Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003
2013 U.S. App. LEXIS 9599
| 10th Cir. | 2013Background
- BYA holds a two-party professional liability insurance policy with Lloyds covering Dec 1, 2006 to Dec 1, 2007; Wahl arbitration involved unsuitability, churning, and supervisory theories against BYA and related respondents; Knotts and Colaner arbitrations also involved BYA and related respondents for similar misconduct; policy defines interrelated wrongful acts and has a $50,000 retention per claim with coverage subject to exclusions for interrelated acts; BYA sought defense and indemnity for Wahl, Knotts, and Colaner, while Lloyds argued Wahl claims were interrelated with pre-policy claims and thus not covered; district court found no interrelation sufficient to relate Wahl to pre-policy claims, then BYA pursued waiver/estoppel and alternative relation-back arguments; the district court ultimately entered judgment for BYA and Lloyds appealed, challenging the relation-back and estoppel theories; this court reverses and remands for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wahl, Knotts, and Colaner constitute interrelated wrongful acts under the Policy. | BYA: there is a sufficient factual nexus showing common facts/circumstances. | Lloyds: no sufficient nexus; pre-policy claims should bar coverage under relation-back terms. | Interrelated wrongful acts present; Wahl relates back to pre-policy claims—reversed. |
| Whether BYA waived or is estopped from asserting a relation-back defense. | BYA argues Lloyds’ conduct and representations created prejudice and reliance. | Lloyds argues no prejudice or waiver; estoppel not applicable. | Estoppel found; waiver not applicable; matter remanded for prejudice assessment. |
| Whether the Wahl claims can be covered if relate-back applies to pre-policy claims. | Wahl claims could be covered if interrelated acts are properly construed. | Relation-back excludes coverage for Wahl under policy. | Relation-back invalidated as basis to deny coverage; proceed with coverage analysis. |
Key Cases Cited
- Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425 (2d Cir. 1992) (contract interpretation; clear and unambiguous exclusions favored)
- Village of Sylvan Beach v. Travelers Indem. Co., 55 F.3d 114 (2d Cir. 1995) (burden on insurer to show exclusions apply; strict construction of exclusions)
- Albert J. Schiff Assocs., Inc. v. Flack, 417 N.E.2d 84 (N.Y. 1980) (waiver vs estoppel distinguished; estoppel prevents belated coverage denial)
- Bluestein & Sander v. Chicago Ins. Co., 276 F.3d 119 (2d Cir. 2002) (prejudice requirement for estoppel when insurer controls defense)