The decision by Justin Baldoni's insurer to seek relief from defending the "It Ends With Us" actor and his associates from co-star Blake Lively's sexual harassment claims has legal experts raising their eyebrows, as they observe strange circumstances mixed with common coverage issues.

Harco National Insurance Co. asked a New York federal court on July 21 to declare it owed no coverage to production company Wayfarer Studios LLC under two separate management liability policies because the company attested on applications that it didn't know of "any act" that could give rise to a claim.

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Marshall Gilinsky of Anderson Kill PC, however, saw little upside for Harco's actions. "It doesn't give them any real leverage; it just adds costs to resolving the claim," said Gilinsky, who represents policyholders. "The policyholders are embroiled in this very public underlying dispute, and it feels like the insurance company just jumped the gun and filed this lawsuit without really even getting down to it with their policyholder."

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Gilinsky mentioned that the Wayfarer defendants gave notice of Lively's suit within the 2024 policy, and the policy only bars coverage for omitting preceding events on the application if made with an actual intent to deceive or if the omission would materially affect acceptance of risk.

He said of the November 2023 letter that "maybe it's something that they could have disclosed, but unless they were intentionally trying to deceive the insurance company, that's not an excuse that lets the insurance company off the hook."

The suit may also face jurisdictional challenge. Although Harco is a North Carolina insurer and Wayfarer is a Delaware company doing business in California, the insurer cited Lively's suit being based in New York as justification for bringing the suit in the Empire State's Southern District.

Gilinsky said it wasn't clear why New York law would apply in the case, even if that is where the underlying suit resides. He noted that New York law is fairly favorable to insurers on the question of whether an omission on an application materially affects the acceptance of risk.

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