Posts in Insurance

Delaware Supreme Court Affirms Delaware Choice-of-Law Ruling In Dismissal of D&O Liability Insurance Coverage Dispute

Stillwater Mining Company v. National Union Fire Insurance Company of Pittsburgh, PA et al., No. 24, 2022 (Del. Jan. 12, 2023)
This decision from Delaware Supreme Court addresses choice-of-law questions for D&O insurance contract disputes and cautions litigants to remain consistent in the positions they take before the trial court. The appellant here, an insured under a tower of directors and officers’ liability insurance policies, asserted that Delaware law applied to the claims in its original complaint for coverage of its defense costs in an appraisal action. Following a decision from the Delaware Supreme Court in another matter (In re Solera Ins. Coverage Appeals), which held that an insurer is not obligated to provide coverage for appraisal actions under a similar insurance policy, the insured amended its complaint and, in so doing, argued that Montana rather than Delaware law controlled. More ›

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Delaware Court of Chancery Holds That Scope of Director and Officer Indemnification Under D&O Policy Is Within Exclusive Jurisdiction Of The Delaware Superior Court

Ernesto Rodriguez et al. v. Great American Insurance Company, C.A. No. 2020-0387-JRS (Del. Ch. Oct. 20, 2021)
The Court of Chancery’s subject matter jurisdiction is limited, and arises in three circumstances: (1) the complaint asserts an equitable claim; (2) the complaint seeks an equitable remedy and there is no adequate remedy at law; or (3) jurisdiction is vested in the Court of Chancery by statute. In this recent decision, the Court of Chancery held that its limited subject matter jurisdiction did not extend to determine the scope of a Delaware corporation’s directors and officers (D&O) insurance policy. More ›

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CCLD Rejects Several Defenses to Insurance Coverage of a Settlement Paid By Investment Fund

Sycamore Partners Management, L.P. v. Endurance American Insurance Co., C.A. No. N18C-09-211 AML CCLD (Del. Super. Sept. 10, 2021)
Prior to the closing of a leveraged buyout of a company (the “Merger”) whereby the plaintiff investment fund sought to divest, liquidate, and resell some of the company’s high-value assets (the “Restructuring Transactions”), the company’s stockholders brought derivative claims against the company’s board relating to the voting process underlying the Merger. The company settled the Merger-related claims, the Merger closed, and the plaintiff executed the Restructuring Transactions. Shortly thereafter, company bondholders sought information from the company—which the company never provided—regarding whether the Merger and Restructuring Transactions violated an indenture between the bondholders and the company.  More ›

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Superior Court CCLD Dismisses Complaint Seeking Insurance Coverage for Appraisal Proceeding

Jarden, LLC v. ACE Am. Ins. Co., C.A. No. N20C-03-112 AML CCLD (Del. Super. July 30, 2021)
Director and corporate liability insurance coverage is determined by the specific language of the insurance policies. Last year, the Delaware Supreme Court held that an appraisal claim under 8 Del. C. § 262 was not a “securities claim” because it was not a claim for a “violation of law[,]” as required under that policy’s definition. See In re Solera Ins. Coverage Appeals, 240 A.3d 1121 (Del. 2020). This case addressed similar issues under somewhat different policy language.  More ›

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Superior Court Finds Securities Lawsuits Do Not Fall within Relatedness Exclusion of Insurance Policy

Northrop Grumman Innovation Systems, Inc. v. Zurich American Insurance Company, C.A. No. N18C-09-210 (Del. Super. Ct. Feb. 2, 2021)

This case arises from an insurance coverage dispute between an insured and multiple insurance providers in a policy tower for defense fees and settlement costs from two securities class action lawsuits. In the Complex Commercial Litigation Division of the Superior Court, the insurers argued that they were not obligated to reimburse losses arising from the two securities lawsuits because of, inter alia, an exclusion regarding the “relatedness” of Wrongful Acts. Under Delaware law, the exception to coverage because of the “relatedness” of Wrongful Acts only applies “where the two underlying claims are fundamentally identical.” The Court held that the exception did not apply in this case simply because the securities lawsuits involved the same wrongdoers and the same transaction, among other things. Instead, the fact that there were variations in the mens rea, motive, burdens of proof, the timing and other factors, suggested that the securities lawsuits did not involve the exact same subject. Accordingly, the Court found that the two claims were not “related” and the relatedness exclusion did not apply.

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Delaware Supreme Court Affirms CCLD Ruling Relying on Expert’s “Dual Hypothetical World” Damages Model for Measuring Business-Interruption Loss

XL Ins. Am., Inc., et al. v. Noranda Aluminum Holding Corp., No. 444, 2019 (Del. Oct. 2, 2020)
An aluminum manufacturer (the “Insured”) decided not to rebuild and resume operations at its facility following two operation-disabling accidents. The Insured made a claim pursuant to its “all risks” property-insurance policy (the “Policy”) to recoup certain amounts including business-interruption losses. The insurers (the “Insurers”) and the Insured each hired expert forensic accountants who, relying on different damages models, rendered widely divergent calculations of the Insured’s loss. Following a seven day trial in Superior Court wherein both parties’ experts presented their methodologies for calculating the business-interruption losses, the jury found in favor of the Insured. More ›

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Superior Court Rejects Insurers’ Motions to Dismiss Coverage Dispute Based upon Ripeness and Lack of Personal Jurisdiction

Energy Transfer Equity, L.P. v. Twin City Fire Insurance Co., et al., C.A. No. N19C-11-009 EMD CCLD (Del. Super. Ct. Sept. 25, 2020)

Energy Transfer Equity, L.P. v. Twin City Fire Insurance Co., et al., C.A. No. N19C-11-009 EMD CCLD (Del. Super. Ct. Sept. 28, 2020) 

Plaintiffs-Insureds sought declaratory relief and damages for Defendants-Insurers anticipatory breach of directors’ and officers’ insurance policies. Defendant Twin City Fire Insurance Co. issued the primary policy, and the remaining Defendants issued excess coverage policies. Plaintiffs specifically sought insurance coverage related to litigation in the Court of Chancery (“Dieckman Action”), in which trial had occurred but no decision had been issued. More ›

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Superior Court Reinforces Established Delaware Insurance Coverage Law that Settlement of a Claim for Less than Policy Limits Attaches to Excess Policies

Pfizer, Inc. v. U.S. Specialty Insurance Company, C.A. No. N18C-01-310 PRW CCLD (Del. Super. Aug. 28, 2020)
On cross-motions for summary judgment in a director and officer insurance coverage dispute, the Superior Court of Delaware, Complex Commercial Litigation Division, reaffirmed the Delaware principle, also known as a the Stargatt Rule, that a settlement of a policy between an insured and an insurer for less than the policy limit amounts to satisfaction of such policy. Thus, excess policies attach irrespective of whether the insured collected the full amount of the primary policies.  More ›

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CCLD Addresses Ripeness Doctrine and the “Stranger Rule” in Tortious Interference Claims, Partially Dismisses Claims for Breach of Corporate-Owned Group Variable Life Insurance Policies

Athene Life and Annuity Co., et al. v. Am. Gen. Life Ins. Co., et al., C.A. No. N 19C-10-055 PRW CCLD (Del. Super. May 18, 2020)

Policy holders (the “Plaintiffs”) brought a suit against American General Life Insurance, Co. (“American General”) for breach of corporate-owned group variable life insurance policies (the “Policies”) and against certain related entities managing the Policies, ZC Resource Investment Trust (“ZCRIT”) and ZC Resource LLC (“ZC Resource”) (together with ZCRIT, “ZC Defendants”) (together with ZCRIT and American General, “Defendants”) for tortious interference with contract. When the Defendants moved to dismiss, the Delaware Superior Court’s Complex Commercial Litigation Division (“CCLD”) granted the motion in part on ripeness grounds and denied it in part. More ›

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