Sixth Circuit affirms summary judgment that carrier had no duty to defend or indemnify

Posted on January 15th, 2014 by sutteroconnell

In Mathew T. Szura & Co., Inc. v. General Insurance Co. of America, Case No. 12-2505, the Sixth Circuit recently issued a coverage opinion involving whether an E&O policy covers claims for tortious interference with contract and tortious interference with business relationship. Applying Michigan law, the Sixth Circuit affirmed summary judgment for the carrier concluding that the carrier had no duty to defend or indemnify the insured on these claims.

The case involved two competing insurance brokerage firms (Szura and Mayfair) in which Szura hired Mayfair’s former broker, Doug Charon. After joining Szura, Charon called on Mayfair’s clients. Mayfair sued Charon and Szura. The claims against Szura were tortious interference with contract, tortious interference with business relationship, and civil conspiracy. Szura tendered the lawsuit to its carrier, which denied defense and indemnity.

The E&O policy required the carrier to cover claims “made against the insured for wrongful acts arising out of the performance of professional services for others.” The policy defines the term wrongful acts “as any actual or alleged negligent act, error or omission.” Relying on decisions in other jurisdictions, the Sixth Circuit concluded that the term “wrongful acts” does not cover intentionally wrongful conduct, but rather only negligent conduct. Since the allegations in Mayfair’s lawsuit involved only intentional conduct, the carrier had no duty to defend or indemnify Szura.

The Sixth Circuit further rejected Szura’s argument that the carrier should have provided a defense under the Exclusion Section, which states: “We will defend the insured against such claim unless or until the dishonest, fraudulent, criminal, malicious or knowingly wrongful act has been determined by any trial verdict, court ruling, regulatory ruling or legal admission, whether appealed or not.” The Sixth Circuit concluded that an exclusion cannot expand coverage beyond that provided in the policy. The court determined that since there is no coverage for intentional wrongful acts under the E&O policy, the carrier had no duty to defend. The defense language in the exclusion may have applied if Mayfair had alleged both negligent and intentional wrongful conduct.