A recurring issue in recent years has been the question of whether there is coverage under D&O insurance for a shareholder appraisal action. Based on differences in policy wording, the analysis of the issue has turned on a variety of different questions. In a July 2021 ruling (discussed here), a Delaware Superior Court Judge had held that there was no coverage under the D&O insurance policy at issue because the underlying appraisal action was not an action “for” a Wrongful Act, as was required under the policy in order for there to be coverage. Now in a brief opinion the Delaware Supreme Court has affirmed the lower court’s decision, leaving in place the ruling that the policy at issue does not provide coverage for the underlying appraisal action. The Delaware Supreme Court’s March 3, 2022 opinion in the Jarden case can be found here.
Continue Reading Del. Supreme Court Affirms Coverage Denial for Appraisal Action

Readers of this blog will be interested to know that in a recent D&O insurance coverage dispute, the Delaware Superior Court actually handed the D&O insurers a win — a rare development indeed in Delaware’s courts. However, the D&O insurers won by successfully arguing that Delaware law governed the insurance dispute; the ultimate outcome may have been due in part to the fact that the losing policyholder was in the uncomfortable position of trying to argue that another jurisdiction’s law controlled after all after having first argued that Delaware law applied. There are a lot of twists and turns to this case, but, as discussed below, the outcome of this case arguably is far from reassuring to D&O insurers, even though the insurers prevailed in this case.
Continue Reading Rare D&O Insurer Win in Delaware Court, But Should D&O Insurers Celebrate?

A recurring D&O insurance coverage issue is the availability under a D&O insurance policy of coverage for a Delaware appraisal action. As discussed here, in October 2020, the Delaware Supreme Court held in the Solera action that an appraisal action was not a “Securities Claim” within the meaning of the policy at issue and therefore was not a covered claim under the policy. As discussed below, a Delaware Superior Court judge has more recently held in an insurance coverage dispute that because an appraisal action is not “for” a “Wrongful Act,” there was no coverage under the policy at issue. A copy of the Delaware Superior Court’s July 30, 2021 decision in the case can be found here.
Continue Reading Appraisal Action is Not a Claim “for” a Wrongful Act

David H. Topol

In the following guest post, David H. Topol of the Wiley law firm reviews the important legal and regulatory developments affecting private investment funds during 2020. I would like to thank David for allowing me 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is David’s article.
Continue Reading Guest Post: Private Investment Funds: Major Developments from 2020

In a closely watched insurance coverage dispute, the Delaware Supreme Court reversed a lower court rulings and held that an appraisal proceeding is not a “Securities Claim” within the meaning of the defendant company’s D&O insurance policy and therefore that the proceeding is not a covered claim under the policy. Because it ruled there is no coverage, the Court did not address the other more controversial aspects of the lower court’s ruling. The Supreme Court’s October 23, 2020 opinion in In re Solera Insurance Coverage Appeals can be found here.
Continue Reading Delaware Supreme Court: Appraisal Action Not a “Securities Claim” and Therefore Not Covered by D&O Insurance

Makoto Ikeya

In the following guest post, Makoto Ikeya, Managing Director, Alpha Financial Experts K. K., analyzes trends in Japanese and Delaware court decisions in appraisal litigation and presents a common recent trend in both jurisdictions to place heavy weight on merger price while highlighting differences on how to assess the fair procedure and other conditions to adopt the merger price as a base for the fair price. A version of this article previously was published on the Alpha Financial Experts’ website. I would like to thank Makoto for allowing me 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 Makoto’s article.
Continue Reading Guest Post: Appraisal Litigation in Japanese and Delaware Courts – Trends of Decisions on the Fair Price

In the following guest post, Alison Finn, Claims Counsel, DWF Claims; Elan Kandel, Member, Bailey Cavalieri; and James Talbert, Associate, Bailey Cavalieri, take a look at the most important management and professional liability coverage decisions for 2019, involving the perennial coverage issues for insurers and policyholders. I would like to thank Alison, Elan, and James for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Key 2019 Management and Professional Liability Insurance Coverage Decisions

Dan Wolf

As I discussed in a recent post, in July 2019, a Delaware Superior Court judge held that an appraisal action is a Securities Claim within the meaning of the applicable D&O insurance policy. While this part of the court’s ruling was noteworthy, there was another part of the court’s ruling that was also important. In addition to the Securities Claim issue, the court also determined that policy provided coverage for pre-judgment interest on the fair value payment in the appraisal action, even though the policy did not provide coverage for the payment itself.

In the following guest post, Dan Wolf, an associate at the Gilbert law firm, takes a look at the pre-judgment interest aspect of the recent Delaware opinion. Among other things, Dan suggests that this aspect of the court’s decision changes defendants’ analysis of whether or not to prepay appraisal claimants. A version of this article first appeared on his firm’s blog, here. I would like to thank Dan for his willingness to allow me 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Dan’s article.
Continue Reading Guest Post: Delaware Court Ruling Creates New Wrinkle for Defendants Evaluating Appraisal Claims

As the number of shareholder appraisal lawsuits increased a few years ago, a recurring question has been whether or not a company’s D&O insurance covers the company’s costs incurred in defending an appraisal action. In a recent decision, a Delaware Superior Court judge rejected a number of the recurring coverage defenses on which insurers rely in disputing coverage for appraisal action costs and expenses. The Court’s opinion in the Solera Holdings case contains several very interesting rulings, some of which could be relevant even outside of the appraisal action context. A copy of the Delaware Superior Court’s July 31, 2019 opinion can be found here.
Continue Reading D&O Insurance: Del. Court Rejects Insurers’ Appraisal Action Coverage Defenses

Between 2010 and 2016, the number of shareholder appraisal actions filed in Delaware courts increased every year, but in 2017 and again in 2018, the number of appraisal actions declined, according to a recent report from Cornerstone Research. The decline arguably is a result of recent Delaware Supreme Court decisions in which the court reversed lower court rulings holding that the fair value exceeded the deal price and instead indicated that the deal price should be given substantial weight, at least where the sales process was “robust.” The report, entitled “Appraisal Litigation in Delaware: Trends in Petitions and Opinions, 20016-2018” can be found here. Cornerstone Research’s February 13, 2019 press release about the report can be found here.
Continue Reading Cornerstone Research: After Years of Increases, Number of Delaware Appraisal Actions Decline