Insurance Policyholder Advocate & Attorney David Gauntlett : Gauntlett Law Firm : Insurance Recovery, Policy Interpretation : Irvine, Orange County, California

Where a company has a significant self-insured retention, the date for notice may dovetail with the exhaustion of the amount of SIR, creating a potential for full recapture of all fees that could have otherwise been incurred had more timely notice been provided. Moreover, the pertinent policies at issue may be those not presently in place, but those issued many years ago on an “occurrence” basis. Thus many major intellectual property cases continue for a number of years. A 1990 lawsuit which was resolved in 2000, with constructive notice provided in 1991, may permit pursuit of a claim against an insurer for several years.

Where the jurisdiction has a long statute of limitations for breach of contract (i.e., six years in Minnesota, four years in California), a lawsuit that ended three and a half years ago, where constructive notice occurred in 1991 for a lawsuit filed in 1990, may permit recovery of attorneys’ fees under a policy issued in 1986, if allegations of the complaint triggered liability for damages within that policy period. The policy forms in existence as of 1986 may be far broader than those present today. Thus the archeological effort to assess for audit purposes whether the existing insurance coverage best responds to present risks may, as an added benefit, reveal pathways to recovery of outstanding attorneys’ fees long ago incurred by the corporation. Continue Reading...

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Corporate Counsel May Be Defendants in IP Litigation and Fall Under Express Provisions of the Corporation’s D&O As Well As E&O Coverage

Many IP litigation matters involve direct exposure to officers and directors of a company under theories of inducement of infringement, whether patent, copyright, or trademark. Similarly, trade secret misappropriation claims may implicate either current or ex-employees. Where the allegedly wrongful conduct occurred while the officer or director was an employee of the company, its policies may be implicated. It is therefore essential in auditing the company’s assets to assess under what circumstances its Errors and Omissions and/or Directors and Officers coverage may include intellectual property coverage. This follows because the capacity in which an employee or officer acts in rendering services for the company may dovetail with its professional activities as well as involve its general business conduct, thereby implicating coverage under an E&O policy.

Similarly, a Directors and Officers policy, while typically implicated in a securities fraud/shareholder derivative suit, would not come into play for intellectual property or antitrust claims. A recent survey reveals that fully 85% of such policies do not include express exclusions Continue Reading...

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Issues to Confront in Assessing the Potential for Insurance Coverage

In assessing the impact of coverage on litigation strategy, the following questions must be considered:

(1) What are the goals of the plaintiff or counterclaimants in monetary versus nonmonetary relief?

(2) Will your company’s carriers contribute to a settlement if nonmonetary issues can be resolved?

(3) Can you procure full reimbursement for the attorneys’ fees you incur in defense of IP/antitrust litigation, even if you are also a plaintiff?

(4) Is there an issue of allocation re recovery of attorneys’ fees in such a situation or simply where there are some claims that are covered and others that are not – again, depending upon the forum whose coverage law will apply? Continue Reading...

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Discover What Insurance Your Litigation Opponent Possesses

Insurance coverage is a two-way street. Where you are litigating against a competitor of similar size and economic resources, it is likely that its insurance portfolio will mirror yours because of market conditions. Pursuant to Federal Rule of Civil Procedure 26(c), you can readily ascertain policies issued to it which may respond to claims asserted in your lawsuit. Parties that contend there is no coverage because their own review of their policies reveals no coverage or due to their receipt of a denial letter from their insurer must be tested. Your opponent’s views on the scope of its coverage can be tested in litigation.

It is important, in this effort, to not limit analysis to Commercial General Liability policies but to pursue umbrella and excess coverage, Errors and Omissions policies, Directors and Officers policies, as well as new forms of multimedia, cyberspace, and net security policies. While your opponent may object that this information is privileged, some level of inquiry is required to clarify whether a Rule 26(c) disclosure has been properly made.
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Vansteen Marine Supply, Inc. v. Twin City Fire Ins. Co., No. 13-05-00231-CV, 2008 WL 599850 (Tex. App. - Corpus Christi March 6, 2008) (Valdez)

Hartford agreed to defend libel and defamation claims in a suit seeking a declaration that a non-competition clause was void and that the former president of Vansteen was entitled to damages from the company. Following a grant of summary judgment on the defamation and libel issues, the insurer sent a notice that it was withdrawing its defense obligation. The court also determined that there was no right to receive affirmative prosecution costs despite the insured’s arguments that they were also defensive of the suit against it. This because requiring a duty to defend which would envision payment of such attorneys’ fees would rewrite the insurance policies that the parties signed. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); Witkowski v. Brian, Fooshee & Yonge Props., 181 S.W.3d 824, 830 (Tex. App. - Austin 2005, no pet.).

Had the attack on the liable/defamation claims awaited the conclusion of trial, the defense activities would arguably have dovetailed with the affirmative relief sought and entitled the insured to obtain an insurer funded trial. While some inconvenience may have attended the continued presence of the defamation claims throughout, absent evidence that it would have lead to a different result therein, delaying a motion to eliminate them until the trial concluded would have been preferable from an insurance coverage maximization perspective. Absent a dismissal of the liable and defamation claims, these affirmative prosecution costs, to the extent prove to also dovetail with defense costs, would have been recoverable. See

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General Star Indem. Co. v. Virgin Islands Port Authority, No. 2001-188, 2008 WL 2235338 (D. V.I. May 29, 2008)

 

A district court in the Virgin Islands, St. Croix Division, joins the plethora of decisions which appears now to be a majority

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