April 16, 2019
Defendants ACE American Insurance Company and Federal
Insurance Companys Motion for Summary Judgment: Denied
J. Baldwin, Esquire, Carla M. Jones, Esquire of POTTER
ANDERSON & CORROON LLP, Wilmington, Delaware, and Peter M.
Gillon, Esquire, Alexander D. Hardiman, Esquire, Tamara D.
Bruno, Esquire of PILLSBURY WINTHROP SHAW PITTMAN LLP,
Washington, D.C., Attorneys for Plaintiff.
F. Fischer, Esquire of COZEN OCONNOR, Wilmington, Delaware,
and Angelo G. Savino, Esquire of COZEN OCONNOR, New York,
NY, Attorneys for Defendants ACE American Insurance Company
and Federal Insurance Company.
P. Keener, Esquire of ROSENTHAL, MONHAIT & GODDESS, P.A,
Wilmington, Delaware, Attorney for Defendants Endurance
American Insurance Company and Liberty Insurance Underwriters
P. Schiller, Esquire, Michael R. Carlson, Esquire, Matthew N.
Klebanoff, Esquire of HANGLEY ARONCHICK SEGAL PUDLIN &
SCHILLER, Philadelphia, Pennsylvania, Attorneys for Defendant
Endurance American Insurance Company.
A. Schechter, Esquire, Matthew E. Mawby, Esquire of KAUFMAN
BORGEEST & RYAN LLP, Valhalla, New York, Attorneys for
Defendant Liberty Insurance Underwriters Inc.
W. McCullough, Esquire, of BODELL BOVÉ, LLC,
Wilmington, Delaware, Attorney for Defendant Zurich American
E. Jameson, Esquire, John G. Day, Esquire of PRICKETT, JONES
& ELLIOTT, P.A., Wilmington, Delaware, and Tammy Yuen,
Esquire, Kenneth M. McBrady, III, Esquire of SKARZYNSKI BLACK
LLC, New York, New York Attorneys for Defendant XL Specialty
Heyman, Esquire, Aaron M. Nelson, Esquire of HEYMAN ENERIO
GATTUSO & HIRZEL LLP, Wilmington, Delaware, and Scott B.
Schreiber, Esquire, James W. Thomas, Jr., Esquire of ARNOLD &
PORTER KAYE SCHOLER LLP, Washington, D.C., Attorneys for
Defendant Illinois National Insurance Company.
F. Dryden, Esquire of WEBER GALLAGHER SIMPSON STAPLETON FIRES
& NEWBY, LLP, New Castle, Delaware, Attorney for Defendant
Hudson Insurance Company.
Phillips, Jr., Esquire, David A. Bilson, Esquire, of
PHILLIPS, GOLDMAN, MCLAUGHLIN & HALL, P.A., Wilmington, DE,
and Geoffrey W. Heineman, Esquire, Jung H. Park, Esquire of
ROPERS, MAJESKI KOHN & BENTLEY, New York, New York, Attorneys
for Defendant Argonaut Insurance Company.
case involves the interpretation of a directors and
officers insurance policy, specifically whether that policy
covers attorneys fees and pre-judgment interest the insured
company incurred defending an appraisal action. Plaintiff
purchased primary and excess directors and officers
liability insurance policies from Defendants. After Plaintiff
was acquired by a private company in March 2016, several of
Plaintiffs shareholders filed an appraisal action in the
Delaware Court of Chancery. Plaintiff first notified
Defendants of the appraisal action in January 2018, after a
substantial portion of the litigation was complete. This
dispute arose when Defendants denied Plaintiff coverage for
expenses incurred defending the appraisal action. In
response, Plaintiff initiated this breach of contract and
declaratory judgment action against Defendants seeking
coverage for pre-judgment interest and defense expenses
incurred in the appraisal action. Defendants moved for
summary judgment on all claims.
pending motion presents three questions: (1) whether a
"Securities Claim" under the insurance policies is
limited to a claim alleging wrongdoing, (2) whether the
policies cover pre-judgment interest on a non-covered loss,
and (3) whether Plaintiffs acknowledged breach of the
policies consent-to-defense clause bars recovery of
Plaintiffs defense expenses. Based on the policies plain
language, I conclude the appraisal action qualifies as a
covered "Securities Claim" because that terms
definition is not limited to claims of wrongdoing.
Additionally, because there is no limiting language in the
policies definition of "Loss," coverage for
pre-judgment interest is not limited to covered losses. As to
the defense expenses, Delaware law implies a prejudice
requirement in insurance contract consent clauses, and
Plaintiffs breach of the consent clause therefore does not
bar coverage for defense expenses absent a showing of
prejudice. Defendants motion for summary judgment therefore
FACTS AND PROCEDURAL BACKGROUND
otherwise noted, the following facts are drawn from the
complaint and the record provided by the parties.
The D & O Policies
Solera Holdings, Inc. ("Solera") is a software
company incorporated in Delaware. Defendants issued Soleras
primary and excess directors and officers liability
insurance policies. Defendants provided Soleras tower of
insurance coverage for securities claims made between June
10, 2015 and June 10, 2016. Defendant XL Specialty Insurance
Company ("XL") issued the primary policy (the
"Policy") and the remaining defendants issued
excess policies, which follow-form ...