Applying Delaware law, the Delaware Superior Court has held that a bankruptcy trustee’s fraudulent transfer claim constitutes a “Securities Claim” under a D&O policy. Verizon Commc’ns Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa, 2021 WL 710816 (Del. Super. Ct. Feb. 23, 2021).
Continue Reading Delaware Trial Court Holds that Fraudulent Transfer Claim by Bankruptcy Trustee is a “Securities Claim”
A Kentucky federal court has held that an Insured v. Insured (IvI) exclusion that included an assistance exception precluded coverage for an entire lawsuit brought by both insureds and non-insureds and that no allocation was required. Tarter v. Navigators Ins. Co., 2021 WL 149302 (E.D. Ky. Jan. 15, 2021).
Continue Reading Insured-versus-Insured Exclusion Precludes Coverage For Entire Suit Brought by Insureds and Non-Insureds
The New York Supreme Court, Appellate Division, applying New York law, has held that an Insured v. Insured exclusion (IvI Exclusion) in a D&O policy did not bar coverage for an action brought by a creditor trust against former directors and officers (D&Os) of a bankrupt company, because the suit fell within the scope of an exception for claims brought by certain bankruptcy-related entities. Westchester Fire Ins. Co. v. Schorsch, 2020 WL 4905056 (N.Y. App. Div. Aug. 20, 2020).
Continue Reading Insured v. Insured Exclusion Held Not to Bar Action Brought by Creditor Trust
The United States Court of Appeals for the First Circuit, applying Massachusetts law, has held that an insured church’s D&O policy did not afford coverage for a claim against a “breakaway” congregation because the breakaway congregation was not an “insured” under the policy. Newton Covenant Church v. Great Am. Ins. Co., 2020 WL 1815971 (1st Cir. Apr. 10, 2020). Even if the breakaway congregation were to be deemed an “insured,” the Court ruled that coverage was still unavailable because an “insured v. insured” exclusion would apply.
Continue Reading First Circuit Holds “Breakaway” Church Not an “Insured” Under Original Church’s D&O Policy
The United States Court of Appeals for the Third Circuit, applying Delaware law, has held that a D&O policy’s Major Shareholder Exclusion, barring claims brought against the insured entity by a company owning five percent or more of the entity, was ambiguous as applied to a company acquiring one hundred percent of the insured’s stock after the policy period. EMSI Acquisition, Inc. v. RSUI Indem. Co., 2019 WL 4511948 (3d Cir. Sept. 19, 2019). The court also rejected the insurer’s argument that the insured’s settlement with the acquiring company did not constitute “Loss” under the policy.
Continue Reading Third Circuit Finds Major Shareholder Exclusion Ambiguous as Applied to Company Acquiring All of Insured’s Stock after Policy Period
A Texas intermediate appellate court, applying Texas law, has held that an insured-versus-insured (IvI) exclusion did not bar coverage for an arbitration award because the underlying dispute arose from alleged wrongful employment practices, bringing the claim within an exception to the exclusion. Prophet Equity LP v. Twin City Fire Ins. Co., 2019 WL 3886651 (Tex. App. Aug. 19, 2019). The court also determined that the insurer had not met its burden of proving that any portion of the arbitration award constituted uncovered loss such that an allocation should be imposed. Id.
Continue Reading Insured-Versus-Insured Exclusion Does Not Bar Coverage for Derivative Claim Arising from Alleged Employment-Related Misconduct
A federal district court in Massachusetts has held that an insurer properly denied coverage for a claim against an insured church brought by another church that had broken away from the original entity because the breakaway church was not an “insured” under the original church’s policy. Newton Covenant Church, et al. v. Great Am. Ins. Co., 2019 WL 3464705 (D. Mass. Jul. 31, 2019).
Continue Reading Breakaway Church Not an “Insured” Under Original Church’s D&O Policy
The United States District Court for the Northern District of Illinois, applying Oklahoma law, has held that the insured bears the burden of demonstrating that an exception to an otherwise applicable exclusion applies to restore coverage. World Water Works Holdings, Inc. v. Continental Cas. Co., 2019 WL 2576560 (N.D. Ill. June 24, 2019).
Continue Reading Insured Bears Burden of Establishing that Exception to Insured Versus Insured Exclusion Applies
The United States District Court for the Central District of California, applying California law, has held that an insurer lacked adequate information to deny coverage under an insured vs. insured exclusion in a D&O policy. MJC Supply, LLC v. Scottsdale Ins. Co., 2019 WL 2372279 (C.D. Cal. June 4, 2019). The court also held that the insureds’ notice under one policy constituted sufficient notice of the claim under two policies issued to a different named insured. However, the court held that the insureds were not entitled to recover the difference between a judgment entered in their favor and a subsequent settlement of multiple lawsuits because the insureds did not sustain a “Loss.”
Continue Reading Insurer Lacked Conclusive Evidence of Insured’s Involvement to Trigger I v. I Exclusion; Insured’s Compromise of Favorable Judgment to Settle Multiple Suits Not a “Loss”
Applying Massachusetts law, a federal district court has held that an insurer owed a duty to defend based on allegations regarding a law firm’s failures to notify clients of an attorney’s departure and to transfer client materials. Governo v. Allied World Ins. Co., 2018 WL4685566 (D. Mass. Sept. 28, 2018). In reaching this determination, the court determined the alleged conduct satisfied the policy’s definition of “Legal Services Wrongful Acts.”
Continue Reading Law Firm Entitled to Coverage for Claim Alleging Failure to Transfer Client Materials and to Notify Clients of Departing Attorneys