Wrongful Act

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In an interesting decision analzing how a D&O run-off policy’s Subsequent Acts Exclusion operates, a New York federal district court has ruled that acts after the cut-off date that aren’t unlawful don’t preclude coverage for an underlying claim based on alleged misrepresentations made before the cut-off date. Judge Jed Rakoff’s March 13, 2026, decision in the case, applying New York law, can be found here. A March 18, 2026 post about the decision on the Pillsbury law firm’s Policyholder Pulse blog can be found here.

Continue Reading Later Acts that are Not “Wrongful” Don’t Bar D&O Run-Off Coverage

In an interesting March 18, 2024, decision, a California federal district court, applying California law, has held that insurance coverage may be available under the D&O liability endorsement to a community association policy for a claim arising from funds misdirected due to fraudulent payment instructions in a spoofed email. The court held that because the non-payment happened due to the association’s treasurer’s alleged negligence, the vendor’s claim for non-payment arose out of “wrongful acts” of the treasurer, and therefore the vendor’s claim triggered coverage. The court’s decision raises some interesting possibilities about the potential for D&O insurance coverage for these kinds of misdirected payment claims, and it also raises interesting possibilities about potential coverage for breach of contract claims.

Continue Reading Claim for Nonpayment Due to Payment Instruction Fraud Potentially Covered Under D&O Policy

In yet another Delaware court D&O insurance coverage decision that is sure to set the D&O insurance industry spinning, a Delaware Superior Court Judge has held that a SPAC’s post-merger runoff policy provides coverage for the defense fees of former directors of the pre-Merger target company for alleged Wrongful Acts that the occurred prior to the merger – even though the former directors were not directors or officers of the SPAC at the time they allegedly committed the alleged Wrongful Acts. The court’s ruling could even further complicate the already fraught process of placing and structuring D&O insurance in the De-SPAC context. A copy of the Court’s February 6, 2023 opinion can be found here. (Please note that I have linked to the copy of the opinion on the Court’s website; the website copy to which I linked says that the opinion was filed under seal, but the seal reportedly was lifted by the court on February 16, 2023.)

Continue Reading Delaware Court: Pre-Merger Target Company Execs Are Insured Persons Under SPAC’S Post-Merger Tail Policy

Peter S. Selvin

In the following guest post, Peter S. Selvin, a partner with Beverly Hills, California based Ervin, Cohen & Jessup law firm where he chairs the firm’s insurance coverage and recovery practice, reviews two recent case decisions involving the question of whether or not D&O insurance policies apply to provide coverage for consumer protection claims arising from the sale or marketing of products. A version of this article previously published in the Los Angeles Daily Journal. I would like to thank Peter for allowing me to publish his 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 Peter’s article.
Continue Reading Guest Post:  Are Consumer Protection or False Advertising Claims Covered by Insurance?

A perception has emerged in certain circles that Delaware Superior Court is a favorable forum for D&O insurance policyholder and unfavorable for D&O insurers. However, in a recent decision in a D&O insurance coverage dispute by the federal court in Delaware (as opposed to the state court in Delaware) not only determined that Delaware law applied but also determined that there was no coverage under the applicable policy for the underlying claim. As discussed below, the court’s ruling in the case may suggest that Delaware’s federal court may represent an alternative to Delaware’s state courts for D&O insurers. A copy of the District of Delaware’s May 23, 2022 decision in the Cocrystal case can be found here.
Continue Reading Del. Federal Court Rules in Insurer’s Favor in D&O Insurance Coverage Dispute

A recurring issue in recent years has been the question of whether there is coverage under D&O insurance for a shareholder appraisal action. Based on differences in policy wording, the analysis of the issue has turned on a variety of different questions. In a July 2021 ruling (discussed here), a Delaware Superior Court Judge had held that there was no coverage under the D&O insurance policy at issue because the underlying appraisal action was not an action “for” a Wrongful Act, as was required under the policy in order for there to be coverage. Now in a brief opinion the Delaware Supreme Court has affirmed the lower court’s decision, leaving in place the ruling that the policy at issue does not provide coverage for the underlying appraisal action. The Delaware Supreme Court’s March 3, 2022 opinion in the Jarden case can be found here.
Continue Reading Del. Supreme Court Affirms Coverage Denial for Appraisal Action

A recurring D&O insurance coverage issue is the availability under a D&O insurance policy of coverage for a Delaware appraisal action. As discussed here, in October 2020, the Delaware Supreme Court held in the Solera action that an appraisal action was not a “Securities Claim” within the meaning of the policy at issue and therefore was not a covered claim under the policy. As discussed below, a Delaware Superior Court judge has more recently held in an insurance coverage dispute that because an appraisal action is not “for” a “Wrongful Act,” there was no coverage under the policy at issue. A copy of the Delaware Superior Court’s July 30, 2021 decision in the case can be found here.
Continue Reading Appraisal Action is Not a Claim “for” a Wrongful Act

In  a prior post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that the individual seeking coverage must have been acting in an Insured Capacity. The prerequisite that the Insured Person must have been acting in an Insured Capacity at the time of the alleged Wrongful Act arises from the fact that individuals act in a number of different capacities; it is only conduct undertaken in their capacity as an officer or director of the insured company for which the insurance policy provides coverage.

A July 3, 2021 decision by Southern District of New York Judge Gregory H. Woods, applying New York law, provides a good illustration of how individuals may be acting in multiple capacities, and underscores the fact that while the insurance under a D&O policy is only available when the insured is acting in his or her capacity as a director or officer of the insured company, coverage is not entirely precluded if the individual is acting in dual or multiple capacities. A copy of the Judge Woods’s opinion can be found here.
Continue Reading Individuals Acting in Multiple Capacities Entitled to Defense for Acts Undertaken in Insured Capacity

As I have detailed on this blog (most recently here), due to two Delaware court decisions — the Delaware Supreme Court’s 2015 decision in Corwin v. KKR Financial Holdings LLC  (here) and the Delaware Chancery Court’s January 2016 court decision in the In re Trulia Shareholder litigation (here)—deal litigation that in the past would have been filed in Delaware is now being filed elsewhere. But while the deal litigation in Delaware generally may be declining, in recent years there has been a significant uptick in Delaware appraisal litigation. As these cases have become more common in recent years, the question of whether or not D&O insurance covers the costs companies incur in defending appraisal actions has become increasingly common as well. Indeed, in the October 11, 2017 Advisen Quarterly D&O Claims Trends Webinar (refer here), the question of D&O insurance coverage for appraisal claim-related defense expenses was a key topic of conversation. In the following post, I review the issues involved in the question of whether or not a D&O insurance covers the costs defendants incur in defending appraisal claims.
Continue Reading D&O Insurance Coverage and the Rise of Appraisal Litigation

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