A New Mexico court recently granted judgment on the pleadings against an insurer and found coverage, reminding the insurer that different words in a policy, indeed, have different meanings.

In Power of Grace, LLC v. Weatherby, Power of Grace, a policyholder, sued its insurer, Hudson Insurance Companies, and its insurance agent, Weatherby-Eisenrich Inc.  Power of Grace alleged that Weatherby and Hudson were liable for damages it might incur in an underlying wrongful death lawsuit arising from a tractor-trailer accident. 
Continue Reading Tomato-Tomato? – New Mexico Court Offers Insurer a $5 Million Reminder that Different Words Have Different Meanings

Earlier this month, current and former Boeing Company directors agreed to a $237.5 million settlement to resolve claims that they ignored safety issues concerning Boeing’s 737 MAX aircraft. While the settlement, which came quickly on the heels of the Delaware Chancery Court’s September denial of the defendants’ motion to dismiss, ranks as one of the largest derivative settlements of all time, the silver lining for the directors and officers named in the suit is that the entire settlement is to be funded by the company’s D&O insurers. The Boeing case is yet another example of the necessity for public companies to purchase sufficient D&O liability coverage, particularly “Side A” insurance coverage, to protect officers and directors implicated in derivative claims, securities class actions, enforcement actions, and similar claims. Because many states, including Delaware, prohibit companies from indemnifying officers and directors for payments made to the company in settlement of stockholder derivative claims or other suits brought on behalf of the company, securing Side A coverage to protect individuals for non-indemnified loss is essential.
Continue Reading Historic Boeing Derivative Settlement Funded By D&O Insurers: How to Ensure Directors and Officers Land Safely With Side A DIC Insurance

Priority of coverage disputes can arise where different insurers for different insureds cover the same claim. Generally, competing insurers will compare the “Other Insurance” clauses of their policies to decide who should cover the claim first. But where one of the insureds owes contractual indemnity to the other, the indemnity obligation may govern. Thus, the insurer for the insured who owes indemnity may cover the claim first, even if it would have been excess per the “Other Insurance” clauses. Such was the case in Cent. Sur. Co. v. Metro. Transit Auth., et al., No. 20-1474-CV, 2021 WL 4538633, at *1 (2d Cir. Oct. 5, 2021).
Continue Reading Indemnity is King: Indemnity Provision in Commercial Contract Trumps Other Insurance Clause in Insurance Policy

While total False Claims Act recoveries decreased in 2020, FCA litigation and investigations are expected to continue to rise under the Biden administration, driven in part by the DOJ opening 250 new FCA investigations and actions in 2020, which is the highest number of new matters since 1994. As recent decisions show, the good news is that companies incurring legal fees defending against government investigations or negotiating settlements with regulators to resolve FCA claims may be able to look to D&O coverage to mitigate those losses. One such company recently prevailed in its $10 million claim against an excess D&O insurer following the insurer’s improper refused to contribute its policy limits to an FCA settlement with the DOJ. The Illinois federal court decision, Astellas US Holdings, Inc. v. Starr Indemnity & Liability Co., No. 17-cv-08220 (E.D. Ill. Oct. 8, 2021), which focuses on whether $50 million of Astellas’s settlement payment to the DOJ was covered “Loss” under the D&O policy, provides useful guidance for companies facing potential FCA exposures.
Continue Reading Policyholder Win Highlights Key Issues to Maximize Coverage for False Claims Act Settlements

On March 3, 2021, the Delaware Supreme Court issued a landmark decision holding that Delaware law should be applied in disputes over directors and officers liability (“D&O”) insurance policies sold to companies incorporated in Delaware. RSUI Indem. Co. v. Murdock, et al. No. 154, 2020, C.A. No. N16C-01-104 CCLD (Del. Mar. 3, 2021). The court addressed this and other key issues in the long-running dispute over D&O insurance purchased by Dole Food Company, specifically addressing issues raised by Dole’s eighth-layer excess insurer, RSUI, which provided $10 million coverage excess of $75 million.

The court decided multiple important issues, finding that liability for alleged fraud is insurable under Delaware public policy, RSUI’s Profit/Fraud Exclusion did not bar coverage because there had been no “final adjudication” of fraud, and the “larger sums rule” governed allocation issues. However, among these important rulings, the most significant may be the Supreme Court’s ruling that Delaware governs the interpretation of D&O insurance issued to a company incorporated in Delaware.  The court specifically rejected the insurer’s arguments that California law (which might preclude coverage) should apply under a policy that was purchased and issued in California to a Delaware corporation headquartered in California.


Continue Reading Delaware Supreme Court Doles Out Landmark Choice-of-Law Decision in Dole Food Case

The First Circuit recently held that a “Special Hazard and Fluids Limitation Endorsement” was ambiguous and therefore there was excess coverage for a fuel spill that occurred after a tanker-truck overturned.

In Performance Trans. Inc. v. General Star Indem. Co., the First Circuit reversed the District Court’s grant of summary judgment in favor of General Star Indemnity Company. The District Court held that the excess policy General Star issued to Performance Trans. Inc. precluded coverage for a spill that resulted in the leaking of thousands of gallons of fuel. The District Court relied on the existence of a total pollution exclusion to bar coverage and held that the policy’s Special Hazards and Fluids Limitation Endorsement could not create an ambiguity that would afford coverage.
Continue Reading First Circuit Rules Excess Insurer Must Provide Coverage for Fuel Spill

The Fifth Circuit recently rebuffed an attempt by Chubb subsidiary Ace American Insurance Co. (“Ace”) to evade liability from its excess insurer, Zurich North America subsidiary American Guarantee & Liability Insurance Co. (“AGLIC”), after Ace unreasonably rejected a settlement offer within its policy limits in violation of its Stowers duty. See Am. Guarantee & Liab. Ins. Co. v. ACE Am. Ins. Co., 19-20779, 2020 WL 7487067 (5th Cir. Dec. 21, 2020). As a result, Ace must now pay approximately $7.27 million in damages to AGLIC to cover its costs to settle the underlying lawsuit plus prejudgment interest and court costs.

Continue Reading Chubb Breaches Stowers Duty, Owes $7+ Million for Rejecting Unconditional Limits Demand

Hunton insurance attorneys Syed Ahmad and Geoffrey Fehling provide several updates on recent recall insurance disputes in the latest edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.

Continue Reading Court Rejects Insurer’s Late-Notice Defense, Allowing Meat and Poultry Producer Recall Claim to Proceed

A federal judge has denied an insurance company’s motion to dismiss the claims of another insurer seeking reimbursement and contribution for the $15 million it paid to settle underlying claims arising from a product recall.

Continue Reading Recall and Recoup: Georgia Court Denies Insurer’s Early Motion to Escape Contribution Claim Arising from $51 Million Product Recall Coverage Dispute

A New York appeals court recently granted partial summary judgment in favor of the insureds, finding that excess directors and officers insurers, Westchester Fire Insurance Co., Aspen American Insurance Co. and RSUI Indemnity Co., must advance the defense costs for former executives of the insured entity. The decision is the most recent victory for policyholders in connection with D&O insurance claims asserted in the wake of alleged securities violations and accounting fraud at related real estate investment firms, which have resulted in millions of insurance recoveries for the company and its officers and directors (as previously reported here and here).

Continue Reading New York Appellate Court Confirms Insurers Must Advance Defense Costs Under D&O Policies