Conestoga Services Corporation v. Executive Risk Indemnity, Inc.

Plaintiff-appellant Conestoga Services Corp. (“Conestoga”), an insurance brokerage, sued defendant-appellee Executive Risk Indemnity, Inc. (“Executive Risk”), claiming that Executive Risk breached its liability insurance contract with Conestoga when it refused to defend Conestoga in a malpractice suit. Executive Risk maintained that it was not obliged to defend Conestoga under Conestoga’s insurance policy because the policy contained an exception that precluded coverage for claims “based on or directly or indirectly arising out of or resulting from the bankruptcy of, or suspension of payments or failure or refusal, in whole or in part, to pay by ... any self-insurance plan.... ” The district court agreed that the exception was applicable and granted summary judgment to Executive Risk on all claims.

Conestoga now appeals the district court’s grant of summary judgment on its claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory judgment. We have jurisdiction under 28 U.S.C. § 1291 , and now reverse in part and vacate and remand in part.

I. BACKGROUND

A. The Contract

Plaintiff-appellant Conestoga is an insurance…