The real estate firm’s D&O is not available for defense in the RealPage antitrust suit

A property management firm’s excess insurers are not required to defend it in multidistrict pricing litigation involving the use of RealPage real estate software.

A federal district judge in Massachusetts found that the terms of Windsor Property Management Co.’s master policy. on directors’ and officers’ liability written by Federal Insurance Co. (Chubb) relieve the excess insurers of any obligation to defend Windsor, one of the owners named in a US Department of Justice antitrust lawsuit involving RealPage.

A professional services exclusion in the main Chubb policy states that loss from any claim “based on, arising out of, or arising out of the performance or non-performance of any professional service” is expressly excluded from directors’ and officers’ coverage. liability coverage.

The primary policy also includes a set of general terms and conditions which, among other things, delineate the parties’ obligations in the event of any claim being made under the primary policy. This section provides that “it shall be the duty of the insured and not the duty of the company to defend the claims” and “the insured shall have the sole obligation to retain counsel.”

Because Chubb did not provide any defense coverage, Windsor sought coverage from excess carriers Argonaut Insurance Co. and Zurich American Insurance Co. Those carriers, in turn, sought a court declaration that they were not obligated to defend Windsor.

The master policy limits Chubb’s total liability for covered losses to $5 million. Windsor obtained a first excess insurance policy from Argonaut for $5 million in excess of the $5 million covered by Chubb and a second excess insurance policy from Zurich for $5 million in excess of the $10 million covered by Argonaut and Chubb. The Argonaut and Zurich excess insurance policies follow the form of the Chubb primary policy.

Windsor’s argument for a ruling in favor of excess coverage was based on the underlying assumption that the primary policy contains a duty to defend so that the common law “potential coverage” standard applies. The insured argued that the professional services exclusion was at least “ambiguous as to its applicability” in the antitrust litigation and therefore the excess insurers had a duty to defend, or at least advance defense costs, for the litigation.

The federal court disagreed, finding no ambiguity in the primary policy that “expressly waives any obligation to defend” claims and its language clearly placing that responsibility on the insured. The court found that nothing else in the policy altered the plain text of this disclaimer.

Windsor pointed to policy language explaining how defense costs would be advanced as a sign that coverage may be available. But the court rejected that argument, noting that the language does not create any independent obligation to advance defense costs, but instead delineates the payment mechanism that will apply when defense costs are advanced, either because the insurer voluntarily assumes the obligation, either because another provision creates a right to them.

The court explained that the policy is written with conditionals: if the insurer, in its discretion, undertakes to advance funds for a defense, it may, “at its sole option,” dictate the terms and conditions. But Chubb never offered to enter into such an agreement with Windsor, and therefore, as with any condition precedent, “if the condition is not satisfied, the contract or the obligations under the condition cannot be enforced,” the court concluded.

Boston-based Windsor, which says it is the nation’s 17th-largest apartment owner, is a named defendant in a class-action lawsuit brought by the federal government in November 2023 and currently pending in the Middle District of Tennessee. See in re RealPage, Inc. Software rental antitrust litigation.

The government alleges illegal price-fixing schemes among landlords that use RealPage’s software algorithm to raise rents in multifamily housing units and artificially inflate rents for student housing. RealPage, the government alleges, unlawfully combines competing landlords’ real-time housing data and prices to generate “anticipated, unit-specific supply prices and recommendations” for all participating landlords.

The Justice Department alleges that RealPage puts significant “pressures” on owners to implement RealPage’s pricing, and as a result, owners adopt RealPage’s recommendations 80-90% of the time.

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