HNRK Coverage Corner

On November 30, 2018, Judge Kahn of the NDNY issued a decision in Young Men’s Christian Assn v. Philadelphia Indem. Ins. Co., Case No. 18-cv-0565 (KEK/DJS), denying an E&O insurer's motion to dismiss the insured's claim for amounts it was required to contribute to employee retirement accounts because of the insured's negligent failure to withdraw contributions from the employees’ paychecks.

Plaintiff YMCA made a claim under an errors and omissions policy after discovering that its executive director had negligently failed to make both employer and employee ...

On December 4, 2018, Justice Lebovits of the New York County Supreme Court issued a decision in Chelsea Piers, L.P. v. Colony Ins. Co., Index No. 150402/2017, holding that a purchase order signed by a contractor triggered coverage for the property owner under the additional insured endorsement to the contractor’s CGL policy.

The policy at issue in this case provided additional insured coverage for “any person or organization for whom you [i.e., the contractor] are performing operations when you and such person or organization have agreed in writing in a contract or agreement ...

On December 6, 2018, the Second Circuit issued a decision in Patriarch Partners, LLC v. Axis Ins. Co., Case No. 17-3022, holding that a Warranty Statement executed in connection with the issuance of an Excess D&O policy barred coverage because the insured had knowledge prior to the issuance of the policy of “facts or circumstances that would reasonably be expected to result in a Claim.”

The coverage dispute in this case arose from an SEC investigation of Patriarch Partners, a private equity investment firm.  The investigation began as an “informal inquiry”, but on June 3, 2011 ...

On October 5, 2018, the Fourth Department issued a decision in Pioneer Cent. Sch. Dist. v. Preferred Mut. Ins. Co., 2018 NY Slip Op 06682, holding that a school district was not entitled to coverage under a cleaning company’s CGL policy – either as an additional insured or as the named insured’s contractual indemnitee – because the underlying injuries were not proximately caused by the named insured.

In Pioneer Central, a school sought coverage under a cleaning company’s CGL policy for a personal injury action by an employee of the cleaning company who was injured “when she ...

On September 20, 2018, the First Department issued a decision in J.P. Morgan Sec., Inc. v. Vigilant Ins. Co., 2018 NY Slip Op 06146, holding 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.

At issue in J.P. Morgan v. Vigilant was a settlement the SEC reached with Bear Stearns, resulting from allegations that “Bear Stearns violated securities laws between 1999 and September 2003 by knowingly facilitating ‘late trading’and deceptive ‘market ...