Navigators Insurance Company v. Baylor & Jackson, P.L.L.C.
888 F. Supp. 2d 55
D.D.C.2012Background
- Navigator issued a 2010 professional-liability policy to Baylor & Jackson, PLLC, with statements in the application that there had been no prior professional-liability claims in five years.
- Six underlying actions arising from the Firm’s representation of Milan Group, LLC allege misappropriation or loss of escrow funds; Navigators treats them as a single claim under related-claims provision.
- Policy excludes damages or expenses from loss, misappropriation, or commingling of assets in the Insured’s care, custody, or control (Exclusion K).
- Navigators later discovered misrepresentations in the Firm’s application and argued the policy could be void ab initio; Navigators filed suit seeking declaratory relief and potential reimbursement of defense costs.
- Defendants defaulted; intervenors Intervenors (Arpad, World Class Construction, Barrett) intervened; the court held Exclusion K bars coverage and awarded Navigators $24,838.14 in defense costs.
- The court applied the eight-corners rule and determined District of Columbia law governs the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exclusion K bars coverage for Underlying Actions | Navigators argued six actions involve misappropriation of assets. | Defendants did not oppose; arguments not developed. | Yes, Exclusion K bars coverage. |
| Misrepresentation voids policy ab initio | Material misrepresentations render the policy void. | Not aggressively contested; court notes Exclusion K controls. | Not reached; Exclusion K dispositive. |
| Governing law for the contract | D.C. law applies under governmental-interest analysis. | - | D.C. law governs; eight-corners analysis applied. |
Key Cases Cited
- Adolph Coors Co. v. Truck Ins. Exchange, 960 A.2d 617 (D.C. 2008) (choice of law/insurance contract analysis under DC law)
- American Registry of Pathology v. Ohio Cas. Ins. Co., 461 F. Supp. 2d 61 (D.D.C. 2006) (eight-corners rule: compare policy scope with complaint scope)
- Holmes v. Brethren Mut. Ins. Co., 868 A.2d 155 (D.C. 2005) (governmental-interest choice-of-law framework)
- Stevens v. United Gen. Title Ins. Co., 801 A.2d 61 (D.C. 2002) (eight-corners rule application in insurance disputes)
- Potomac Elec. Power Co. v. California Union Ins. Co., 777 F. Supp. 968 (D.D.C. 1991) (choice-of-law factors for insurance contracts)