D&O insurance policies typically extend coverage to “duly elected or appointed” directors and officers. But what happens if the proper election or appointment procedures were not followed yet the individual served as a director anyway? Is that person a “director” for purposes of D&O insurance coverage? How about for purposes of the Insured vs. Insured exclusion? These are the questions that a federal district court, applying Idaho law, addressed in a case involving individuals whose board appointments were procedurally flawed but whose board membership was subsequently ratified by corporate conduct. The court concluded the individuals are “directors” within the meaning of the policy, and so lawsuits brought by the individuals against the company and other board members represent insured vs. insured claims for which coverage is precluded by exclusion. A copy of the court’s March 15, 2024, decision can be found here. (Hat Tip to Paul Curley of the Kaufman, Borgeest, & Ryan law firm for his March 16, 2024 LinkedIn post about the case, here.)Continue Reading Is a Director “Duly Elected or Appointed” If the Election Was Flawed But Later Ratified?
Among the looming economic consequences of the pandemic is the likelihood of a huge surge in bankruptcy filings. A rise in bankruptcies will in turn likely lead to an increase in the number of bankruptcy-related litigation claims against directors and officers of the bankrupt companies, which in turn could lead to insurance coverage issues under the companies’ D&O insurance policies. In the following guest post, Alicia Garcia and Kate Hausmann, Complex Claim Specialists with Hiscox USA, and James Talbert and Elan Kandel of the Bailey Cavalieri law firm take a look at the issues that could arise in the bankruptcy context with respect to the policies’ Insured vs. Insured Exclusion. I would like to thank the authors 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.
As I noted in yesterday’s post, there could be a significant number of bankruptcies in coming months, and D&O claims in the bankruptcy context could give rise to insurance coverage disputes. In addition to the possible coverage issues I noted in yesterday’s post (pertaining bankruptcy exclusions, in particular), another issue that could arise is whether or not coverage for claims brought on behalf of the bankrupt debtor’s estate or on behalf of unsecured creditors is precluded by the insured vs. insured exclusion found in most policies.
The insured vs. insured exclusion is a standard exclusion in most management liability insurance policies. The exclusion precludes coverage for claims brought by one insured against another. The IvI exclusions in most management liability insurance policies typically include a number of exceptions to the exclusion preserving coverage for claims that otherwise would be excluded. In a recent decision, a Texas intermediate appellate court found that the IvI exclusion in an investment management firm’s policy did not preclude coverage for an arbitration award because the underlying dispute arose out of an employment practices claim and therefore the dispute – including even the derivative claims the claimant asserted in the arbitration – came within the exclusion’s coverage carve-back for wrongful employment practices claims. As discussed below, the court’s opinion has a number of interesting features.
In the following guest post, Jennifer Bergstrom, Esq., Senior Claim Counsel, Hiscox USA, Elan Kandel, Esq. and Jennifer Lewis, Esq. of Bailey Cavalieri take a look at the key D&O insurance coverage decisions of 2017. I would like to thank the authors for allowing me to publish their article. 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 the authors’ guest post.
The Insured vs. Insured exclusion is a standard provision found in most D&O insurance policies. As its name implies, the exclusion precludes coverage for claims brought by one insured against another insured. The exclusion is a frequent source of coverage disputes, particularly in the bankruptcy context, due to frequent disagreements over the exclusion’s application to claims brought against company management by representatives of the creditors or of the bankrupt estate. One recurring dispute of this type is the question of the exclusion’s applicability to claims brought against company management by the company as debtor-in-possession. A recent appellate question considered a variation of this question – that is, whether the exclusion precluded coverage for claims brought against company management by the trustee of a liquidation trust as an assignee of the company as debtor in possession. In a June 20, 2017 opinion (
As I readers of this blog well know, a 
You know that the Insured vs. Insured Exclusion is a frequent source of D&O insurance coverage disputes when on consecutive days two federal appellate courts issue opinions interpreting and applying the provision. As I