Homesite Insurance Company v. Newport Group Holdings
Homesite Insurance Company, Argonaut Insurance Company, and Ironshore Indemnity Inc. v. Newport Group Holdings, L.P. and Newport Group, Inc.
- Alex Tse
- 3:25-cv-02626
- U.S. District Court · Northern District of California
- 12
In Homesite Insurance v. Newport Group, Magistrate Judge Tse granted summary judgment for the insurers, ruling that a Prior Acts Exclusion bars coverage for Newport's insurance claims.
Businesses that hold insurance policies with prior acts exclusions and interrelated wrongful acts provisions — particularly those facing claims spanning multiple policy periods. Insurers seeking to enforce exclusions based on pre-cutoff conduct that allegedly continued after the cutoff date may find this ruling useful, while insureds facing similar exclusions should be aware that allegations alone (not proven facts) may be sufficient to trigger interrelated wrongful acts clauses under California law.
What happened
In Homesite Insurance Company v. Newport Group Holdings, L.P., three insurance companies sued their insured, Newport Group, seeking a ruling that they owe no coverage for claims arising from an underlying class-action lawsuit alleging that Newport misappropriated funds from a church retirement plan over many years. Newport filed its own motion seeking partial summary judgment on whether the insurers waived objections to its settlement and whether a particular allocation rule applied.
The central legal question was whether a provision in the insurance policy called the Prior Acts Exclusion blocked coverage. That exclusion denies coverage for wrongful acts occurring before August 31, 2018, and for any later acts that are "interrelated" — meaning causally connected — with those earlier acts. The court found that Newport's conduct before and after that cutoff date was part of the same ongoing scheme: the same company issuing earnings reports about the same investments for the same victims, based on faulty information, across many years. Under California law, the court interpreted the policy's own definition of interrelated wrongful acts to allow allegations (not just proven facts) to establish the connection, and concluded that all of Newport's alleged conduct was causally connected by a series of common facts, circumstances, and transactions.
Magistrate Judge Tse granted the insurers' motion for summary judgment and denied Newport's motion for partial summary judgment. Because the Prior Acts Exclusion was found to bar all coverage, the court did not need to address Newport's separate arguments about settlement reasonableness or allocation. The court also ruled on several pending motions to seal court records, granting some, denying others, and ordering the parties to file additional statements or publicly refile certain documents within ten days.
The detailed version
- Homesite Insurance Company v. Newport Group Holdings · No. 3:25-cv-02626
- Alex Tse
- Aug. 20, 2026
Background
This is an insurance coverage dispute tied to an underlying class-action lawsuit, identified in the opinion as In re AME Church Employee Retirement Fund Litigation, No. 22-md-03035 (W.D. Tenn.). That underlying suit alleges that Newport Group — which managed retirement assets for the African Methodist Episcopal Church Ministerial Retirement Annuity Plan — entered a conspiracy beginning in 2001 to misappropriate funds, defraud, and manage the Plan for its own benefit. A key aspect of those allegations involves Newport issuing earnings reports about the Plan's investment in entities collectively called Motorskill, which allegedly benefited from more than $36 million in Plan assets between 2005 and 2016. Before 2019, Newport allegedly based those reports on written statements from Motorskill that did not support Newport's valuations. After 2019, Newport allegedly continued issuing earnings reports without any written statements to rely on.
The three insurers — Homesite Insurance Company, Argonaut Insurance Company, and Ironshore Indemnity Inc. (collectively, the Insurers) — moved for summary judgment (a ruling in their favor based on undisputed facts without a trial), arguing that a Prior Acts Exclusion in the Primary Policy bars all coverage. Newport Group Holdings, L.P. and Newport Group, Inc. (together, Newport) moved for partial summary judgment on two issues: (i) whether the Insurers waived their right to challenge the reasonableness of Newport's settlement, and (ii) whether the "larger settlement rule" applies to the parties' allocation dispute.
The parties agreed that the court may treat allegations in the underlying complaint as true for purposes of analyzing wrongful acts. California law applies without dispute.
The Prior Acts Exclusion
The Primary Policy's Prior Acts Exclusion bars coverage for: (1) any Wrongful Act occurring before August 31, 2018; or (2) any other Wrongful Act, whenever it occurred, that together with a pre-cutoff Wrongful Act would constitute "Interrelated Wrongful Acts." The policy defines Interrelated Wrongful Acts by incorporating the definition of Wrongful Acts — which covers "actual or alleged" errors, misstatements, misleading statements, acts, omissions, neglect, or breaches of duty — that are "causally connected by reason of any common fact, circumstance, situation, transaction, or event or series of common facts, circumstances, situations, transactions, or events."
Whether Allegations Suffice to Establish Interrelated Wrongful Acts
Newport argued that Interrelated Wrongful Acts must be established by actual proven facts, not mere allegations. The court rejected this. Newport conceded that allegations are sufficient to support a finding of Wrongful Acts. The court reasoned that it would be internally inconsistent for the policy to allow Wrongful Acts to be based on allegations, but then require actual proof for Interrelated Wrongful Acts — especially since the policy explicitly incorporates the "actual or alleged" language from the Wrongful Acts definition into the Interrelated Wrongful Acts definition. Under California law, a policy's own defined terms control, and a contract must be read as a whole to give effect to every part.
The court distinguished Newport's cited authority, Medeanalytics, Inc. v. Federal Insurance Company, No. 15-CV-04101-JST, 2016 WL 687976 (N.D. Cal. Feb. 19, 2016), because the exclusion language in that case did not include "actual or alleged," whereas the policy here does — through incorporation by reference.
Whether Newport's Pre- and Post-Cutoff Acts Are Causally Connected
The court next considered whether Newport's reporting conduct before and after August 31, 2018, constitutes Interrelated Wrongful Acts by being "causally connected."
The Insurers initially relied on cases interpreting the broader term "related," particularly Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Insurance Co., 855 P.2d 1263 (Cal. 1993), which holds that "related" encompasses both logical and causal connections. The court agreed with Newport that this standard was inapplicable here because the policy uses the narrower term "causally connected," not merely "related." Cases applying the logical-connection standard under "related" language, such as Impress Communications and Davies Lemmis, were therefore not directly on point.
However, the court found that the Insurers' alternative argument — that Newport's pre- and post-cutoff conduct shares common facts, circumstances, situations, and transactions constituting a causal connection — was persuasive. The court identified the following common elements across the entire period of alleged conduct: the same alleged actor (Newport), the same alleged conduct (reporting earnings based on deficient or faulty information regarding Motorskill), the same alleged victims (Plan participants), and the same alleged harm. The court concluded that these allegations are causally connected by reason of a series of common facts, circumstances, situations, transactions, or events, as the policy requires.
The court rejected Newport's argument that "causally connected" requires one act to directly cause another. Accepting that narrow reading, the court explained, would strip meaning from the policy's explicit inclusion of a "series of common facts, circumstances, situations, transactions, or events."
The court also found support in Reconstruction Experts, Inc. v. Associated Industries Insurance Co., No. 25-CV-07872, 2025 WL 3030586 (C.D. Cal. Oct. 8, 2025), which similarly found a prior acts exclusion applied where the complaint described one cohesive scheme set in motion before the exclusion date.
Newport's reliance on Davies Lemmis was distinguished on the grounds that (a) that case involved seven separate incidents with different plaintiffs rather than one continuous alleged scheme against one group, and (b) the policy language in Davies Lemmis did not include "series of common facts or circumstances." Bay Cities was also distinguished because it involved only two discrete errors and used the term "related" rather than "causally connected by reason of common facts."
Conclusion on Coverage
Because Newport's pre- and post-cutoff reporting conduct constitutes Interrelated Wrongful Acts, the Prior Acts Exclusion bars coverage. The Insurers' motion for summary judgment was granted.
Newport's Motion for Partial Summary Judgment
Newport moved for partial summary judgment on two issues: (i) whether the Insurers waived their right to challenge the reasonableness of Newport's settlement, and (ii) whether the "larger settlement rule" applies to the allocation dispute. Because the Prior Acts Exclusion bars all coverage, the court found it unnecessary to reach either issue. Newport's motion for partial summary judgment was denied.
Sealing Motions
The parties filed five motions to seal various exhibits and briefing documents (Dkt. Nos. 92, 97, 98, 99, and 109). The court ruled on each as follows:
Dkt. 92 - The request to seal Exhibit 4 (dkt. 92-4) was granted in part; Newport must file a redacted public version within ten days, removing references to business practices and confidential materials. - The requests to seal Exhibits 5 (dkt. 92-5), 6 (dkt. 92-6), and 23 (dkt. 92-9) were granted. - The requests to seal Exhibits 21 (dkt. 92-7) and 22 (dkt. 92-8) were denied because Newport did not oppose public filing; the Insurers must refile those documents publicly within ten days. - Regarding the unredacted motion for summary judgment (dkt. 92-10), supporting declaration (dkt. 92-11), and Exhibit 1 (dkt. 92-1), Newport was ordered to file an updated statement within ten days addressing the reasons for sealing, with a warning that failure to do so may result in unsealing.
Dkt. 97 - Newport's request to seal portions of Exhibits 18, 20, 21, and its unredacted opposition was granted, compelling reasons having been shown.
Dkt. 98 - Newport filed this motion on behalf of Ironshore and Homesite as designating parties. Because neither Ironshore nor Homesite filed the required statement explaining reasons for sealing within seven days, the court ordered each to provide statements within ten days, warning that failure may result in unsealing.
Dkt. 99 - The requests to seal Exhibits 25 (dkt. 99-4) and 26 (dkt. 99-5) were denied because Newport took no position on sealing those documents; the Insurers must refile them publicly within ten days. - The requests to seal Exhibit 24 (dkt. 99-3) and portions of the Insurers' reply (dkt. 99-6) were granted, Newport having shown compelling reasons related to litigation risks and settlement strategies.
Dkt. 109 - Newport's requests to seal Exhibit 4 (dkt. 109-2) and an unredacted copy of its supplemental briefing (dkt. 109-3) were granted, compelling reasons having been shown.
Disposition
The Insurers' motion for summary judgment (Dkt. 93) was granted. Newport's motion for partial summary judgment (Dkt. 59) was denied. The sealing motions were granted in part and denied in part.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.