Federal Insurance Company v. Raytheon Company
First Circuit
426 F.3d 491 (2005)
Raytheon Company (defendant) carried a claims-made liability policy with Federal Insurance Company and an excess policy with Axis Surplus Insurance Company (plaintiffs/insurers), which excluded coverage for any complaint based on facts substantially similar to those underlying a prior complaint against Raytheon. After an October 1999 report of cost overruns and a stock-price drop, a securities class action was filed alleging Raytheon issued misleading reports and hid losses. Nearly four years later, a separate ERISA class action was filed on behalf of Raytheon's pension-plan beneficiaries alleging breach of fiduciary duty, built substantially on the same underlying facts as the securities case though with some later-occurring allegations and different parties and legal theories. When Raytheon sought coverage for the ERISA suit, the insurers filed declaratory actions arguing the overlapping-complaint exclusion barred it, and the trial court agreed.
Whether an insurance policy's overlapping-complaint exclusion bars coverage for a later lawsuit that substantially overlaps in underlying facts with an earlier lawsuit, even though the two suits involve different legal theories and different parties.