Antitrust Law Daily Wrap Up, ANTITRUST—1stCir: Insurance Company’s Policy Excluded Antitrust Suit, Related RICO Claims from Coverage, (Nov 5, 2012)

By Jody Coultas, J.D.

Exclusions included in an insurance policy issued by Endurance American Specialty Insurance Company to The Saint Consulting Group, Inc. barred claims filed by Saint Consulting stemming from Endurance’s refusal to defend Saint Consulting against antitrust and Racketeer Influenced and Corrupt Organizations Act (RICO) claims, the U.S. Court of Appeals in Boston has held (The Saint Consulting Group, Inc. v. Endurance American Specialty Insurance Co., November 2, 2012, Boudin, M.).

Saint Consulting is a consulting company that advises and advocates for its clients in land use disputes and has developed a niche practice of acting on behalf of rival grocery store chains to block or delay Wal-Mart stores from opening in a rival's territory. A development company, Rubloff Development Group, Inc., sued Saint Consulting for federal RICO violations, conspiracy in restraint of trade under the Sherman Act, and tortious interference with prospective economic advantage for allegedly blocking two Wal-Mart stores in the Chicago area on behalf of its client SuperValu, Inc.

Endurance issued Saint Consulting an “errors and omissions” policy which insures against liability from errors and omissions committed in the performance of their professional services. The policy included numerous exclusions, including Sherman Act antitrust claims and state antitrust law claims. After Endurance refused to defend Saint Consulting against the claims by Rubloff, it alleged that Endurance breached the contract.

Because the insurance policy exclusions applied to the Rubloff antitrust and RICO claims, the court found that Endurance was not required to defend Saint Consulting. The policy explicitly excluded the federal and Illinois antitrust claims. The RICO claims relied on the same facts but were not limited to and did not expressly identify their target as restraints of trade. However, the policy language extended the exclusion to any claims based on or arising from any actual or alleged restraint of trade. Because all of the Rubloff claims arose from allegations of a conspiracy to forestall competition through misuse of legal proceedings and through deception, Endurance was not required to defend Saint Consulting. Saint Consulting was unable to invoke the covenant of good fair and fair dealing or the Massachusetts Consumer Protection Act to negate an express provision of the contract. While Saint Consulting’s core business was working to halt developments opposed by its clients, the exclusion applied to all business activities and Endurance never represented that the exclusions did not cover core business activities.

The case is No. 12-1569.

Robert D. Cohan (Cohan Rasnick Myerson LLP) for The Saint Consulting Group, Inc. Michael F. Perlis (Locke Lord LLP) for Endurance American Specialty Insurance Company.

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