Costs to Respond to Third-Party Subpoena Do Not Constitute a Claim

The United States District Court for the District of Connecticut granted an insurer’s motion for summary judgment on the grounds that neither a subpoena issued as part of multi-district litigation nor a chart listing the insured as a potential defendant in the litigation constituted a “Claim.” Steadfast Ins. Co. v. Shambaugh & Son, L.P., 2024 WL 4188459 (D. Conn. Sept. 13, 2024).

Plaintiffs in a multi-district product liability litigation served a subpoena on the insured. The insured was not a defendant in the MDL, but it was identified as a distributor of the products at issue in the litigation and plaintiffs had provided a chart to the MDL court listing the insured as a potential future defendant. The insured incurred over $1.7 million in attorneys’ fees responding to the subpoena and sought coverage under its professional liability insurance policy. The insurer denied coverage on the grounds that neither the subpoena nor the chart listing the insured as a potential future defendant constituted “Claims.” Coverage litigation ensued, and both parties filed motions for summary judgment.

The court concluded that law of the three jurisdictions proposed by the parties—Texas, Connecticut, and Indiana—did not conflict and ruled in favor of the insurer. In doing so, the court analyzed the term “Claim,” which the policy defined as “a demand received by an Insured seeking a remedy and alleging liability or responsibility on the part of the Named Insured for [L]oss.” The court held that neither the subpoena nor the chart constituted “Claims” because they merely identified the insured as a distributor and potential future defendant but did not allege liability or responsibility for a Loss. The court distinguished cases cited by the insured on the ground that the policies at issue in those cases defined the term “Claim” more broadly than the definition at issue.

The court further held that neither the subpoena nor the chart qualified as “Claims” because the costs incurred to respond to the subpoena did not constitute “Loss.” In relevant part, the policy defined “Loss” to include “Claim Expenses.” “Claim Expenses,” in turn, were defined to include “[f]ees charged by any lawyer designated by the [insurer]” and “all other fees, costs and expenses resulting from the investigation, adjustment, defense and appeal of a Claim, if authorized by the [insurer].” In this case, the attorneys’ fees were not charged by lawyers designated by the insurer, nor did the insurer provide its authorization. As such, the attorneys’ fees did not constitute “Loss.”