INSURANCE COVERAGE: Federal District Court denies summary judgment on issue of duty to defend under claims-made policy based on prior notice of claim

In this action for damages and declaratory relief the plaintiffs alleged that the defendant, Arch Insurance Company breached its duty to defend or indemnify Juliano Associates under a claims-made insurance policy. The plaintiffs hired Juliano Associates to make improvements to properties. After completion of the projects, the Army Corps of Engineers (ACOE) issued a Notice of Enforcement Investigation to Juliano Associates. Two years later, Mr. Juliano took out an insurance policy on behalf of Juliano Associates, but did not include the ACOE enforcement notice in his application. The plaintiffs sent demand letters to Juliano claiming damages. Arch Insurance sent denial letters to Juliano Associates, explaining it did not have a duty to defend based on a prior knowledge exclusion. The court considered the prior knowledge exclusion that Arch Insurance Company invoked as a defense to denying the policy coverage. The court found that there was a genuine dispute of material fact on the issue of whether or not Juliano lacked subjective knowledge of the misrepresentation in the application. Accordingly, the court denied the plaintiff’s motion for summary judgment. As to the defendant’s motion for summary judgment regarding the policy being void ab initio, the court found that Juliano’s knowledge of the misrepresentation was the key to answering that question. As a result, the court denied the defendant’s motion for summary judgment. Wallingford Grp., LLC v. Arch Ins. Co., No. 3:18-CV-00946 (AVC), 2020 WL 4464629, (D. Conn. May 11, 2020)