Email Expressing Intention to Discuss Settlement Constitutes “Claim”  

The U.S. District Court for the Middle District of Florida, applying Florida law, has held that an email stating that the sender intended “to move forward with discussions concerning a national settlement” regarding the insured’s alleged mortgage servicing deficiencies constituted a “Claim” under the insured’s policy.  Ditech Fin., LLC v. AIG Specialty Ins. Co., 2021 WL 4263330 (M.D. Fla. Sept. 20, 2021).

The insured, a mortgage loan servicing company, sought coverage for a settlement resolving alleged deficiencies in its mortgage servicing practices.  In October 2015, the Executive Office of the United States Trustee (EOUST) sent an email to the insured stating that EOUST “intends to move forward with discussions concerning a national settlement with [the insured] that addresses all of the mortgage servicing deficiencies for borrowers in bankruptcy[.]”  In April 2017, after continued discussions with EOUST, the insured tendered a “Notice of Claim” under its insurance policy, which provided specified coverage for a “Claim” first made against the Insured during a September 1, 2016 to September 1, 2017 policy period (2016-2017 Policy).  The definition of “Claim” in the 2016-2017 Policy included “any written notice received by an Insured that any person or entity intends to hold any Insured responsible for a Wrongful Act.”  In September 2019, the insured reached a final settlement with EOUST and sought coverage under the 2016-2017 Policy.  The insurer denied coverage for the settlement.  

The court held that no coverage was available under the 2016-2017 Policy because the October 2015 email constituted the relevant “Claim” and was first made prior to the policy period.  The court concluded that the October 2015 email “falls squarely within the definition of a Claim” as “[i]t is a written notice (i.e., an email) received by [the insured] that the EOUST intended to hold [the insured] responsible (i.e., through a national settlement) for a Wrongful Act (i.e., all of [the insured’s] mortgage servicing deficiencies for borrowers in bankruptcy).”  In the court’s view, “[t]his email [was] not a simple request for more information or a mere inquiry into some untoward event” but rather “contain[ed] a specific demand for [the insured] to rectify the legally cognizable damage created by its escrow analysis deficiencies.”  The court rejected the insured’s argument that the email was not a “Claim” because it did not include a demand for monetary payment, as “[n]owhere in the definition of Claim does a requirement for monetary damages appear.”