A judge in the United States District Court for the Southern District of New York granted The Hartford Fire Insurance Company’s motion for judgment on the pleadings, and denied Western Union’s cross-motion, ruling that the policy’s War Exclusion and Financial Services Exclusion barred coverage. The underlying litigation arose because the DPR, a Russian-backed separatist group controlling territory in eastern Ukraine, fired a surface-to-air missile at Malaysia Airlines Flight 17, killing 283 passengers and 15 crew members. One of those passengers was 18-year-old Quinn Lucas Schansman, whose estate and family members subsequently filed a lawsuit against Hartford’s insured, Western Union, and other defendants. According to the Schansman lawsuit, the DPR committed various acts of violence and intimidation—including the attack on MH17—to advance its goals of “consolidat[ing] control over areas of Ukrainian territory,” “undermining the Government of Ukraine,” “establish[ing] their authority against the Ukrainian government,” and ultimately reestablishing the Russian Empire, or “‘Novorossiya’ (New Russia).” Western Union also allegedly provided “material support and financing” to the DPR, namely money transfer and exchange services.
Hartford denied Western Union’s demand that it defend the lawsuit under its commercial general liability policy, citing the policy’s War Exclusion. More than two years later, Western Union challenged Hartford’s denial for the first time, prompting Hartford to retain our firm and seek declaratory relief that there was no duty to defend or indemnify because the War Exclusion, the Financial Services Exclusion, and other defenses barred coverage. Western Union, in turn, filed counterclaims against Hartford for breach of contract and bad faith, asserting that Hartford was required to defend the lawsuit.
After the parties filed cross-motions for judgment on the pleadings, the Court ruled for Hartford. The Schansman lawsuit fell squarely within the War Exclusion’s “insurrection” prong, according to the Court, because the complaint alleged that the DPR was in the midst of a “violent uprising” to “overthrow[] the constituted government” in eastern Ukraine when it shot down MH17. Even if the War Exclusion Services did not defeat coverage, the Court continued, the policy’s Financial Services Exclusion would. That is because the underlying complaint did not accuse Western Union of doing anything other than facilitating money transfers to the DPR.
Ron Schiller, Michael Carlson and Elizabeth Dolce handled this for The Hartford.
