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Can the Innocent Survive Rescission? The Innocent-Insured Exception to the Wrongful-Acts Exclusion
Professional liability policies typically exclude coverage for claims arising out of an insured's knowing, wrongful acts, but, in recognition of the fact that a single policy may extend coverage to multiple insureds working together in association, insurance companies sell the policies with language reinstating coverage for innocent insureds, those of the insureds who had no knowledge of the allegedly wrongful acts of their colleagues. Recently, this innocent-insured coverage has received scrutiny. In two decisions involving professional liability policies, courts have granted an insurer summary judgment, finding that the material misrepresentation regarding prior conduct of a member of an insured firm was grounds for rescinding the coverage of all of the insureds, including those who were innocent and unaware of the wrongdoing. TIG Ins. Co. v. Robertson, Cecil, King & Pruitt, No. 1:01CV00143, 2003 WL 253167 (W.D. Va. Jan. 31, 2003); First American Title Ins. Co. v. Lawson, 798 A.2d 661 (N.J. Super. Ct. App. Div.), appeal granted, 807 A.2d 191 (N.J. 2002). These decisions stand in marked contrast to recent decisions on similar issues by courts in Massachusetts and New York, confirming that innocent insureds are entitled to coverage following the exposure of a co-worker's covert wrongdoing. See In re Perrone, 284 B.R. 315, 320 (Bankr. D. Mass. 2002); Fuchsberg & Fuchsberg v. Chicago Ins. Co., No. 00 Civ. 3118 DLC, 2001 WL 484013, at * 7 (S.D.N.Y May 7, 2001), aff'd sub nom. Fuchsberg & Fuchsberg v. Galizia, 300 F.3d 105 (2d Cir. 2002); Holloway v. Sacks & Sacks, Esqs., 713 N.Y.S.2d 162, 164 (N.Y. App. Div. 2000).
Covert Wrongdoing By a Co-Worker
In Robertson, the insurer, TIG, issued a policy to a law firm upon a renewal application completed by one of the firm's partners, King. King had answered in the negative to a question asking if “any attorney [was] aware of any claims made … wrongful acts, errors or omissions that could result in a professional liability claim” or was aware of the reasonable foreseeability of such a claim being made. Id. at *1. When King answered in the negative, he had indeed misappropriated client funds, but none of the clients or anyone at the firm (or elsewhere) was aware of this fact. King's actions subsequently were uncovered, and clients brought claims against the firm and its remaining partners (King had died). TIG declined coverage.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.