HNRK Coverage Corner

On May 10, 2023, Judge Komitee of the EDNY issued a decision in Huang & Assocs., P.C. v. Hanover Ins. Co., Case No. 21-CV-4909(EK)(RER), holding that a law firm (Huang & Associates) was not entitled to coverage under its professional malpractice policy, for a negligence claim brought by a client whose funds were misappropriated by a third-party in a “real-estate transaction that went badly.”

The firm’s policy had an exclusion for any claim “[b]ased upon or arising out of, or relating directly or indirectly to . . . [a]ny actual or alleged conversion, commingling, defalcation ...

On May 1, 2023, the New Jersey Superior Court, Appellate Division, issued a decision in a closely-watched cyber insurance case, Merck & Co, Inc. v. ACE Am. Ins. Co., Appellate Division Docket No. A-1889-21, A-1882-21. (I spoke to Law360 about the case in January.)  Affirming the trial court’s ruling in favor of the policyholder, the appellate court held that an exclusion in an all-risk insurance property insurance policy for damages arising from “hostile or warlike action” by a “government  or sovereign power” did not apply to a cyberattack on a private company ...

On March 31, 2023, Justice Cohen of the New York County Supreme Court, Commercial Division issued a decision in Liberty Ins. Underwriters Inc. v. Plaza Condominium, 2023 NY Slip Op 31035(U), granting an insurer’s motion to recoup defense expenses from the insured, after the Court found that there was no duty to indemnify.  The Court explained: 

Liberty established in its original summary judgment papers that it defended the Underlying Action subject to a reservation of rights, which included (implicitly at first, then explicitly) a right to recoup expenses if it were later ...

Insurance law is generally a matter of state law.  Determining the applicable state law can be outcome determinative in a coverage dispute, as different states have different rules concerning the interpretation and enforcement of policy provisions, what claims the insured can bring, and other issues.  As previously noted on this blog, insurance policies frequently have no choice of law provisions, so the applicable law must be determined under a conflicts of law analysis.  Under New York law, where an insurance policy covers risks across multiple states (a common scenario for a large ...

On December 27, 2022, the Ohio Supreme Court issued a decision in EMOI Servs., LLC. v. Owners Ins. Co., 2022-Ohio-4649 (Ohio 2022), holding that losses resulting from damage to an insured’s software were not covered under the “Electronic Equipment” endorsement of a property insurance policy.

The insured, EMOI Services, is a computer software company whose product “provide[s] medical offices with service and support for setting appointments, record keeping, and billing.”  EMOI fell victim to a ransomware attack and was forced to pay a $35,000 ransom in exchange for ...