HNRK Coverage Corner

On May 9, 2024, Judge Rennie of the Delaware Superior Court issued a decision in Origis USA LLC v. Great Am. Ins. Co., Case No. N23C-07-102, holding that an insured’s coverage action against its D&O insurers was premature in light of the policy’s “No Action” clause.

The insured’s primary policy (to which three excess insurers followed form) states:

With respect to any Liability Coverage Part, no action shall be taken against the Insurer unless, as a condition precedent thereto, there has been full compliance with all the terms of this Policy, and until the Insured’s

On August 10, 2023, Judge Rennie of the Superior Court of Delaware issued a decision in a pair of cases, Viacom Inc. v. Paramount Global, C.A. N22C-06-016 SKR CCLD and Redstone v. ACE American Insurance Co., C.A. No. N22C-06-020 SKR CCLD, ruling that a D&O policy’s “bump-up” exclusion did not apply to losses arising from a merger transaction.

The coverage dispute arose from a 2019 transaction through which Viacom merged with CBS.  As a result of the all-stock transaction, “all assets of Viacom ‘vest[ed] in CBS, and CBS was the surviving corporation.”  Shareholders ...

On May 23, 2023, SDNY Bankruptcy Judge Martin Glenn issued an order in In re: SVB Financial Group, Case No. 23-10367(MG), lifting an automatic stay to permit Silicon Valley Bank’s D&O insurers to advance to defense costs to the bank’s officers in connection with litigation arising from the bank’s collapse.

A typical D&O policy offers coverage both to the corporation and to its officers and directors.  SVB D&O insurance program consists of 16 so-called “ABC Policies”, which provides three categories of coverage: (1) “Side A” coverage goes directly to directors and ...

Insurance law is generally a matter of state law.  Determining the applicable state law can be outcome determinative in a coverage dispute, as different states have different rules concerning the interpretation and enforcement of policy provisions, what claims the insured can bring, and other issues.  As previously noted on this blog, insurance policies frequently have no choice of law provisions, so the applicable law must be determined under a conflicts of law analysis.  Under New York law, where an insurance policy covers risks across multiple states (a common scenario for a large ...

On November 27, 2020, Justice Masley of the New York County Commercial Division issued a decision in Alvarez v. XL Specialty Ins. Co., 2020 NY Slip Op 33917(U), holding that a lawsuit against the insureds was not wholly excluded from coverage under a D&O policy where only one part of the lawsuit involved “Wrongful Acts” at issue in an earlier lawsuit that was covered under a prior policy period.

The underlying lawsuit in Alvarez was an action by the Creditors’ Committee of Sears Holdings Corp. against former officers and directors, alleging 35 causes of action, arising from three ...