In a noteworthy decision that raises a number of interesting issues, District of Minnesota Judge Ann D. Montgomery, applying Minnesota law, held that a company’s excess D&O insurance policy’s prior acts exclusion precludes coverage for the entirety of claims asserted against the company, even with respect to wrongful acts alleged to have taken place after the prior acts date. This case involves a number of twists and turns, while raising some important questions. Judge Montgomery’s June 4, 2019 opinion in the case can be found here. The Wiley Rein law firm’s June 20, 2019 post about the ruling on its Executive Summary Blog can be found here.
Continue Reading D&O Insurance: Prior Acts Exclusion Precludes Coverage for Post-Past Acts Date Conduct

I have frequently written on this blog about relatedness issues and how they affect the availability of D&O insurance coverage for a series of lawsuits that have been filed over time against a company. D&O insurers frequently argue, in order to try to avoid coverage,  that a later lawsuit is related to an earlier proceeding in order to try to argue that the subsequent suit is deemed made at the time of the earlier proceeding. In an interesting case in the Southern District of Texas, the insurer took the opposite position and tried to argue that two securities class action lawsuit complaints filed after the end of the policy period were unrelated to an earlier securities suit that had been filed during the policy period, in order to try to avoid coverage for the subsequent lawsuits.

In an October 4, 2018 decision (here), Magistrate Judge Nancy K. Johnson ruled that the later securities lawsuits filed against Nobilis Health were interrelated with the earlier lawsuit against the company, and therefore that the insurer was obligated to cover the costs the insured company incurred in defending all three lawsuits. The court’s decision underscores the breadth of the relatedness in D&O insurance policies and highlights the fact that relatedness issues can, depending on the circumstances, result in a coverage expansion and not only a narrowing of coverage.
Continue Reading D&O Insurance: Insurer Must Defend Later Securities Lawsuits Related to Earlier Claim

zillowA recurring circumstance fraught with peril for policyholders is one in which the policyholder receives a demand letter in one policy period and then receives a related lawsuit in a subsequent policy period. The fact that these events straddle two policy periods creates potential for possible coverage preclusive issues having to do with Notice of Claim and Claims Made Date issues. In an April 13, 2017 order (here), Judge James Robart, applying the law of Washington State, held that because Zillow failed to give timely notice of a demand letter it received in the prior policy period, there was no coverage for the later lawsuit filed against Zillow in the subsequent policy period, because the claim had first been made at the time of the demand. As discussed below, this case and Judge Robart’s analysis raises some interesting issues.
Continue Reading Late Notice and Claims Made Date Issues

nomura1As the litigation wave arrived following the global financial crisis, many financial institutions were hit with multiple suits that arrived piecemeal and over time. For D&O insurance coverage purposes, these lawsuits were filed across multiple policy periods. A recurring question as the subprime litigation has worked its way through the system is whether the various

prOn July 9, 2014, in yet another in the ever growing line of cases examining whether or not separate D&O claims involving interrelated wrongful acts, District of Puerto Rico Judge Gustavo Gelpi, applying Puerto Rico law, held that the FDIC’s claims against the former directors and officers of the failed Westernbank did not involve

The options backdating scandal may now be ancient history, but questions surrounding insurance coverage for the scandal’s consequences apparently continue to live on. In a September 9, 2011 opinion applying Maryland law, Southern District of New York Judge Naomi Reice Buchwald ruled in a coverage action brought by SafeNet’s excess D&O insurer that, among many