In an insurance coverage dispute arising out of the high-profile and long-running SEC investigation of and enforcement action against the investment firm Patriarch Partners and its CEO Lynn Tilton, a federal district court judge has ruled that coverage under Patriarch’s excess D&O insurance policy is precluded under the policy’s “Pending and Prior Claim” exclusion, because the investigation pending at the time the excess policy incepted represented a “Claim” under the relevant policy language. The court’s analysis includes an interesting discussion of the interaction between the SEC’s investigative actions and the applicable definition of the term “Claim.” The court’s analysis also involves a consideration of the implications for coverage purposes of the various stages within the SEC’s investigative processes. Southern District of New York Judge Valerie Caproni’s September 22, 2017 opinion can be found here.
Continue Reading Ongoing SEC Investigation is a “Claim” Sufficient to Trigger Prior Claim Exclusion

One of the perennial D&O insurance coverage questions is the issue of whether or not the D&O policy provides coverage for costs incurred in responding to a subpoena, as I have discussed in prior posts (refer here and here). Increasingly these days, policies expressly address the issue through language specifying that a subpoena is a “claim” within the meaning of the policy. However, other policies do not includes this language, and even when the policy’s definition of the term “claim” expressly addresses subpoenas, other questions may arise, as discussed below.
Continue Reading Insurance Coverage for Subpoena Response Costs

ohioA standard D&O insurance policy provision specifies that the term “Claim” means, in part, a “written demand for monetary damages or non-monetary relief.” A recurring question that arises under this language is: what exactly is “non-monetary relief”?  In a recent case, an Ohio intermediate appellate court considered the question whether a demand for a software audit from a software industry group alleging unauthorized software copying constituted a written demand for non-monetary relief; the court concluded that it did and that it therefore that the demand represented a claim under the applicable D&O policy. The court also considered the applicability of the policy intellectual property (IP) infringement exclusion. A copy of the Ohio Court of Appeals, Third Appellate District’s October 11, 2016 opinion can be found here
Continue Reading D&O Insurance: Is a Software Audit Demand a “Claim”?

delawareAmong the key parts of a claims-made insurance policy are its definition of the term “claim” and its provisions specifying the policyholder’s notice of claim obligations. A recent Delaware Superior Court decision by Judge Eric Davis examined both of these basic policy features and considered what is required in order to meet the policy’s claim definition and in order for an insurer to raise late notice as defense to coverage. As discussed below, Judge Davis’s analysis raises some important considerations about these both of these basic policy features. Judge Davis’s September 29, 2016 opinion can be found here.
Continue Reading D&O Insurance: What is a Claim and When Does Late Notice Defeat Coverage?

coloradoAmong the most frequently recurring D&O insurance coverage issues is the question of the carrier’s obligation to pay for costs incurred in connection with an informal SEC investigation. Indeed over the years, numerous policy revisions have been adopted in various forms by various carriers to address certain aspects of this issue. Yet the issues continue to arise, as shown most recently in District of Colorado Judge Robert E. Blackburn’s August 4, 2016 opinion (here), in which he held that the D&O policy at issue did not provide coverage for the insured company’s expenses incurred in responding to an informal SEC investigation. The opinion raises a number of issues, as discussed below.
Continue Reading No D&O Insurance Coverage for Costs of Responding to Informal SEC Investigation