Duty to Defend Triggered Despite Prior Acts Exclusion Where Some of the Underlying Allegations Occurred After the Policy’s Inception Date
Opus Bank v. Liberty Ins. Underwriters, Inc., 2015 U.S. App. LEXIS 18524 (9th Cir. Oct. 21, 2015).
In Opus Bank, the Ninth Circuit affirmed the District Court’s holding that an insurer could not rely on a policy’s prior acts exclusion to deny the duty to defend where some of the alleged acts at issue occurred after the policy’s inception date.
In Opus, the policy at issue contained a prior acts exclusion that barred coverage for “Loss on account of any Claim made against any Insured based upon, arising out of or attributable to any Wrongful Acts that were committed, attempted, or occurred or were allegedly committed, attempted, or occurred, in whole or in part prior to September 30, 2010 [the policy’s inception date].”
During the policy period, one of the insured’s executives resigned her position after complaining of bank management practices, and her attorney sent a demand letter alleging fraudulent misrepresentations and retaliation during the policy period. The carrier denied coverage and contended that the exclusion must be construed as representing a single harm, and that any pre-policy acts barred coverage for the entire claim even if the claim was also based on some actions which occurred after the policy’s inception.
The court found that the language of the policy was unclear as to whether a “Claim” constituted a single group of events or a divisible set of wrongful acts in the context of this matter. Further, the court found that by preceding the phrase “Wrongful Aces” with the word “any” in the exclusion opened the exclusion to all wrongful acts predating the policy term, but did not necessarily require combining them with other wrongful acts to prevent coverage of a broader claim.
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