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
D&O Insurance: New York Appellate Court Refuses Dismissal for Insurer that Raised Late Notice Defense
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
D&O Insurance: Delaware Supreme Court Rules WaMu Liquidating Trust Coverage Suit Not Yet Ripe
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
Management Liability Insurance: Broad Professional Services Exclusion Precludes Coverage for Securities and Mismanagement Claims
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
Lender Liability Coverage: Contractual Liability Exclusion Does Not Preclude Coverage for Interrelated Claim
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
D&O Insurance: Guilty Pleas Trigger Coverage Exclusions, Entitle Insurer to Recoupment
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
Bankruptcy Court Lifts Stay to Allow D&O Insurer to Pay Individuals’ Defense Expenses
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
D&O Policy’s Professional Services Exclusion Does Not Preclude Law Firm’s Coverage for False Advertising Claim
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
First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses
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
More About D&O Insurance Coverage for Subpoena Response Costs
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