Insurance Law

Dist. Ct. did not err in entering judgment in plaintiff-insurance company’s favor in action seeking declaration that its primary and excess policies provided only $1,250,000 in coverage in underlying wrongful death action against defendant-insured that resulted in $4 million settlement on allegations that insured placed 3-year-old foster child with individual who killed said child one year later. While both parties agreed that primary policy provided $1 million in coverage, defendant argued that excess policy provided additional $5 million in coverage. However, Dist. Ct. could  properly find that policy contained sublimit of $250,000 for physical abuse claims, and that said sublimit applied to underlying wrongful death action. Ct. rejected contention that sublimit in excess policy applied only to primary policy’s limit.

Dist. Ct. erred in failing to grant defendant-insurance company’s motion for summary judgment in plaintiff-insured’s action alleging that defendant breached insurance contract by failing to provide coverage in directors-and-officer’s liability policy. Terms of policy covered claims that occurred between October of 2011 to October of 2012, and excluded “all notices of claims of circumstances ‘as reported’” under policy issued to plaintiff by different insurance company (Chubb). Record showed that in 2012 plaintiff sent notice of underlying lawsuit to Chubb and sought coverage for lawsuit under defendant’s policy. Ct. of Appeals found that “as reported” language in defendant’s policy precluded coverage in underlying lawsuit because exclusion covered all notices of claims reported to Chubb at any time.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that it owed no duty to indemnify defendant-insured on default judgment entered against defendant. Record showed that underlying action was not covered by insurance policy issued by plaintiff because claim occurred outside relevant 2012 to 2013 time period covered by policy. Moreover, while defendant argued that plaintiff was estopped from denying coverage because it had assisted defendant in defending underlying claim, defendant failed to establish any prejudice arising out of plaintiff’s actions in assisting with defense in underlying action, since: (1) defendant, through its own retained attorney, always maintained control of legal defense in underlying action; and (2) defendant had settled underlying action without knowledge or input from plaintiff.

In ERISA action alleging that defendant-plan administrator improperly denied plaintiff-beneficiary’s claim for work-related long-term disability benefits through former employer’s benefits plan, Dist Ct. erred, when upholding instant denial, by applying arbitrary and capricious standard of review, where record showed that defendant had failed to issue decision on plaintiff’s internal appeal of said denial within deadline mandated by ERISA regulations. Ct. rejected defendant’s claim that use of arbitrary and capricious standard was appropriate, because it had substantially complied with ERISA regulations by issuing denial only eight days after said deadline, and further found that doctrine of substantial compliance does not apply to ERISA’s regulatory deadlines. As such, remand was required for Dist. Ct.’s determination as to whether instant denial of benefits was appropriate under de novo standard of review.