D&O liability lawsuit against Chubb unit can proceed
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A federal district court judge in Chicago has refused to dismiss a directors and officers liability lawsuit filed against a Chubb Ltd. unit in a dispute over coverage for a conference’s COVID-19-related cancellation.
Chicago-based Healthcare Information and Management Systems Society Inc. canceled its March 2020 global conference in Orlando because of the pandemic, according to the Oct. 19 ruling by the U.S. District Court in Chicago in Federal Insurance Company et al v. Healthcare Information and Management Systems Society, Inc. The ruling was reported by The D&O Diary.
Exhibitors had paid nonrefundable fees to HIMSS and incurred thousands of dollars in nonrecoverable expenses in connection with the conference, the ruling said.
In June 2020, an exhibitor filed suit against HIMSS in state court in Illinois seeking compensation for its fees and damages, and a week later another exhibitor filed a putative class action against the organization, stating it had breached its contracts by refusing to refund the fees paid. The litigation was combined and settled for an undisclosed amount.
After Chubb unit Federal Insurance denied coverage, the insurer filed suit, seeking a declaration it had no obligation to defend or indemnify the organization, which filed a counterclaim in the case.
The coverage had two “arguably applicable” exclusions, the ruling said, a professional services exclusion and a contract exclusion.
“The court concludes that plaintiff has failed to carry its burden of establishing with absolute clarity the professional services exclusion applies,” the ruling said, adding that the contract exclusion “by its own terms does not negate plaintiff’s duty to defend defendant in the underlying cases,” it said.
The court did agree to dismiss HIMSS’ bad faith claims.
Attorneys in the case did not respond to requests for comment.
