Guaranteed Rate, Inc. v. ACE American Insurance Co.
N20C-04-268 MMJ CCLD
| Del. Super. Ct. | Oct 11, 2021Background
- Plaintiff Guaranteed Rate, Inc. (GRI) sued several insurers, including ACE American, seeking coverage for a government Civil Investigative Demand (CID) and related defense costs under its policy (policy period: June 20, 2018–July 21, 2019).
- On August 18, 2021 the Court granted GRI’s Motion for Partial Judgment on the Pleadings, holding the Professional Services Exclusion did not bar coverage, and denied insurers’ cross-motion on that ground.
- The Court also concluded GRI stated a plausible claim under the Employment Practices Liability (EPL) coverage, denying summary relief to insurers because factual issues remained.
- ACE moved for reargument, arguing the Court misread the Professional Services Exclusion (it should require services provided directly to borrower clients) and that GRI’s notice was ineffective because ACE did not receive a copy of the CID until after the policy expired.
- The Court applied Delaware contract/insurance principles (read policies as a whole; exclusions construed narrowly; insurer bears burden to prove exclusion) and found ACE failed to show the exclusion applied.
- The Court held the July 8, 2019 notice (which described the CID and investigation) was material and sufficient to place the CID within the policy period; the actual transmission date of a copy of the CID was immaterial. The motion for reargument was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Professional Services Exclusion | Exclusion does not cover the government investigation activity at issue; exclusion should be read narrowly | Exclusion bars coverage because services at issue were "professional services" provided directly to borrower clients | Court held exclusion did not apply; insurer failed to meet burden to prove exclusion applies |
| Timing/receipt of CID and notice | July 8, 2019 email describing the CID constituted notice/claim within the policy period | Receipt of an actual copy only on Dec 16, 2019 (after policy expired) means no claim arose during policy period | Court held the July 8, 2019 notice/description was sufficient; copy receipt date immaterial; claim falls within policy period |
Key Cases Cited
- Hessler, Inc. v. Farrell, 260 A.2d 701 (Del. 1969) (standards for motions seeking reconsideration)
- IberiaBank Corp. v. III. Union Ins. Co., 952 F.3d 339 (5th Cir. 2020) (discussion of professional services exclusion language)
- Viking Pump, Inc. v. Century Indem. Co., 148 A.3d 633 (Del. 2016) (insurance-policy interpretation; read policy as whole; plain meaning)
- Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925 (Del. 1982) (ambiguity must not be created where none exists)
- Alstrin v. St. Paul Mercury Ins. Co., 179 F. Supp. 2d 376 (D. Del. 2002) (insurer bears burden to prove applicability of exclusions)