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AIG unit loses ruling against Zillow over professional liability cover


A federal appeals court has overturned a ruling in favor of an American International Group Inc. unit in a coverage dispute with a real estate firm over its professional liability insurance policy.

The U.S. District Court in Seattle had ruled that AIG unit National Union Fire Insurance Co. of Pittsburgh was not obligated to provide coverage to Seattle-based Zillow Inc. in a copyright infringement suit filed against it by Rosemont, Illinois-based VHT Inc., which provides technology and services for marketing real estate online, according to Tuesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in National Union Fire Insurance Co. of Pittsburgh, PA v. Zillow Inc.

The district court had based its ruling on a demand letter VHT Inc. had sent to Zillow before the policy period, holding that the letter, and the litigation, comprised “a single claim that was first made” before the policy period, and was therefore not covered by the policy, according to the ruling.

A unanimous three-judge appeals court panel disagreed. “The district court’s interpretation finds no support in the plain language of the policy,” said the ruling.

The policy defines a “claim” as either a written demand or a suit, said the ruling.  “The VHT Action falls squarely within the definition of a “Suit,” and is therefore a “Claim,” which was made during the Policy Period,” said the ruling, in reversing the lower court ruling.

The ruling adds, however, that the policy’s use of the term “claims first made” was ambiguous and directed the district court on remand  to consider “any admissible extrinsic evidence of the parties’ intent to resolve the ambiguity in the coverage provision. After considering the extrinsic evidence any remaining ambiguity related to the coverage issue must be resolved in favor of Zillow,” said the ruling, which also affirmed dismissal of Zillow’s breach of contract counterclaim.

Zillow said in a statement, “We are pleased with the Ninth Circuit’s ruling and look forward to proceeding with the matter in District Court.”

AIG’s attorneys did not respond to a request for comment.

In December, a New York state appeals court overturned a lower court ruling Tuesday and held an AIG unit must insure McGraw-Hill Education Inc. in underlying copyright litigation.








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