Washington Federal Court Bars Coverage for Claim Not Made and Reported Within Policy Period
On May 23, 2014, the U.S. District Court for the Western District of Washington held that, where a "Claim" was first made during the first of two consecutive claims-made-and-reported polices, but not reported until the second policy, no coverage was available under either policy. Great Am. Ins. Co. v. Sea Shepherd Conservation Soc'y, Case No. 13-CV-1017 (W.D. Wash. May 23, 2014). Our client had issued two consecutive claims-made-and-reported professional liability policies to the insured, the first for the period of June 23, 2011 to June 23, 2012 (the "2011 policy") and the second for the period of June 23, 2012 to June 23, 2013 (the "2012 Policy"). During the 2011 Policy Period, on December 8, 2011, the Insureds were named in a lawsuit seeking to enjoin them from attacking certain whaling research vessels. The lower court did not enter an injunction. The litigation proceeded to the Ninth Circuit Court of Appeals, which reversed the lower court and entered the injunction. Thereafter, further "contempt" proceedings ensued concerning purported violations of the injunction. The Insureds made their first request for coverage on February 13, 2013 – well over a year after the litigation first incepted. Our client filed a declaratory judgment action in the U.S. District Court for the Western District of Washington seeking a declaratory judgment that the insurer had no duty to defend or indemnify the defendants in connection with the litigation since the litigation incepted during the 2011 Policy Period and was not reported until the 2012 Policy Period. Moreover, the notice came well after the 90-day grace period for notices had expired under the 2011 Policy. The court held that the matter constituted a single "Claim" first made during the 2011 Policy Period. The court relied on the Policy's "Related Claims Provision," which aggregated "Claims" that involved "the same Wrongful Act or Related Wrongful Acts of one or more insurers" into a single "Claim" deemed first made when the first related "Claim" was made. The Policy defined "Related Wrongful Acts" as "Wrongful Acts which are casually connected by reason of any common fact, circumstance, situation, transaction, casualty, event or decision." The court found that the contempt proceedings and the original injunction litigation arose out of a common set of facts, circumstances, and events – the defendants' alleged attacks on whaling vessels. Ommid C. Farashahi and Michael T. Skoglund briefed and argued the case.