Defense Victorious in Insurance Coverage/Bad Faith Case
Marshall Dennehey attorneys were victorious in the Third Circuit Court of Appeals in an insurance coverage and bad faith case. The case involved claims by an insured for coverage under a Business Owners and Technology Professional Liability policy issued by a major insurance carrier. The insured was sued by two other participants in a prior business venture who sought a declaratory judgment as to the ownership of certain intellectual property. The insured counterclaimed, and when the other parties answered the counterclaim, they included claims for attorneys fees, expenses and costs for the insured’s wrongful conduct under the fee-shifting provisions of the federal and state statutes relating to copyright infringement and misappropriation of trade secrets. The carrier denied coverage because the claims against the insured did not constitute a covered "occurrence" under the policy, the insured had not been sued for malicious prosecution and the policy excluded claims for infringement of intellectual property rights. The insured filed suit against the carrier, seeking coverage on the basis that the counterclaim answers amounted to "malicious prosecution" claims that fell within the policy’s coverage, and also claiming bad faith. The U.S. District Court for the Western District of Pennsylvania granted summary judgment in favor of the carrier as to both coverage and bad faith, and the insured appealed. At a Third Circuit mediation, the insured continued to demand $1 million. Eventually, the Third Circuit affirmed in a unanimous unpublished decision.