This appeal concerned an insurer's duty to defend where the insurer alleged material misrepresentations and breach of policy conditions by the insured.
The insurer, Certain Underwriters at Lloyd's, London, denied defence to IT Haven Inc. and Ryan Hunt against a copyright infringement lawsuit, claiming the insured misrepresented their business operations in the insurance application.
The motion judge granted the duty to defend, refusing to consider extrinsic evidence.
The Court of Appeal dismissed the insurer's appeal, affirming the duty to defend.
The court applied a flexible approach, distinguishing this from a typical 'pleadings rule' case, and held that resolving the alleged misrepresentations would require determining contested factual issues central to the underlying litigation, which is inappropriate at the duty to defend stage.