On March 3, 2021, the Supreme Court of Delaware issued a significant decision in the D&O coverage space, RSUI Indemnity Co. v. Murdock, analyzing whether fraud claims against insureds were covered under an excess D&O policy issued by RSUI Indemnity Co. to Dole Food Company Inc. The coverage dispute centered on stockholder litigation arising after David Murdock, the CEO and a director of Dole, took Dole private through a merger transaction resulting in Murdock ... Keep Reading »
Directors & Officers Liability
New York Court Finds Securities Settlements Not Covered by D&O Policies Due to Insured Capacity and Uninsurable Loss Issues
A New York trial court recently granted summary judgment to a group of excess D&O insurers seeking a declaration that their policies do not cover settlements and consent judgments the defendants paid in connection with underlying securities actions. The decision emphasizes the insured capacity limitation in the D&O policy definition of a “wrongful act” and also reinforces that amounts paid as disgorgement are uninsurable as a matter of New York ... Keep Reading »
Delaware Supreme Court Finds That Appraisal Proceedings Are Not a “Securities Claim,” Again Refusing To Broaden That Definition in the Context of D&O Policies
We previously discussed the Delaware Supreme Court's refusal to broaden the definition of a "securities claim" in In re Verizon Insurance Coverage Appeals, and this issue continues to be ripe for dispute. The Delaware Supreme Court took another look at what constitutes a "securities claim" in In re Solera Insurance Coverage Appeals, Nos. 413, 2019; 418, 2019 (Del Oct. 23, 2020), where it considered as a matter of national first impression the question of whether ... Keep Reading »
Ohio Appellate Court Rejects Policyholder’s Notice-Prejudice and Continuity of Coverage Arguments
Claims-made liability insurance policies typically require the policyholder to notify the insurer of a claim within a set amount of time — typically during the policy period, or within a specific period of time after the end of the policy period — to obtain coverage. When policyholders fail to do so, they often argue that the “notice-prejudice rule” should apply, such that the insurer can only deny coverage if it was prejudiced by the policyholder’s untimely notice. ... Keep Reading »
Is Your “Securities Claim” Actually Covered Under Your D&O Policy? A Review of In Re Verizon Insurance Coverage Appeals
The question of what constitutes a "securities claim" in the context of public company D&O policies is often debated in insurance coverage disputes, and the answer to this question can have significant effects on the scope of what insurance companies would be forced to cover under these policies. In In re Verizon Insurance Coverage Appeals, the Delaware Supreme Court reversed an earlier Superior Court ruling that, if upheld, would have considerably broadened that ... Keep Reading »
Look No Further Than the Insuring Clause: Ill-Gotten Gains Do Not Constitute Covered “Loss”
On August 26, 2019, the Eleventh Circuit Court of Appeals, applying Florida Law, held that ill-gotten gains do not constitute covered “loss” within the meaning of a D&O policy. In Philadelphia Indemnity Insurance Co. v. Sabal Insurance Group, Inc., No. 17-14844 (11th Cir. Aug. 29, 2019), the Miami-Dade County Office of the Inspector General investigated Sabal Insurance Group and its CEO/president Ian Norris for overcharging the Miami-Dade Aviation Department for ... Keep Reading »
Seventh Circuit Reverses Prior Ruling After Reexamining Exclusion Clause
After a panel rehearing, the Seventh Circuit in Emmis Communications Corp. v. Illinois National Insurance Co., No. 18-3392 (7th Cir. Aug. 21, 2019), vacated a prior judgment and withdrew an opinion issued in July 2019, finding upon second review that Emmis Communications was entitled to summary judgment in its favor with regard to a breach of contract claim against Illinois National Insurance Co. The litigation involved Illinois National's denial of insurance coverage to ... Keep Reading »
Beware Of The Warranty – Second Circuit Relies On Terms Of Warranty, Not Policy, To Make Coverage Determination
Can the terms of a warranty impact the scope of coverage provided by an insurance policy even if the policy does not explicitly incorporate the terms of the warranty? The answer to this question appears to be yes, at least under New York law, according to the recent decision by the U.S. Court of Appeals for the Second Circuit in Patriarch Partners, LLC v. Axis Ins. Co., No. 17-3022, 2018 WL 6431024 (2d Cir. Dec. 6, 2018). Insured Issues Warranty To Insurer Related To ... Keep Reading »
Related Decisions: Three Recent Cases Emphasize Breadth of “Related Wrongful Acts”
Third-party liability policies often include aggregation clauses. As the name suggests, these clauses aggregate "related claims" or "interrelated wrongful acts" into one claim or occurrence. This provides the parties with certainty as to when a claim was "first made" or when an occurrence "first occurred." These clauses often lead to litigation, with carriers and policyholders asserting narrow or broad readings of the language, depending on the desired result. A trio ... Keep Reading »
SEC-ordered Disgorgement is an Uninsurable “Penalty,” not a Covered “Loss”
A New York intermediate appellate court has ruled that a $140 million “disgorgement” payment ordered by the SEC in resolution of an investigation into securities laws violations was a “penalty” that was not covered by insurance rather than a covered “loss.” The case, J.P. Morgan Securities, Inc. v. Vigilant Ins. Co., 2018 NY Slip Op. 06146 (App. Div., 1st Dept. Sept. 20, 2018, stemmed from a 2003 investigation into claims that Bear Stearns employees knowingly ... Keep Reading »