies Intentional Acts Exclusion, Rejects Application of Bodily Injury and Pollution Exclusions
• Binder Provided Coverage Subject to “Related Wrongful Acts” Exclusion, Even Though Binder Did Not Mention “Related Acts” Exclusion
• Two Alleged Breaches of Professional Obligations by Accountant Held to Be Separate Claims
• Billing for Legal Services Does Not Constitute “Professional Services”
• Insurer Has Duty to Defend Attorney Where Notice of One of Four Allegations in Complaint Was Untimely

July/August 2003

• Sexual Harassment and Discrimination Claims Barred by Employment-Related and I v. I Exclusions
• Illinois District Court Affirms Bankruptcy Court’s Injunction of Nationwide Securities Class Action
• $70 Million Disgorgement Paid to SEC and NASDR by CSFB Is Not "Loss" under E&O Policy
• Allegations of Fraudulent Transfer Excluded under “Knowingly Wrongful Acts” and “Unlawful Profit” Exclusions in Legal Malpractice Policy
• Letter Demanding that Board Remedy Corporate Waste Constitutes “Demand for Monetary Damages”
• Texas District Court Holds that Fortuity Doctrine Applies Regardless of Actual Knowledge of Underlying Loss and Potential Liability
• Overbilling Does Not Constitute “Printing Services” under Printers E&O Policy
• U.S. District Court Holds that Parties Can Voluntarily Reform Insurance Contract
• Title Insurance Company’s Failure to Disclose Injunction against It Is Material Misrepresentation Allowing E&O Insurer to Rescind Policy
• Insurer Did Not Waive Ability to Rescind by Accepting Premiums
• Insurer Liable for Negligent Monitoring of Defense, under Duty to Defend Policy, Prior to Withdrawal of Defense
• Insurer Has a Duty to Defend against Federal Trade Commission Investigation Even Absent Claim for Damages
• No Coverage under Claims-Made Policy Where Policyholder Received Written Notice of a Potential Claim Prior to Inception of Policy
• No Coverage under Claims-Made Policy for Previously Reported Potential Claim
• No Duty to Defend Lawyer Sued in Capacity as President of Manufacturing Company
• Interview of Policyholder under “Cooperation Clause” Does Not Require Disqualification of Interviewing Attorney in Rescission Litigation
• Bad Faith Action Can Proceed against Medical Malpractice Insurer Even without Initiation of Malpractice Suit against Insured Doctor
• Coverage Available under Medical Liability Policy in Texas for Punitive Damages
• Physician’s Excessive Charges for Prescription Drugs to Patients Constitute “Professional Services”
• Embezzlement Is Not Act in Capacity as President; Other Exclusions Also Bar Coverage
• Coverage for Embezzlement by Employee of Policyholder Barred under I v. I and Conversion Exclusions

May 2003

• “Loss” or “Liability” under ERISA Fiduciary Policy Includes Amounts Paid to Establish and Fund Employee Accounts
• Written Notice of Wrongful Acts Not Required Where Insurer Was Aware of Acts; Later Suit Related Back to Prior Litigation
• Property Damage Exclusion in E&O Policy Does Not Apply to Reprinting of Mailing to Correct Errors
• No Coverage For Foreseeable Legal Malpractice Claim Based On Prior Knowledge Exclusion
• Claims-Made E&O Policy Provides Coverage for Loss Caused by Continuous Exposure to Harmful Conditions Prior to Retroactive Date
• “Eight Corners Rule” Prohibits Consideration of Extrinsic Facts; Prior Knowledge Exclusion Not Yet Applicable
• Sixth Circuit Holds E&O Policy Exclusions for Specific Conduct Apply Even if Conduct Was Negligent
• Seventh Circuit Holds No Duty to Defend Where Complaint Alleges only Intentional Conduct
• Controlled Enterprise Exclusion in Lawyers Policy Inapplicable

April 2003

• Suit by Law Partner over Legal Fees Does Not Involve “Professional Services”
• Policy Language Trumps Alleged Agreement with a Broker
• Prejudgment and Post-Judgment Interest Are Cost of Defense, Not Part of Policy Limits
• Intentional Acts Exclusion Does Not Bar Coverage for Consumer Fraud Action
• Written Notice Not Required for Claims-Made Policy
• Insurer Has Duty to Defend Even Though “Primary Thrust” of Action Excluded
• Third-Party Claimant Lacks Standing to Sue D&O Insurer
• WRF Expands Insurance, Litigation and Privacy Practices
• Sexual Misconduct by Teacher Does Not Constitute "Educational Employment Activity"
• Sexual Molestation Not Covered under Educator’s Employment Liability Policy
• Comprehensive Excess Policy Applicable only after Exhaustion of Professional Liability Policy
• Application of “Other Insurance” Clause Not Dependent on Theory of Liability

March 2003

• No Coverage for Claim Reported a Year Late, Even with Extended Reporting Period
• General Liability Policy Excludes Professional Services
• Lawyer’s Policy Voided Due to Misrepresentation
• Laddering Suits Allowed to Proceed
• Administrative or Ministerial Acts Are Not Professional Services
• Ds & Os of Parent Corporation Not Insured; Cancellation of Policy Does Not Violate Bankruptcy Automatic Stay
• Section 1983 Claim Sounds in Tort and Is Not Excluded under Breach of Contract or Debt Financing Exclusions
• No Coverage for Claim Made after the Policy Period
• Fraud Exclusion Applicable Where Policyholder Found Negligent
• Claims-Made Policy with Limited Retroactive Coverage Does Not Violate Public Policy
• Excess Insurer Has Right to Select Counsel in Medical Malpractice Action
• Objective Standard Used to Assess Knowledge of Prior Wrongful Acts

February 2003

• D&O Policy Proceeds Not Property of Estate; Shareholder Suit Related to Bankruptcy Action Preliminarily Enjoined under Section 105(a)
• Florida Court Honors New York Order Staying Litigation
• Member of Condominium Association Lacks Standing to Sue Condominium Board’s D&O Insurer
• Stockholders of One Company Lacks Standing for Securities Claim against Another Company; Soft-Opinions May Be Actionable
• Judge Harmon Rules on Secondary Actors’ Motions to Dismiss in Enron Litigation
• Validity of Conseco Coverage Decision Challenged in Bankruptcy Proceeding
• No Coverage for Section 11 Claims Because Not a “Loss”

January 2003

• Professional Liability Policy May Provide Coverage for Sexual Abuse Claims by Insured's Foster Children
• No Coverage under Business Enterprise Exclusions
• Sixty-Day Notice Requirement for Nonrenewal Inapplicable if Replacement Policy Obtained
• Underlying Claimants Are Not Entitled to Separate Per Person Limits Arising from one Occurrence
• Insurer May Recover Legal Fees Paid to Defend Claim When Insured Has Recovered the Fees from Another Party
• No Duty to Defend Proceeding before Administrative Agency
• Coverage Available for Claim Caused by Both Covered Act and Excluded Event
• Court Enjoins Arbitration by D&O Insurers Where ADR Provision Allows Insured to Elect ADR Process
• Second Circuit Certifies Notice Prejudice Rule to New York Court of Appeals
• Insured's Delay of 58 Days in Notifying Insurer of Claim against It Precludes Coverage