In an article appearing in Law360 on August 8, 2019, Hunton insurance partner, Syed Ahmad, provided insight into three recent significant D&O insurance decisions.
The first decision, Solera Holdings Inc. v. XL Specialty Insurance Co., discussed first on the Hunton Insurance Recovery Blog on August 5, 2019 in an article by Hunton insurance partner, Michael Levine, and associate, Daniel Hentschel, concerned a finding by a Delaware court that an appraisal proceeding constituted a “securities claim” sufficient to trigger coverage under a D&O insurance policy held by Solera Holdings, Inc. As Ahmad explained, “[t]his is a significant ruling because of the court’s analysis about the reference to ‘violation’ which is in a variety of policy provisions.” “The court’s rationale is another example of why the specific terms in a policy matter, and they matter a great deal. The court’s reliance on dictionary definitions is also important because it provides another pathway to advance an interpretation of a term in a way that supports coverage.”
In the second decision, Emmis Communications Corp. v. Illinois National Insurance Co., the Seventh Circuit found that a D&O insurer properly denied coverage for a shareholder suit on the grounds that the suit had already been reported by the insured under an earlier policy, thereby triggering an exclusion barring coverage for any losses involving circumstances “as reported” under a previous policy with another insurer.
In the third decision, Pfizer Inc. v. Arch Insurance Co., a Delaware court refused to apply a common D&O policy exclusion and allowed Pfizer Inc. to press its suit to force two excess insurers to help cover its costs in multidistrict litigation. The decision turned on the court’s decision to apply one state’s law over another based on the policyholder’s state of incorporation, unlike many states which look to the policyholder’s principle place of business. As Ahmad commented, “[the] ruling follows many others where Delaware courts have favored the law of a company’s state of incorporation instead of its headquarters.” “That should not be too surprising given the unique role Delaware plays as a go-to state of incorporation for many companies.”
The Law360 article can be found here.