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Travelers win based on insured v. insured exclusion


An “insured vs. insured” exclusion in a primary and excess public entity management liability policy issued by Travelers Cos. units to the city of Burlington, Vermont means the insurer is not obligated to defend or indemnify a city official, says an appeals court.

In February, 2014, St. Paul Fire and Marine Insurance Co. and its St. Paul Guardian Insurance Co. unit, filed a complaint in U.S. District Court in Rutland, Vermont, seeking a declaration they were not entitled to defend or indemnify Jonathan Leopold, the city's former administrative officer.

The complaint was filed in connection with a taxpayer lawsuit filed in state court against Mr. Leopold by two former city councilman on behalf of the city, according to court papers in St. Paul Guardian Insurance Company and St. Paul Fire and Marine Insurance Co. v. Jonathan Leopold.

The state court action related to the city's funding of Burlington Telecom, a municipal telecommunications company.

In a summary order issued Wednesday, a three-judge appeals court panel agreed with the lower court that St. Paul was not obligated to provide coverage in the case because of the exclusion.

“There is no dispute that Leopold is a 'protected person' and it is clear that the suit was brought on behalf of the City of Burlington, a public entity protected by the policy,” said the summary order.

“Under the plain wording of the contract, any 'loss from which any claim or suit is made or brought by, or on behalf of, any … protected person against any … protected person' is excluded from coverage. It is therefore clear that St. Paul had no duty to defend or indemnify Leopold for the underlying action.”