HNRK Coverage Corner

On May 9, 2024, Judge Theodore C. Zayner of the California Superior Court for the County of Santa Clara issued a decision in Zoom Video Communications, Inc. v. Underwriters at Lloyd’s London, Case No. 22-CV-398878, holding that a civil investigative demand (“CID”) from the Federal Trade Commission (“FTC”) did not constitute a covered “Claim” under an errors and omissions policy issued to Zoom.

Responding to a government investigation can be a costly proposition.  The attorneys’ fees and other expenses incurred to comply with a grand jury subpoena or a civil ...

On May 9, 2024, Judge Rennie of the Delaware Superior Court issued a decision in Origis USA LLC v. Great Am. Ins. Co., Case No. N23C-07-102, holding that an insured’s coverage action against its D&O insurers was premature in light of the policy’s “No Action” clause.

The insured’s primary policy (to which three excess insurers followed form) states:

With respect to any Liability Coverage Part, no action shall be taken against the Insurer unless, as a condition precedent thereto, there has been full compliance with all the terms of this Policy, and until the Insured’s

As policyholder counsel, we’re predisposed to look at insurers with a jaundiced eye. So, we were pleased to read reports that Chubb—the insurer for Baltimore’s Francis Scott Key Bridge, which collapsed on March 26—is preparing to make a prompt $350 million payment to the State of Maryland.

Where coverage and a loss far exceeding the coverage limits are clear, there is no good faith reason to delay payment.  Good to see an insurer doing the right thing.

On April 8, 2024, the Sixth Circuit issued an opinion in Great Am. Fidelity Ins. Co. v. Stout Risius Ross, Inc., Case No. 23-1167/1195, holding that, under Michigan law, an insurer was entitled to seek reimbursement of defense costs upon a finding it had no duty to defend. 

Although the policy “did not expressly authorize such reimbursement,” the Sixth Circuit, making an “Erie guess” as to how the Michigan Supreme Court would resolve the issue, found that where “an insurer explicitly reserves its right to reimbursement and notifies the insured of the specific possibility of ...

On March 21, 2024, the Fifth Circuit issued a decision in SXSW, L.L.C. v. Federal Ins. Co., Case No. 22-50933, holding that a liability policy’s contract and professional services exclusions did not bar defense coverage for a class action lawsuit on behalf of ticket holders seeking refunds for a festival canceled in the early months of the Covid-19 pandemic.

In the class action, SXSW, which hosts a yearly festival in Austin, Texas, faced ticket holder claims for breach of contract, as well as unjust enrichment and conversion, arising from its refusal to give refunds (as opposed to ...