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

Tag Archives: coverage litigation

Professional Liability Insurance: Application Misrepresentation Precludes Coverage for Legal Malpractice Claim

Posted in D & O Insurance
In a July 31, 2014 opinion (here), Central District of California Judge Fernando M. Olguin, applying California law, granted a professional liability insurer’s motion for summary judgment in a coverage lawsuit brought by the Blum Collins LLP law firm and Craig M. Collins dba the Collins Law Firm for breach Judge Olguin agreed that because … 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

Seventh Circuit: D&O Insurance Covers Multiplied Portion of Attorney Fee Award

Posted in D & O Insurance
Does the multiplied portion of an attorneys’ fee award constitute the “multiplied portion of multiplied damages” such that it is precluded from coverage under a D&O insurance policy? That was the question addressed in a July 16, 2013 decision from the Seventh Circuit. In an interesting opinion from Chief Judge Frank Easterbrook, the appellate court, … Continue Reading

Professional Liability Insurance: Criminal Plea Precludes Insurer’s Duty to Defend

Posted in D & O Insurance
An insured’s guilty plea to criminal charges relieved his professional liability insurer of its duty under the policy to defend him against related civil claims, according to a June 18, 2013 Order by Southern District of Florida Judge Daniel Hurley. Judge Hurley’s decision is interesting because it addresses the question whether the court can consider … Continue Reading

D&O Insurance: Actions Not Undertaken in an “Insured Capacity” Not Covered

Posted in D & O Insurance
Many organizations purchase management liability insurance to provide liability and defense cost protection for their directors and officers. But the management liability insurance protects the individuals only for their actions undertaken in an “insured capacity.” The policies are not intended to not protect them for actions they undertake in a capacity other than as a … Continue Reading

D&O Insurance: So What is a “Securities Claim”?

Posted in D & O Insurance
The modern public company D&O insurance policy provides coverage not only for the directors and officers of the company but also for the company itself – however, in the public company D&O insurance policy, the entity coverage applies only to securities claims, a limitation that sometimes leads to disputes whether or not a particular matter … Continue Reading

D&O Insurance: Bank Directors’ Notice of FDIC Failed Bank Suit Held Timely

Posted in D & O Insurance
On February 5, 2013, in a detailed opinion exploring the nuances of a D&O policy’s extended reporting period provisions, Western District of North Carolina Judge Henry Herlong Jr.  determined that the directors of the failed Bank of Ashville of Asheville, North Carolina timely provided their D&O insurer notice of the FDIC’s lawsuit against them as … Continue Reading

D&O Insurance: “Ambiguity” Whether Insured vs. Insured Exclusion Bars Coverage for FDIC’s D&O Claims

Posted in D & O Insurance
As I have discussed in prior posts (refer here for example), one of the recurring D&O insurance coverage issues that has arisen in connection with the FDIC’s failed bank litigation is the question whether or not the FDIC’s claims as receiver for the failed bank against the bank’s former directors and officers trigger the D&O … Continue Reading

District Court: Insured vs. Insured Exclusion Does Not Preclude Coverage for FDIC’s Claims Against Failed Bank’s Directors and Officers

Posted in D & O Insurance
A significant side-effect from the current bank failure wave has been the FDIC’s assertion of claims against the former directors and officers of many of the failed banks. The FDIC’s claims have in turn raised significant questions of insurance coverage under many of the failed banks’ D&O insurance policies. As discussed in a prior post … Continue Reading

D&O Insurance: Two More Cases Hold No Excess Coverage Where Underlying Insurance Not Exhausted

Posted in D & O Insurance
Two more courts have joined the growing line of cases holding that excess insurer’s payment obligations were not triggered where the policyholder funded part of the loss below the excess insurer’s limit.   First, on September 12, 2012, New York (New York County) Supreme Court Judge Melvin Schweitzer, applying New York law, ruled in favor … Continue Reading

D&O Insurance: Contract Exclusion Precludes Coverage for Negligent and Fraudulent Misrepresentation Claims

Posted in D & O Insurance
In a decision that gives broad effect to a D&O insurance policy’s contractual liability exclusion, on August 17, 2012, Middle District of Pennsylvania Judge William Nealon granted the insurer’s motion for summary judgment, holding under Pennsylvania law that the insurer had no obligation to defend or indemnify the policyholder in the underlying action. A copy … Continue Reading

D&O Insurance: When is a Claim First Made?

Posted in D & O Insurance
Most management liability insurance policies these days are written on a claims made basis – -that is, they cover claims that are first made during the policy period. But what determines when a claim is first made? A February 15, 2012 decision from the Western District of Texas and applying Texas law took a look … Continue Reading

D&O Insurance: “Disgorgement” Paid in SEC Settlement Held Not Covered

Posted in D & O Insurance
Carriers generally contend that  insurance does not cover amounts that represent “disgorgement” or that are “restitutionary” in nature. But what makes a particular payment a “disgorgement”?  In a December 13, 2011 opinion (here), the New York Supreme Court, Appellate Department, First Division, held that amounts Bear Stearns paid in settlement of SEC late trading and market … Continue Reading

Credit Crisis Securities Suits: Potential Hurdles?

Posted in Subprime Litigation
The current global financial crisis may result in "unprecedented levels of litigation" that "will either serve to identify ‘weak links’ in the chain of participants who originate, appraise, and service collateral and underwrite, manage, insure, rate and sell securities," or it will serve to "highlight where the market may have underappreciated certain risks or failed … Continue Reading

D&O Insurance: Consequences of Withheld Settlement Consent

Posted in D & O Insurance
In prior posts (here and here), I discussed two recent decisions in which courts held that D&O insurance coverage was precluded for settlements the insureds entered without first obtaining the insurers’ consent as required under the applicable policies. An August 19, 2008 Second Circuit opinion (here) addressed the related question of what happens when the … Continue Reading

D&O Insurance: A Bonfire of Policy Application Issues

Posted in D & O Insurance
A June 18, 2008 opinion (here) by Judge Gerald Lynch in the coverage litigation between former Refco directors and officers and one of the company’s excess D&O insurers presents a veritable conflagration of policy application issues, including perennial questions concerning warranties, severability, and imputation, as well as a host of related issues arising from the policy procurement … Continue Reading