A federal court in California recently held that a D&O policy issued to Ceradyne, Inc. affords no coverage for an $11.3 million settlement of breach of fiduciary duty claims alleging that Ceradyne’s directors undervalued the company and agreed to sell
Insurance Coverage Notes and Developments
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New York Federal Court Holds That Imposition of Criminal Sentence Is “Final Adjudication” Triggering Conduct Exclusions
By Jeffrey Ward
A federal court in New York recently addressed what constitutes a “final adjudication” triggering conduct exclusions. In Cumis Specialty Insurance Co. v. Kaufman, No. 21cv11107 (DLC), 2022 U.S. Dist. LEXIS 176535 (S.D.N.Y. Sept. 28, 2022), the court held that the…
Delaware Court Holds That Warranty Letters’ Prior Knowledge Exclusion Bars Coverage
By Jeffrey Ward
In a recently unsealed opinion, a trial court in Delaware granted summary judgment to three excess insurers holding that a prior knowledge exclusion in warranty letters provided to the excess insurers precludes coverage for government investigations, enforcement actions, and civil…
Michigan Coverage Dispute Highlights Steep Cost of Statutory Penalty Interest
Statutory penalty interest can be a significant exposure for insurers in some jurisdictions. A court’s recent ruling in Alticor Global Holdings Inc., et al. v. American International Specialty Lines Insurance Co., et al., Case No. 1:17-cv-388, 2022 U.S. Dist.…
Recent Rulings in Delaware Courts on Allocation Under D&O Policies
Delaware state and federal courts have issued several important rulings on allocation under D&O insurance policies. Most recently, in SSC Technologies Holdings, Inc. v. Endurance Assurance Corp., No. N20C-01-088 EMD CCLD, 2022 Del. Super. LEXIS 164 (Del. Super., April 26,…
New York Trial Court Enforces D&O Policy’s Insured Capacity Limitations and Exception of SEC Disgorgement Amounts from Covered Loss
By Jeffrey Ward
A trial court in New York has granted summary judgment for a group of D&O insurers seeking a declaration that policies issued to AR Capital, LLC (“AR Capital”) do not provide coverage for settlements and consent judgments in actions alleging…
Somebody’s Watching Me: A Recent Smart-TV Lawsuit Seeks Insurance Coverage for Privacy Litigation
After the Fourth Circuit held that a commercial general liability (“CGL”) policy could cover a data incident in 2016, confusion arose as to whether CGL policies would continue to cover data breaches. A recent California lawsuit by the smart-TV maker…
Pennsylvania Court Estops Insurer From Asserting Coverage Defense That Was Not Identified in Its Reservation of Rights Letter
By Jeffrey Ward
A split appellate court in Pennsylvania has held that an insurer is estopped from asserting a policy exclusion that it failed to expressly raise in its reservation of rights letter. See Selective Way Ins. Co. v. MAK Servs., No. 1289 EDA…
Not All Violation of Statutes Exclusions Are Created Equal
By Dykema
Coverage litigation relating to liability claims arising out of the Illinois Biometric Information Privacy Act (“BIPA”) has been relatively non-existent. One reason for this may be insurers’ reasonable conclusion that an exclusion introduced in 2006 in response to litigation arising…
Still Only Eight Corners?: The Texas Supreme Court Decides Richards v. State Farm
In November, the Texas Supreme Court accepted a certified question from the Fifth Circuit directly calling into question the continued vitality of the well-known “eight corners rule,” under which a liability insurer can only consider the four corners of the…