Civil Investigative Demand

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The Delaware Supreme Court recently affirmed a grant of summary judgment in favor of a mortgage lender who sought coverage for a government investigation under its management liability insurance policy, in the case ACE American Ins. Co. v. Guaranteed Rate, Inc., No. 360, 2022 (Del.). We previously reported on the trial court’s grant of summary judgment to the policyholder and ruling in favor of the policyholder on cross-motions for judgment on the pleadings. The Supreme Court rejected the insurers’ arguments that it had no duty to defend the policyholder in connection with a $15 million False Claims Act (FCA) investigation and settlement.
Continue Reading Delaware Supreme Court Affirms that D&O Insurer Must Cover Settlement of Alleged False Claims Act Violations

A Delaware court recently granted summary judgment to a mortgage broker targeted in a federal government investigation for alleged False Claims Act violations, holding that the company’s directors and officers liability (“D&O”) insurer was required to indemnify more than $15 million in settlement costs with the U.S. Department of Justice. Guaranteed Rate, Inc. v. ACE American Insurance Company, No. N20C-04-268 MMJ CCLD (Del. Super. Ct. Sept. 6, 2021). We previously reported on the policyholder’s earlier victory in this case, in which the court held that a Civil Investigative Demand (“CID”) from federal authorities triggered the insurer’s obligation to pay defense costs under the D&O policy.
Continue Reading D&O Insurer Must Cover Mortgage Broker’s $15 Million Settlement of Alleged False Claims Act Violations

The Superior Court of Delaware held that a directors and officers liability insurer must advance defense costs to a mortgage broker targeted in a federal government investigation of alleged False Claims Act violations. In Guaranteed Rate, Inc. v. ACE American Insurance Company, No. N20C-04-268 MMJ CCLD (Del. Sup. Ct. Aug. 18, 2021), Guaranteed Rate received a Civil Investigative Demand from federal authorities in June 2019 regarding the company’s underwriting and issuance of federally-insured mortgage loans. Eleven days later, Guaranteed Rate provided notice of the CID under a private company management liability policy issued by ACE American Insurance Company.
Continue Reading D&O Insurer Must Fund $18 Million Defense of Mortgage Broker in Fed’s Investigation of False Claims Act Violations

The Northern District of Illinois in Astellas US Holding, Inc. v. Starr Indemnity and Liability Co., 2018 WL 2431969, at *1 (N.D. Ill. May 30, 2018) held that a U.S. Department of Justice subpoena demanding documents relating to a government investigation constitutes a “Claim.”
Continue Reading Another Court Holds That Government Subpoenas Seeking Documents Constitute “Claims” Under Standard D&O Policy Language