{"id":10403,"date":"2019-11-27T16:15:13","date_gmt":"2019-11-27T16:15:13","guid":{"rendered":"https:\/\/www.steinberglawfirm.com\/?p=10403"},"modified":"2019-11-27T16:15:16","modified_gmt":"2019-11-27T16:15:16","slug":"el-tribunal-de-apelacion-del-septimo-circuito-considera-inaplicable-la-exclusion-de-la-politica-de-contratacion-en-el-ambito-de-la-educacion-superior","status":"publish","type":"post","link":"https:\/\/www.steinberglawfirm.com\/es\/blog\/seventh-circuit-court-of-appeals-holds-breach-of-contract-exclusion-in-eo-policy-unenforceable\/","title":{"rendered":"El Tribunal de Apelaci\u00f3n del S\u00e9ptimo Circuito sostiene que la exclusi\u00f3n por incumplimiento de contrato en la p\u00f3liza de E&O es inaplicable"},"content":{"rendered":"\n

In a recent opinion in Crum\n& Forster Specialty Insurance Co. v. DVO, Inc.<\/em>,[1]<\/a>\nthe United States Court of Appeals for the Seventh Circuit considered whether a\nbreach of contract exclusion in an errors and omissions insurance (\u201cE&O\u201d)\npolicy eliminated coverage for a breach of contract claim related to an\nimproper design.  The Seventh Circuit\nheld the breach of contract exclusion rendered coverage under the policy\nillusory and therefore the exclusion was not enforceable.<\/p>\n\n\n\n

The insurance coverage dispute arose from an underlying case\nin which an engineering firm was sued for breach of contract for failing to\nproperly design an anaerobic digester. \nThe engineer had a liability insurance policy which included E&O\ncoverage among other types of coverage, and the engineer tendered the claim to\nthat insurer.  The insurer refused to\ndefend the engineer, and the claims against the engineer proceeded to trial\nwhere the engineer was found liable.  The\ninsurer filed a declaratory judgment action as to whether the claim was covered\nunder the E&O policy.  After the\nlower court entered summary judgment in favor of the insurer, the Seventh\nCircuit reversed the judgment on appeal.<\/p>\n\n\n\n

The engineer and insurer agreed that the conduct giving rise\nto the breach of contract claim in the underlying suit came within the\nprofessional malpractice coverage of the E&O policy.  The parties also agreed that a breach of\ncontract exclusion in the policy eliminated coverage for the breach of contract\nclaim in the underlying suit.  The breach\nof contract exclusion provided that the policy did not cover any claim \u201cbased\nupon or arising out of breach of contract.\u201d \nThe parties\u2019 sole disagreement was whether that breach of contract\nexclusion rendered the E&O coverage illusory and therefore whether the\nexclusion was enforceable.<\/p>\n\n\n\n

Looking to Wisconsin insurance law, the Seventh Circuit\nstated that illusory insurance policy language is language that defines the policy\u2019s\ncoverage in such a way that the coverage can never actually be triggered.  Where policy language is illusory, a court\ncan reform the language to conform with the insured\u2019s reasonable expectations\nof coverage.<\/p>\n\n\n\n

Below, the lower court had found the language was not\nillusory because the policy would still provide coverage for claims by\nthird-parties who had no contractual relationship with the insured.  The Seventh Circuit disagreed, finding the\nexclusion\u2019s use of the \u201carising out of\u201d language rendered the exclusion so\nbroad as to cover claims by third-parties and thereby eliminate all E&O\ncoverage.  The Court reasoned that any\nwork by an engineer will be pursuant to a contract and therefore, given the\nbroad effect of the \u201carising out of\u201d language, any claim against the engineer\nwould be barred by the exclusion and coverage would be illusory.
<\/p>\n\n\n\n

\n\n\n\n

[1]<\/a> Crum & Forster Specialty Ins. Co. v. DVO, Inc.<\/em>, 939 F.3d 852 (7th Cir. 2019).<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In a recent opinion in Crum & Forster Specialty Insurance Co. v. DVO, Inc.,[1] the United States Court of Appeals for the Seventh Circuit considered whether a breach of contract exclusion in an errors and omissions insurance (\u201cE&O\u201d) policy eliminated coverage for a breach of contract claim related to an improper design.  The Seventh Circuit…<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[289],"tags":[],"class_list":["post-10403","post","type-post","status-publish","format-standard","hentry","category-construction-defect-case-law"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/posts\/10403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/comments?post=10403"}],"version-history":[{"count":0,"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/posts\/10403\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/media?parent=10403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/categories?post=10403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.steinberglawfirm.com\/es\/wp-json\/wp\/v2\/tags?post=10403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}