The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: D & O Insurance

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Despite Policyholder’s Delayed Notice, Insurer Must Cover Subsequent Claims Related to Earlier Timely Claim

Posted in D & O Insurance
On July 16, 2014, the Eighth Circuit, applying New York law, concluded that because a financial services firm’s professional liability insurance policy was ambiguous on the question whether the policy’s timely notice requirements apply to later claims related to a timely original claim, the policy provides coverage for the later claims. The district court had … Continue Reading

D&O Insurance: FDIC’s Claims Against Failed Bank’s Directors and Officers Not Related to Earlier Claims, Trigger Separate Policy Period

Posted in D & O Insurance
On July 9, 2014, in yet another in the ever growing line of cases examining whether or not separate D&O claims involving interrelated wrongful acts, District of Puerto Rico Judge Gustavo Gelpi, applying Puerto Rico law, held that the FDIC’s claims against the former directors and officers of the failed Westernbank did not involve the … Continue Reading

Court Holds Professional Liability Insurance Covers Restitutionary Settlement

Posted in D & O Insurance
On July 3, 2014, in an interesting decision that is sure to stir up much discussion and controversy, District of Minnesota Judge Paul Magnuson, applying Delaware law, held that U.S. Bank was entitled to coverage under its professional liability insurance for restitutionary amounts it paid in settlement of an overdraft fee overcharge class action. The … Continue Reading

D&O Insurance: Excess Insurance Not Triggered Due to Insolvency of Underlying Insurer and Due to Insufficient Loss

Posted in D & O Insurance
In a long and convoluted opinion befitting the long and convoluted case in which it was entered, Judge David Grine of the Pennsylvania (Centre Country) Court of Common Pleas, applying Pennsylvania law, entered summary judgment for an excess D&O insurer, holding that the excess insurer’s payment obligation had not been triggered due to the insolvency … Continue Reading

D&O Insurance: Liberalization Endorsement Allows Insureds to Rely on New Policy Form’s Enhanced Insured vs. Insured Exclusion Carve-Back

Posted in D & O Insurance
On June 19, 2014, in a case involving so many unusual coverage issues that it seems more like a law school exam question than an actual coverage dispute, New York (New York County) Supreme Court Judge Melvin Schweitzer, applying New York law, granted summary judgment for the former directors of the bankrupt Lyondell Chemical Company … Continue Reading

Insurance Coverage: Six-Month Delay in Providing Notice Not “As Soon as Practicable”

Posted in D & O Insurance
Has notice of claim been provided “as soon as practicable” if it is sent to the insurer during the policy period but six months after service on the insured of the underlying complaint? Apparently not, at least according to a June 6, 2014 opinion of a New Jersey intermediate appellate court, applying New Jersey law. In addition, … Continue Reading

D&O Insurance: Later Securities Suit and Prior FDIC Failed Bank Claim Held Unrelated, Securities Suit Not Covered

Posted in D & O Insurance
On May 8, 2014, Southern District of New York Judge Deborah Batts, applying New York law, held that a there was not a sufficient “factual nexus” between a securities suit filed after the expiration of a failed bank’s D&O insurance policy and an FDIC claim that had been first made during the policy period and … Continue Reading

D&O Insurance: New York Appellate Court Refuses Dismissal for Insurer that Raised Late Notice Defense

Posted in D & O Insurance
A New York appellate court, applying New York law, has rejected a D&O insurer’s argument based on alleged late notice of claim that it had no coverage obligations for amounts Sirius XM Radio  had incurred in underlying litigation, holding that the insurer’s policy was ambiguous on the timeliness requirements for notice of interrelated claims. A … Continue Reading

D&O Insurance: Delaware Supreme Court Rules WaMu Liquidating Trust Coverage Suit Not Yet Ripe

Posted in D & O Insurance
In a May 28, 2014 opinion (here), the Delaware Supreme Court held that an action by the bankrupt Washington Mutual bank holding company’s liquidating trust seeking a judicial declaration of coverage under the bank’s D&O insurance program for claims asserted by the trust against the failed bank’s directors and officers must be dismissed on ripeness … Continue Reading

Management Liability Insurance: Broad Professional Services Exclusion Precludes Coverage for Securities and Mismanagement Claims

Posted in D & O Insurance
On May 15, 2014, in an interesting decision illustrating how complex insurance contract wordings can interact to produce outcomes policyholders may not have expected or intended, District of Columbia Superior Court Judge Frederick H. Weisberg held that as worded a broad professional services exclusion in The Carlyle Group’s management liability insurance policy precluded coverage for … Continue Reading

Lender Liability Coverage: Contractual Liability Exclusion Does Not Preclude Coverage for Interrelated Claim

Posted in D & O Insurance
In a March 20, 2014 decision involving interpretation of the interrelated wrongful acts provision and of the contractual liability exclusion in a bank professional liability insurance policy, District of Idaho Magistrate Judge Ronald E. Bush entered summary judgment on behalf of the policyholder, ruling that the underlying dispute was covered under the policy’s lender liability … Continue Reading

D&O Insurance: Guilty Pleas Trigger Coverage Exclusions, Entitle Insurer to Recoupment

Posted in D & O Insurance
In a detailed April 23, 2014 opinion (here), Eastern District of Virginia Judge Liam O’Grady, applying Virginia law, held that the guilty pleas of executives of Protection Strategies, Inc. triggered four separate exclusions in the D&O coverage section of PSI’s management liability policy and that the management liability insurer was entitled to recoup the defense fees … Continue Reading

Bankruptcy Court Lifts Stay to Allow D&O Insurer to Pay Individuals’ Defense Expenses

Posted in D & O Insurance
As those involved in D&O Insurance claims well know, a recurring D&O insurance problem is the question of whether or not the D&O insurer for a bankrupt company can pay the costs of the bankrupt company’s former directors and officers incurred in defending claims against them. Disputes arise when the individuals seek to have the … Continue Reading

D&O Policy’s Professional Services Exclusion Does Not Preclude Law Firm’s Coverage for False Advertising Claim

Posted in D & O Insurance
Well-advised professional services firms will carry both errors and omissions insurance and management liability insurance. A recurring problem under management liability insurance policies for all types of professional services firms relates to the very broad professional services exclusions often found in these polices. These exclusions preclude coverage for claims relating to the professional services firm’s delivery of … Continue Reading

First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

Posted in D & O Insurance
In an interesting March 31, 2014 opinion (here), the Unites States Court of Appeals for the First Circuit, applying Puerto Rico law, affirmed a district court’s ruling that the D&O insurer for the failed Westernbank of Mayaguez, Puerto Rico must advance the bank’s former directors’ and officers’ expenses incurred in defending the FDIC’s suit against … Continue Reading

More About D&O Insurance Coverage for Subpoena Response Costs

Posted in D & O Insurance
As I have previously noted on this blog, a recurring insurance coverage issue is whether or not the costs incurred in responding to a regulatory or enforcement subpoena represent covered defense under a D&O insurance policy. In an interesting March 27, 2014 memo entitled “D&O Coverage for Subpoena Response Costs: An Emerging Consensus?” (here), Benjamin … Continue Reading

More About Stories We’re Following

Posted in D & O Insurance
IndyMac Coverage Suit Settled, But Oral Argument Will Stay on the Calendar?: As I noted in a recent post (here, second item), the parties in the IndyMac D&O insurance coverage action – that is, the dispute to determine whether or not only a single $80 million tower of insurance applies to the various D&O claims … Continue Reading

NY Court of Appeals Reverses Itself, Holds Insurer’s Breach of Duty to Defend Doesn’t Waive Coverage Defenses After All

Posted in D & O Insurance
In an unusual development in a closely watched case, K2 Investment Group, LLC v. American Guarantee & Liability Ins. Co., the New York Court of Appeals has reversed its own June 2013 ruling in the case in which it held that a legal malpractice insurer that breached its duty to defend is barred from relying … Continue Reading

Private Companies: Risks, Exposures and Insurance

Posted in D & O Insurance
In general, and at least in the United States, executives at public companies don’t need to be convinced that their companies need to have D&O insurance. That is not always true with officials at private companies. Some officials at some private companies – particularly very closely held private companies – are skeptical that they need … Continue Reading

Guest Post: Dispelling the Myths of Side A Directors and Officers Insurance

Posted in D & O Insurance
Many insurance buyers now regularly include a separate component of Side A insurance as part of their D&O insurance program. However, even though it has become an increasingly common part of many companies’ D&O insurance programs, Side A D&O insurance is not always fully understood. In the following guest post, Robert F. Carangelo and Paul … Continue Reading

D&O Insurance: Settlement of Antitrust Claim for Underpaid Wages Not Excluded “Disgorgement”

Posted in D & O Insurance
A settlement of an antitrust lawsuit alleging that a group of hospitals conspired to underpay their nurses did not represent excluded “disgorgement” and therefore was not excluded from coverage under William Beaumont Hospital’s management liability insurance policy, according to a January 16, 2014 Sixth Circuit decision. The opinion will likely be of particular interest to … Continue Reading

Kiwi Supreme: Claimants’ “Charge” on D&O Insurance Blocks Payment of Directors’ Defense Costs

Posted in D & O Insurance, International D & O
In a December 23, 2013 ruling that will be surprising and unwelcome to D&O insurers and their insureds in New Zealand (and perhaps elsewhere) , the New Zealand Supreme Court has reversed the holding of an intermediate appellate court and ruled that, by operation of a statutory “charge” on insurance in favor of third party … Continue Reading

D&O Insurance: Health Care Organizations Face Increasing Rates, Tightening Terms

Posted in D & O Insurance
Largely as a result of changes in the industry following the enactment of the Affordable Care Act, health care organizations have seen their D&O insurance rates increasing and the available terms and conditions tightening, according to a December 10, 2013 report from Marsh. Moreover, these changes are likely to continue in 2014, according to the … Continue Reading