The federal district court in Delaware recently ruled in Calamos Asset Management Inc. v. Travelers Casualty & Surety Company of America that stockholder suits alleging breaches of fiduciary duty in connection with a merger do not constitute a "securities claim" in the context of D&O policies. This decision is another in a string of recent cases that have refused to expand that definition. The Merger and Subsequent Shareholder Litigation In December 2016, ... Keep Reading »
Beware the Honest Hacker: Indiana Supreme Court Finds That Bitcoin Payment Is Not Necessarily Covered Loss Under Commercial Crime Policy Because Not Every Ransomware Attack Involves Fraud
In G&G Oil Company of Indiana Inc. v. Continental Western Insurance Co., the Indiana Supreme Court considered the emerging area of computer crime coverage. G&G Oil was insured under a multi-peril commercial common insurance policy by Continental that provided commercial crime coverage. Specifically, the policy provided the following coverage provision: We will pay for loss or damage to "money," "securities" and "other property" resulting directly from the use ... Keep Reading »
Arizona Supreme Court Finds That Reasonableness of Insurer’s Refusal to Consent to Settlement Under D&O Policy Is in the Eye of the Insurer
In Apollo Education Group Inc. v. National Union Fire Insurance Company of Pittsburgh, the Arizona Supreme Court found that the reasonableness of the insurer’s decision to refuse to consent to settlement under a directors and officers policy is determined from the insurer’s perspective — not that of the insured. Apollo stems from a multimillion-dollar settlement following litigation surrounding an education company’s practice of backdating stock options for corporate ... Keep Reading »
Gluing Feathers to a Phone Does Not Make a Turkey: Seventh Circuit Finds Mere “Negligence” Label and “Stitched Together” Factual Allegations Do Not Trigger Duty to Defend Aggressive Robocall Lawsuit Under Illinois Law
In 2015, Ocwen Financial Corp. was sued for its attempts to collect on a mortgage loan that had been discharged in bankruptcy. It tendered the defense to Zurich American Insurance Co., but Zurich asserted that two exclusions precluded coverage and sought a declaration from a federal court that it had no duty to defend the underlying complaint. The district court agreed, and the Seventh Circuit affirmed on appeal. The underlying complaint alleged that Ocwen violated ... Keep Reading »
“Specific” Means “Specific” – Florida’s Bad Faith Statute Must Be Strictly Construed
The purpose of Florida’s “bad faith” statute is to “avoid unnecessary bad faith litigation.” To that end, the statute provides a civil remedy for any person damaged by an insurer’s conduct. However, as a condition precedent to filing suit, the policyholder must provide appropriate information to the Department of Insurance and the insurer by filing and serving a civil remedy notice (CRN). The CRN must specify the policyholder’s complaint and provide the insurer with a ... Keep Reading »
Texas Federal Court Finds No Coverage Under Crime Policy for Phishing Scheme Because Insured Did Not “Hold” Diverted Funds and Suffered No Direct Loss
RealPage was the victim of a phishing scheme that resulted in the diversion of its client funds from the bank account of a third-party payment processer, Stripe Inc. In the ensuing insurance coverage litigation styled RealPage Inc. v. National Union Fire Insurance Company of Pittsburgh, the court ultimately concluded that RealPage was not entitled to coverage for its loss because RealPage did not “hold” the diverted funds and because RealPage did not suffer a direct loss ... Keep Reading »
Delaware Supreme Court Affirms Insurability of Fraud and Larger Settlement Allocation Rule
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 »
New Jersey Federal Court Holds Virus Exclusion Bars Coverage for Car Dealerships’ COVID-19 Losses; Rejects Public Policy Argument Based on Pending Legislation
We previously described a proposed New Jersey bill that was introduced to the state assembly in March 2020 that would require insurers to cover business interruption losses related to the novel coronavirus pandemic. Almost a year later, the proposed bill has yet to be voted on by the legislature — and the stalled bill is causing significant roadblocks for policyholders who wish to rely on it to escape the application of virus exclusions in property insurance policies to ... Keep Reading »
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 »
Target Data Breach Not Covered Under CGL Policy: Court Rejects “But-For” Theory for Loss of Use Damages Where There Was No Evidence of Value of the Use of Payment Cards
Following a 2013 data breach in which the credit and debit card information of more than 110 million customers was stolen or exposed, Target Corp. sought coverage from its CGL insurers for $74 million that it incurred in settlements with various banks (the credit and debit card issuers) for their costs in issuing new payment cards (both credit and debit cards) to the customers. In a recent decision on the parties’ cross-motions for summary judgment, the U.S. District ... Keep Reading »
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