Unified Coverage for Interrelated Wrongful Acts: Redefining the “Related Wrongful Act” Principle

Introduction

In the case of Zurich American Insurance Company v. Giorgio Armani Corporation, et al. (2025 N.Y. Slip Op. 1335), the Supreme Court of New York, First Department was confronted with the complex issue of whether multiple lawsuits arising from a series of wrongful acts are sufficiently related to be covered under a single insurance policy. The dispute centered on two insurance policies—one issued by Hiscox Insurance Company and the other by Zurich American Insurance Company (ZAI)—and involved allegations of sexual harassment, assault, and discriminatory practices by an employee of Giorgio Armani Corporation (GAC), Javier Herrera.

The case is characterized by three interrelated lawsuits: the Loreto-Hays, Oberloh, and Christin actions. These actions, filed over a period of time between 2018 and 2019, all revolve around allegations that GAC failed to adequately respond to Herrera's misconduct. The key legal question was whether the later Christin action, despite its filing date, was sufficiently connected to the earlier actions (Loreto-Hays and Oberloh) by the same set of facts and circumstances, thereby falling within the coverage of the policies.

Summary of the Judgment

The court’s opinion, delivered by Justice Singh, clarified that the Christin action shares a “common nexus or nucleus of facts” with the Loreto-Hays and Oberloh actions, making it a claim that arises from related wrongful acts. Analyzing both insurance policies, the court held:

The Hiscox policy explicitly provides for claims arising from “Related Wrongful Acts,” meaning either repeated or continuous wrongful acts or acts connected by a common causal link.
The ZAI policy contains a similar provision, describing claims emerging from “Interrelated Wrongful Acts” as one claim marked by a common nexus of facts.
Both policies, therefore, do not restrict the coverage based solely on the plaintiff affected but rather on the underlying causal and factual interconnections between the claims.

The court reversed the earlier order that had effectively denied coverage under the Hiscox policy, ruling that the Christin action should be deemed filed on the same basis as the earlier lawsuits. As a result, Zurich American Insurance Company's motion was granted and Hiscox's cross-motion was denied.

Analysis

Precedents Cited

The decision draws heavily on several precedents:

Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co.: Although this case originally pertained to the definition of a single “occurrence,” its analytical approach influenced the court’s framework in distinguishing between related wrongful acts and isolated incidents.
Nomura Holding Am., Inc. v. Federal Ins. Co.: This precedent provided guidance on the interpretation of policy language concerning related or interrelated wrongful acts, emphasizing the importance of the plain language of the policy.
Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate: The court referenced this case to support the broad, inclusive test for establishing a common nexus among wrongful acts, arguing against a narrow interpretation.
Natural Organics, Inc. v. Onebeacon Am. Ins. Co.: This case was cited to explain that the causation requirement in insurance policies need only establish some causal relationship, not necessarily a strict chronological or identical occurrence.

These precedents collectively supported the court’s broad interpretation of what constitutes “related” or “interrelated” wrongful acts, emphasizing cause and common factual origin over rigid definitions of occurrence.

Legal Reasoning

The court’s reasoning was built on a few core legal principles:

Plain Language Interpretation: The decision rested on a careful reading of the policy terms. The Hiscox and ZAI policies each include provisions that explicitly cover claims arising out of a common nexus or nucleus of facts, irrespective of whether they affect the same plaintiff.
Common Nexus Test: The court applied a broad test to determine whether the Christin action shared a common connection with the earlier lawsuits. The key was assessing if the later claims “arose from” the same series of events or misconduct by Herrera, which had led GAC to be aware of and fail to counteract the wrongful acts.
Continuous Nature and Repetition of Wrongful Acts: Notably, the court emphasized that repeated instances of wrongful behavior and the failure of management to take corrective action create a continuous or interrelated set of claims. This interpretative approach rejects an overly narrow view that only allows claims to be bundled if they involve identical factual circumstances.

The court’s legal reasoning acknowledged that even if the Christin action appeared to be filed on a later date, its factual basis was inherently linked to the Harassment pattern documented in the earlier actions. Consequently, the decision realigned the potential division of coverage, favoring a unified approach that supports broad coverage under the Hiscox policy and the analogous provision in the ZAI policy.

Impact on Future Cases and the Relevant Area of Law

This judgment is likely to have a lasting effect on the interpretation of insurance coverage in cases involving multiple claims arising from a common source:

Broader Coverage Scope: Insurers will need to consider claims collectively when allegations stem from a common series of acts—even if they do not affect the same individual plaintiff—thus broadening the scope of coverage.
Policy Drafting Implications: Future insurance policies may be drafted with more precise language regarding what constitutes “related” or “interrelated” wrongful acts, to either include or exclude certain repetitive actions.
Litigation Strategy Changes: Plaintiffs in multi-claim cases might now confidently argue for bundled claims based on common fact patterns, while defendants and insurers may attempt to delineate boundaries more strictly.
Uniformity and Predictability: The decision helps in creating a uniform standard, reducing uncertainties by emphasizing the plain language of policies and the significance of a “common nexus” of facts.

Complex Concepts Simplified

Several legal concepts in the judgment are dense and technical. Here is a simplified explanation:

Related or Interrelated Wrongful Acts: This term is a way to group claims together when they are connected by the same series of events or when the same misconduct is repeated over time. It means that even if a claim is filed at a later date, if the underlying facts are linked to earlier behavior, all such claims can be viewed as one coherent set.
Common Nexus or Nucleus of Facts: This refers to the idea that different claims must share a fundamental connection—whether that is the same series of actions, a shared victim or victims, or common circumstances—making it reasonable for an insurer to cover them under one policy period.
Causal Connection: In the context of insurance, there needs to be some cause-and-effect relationship between the wrongful act and the resulting harm. The court explained that this connection does not have to be exact; it is enough that there is some link between the misconduct and the injury.

Conclusion

The judgment in Zurich American Insurance Company v. Giorgio Armani Corporation, et al. represents a pivotal shift in how courts may approach the bundling of claims under insurance policies. By affirming that claims arising from interrelated instances of wrongful behavior should be connected under a single policy coverage, the court has reinforced a broad interpretation that favors the plain language of the policies.

The key takeaway is that the insurer cannot differentiate between claims solely based on filing dates if the underlying factual nexus remains unchanged. This decision promotes a more integrated view of policy coverage where the consistency in wrongful acts—regardless of the affected party—can dictate the inclusiveness of coverage. For insurers, policyholders, and legal practitioners, this ruling sets a new benchmark on the interpretation of “Related Wrongful Acts” and “Interrelated Wrongful Acts,” with profound implications for future litigation and policy drafting in the realm of insurance law.