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In November 2018, we noted that the California Supreme Court had agreed to resolve Pitzer College v. Indian Harbor Insurance Company, a case that hinged on the importance and application of California’s notice-prejudice rule. On August 29, 2019, the court issued its decision: a policyholder-friendly ruling that opposes technical forfeitures of insurance coverage. Although further proceedings are needed to determine whether Pitzer will ultimately benefit from this victory, the principles it articulates are of immediate interest to policyholders in California and across the country.

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Delaware-superior-court-logoIn a prior post, we reported an important ruling of first impression by the Delaware Superior Court that a shareholder appraisal action against Pillsbury’s client Solera Holdings Inc. was a “Securities Claim” under Solera’s directors and officers liability insurance policies. In the same decision, the court ruled on two additional issues that no Delaware court had previously decided and that highlight the importance of understanding the specific terms of your company’s D&O policies.

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iStock-1039710166-disbelief-e1565975777783-300x255When a company receives a claim or lawsuit, it is critical to provide timely notice to its insurers. But when the claim is first made, sufficient facts may not yet be known to indicate which policy will respond. Many policies also contain language that purports to shift coverage to earlier insurance policies for claims that “relate back” to earlier events. As a best practice, policyholders and their brokers often provide notice of a claim under all policies that might cover a loss, to ensure that coverage is not defeated by failure to meet any obligation to give notice. This method of first providing notice for claims to multiple insurers, and then working with insurers to determine the correct policy to respond, is a well-established practice for managing insurance claims. Once the proper policy to respond to the claim is established, exclusions in the other policies kick in to avoid double coverage.

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Delaware-superior-court-logoPillsbury secured an important victory for its client, Solera Holdings Inc., when Delaware Superior Court Judge Abigail LeGrow held—in a matter of first impression anywhere in the country—that a shareholder appraisal action challenging the price Solera obtained for its shares when it sold itself to private equity firm Vista Equity Partners was a “Securities Claim” within the meaning of Solera’s directors and officers liability insurance policies. Last month’s groundbreaking decision in Solera Holdings, Inc. v. XL Specialty Ins. Co., may be found here.

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iStock-1139836485-confidentiality-300x200Disputed insurance claims often end in confidential settlements, as do many insured liabilities.  But does it matter if lawyers sign a settlement agreement approving “as to form and content”? Last month, the California Supreme Court answered that question with a resounding “Yes!” In Monster Energy Company v. Schechter, a unanimous California Supreme Court ruled that a lawyer signing such an agreement may be bound by that agreement’s confidentiality provisions.

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iStock-1051243646-esports-300x225Packed stadiums? Check.

Players and teams with huge followings? Check.

Massive social media appeal? Check.

But here, the events that spectators are so eager to attend aren’t live basketball or football games. Instead, fans are lining up to watch others competitively play video games, more commonly known as eSports. In 2018, eSports garnered 258 million unique viewers globally, compared to 204 million for the National Football League’s 2016 regular season. In 2019, eSports are predicted to draw 299 million viewers and hit $2 billion in revenue, up from $1.5 billion in 2018. The International Olympic Committee is even considering adding eSports to the 2024 Olympic Games.

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Hurricane Barry provides the latest reminder of insurance precautions that should always be top of mind for business owners in coastal areas. In “Hurricane Barry: Prepare Now to Maximize Insurance Recoveries,” colleagues Tamara D. Bruno, David F. Klein, Joseph D. Jean, Vincent E. Morgan and  Matthew F. Putorti provide a list of helpful reminders and immediate and proactive steps one should take to maximize insurance recovery before, during and after a tropical storm or hurricane makes landfall.

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iStock-1090501692-bankrupt-300x200A data breach may cost a company millions in recovery and liability damages, but rarely does a breach force a company into bankruptcy. However, a months-long data breach at American Medical Collection Agency (AMCA) in 2018-2019 did just that, forcing its parent company, Retrieval-Master Creditors Bureau Inc., into Chapter 11 bankruptcy. AMCA has not stated whether it had cyber insurance, but the situation presented by this breach and bankruptcy filing serves as a cautionary tale for those without adequate cyber insurance coverage—or any at all.

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iStock-508789795-minnesota-300x205Since 2008, Minnesota has had a bad-faith statute that penalizes an insurance company for its unreasonable denial of a first-party insurance claim. But it was only earlier this month that a Minnesota appellate court interpreted the statute to require insurance companies to conduct a reasonable investigation and fairly evaluate its results to establish a reasonable basis for denying the claim. In so doing, the court rejected the interpretation offered by the insurance company: that the policyholder must prove there are no facts or evidence upon which the insurance company could rely to deny coverage. That interpretation would have allowed insurers to rely on post hoc justifications for denying coverage. The court’s rejection of that argument is an important development in bad-faith law that will likely affect both suits brought in Minnesota and those in other jurisdictions where courts might look to this decision for guidance in connection with many types of insurance claims. Continue reading →

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iStock-176958755-300x199Insurers have recently argued that environmental property damage claims for “closure” costs arising out of historic pollution are not covered, because the claimed damages are just “ordinary costs of doing business.” Policyholders should strongly resist denials based on this argument, which is unsupported custom and practice in the insurance industry and contradicts the terms of standard-form third-party liability policies, applicable environmental laws, and insurance law in nearly all jurisdictions.

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