As I have frequently noted on this blog, most recently here, the question of whether or not the Insured vs. Insured applies to preclude coverage is a frequently recurring D&O insurance coverage issue. In the following guest post, Peter Webster of the Carlton Fields law firm takes a look at a recent Florida intermediate appellate court decision interpreting and applying a D&O insurance policy’s Insured vs. Insured exclusion. Peter and his Carlton Fields colleague Patricia Thompson represented the insurer in the proceeding. I would like to thank Peter for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter’s guest post.
The Florida First District Court of Appeal, in Durant v. James and Progressive Casualty Insurance Company, an April 4, 2016, opinion, rejected arguments by a former director of a defunct bank holding company that an insured vs. insured exclusion was ambiguous and that, therefore, his claim against the former President and CEO of the holding company should have been covered by the company’s D & O policy because the claim was not brought in the former director’s capacity as a director but, rather, in his personal capacity. In a case of first impression in the Florida courts, the First District distinguished an earlier decision by Florida’s Third District Court of Appeal in Rigby v. Underwriters at Lloyd’s, London, 907 So. 2d 1187 (Fla. 3d DCA 2005), which the former director contended supported his position that the exclusion did not expressly state whether it applied to all claims brought by a former director or only to claims brought by a former director in his capacity as a former director and that the exclusion must be read in favor of the insured, and coverage. The court concluded that Rigby was factually distinguishable because the named insured was the insured company’s bankruptcy trustee, who had been added as an insured at his request “after his claim had materialized to advance a particular statutory duty,” in essence, limiting Rigby to its peculiar facts. The court also held that coverage was not afforded by an exception to the insured vs. insured exclusion for claims “brought by the Insured Person [that] arise out of the employment of the Insured Person” because the former director was not an employee of the company simply by virtue of his position as director.
Noting that Florida law requires that words in an insurance policy be given their “plain and ordinary meaning,” the court concluded “there is no ambiguity or lack of clarity in the terms” requiring interpretation, and that, “[a]pplying the clear language of the policy, the trial court correctly declared that there was no coverage.”