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A company faces two class action lawsuits—filed by different plaintiffs, complaining of different allegedly wrongful conduct, asserting different causes of action subject to different burdens of proof, and seeking different relief based on different time periods for the alleged harm. Those facts suggest the suits are not “fundamentally identical,” but that is what a Delaware Superior Court recently concluded in barring coverage for a policyholder seeking to recover for a suit the court deemed “related” to an earlier lawsuit first made outside the policy’s coverage period. First Solar Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. N20C-10-156 MMJ CCLD (Del. Super. Ct. June 23, 2021). The decision, which is not on all fours with some of the authority upon which it relies, underscores the inherent unpredictability of “related” claim disputes and need for careful analysis of the policy language against the factual and legal bases of the underlying claims.
Continue Reading When “Substantially Similar” Means “Fundamentally Identical”: Delaware Court Enforces Related Claim Provision to Deny D&O Coverage for Securities Class Action

Real estate investment trust VERIET, Inc. (formerly known as American Realty Capital Properties) announced this week that it agreed to a $765.5 million settlement to resolve shareholder class action and related lawsuits arising from a host of alleged securities violations and accounting fraud at ARCP since the company went public in 2011. Defendants in the class action settlement have agreed to pay more than $1 billion in compensation, including millions from ARCP’s former manager and principals, chief financial officer, and former auditor.
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Continue Reading Newest REIT Settlement and Ongoing Disputes Pose Potential D&O Coverage Issues

On June 17, 2019, the First Circuit held that an insurer’s duty to defend was triggered because the underlying complaint set forth claims that required a showing of intent as well as claims that sought recovery for conduct that “fits comfortably within the definition of an ‘accident.’” In Zurich American Ins. Co v. Electricity Maine, LLC, Zurich sought declaratory judgment that, under a D&O policy, it had no duty to defend the insured, Electricity Maine, an electrical utility company being sued in the underlying class action. Zurich argued it had no duty to defend because the underlying complaint failed to allege that Electricity Maine engaged in conduct that qualified as an “occurrence” or that caused “bodily injury” under the terms of the policy. The First Circuit disagreed.
Continue Reading Claims for Negligence? Duty to Defend Triggered

The Tennessee Supreme Court has refused to construe an ambiguous definition of actual cash value to allow for deduction of labor costs as part of depreciation calculations where that subset of repair costs are not clearly addressed in the policy. Despite the split of authority nationwide, the Tennessee case presents a straightforward application of policy interpretation principles to a common valuation issue in first-party property claims.
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Continue Reading Tennessee High Court Excludes Labor Costs from Insurer’s Actual Cash Value Depreciation Calculations

Corporate policyholders should carefully consider insurance coverage implications when structuring mergers, acquisitions, or other transactions that may impact available insurance assets. A New Jersey federal court recently granted summary judgment for a surviving bank asserting coverage rights under a D&O policy issued to an entity that dissolved in a statutory merger, based in part on the wording of the parties’ merger agreement structuring the transaction in accordance with the New Jersey Business Corporation Act (“NJBCA”).
Continue Reading Insurer Must Pay Post-Merger Defense Costs Under Merged Entity’s D&O Policy

In a June 1, 2016 decision, the Second Circuit Court of Appeals in National Fire Insurance Co. of Hartford et al. v. E. Mishan & Sons Inc. required CNA Financial Corporation to defend E. Mishan & Sons, Inc.(“Emson”) – best known for its “As Seen on TV” products –in two class actions alleging a conspiracy to trap customers into recurring credit card charges and that Emson sold private consumer information that it obtained through its product sales.
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Continue Reading “As Seen on TV” — Insurer Must Defend Well Known Television Marketer in Data Privacy Suit

On April 11, 2016, the Fourth Circuit affirmed a trial court’s decision that Travelers must defend a class action against its policyholder, Portal Healthcare Solutions, arising out of Portal’s alleged failure to safeguard confidential medical records. In the class action, the plaintiffs contended that Portal had allowed their private medical records to be accessed on the internet for more than four months by a simple Google search of a patient’s name. Portal sought coverage under provisions in two Travelers policies that provided coverage for alleged injury arising from “electronic publication of material” that “gives unreasonable publicity to a person’s private life” or that “discloses information about a person’s private life.”
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Continue Reading Fourth Circuit Affirms Coverage For Cyber Incident

On February 11, 2016, New York’s highest court held in Selective Ins. Co. of Am. v. Cnty. of Rensselaer, 2016 N.Y. Slip Op. 01001 (2016) that, in a class action alleging improper strip searches of arrestees over a four-year period, each improper strip search was a separate occurrence under the policies at issue, mandating a separate deductible per strip search. Significantly, although the issue in this case concerned application of per-occurrence deductibles, the same reasoning would apply if the issue had been over the number of applicable policy limits.
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Continue Reading Each Improper Strip Search is a Separate Occurrence