Markel American Insurance Company is staring down a bad faith lawsuit and a demand for punitive damages after allegedly refusing to defend two executives.
The case, filed on January 28, 2026, in the United States District Court for the Southern District of California, pits San Diego-based financial advisory firm enTrust Wealth Advisors against its former D&O insurer. At the heart of the dispute is a question that should give claims handlers pause: how far can a breach of contract exclusion really stretch?
enTrust says Markel crossed the line when it invoked that exclusion to deny coverage for an underlying arbitration brought by BxC Partners, Inc., which had provided management consulting services to enTrust for several years. BxC initiated the arbitration in October 2023, alleging breach of a consulting agreement and accusing enTrust executives Daniel Conners and Michael Crawford of tortiously disrupting its contractual relationship.
But here is where it gets interesting for coverage professionals.
BxC did not stop at breach of contract. Its arbitration demand also included a count for negligent interference with prospective economic advantage. Later, in an amended filing, BxC added a promissory estoppel claim after discovering that the entity named as a counterparty in the consulting agreement apparently did not exist.
According to the lawsuit, those additional claims should have triggered Markel's duty to defend. Under California law, a tortious interference claim does not require proof of an actual breach—a plaintiff need only show that performance was made more costly or burdensome. And promissory estoppel, by its very nature, presumes no enforceable contract exists. California courts have held that promissory estoppel and breach of contract claims are mutually exclusive.
enTrust alleges Markel ignored all of this. On January 29, 2024, the insurer denied a duty to defend, stating that the relief sought in each cause of action stemmed from the alleged breach of the consulting agreement. The lawsuit claims Markel held firm even after enTrust requested reconsideration and pointed out what it saw as obvious flaws in the insurer's reasoning.
The D&O policy in question, which covered January 1, 2023, to January 1, 2024, carried limits of $1 million each loss and $2 million in the aggregate. It included a duty to defend claims against insureds "even if such claim is groundless, false or fraudulent."
enTrust is not pulling punches. The lawsuit accuses Markel of willfully and maliciously ignoring California's liberal duty-to-defend standards and making a calculated decision to deny coverage while betting the denial would go unchallenged. The firm alleges Markel failed to weigh the insured's interests fairly and instead focused only on facts that supported a denial.
The suit brings two causes of action: breach of contract and breach of the implied covenant of good faith and fair dealing. enTrust is seeking contractual damages, attorney fees, and punitive damages, alleging conduct that rises to the level of oppression, fraud, or malice under California law.
No determination on the merits has been made.
