SNL Financial LC v. Philadelphia Insurance Co. (W.D. Vir. September 30, 2009)
Plaintiff commenced this declaratory judgment lawsuit seeking coverage of an underlying discrimination lawsuit pursuant to its employment practices liability insurance policy. Defendant denied the claim, arguing that plaintiff made material misrepresentations when plaintiff renewed the policy. Specifically, defendant argues that the "litigation hold" letter plaintiff received in which it was required to preserve all evidence relating to a possible discrimination lawsuit triggered its notice obligation under the policy and such information was material to the defendant in analyzing whether to renew the policy. As such, defendant seeks to rescind the policy.
Both parties moved for summary judgment. The Court, in deciding the respective motions, turned to the definition of "claim." The policy defines "claim", in part, as a "written demand for monetary or non-monetary relief." The Court determined that the litigation hold, though informing the plaintiff of a possible lawsuit, did not seek monetary relief at the time. Given that there was no monetary demanded, defendant's basis in denying coverage was incorrect. As such plaintiff's motion for summary judgment is granted.
The court, however, rejected plaintiff's request that defendant's conduct constitutes bad faith despite acknowledging that "defendant violated the language of the contract in denying coverage." The Court found that defendant's position was supportable based upon its investigation.
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Thomas F. Segalla