A Contract by Any Other Name Would … Still Be a Contract: Wisconsin Court of Appeals Enforces Breach of Contract Exclusions to Preclude Coverage for Business Competition Claim

In Great Lakes Beverages, LLC v. Wochinski (Jan. 18, 2017), the Wisconsin Court of Appeals held that AMCO had no duty to defend or indemnify its insured against the underlying third-party tortious interference with contract claim because the breach of contract exclusions applicable to personal and advertising injury squarely applied.

As background, K-Way Systems contracted with Wochinski to purchase his company. The purchase agreement contained an asset purchase agreement, a covenant not to compete, and a supply agreement. Relations between the two parties turned sour, …

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Ninth Circuit Confirms the FDIC Cannot Avoid the Insured-Versus-Insured Exclusion

In recent years, courts frequently have held that a D&O policy’s “insured-versus-insured” exclusion bars coverage for claims by the FDIC, as receiver of a failed bank, against the bank’s former directors and officers because the FDIC stands in the shoes of the insured bank. Therefore, the FDIC has tried to circumvent this exclusion by arguing that a policy’s shareholder derivative suit exception to the insured-versus-insured exclusion brought the FDIC’s claim back within coverage. A recent decision by the Ninth Circuit Court of Appeals rejected this …

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Five Yards for Encroachment: Prematurity Doctrines Found to Preclude Insurer’s Use of Extrinsic Evidence to Evade Coverage

In Pekin Insurance Co. v. St. Paul Lutheran Church, 2016 IL App (4th) 150966, the Illinois Appellate Court refused, based on the Prematurity Doctrine, to consider extrinsic evidence in an insurer’s declaratory judgment action in connection with an underlying wrongful death suit.

As background, Hope Farney, as administrator of the estate of Kitty Mullins, sued St. Paul Lutheran Church (Church) for wrongful death. She alleged that a Church employee, Matthew Geerdes, used his personal vehicle for Church business and negligently crashed into a vehicle …

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Disparage Me Not: Maryland Federal District Court Finds No Coverage for Phone Unlocking Suit

In Wireless Buybacks, LLC v. Hanover American Insurance Co. (D. Md. Dec. 8, 2016), the U.S. District Court for the District of Maryland held that an insurer had no duty to defend its insured against claims stemming from the company’s unauthorized acquisition and resale of Sprint phones.

As background, Sprint accused Wireless of illegally acquiring Sprint phones, unlocking them so they could function on non-Sprint wireless networks, and reselling the phones overseas. Sprint filed a sixteen-count suit against Wireless, alleging mainly business torts. Wireless …

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Don’t Let The Door Hit You on the Way Out: Insurer Loses Coverage Suit Involving Injuries Sustained By Fitting Room Door

In Selective Insurance Co. of South Carolina v. Target Corporation, No. 16-1669, 2016 U.S. App. LEXIS 23370 (7th Cir. Dec. 29, 2016), the Seventh Circuit affirmed an Illinois district court’s decision finding coverage for an additional insured after parsing through the language of two contractual agreements.

The coverage dispute arose when a customer shopping at a Target store was injured after a fitting room door came off and fell on her in December 2011. The customer filed suit against Target, alleging it was negligent …

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Heartbreak in the First Circuit: Court Dismisses Suit Against Insurer Over Coverage for Claims Related to Attorney’s Rocky Affair with Client

In Sanders v. The Phoenix Insurance Co. (1st Cir. Dec. 7, 2016), the First Circuit held that a homeowner’s insurance company had no duty to defend or indemnify its insured, a divorce attorney, against claims stemming from his “on-again/off-again intimate relationship” with his client. The First Circuit affirmed the lower court’s dismissal of a complaint filed by the assignee of the insured attorney against his insurer, Phoenix Insurance Company , for its failure to provide coverage.

As background, Phoenix issued a homeowner’s insurance policy to …

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No Magic Words Needed To Trigger Application of the Construction Contract Anti-Indemnification Statute Says Illinois Appellate Court

In Pekin Insurance Co. v. Designed Equipment Acquisition Corp., 2016 IL App (1st) 151689, the Illinois Appellate Court examined a common issue for insurance carriers in disputes involving construction site injuries. In particular, the Appellate Court provided helpful clarification with respect to the application of the Construction Contract Indemnification for Negligence Act (Act), also known as the anti-indemnification statute.

The circumstances at issue involved a rental agreement between Abel Building & Restoration and Designed Equipment Acquisition Corporation, whereby Designed leased from Abel scaffolding materials. …

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Hold the Sauce: Insurer Must Indemnify Insured for Trade Disparagement and Defamation Claims Arising Out of Indian Sauce Recipe Dispute

Rass Corporation v. The Travelers Companies, Inc., No. 15-P-358, 2016 Mass. App. LEXIS 163 (Nov. 10, 2016), represents a continuation of Massachusetts law in the context of an insurer’s duty to defend, indemnify, and settle in good faith. Since the underlying settlement included covered and non-covered claims, the court concluded The Travelers Companies, Inc. and Travelers Property Casualty Companies of America were obligated to indemnify Rass Corporation for the amount the trial court allocated to covered claims.

As background, Ranbir Jaggi and Neera Tulshian …

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No Complaint, No Duty to Defend: An Insurer’s Duty To Defend Does Not Arise from Unfiled Draft Complaints

In Philadelphia Indemnity Insurance Co. v. Pace Suburban Bus Service, 2016 IL App (1st) 151659, the Illinois Appellate Court provided keen insights into when the duty to defend is triggered and when an action for equitable contribution can be maintained.

As background, Pace Suburban Bus Services and Countryside Association for People with Disabilities entered into a leasing agreement whereby Pace would provide Countryside with a van, which would be driven by a Countryside employee, for the purposes of transporting disabled individuals to Countryside’s facility. …

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Seventh Circuit Recognizes Illinois Law to Allow Extrinsic Evidence in Evaluating an Insurer’s Duty to Defend

The Seventh Circuit recently handed down a decision encouraging Illinois courts to consider evidence beyond the complaint and the insurance policy when evaluating an insurer’s duty to defend. In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016), the Seventh Circuit reviewed a district court’s judgment on the pleadings favor of a purported insured in a declaratory judgment suit filed by Landmark American Insurance Company. At issue was whether Peter Hilger was covered as an insured in connection with lawsuits filed …

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