I have long believed and said that the typical professional liability and D&O liability insurance policy contractual exclusion written with the broad “based upon, arising out” preamble sweeps too broadly and precludes coverage for the very kind of claims for which policyholders buy the insurance. The Seventh Circuit has now said what I have long been saying; the appellate court found that the contractual liability exclusion in an E&O insurance policy renders coverage under the policy “illusory” and therefore the policy must be reformed to match the policyholder’s “reasonable expectations.” I hope everyone involved in the professional liability and D&O liability insurance industry will take the time to familiarize themselves with this recent decision. I also hope this decision means the end of contractual liability exclusions using the broad “based upon, arising out of” preamble.
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seventh 2Cornerstone Research’s recent report on merger objection lawsuit filings showed what many of us expected to see – that in the wake of Delaware Chancellor Andre Bouchard’s rejection of the disclosure only settlement in the litigation arising out of Zillow’s acquisition of Trulia, there would be a decline in the number of merger objection lawsuits filed. The report also showed that the filing decline was particularly steep in Delaware, but not as sharp elsewhere. In other words, the plaintiffs’ lawyers still active in pursuing this type of litigation increasingly are filing their merger objection lawsuits outside of Delaware. With these kinds of cases now relatively more likely to be heard outside Delaware, the question of whether or not judges in other jurisdictions will follow the lead of Delaware’s courts in rejecting disclosure only settlements takes on relatively greater importance.
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