A New York intermediate appellate court, applying New York law, has held that an insurer had no coverage obligation for a third lawsuit filed against its insured that was deemed related to two earlier lawsuits that were filed prior to its coverage period. Zurich Am. Ins. Co. v. Giorgio Armani Corp., 230 N.Y.S.3d 49 (N.Y. App. Div. 1st Dep't Mar. 13, 2025).
Between January 2018 and July 2019, the insured retailer was sued in three lawsuits that alleged a company employee had sexually harassed and assaulted multiple female employees, and that the company failed to deter or punish the employee's misconduct. The company's liability insurer agreed to cover the first two lawsuits, which were filed during the coverage period of its policy, but declined coverage for the third lawsuit on the grounds that it was filed after its policy had expired and was therefore the responsibility of the insurer who issued a policy to the company for that later period. The later insurer filed a declaratory judgment action against the earlier insurer and the retailer to reconcile the policy placement for the third lawsuit. On cross-motions for summary judgment, the lower court found in favor of the earlier insurer.
On appeal, the appellate court reversed. It held that the lower court had incorrectly analyzed whether the allegations in the third lawsuit constituted a single "occurrence" rather than whether they were "related" or "interrelated" to the earlier cases. The prior policy stated that any subsequent claim alleging "related wrongful acts" would be deemed first made at the time notice was given for the first claim, and further that "related wrongful acts" consisted of acts which arise from "a common nexus or nucleus of facts to other wrongful acts." The appellate court concluded that the third lawsuit met this standard because the third lawsuit concerned similar conduct perpetrated by the same employee as the earlier lawsuits, alleged misconduct by the employee toward the plaintiffs in the earlier actions, and asserted similar allegations that the company took no action to punish the employee or prevent repetition. Additionally, the court found that nothing in the language of the two policies restricted related acts to those harming the same plaintiff.
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