Tag Archives: defense expense

Delaware Supreme Court: What is a “Securities Claim”?

Most public company D&O insurance policies provide coverage for the corporate entity only for “Securities Claims.” But what constitutes a “Securities Claim”? That is the question the Delaware Supreme Court addressed in a recent appeal of an insurance coverage dispute in which a bankruptcy trustee had sued Verizon for breach of fiduciary duty, unlawful payment … Continue Reading

News Flash: Insurer That Paid Full Policy Limits Did not Breach the Policy or Act in Bad Faith

D&O insurance policyholders sometimes bridle when the insurers take steps to try to rein in burgeoning defense expense. In that situation, the D&O insurers will often try to remind the policyholder that because defense expense erodes the limit of liability, it is in everyone’s interest for defense expense to be monitored closely. An unusual coverage … Continue Reading

Guest Post: Fee Exclusion Precludes Coverage with No Allowance for Defense Costs

In prior posts (most recently here) I have reviewed cases in which courts considered the question of insurance coverage for a bank’s obligation to repay allegedly improper overdraft fees.  The following guest post discusses a recent overdraft fee coverage case from the Seventh Circuit. BancorpSouth v. Federal Insurance Co. (the opinion can be found here). … Continue Reading

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 suit against … Continue Reading

Management Liability Insurer Must Defend Insured Accused of Sexual Molestation

The criminal trial in which Jerry Sandusky, the former defensive coordinator of Penn State’s football team, stands accused of sexually abusing at least 10 boys over a 15-year period began Tuesday, June 4, 2012, in Bellefonte, Pa. Sandusky has been charged with forty criminal counts. Sandusky has also separately named as a defendant in a … Continue Reading

Automatic Bankruptcy Stay Lifted to Permit MF Global’s D&O and E&O Insurers to Pay Defense Costs

The automatic stay in bankruptcy may be lifted to permit MF Global’s D&O and E&O insurers advance the defense expenses of individual defendants in the underlying litigation arising out of the company collapse, notwithstanding the objections of the failed company’s commodities customers, according to an April 10, 2011 ruling from Southern District of New York … Continue Reading

D&O Insurance: A Hornets’ Nest of Defense Cost Coverage Issues

Among the most contentious D&O claims issues are questions surrounding defense cost coverage, including in particular questions such as the allowable billable rates or the involvement of multiple firms.  In a detailed November 8, 2011 opinion, Eastern District of California Judge Lawrence O’Neill, applying California law, addressed the hornets’ nest of problems involved when these … Continue Reading

Lehman Bankruptcy, Defense Expenses, and D&O Insurance

The September 2008 collapse of Lehman Brothers resulted in the largest bankruptcy filing in U.S. history, as well as an explosion of litigation and regulatory actions and investigations. In the pending bankruptcy proceedings a recent motion by the debtor’s counsel details the massive legal costs accumulating in the various legal proceedings and also raises some … Continue Reading

Two Appellate Courts Consider D&O Insurers’ Obligation to Advance Defense Expenses

Within the space of just a few days, two federal appellate courts – the Fifth and Sixth Circuits – issued separate opinions consider D&O insurers’ obligations to advance defense expenses. The Fifth Circuit entered its March 15, 2010 decision in the high-profile Stanford Financial insurance coverage dispute. The Sixth Circuit’s March 11, 2010 opinion was … Continue Reading

Court Orders Stanford Financial D&O Insurers to Advance Defense Expenses

The individual defendants in the various Stanford Financial-related SEC enforcement and criminal proceedings have been engaged in a long-running and procedurally complicated battle over whether the firm’s D&O insurers must advance the individuals defense expenses. In a sweeping January 26, 2010 opinion (here), Southern District of Texas Judge David Hittner rejected the grounds on which … Continue Reading

D&O Insurance: More about Defense Expense and Limits Adequacy

For many companies, one of the most challenging parts of the Directors and Officers (D&O) insurance procurement process is determining how much insurance to purchase. Against a backdrop of basic affordability, the company must consider complex issues such as limits adequacy – that is, how much insurance is enough?   Determining limits adequacy is even … Continue Reading

Subprime Litigation: A Glimpse of the End Game?

The 2007 settlement of an Ontario securities class action may suggest the eventual direction of many of the lawsuits in the current subprime and credit crisis-related litigation wave. Even though the lawsuit was filed in a Canadian court and involved a company (FMF Capital Group Ltd.) whose shares traded only on a Canadian exchange, the … Continue Reading

D&O Insurance: Defense Expense Advancement

On June 26, 2008, Judge Gerard Lynch of the Southern District of New York issued another opinion (here) in the D&O insurance coverage litigation arising out of the Refco debacle (My recent post discussing Judge Lynch’s prior opinion in the case discussing insurance application issues can be found here.)   In yet another judicial decision that … Continue Reading

D&O Insurance: A Criminal Sentencing Factor?

In a prior post (here), I commented on former Refco CEO Phillip Bennett’s extraordinary cooperation with the Refco class action plaintiffs, following his entry of a guilty plea in the criminal case against him. As might have been anticipated, Bennett is hoping that his cooperation with the class plaintiffs, as well as the Bankruptcy Trustee, … Continue Reading