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New York's First Department agrees that insurer does not owe duty to defend insured against allegations of knowingly false statements under CGL policy

Posted on May 5, 2016

When a licensing and services agreement between a real estate developer and a sports & media operating services company went bad, allegations were leveled that the latter “knowingly and intentionally” interfered with the former’s business relationships. The arbitration which followed would result in the expenditure of millions of dollars and the question became, does the insurer have a duty to defend.  In Allied World National Assurance Co. v. Great Divide Insurance Co., et al., 104 AD3d 103 (1st Dept. 2016), the First Department agreed that no such duty to defend against tortious interference claims exists under the applicable Ohio law.  Because the policy excluded coverage for personal or advertising injury if done with “knowledge of its falsity,” there could be no duty to defend against tortious interference claims where intent is a necessary element.  Likewise, the policy’s breach of contract exclusion equally applied where Ohio courts employ an “arising out of” approach that bars coverage for advertising injury arising out of breach of contract.

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