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New York Court of Appeals Holds Investigative Subpoena Constitutes a “Claim” Sufficient to Trigger Coverage

Blogs, Insurance Coverage

The New York Court of Appeals recently held that an investigative subpoena constitutes a “claim” thereby triggering coverage under a not-for-profit individual and organization insurance policy. Syracuse University v. National Union Fire Ins. Co. of Pittsburgh, 2013 N.Y. Slip Op. 8775 (December 27, 2013). 

The National Union case arose after Syracuse University (“Syracuse”) received six subpoenas in connection with state and federal investigations regarding allegations that an Associate Basketball Coach sexually abused former participants of Syracuse’s basketball program. Thereafter, Syracuse sent notice of the investigation to its insurer, National Union Fire Insurance Company of Pittsburgh (“National”). National denied coverage claiming the policy did not cover the costs associated with an investigative subpoena. 

The subject policy provided that National shall pay for “any loss arising from a claim made against [Syracuse] during the policy period for any actual or alleged wrongful acts.” The policy defined “claim” as “a written demand for monetary, non-monetary or injunctive relief.” After concluding the terms of the policy and definition of “claim” were clear and unambiguous, the trial court held that a grand jury investigation and subpoenas constituted a written demand for non-monetary relief and were not a mere discovery device, as alleged by National. National appealed, and in a very brief opinion, the Appellate Division affirmed the lower court’s ruling.

Notably, the New York Court’s holding is similar to the one recently reached by the United States District Court for the Eastern District of Virginia with respect to a search warrant. In Protection Strategies, Inc. v. Starr Indemnity and Liability Co., the Eastern District concluded that a search warrant constituted a “claim” under the subject directors and officers insurance policy. Civil Action No. 1:13-CV-00763 (E.D. Va. 2013). 

For more information on the Protection Strategies, Inc. v. Starr Indemnity and Liability Co., decision sees Federal Court Finds Search Warrant is a “Claim” Triggering Duty to Defend.

Download Syracuse University v National Union Fire Ins Co of Pittsburgh PA (1) to read the Trial Court Decision and Download Syracuse University v National Union Fire Ins Co of Pittsburgh Pa to read the Appellate Court Decision.