Travelers did not have to defend, indemnify broker

A federal appeals court ruled Tuesday that a Travelers Cos. Inc. unit did not have to defend or indemnify an insurance broker under a financial services exclusion in its commercial general liability insurance policy, in a coverage dispute with a Utica Mutual Insurance Co. unit.

Ewing Township, New Jersey-based Borden-Perlman Insurance Agency Inc., which is now known as CBIZ Borden-Perlman, had insurance policies with Travelers unit Travelers Casualty Insurance Co. of America and Utica Mutual unit Republic Franklin Insurance Co., according to the ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Republic Franklin Insurance Co. v. Travelers Casualty Insurance Co. of America.

Republic insured B-P under an errors and omissions policy for its professional services.

B-P hired a former employee of Addison, Texas-based Orchestrate H.R., a B-P competitor, the ruling said. After he joined B-P, he allegedly used Orchestrate’s confidential information to pursue its current and prospective clients and make a variety of false and misleading statements to them, the ruling said.

Orchestrate sued B-P in Texas for, among other things, defamation. Both Republic and Travelers refused to defend or indemnify the company.

B-P sued Republic for coverage in state court in New Jersey, and obtained a judgment that the insurer had a duty to defend it in the Texas lawsuit, which was affirmed by a state appeals court.

Republic, which allegedly had spent millions of dollars to defend B-P, sought to recoup at least some of those costs by suing Travelers in U.S. District Court in Newark, New Jersey, seeking a judgment declaring Travelers had a duty to defend and indemnify B-P under its CGL policy. The district court ruled in Travelers’ favor.

The statements allegedly made against Orchestrate are “the kind of ‘advising’ or ‘recommend(ing)’ contemplated by the FPS Exclusion,” a three-judge appeals court panel said, in citing an earlier case, and affirming the lower court.

Attorneys in the case did not respond to requests for comment.