HNRK Coverage Corner

On April 9, 2020, the Second Circuit issued a decision in Brooklyn Center of Psychotherapy, Inc. v. Philadelphia Indemnity Ins. Co., Docket No. 19-2266-cv, certifying the following question to the New York Court of Appeals:  Can a discrimination claim based on a “failure to accommodate” theory trigger coverage under a general commercial liability policy?

The coverage dispute in this case arose from a disability discrimination lawsuit brought by a deaf woman, who alleged that the Brooklyn Center for Psychotherapy discriminated against her, in violation of state and federal ...

On March 26, 2020, the New York Court of Appeals granted leave to appeal from the First Department's decision in J.P. Morgan Sec., Inc v. Vigilant Ins. Co.,126 A.D.3d 76 (1st Dep't 2018), which held that that a disgorgement payment made as part of the settlement of an SEC enforcement action was a “penalty” and therefore did not qualify as a covered “loss” under a CGL policy. This case has a long history. See our post about the First Department's decision here.

As the novel Coronavirus/COVID-19 spreads throughout the country and the world—and governments respond with travel restrictions and “shelter in place” orders—businesses of all kinds are experiencing sudden losses of revenue on an unprecedented scale.  Business interruption insurance may provide much-needed coverage for some of these losses.  Does your company have a viable business-interruption claim?  As always, the answer depends on the specific circumstances regarding your loss and the terms of your insurance policy.  Given the enormity of the business losses ...

On February 7, 2020, the Second Circuit issued a decision in Lepore v. Hartford Fire Ins. Co., Case No. 19‐778‐cv, holding that a CGL policy exclusion for any suit alleging “an infringement or violation of any intellectual property right” was triggered even though the underlying complaint did not contain a direct IP-infringement claim. The Second Circuit affirmed the trial court’s decision granting summary judgment to the insurer, explaining:

Plaintiffs argue that because no violation of IP rights was asserted in the NL suit, the IP exclusion must be read narrowly, and ...

On February 3, 2020, Justice Sherwood of the New York County Commercial Division issued a decision in Alexander v. Starr Surplus Lines Ins. Co., 2020 NY Slip Op 30297(U), granting a preliminary injunction directing a D&O insurer to advance defense costs to a former corporate officer for an investor lawsuit alleging fraudulent inducement.

The insurer (Starr) argued that coverage was barred by a Major Shareholder Exclusion, which provided that the policy would not cover any claim “made by the individual(s) or entity(ies) that own or control . . . 10% or more of the outstanding voting ...