Federal Court Maintains No Property Damage, No Occurrence Stance for Intentional Breach of Contract

NWS Corp. v. Hartford Fire Ins. Co. (D. Mass.) (12-30113-KPN) The U.S. District Court for Massachusetts relied on long-standing state law to deny coverage for an insured television programmer who was sued by DirectTV for setting prices below those set forth in its contract with DirectTV, and fraudulently concealing its conduct with numerous material misrepresentations.  In the underlying matter, the arbitrator awarded DirectTV $5 million, finding that the insured “materially breached its contract,” “made intentional, deliberate misrepresentations” and “was also liable for … conversion.”  A post-judgment settlement of approximately $2 million was submitted to the defendant who denied the claim. The policy in the matter provided coverage for “property damage” due to an “occurrence.”  It further included a form of the “expected or intended” exclusion.  The defendant relied on Smartfoods, Inc. v. Northbrook Property & Cas. Co., 618 N.E.2d 1365 (Mass. App. Ct. 1993), for the proposition that financial loss could not constitute “property damage” and that further, there could be no occurrence for intentional conduct.  The court agreed. The court also noted that the insured’s attempt to frame the issue as “something that happened to [the insured] rather than intentional actions undertaken by [the insured]” were “creative” but “misses the mark.” (emphases in original).  Additionally, the court found unpersuasive the insured’s argument that the conversion allegation meant there must be “property damage.”  Regardless of these findings, the court noted that the “expected or intended” exclusion would have barred coverage anyways.

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