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Delaware Supreme Court Addresses D & O Policy Coverage Issue

By Francis G.X. Pileggi

Axis Reinsurance Company v. HLTH Corp., No. 565, 2009 (Del. Supr. Apr. 22, 2010),  read opinion here. This is a case involving a coverage issue under a D & O policy. Because it is somewhat outside the typical scope of most decisions that are summarized on this blog, (although the issue of D & O policy coverage is likely of interest to readers of this blog), we will highlight only the issues addressed in the decision and refer you to the link above to download the entire opinion.

Claims on Appeal

1) Whether the National Union Prior Acts Exclusion unambiguously precludes coverage for any claims associated with a criminal indictment of former directors and officers who were accused of participating in a scheme to defraud shareholders, members of the public and others by deliberately inflating the company's earnings;

2) Whether the Prior Acts Exclusion conflicts with the language of the Amended Retention Endorsement so as to uniquely create coverage for those claims; and

3) Whether the Prior Notice Exclusion definitively bars coverage of the claims arising out of the criminal proceedings based on notice issues.

Holding of the Court

The Court affirmed the judgment of the Superior Court denying HLTH's motion, and dismissing coverage claims based upon the Prior Notice Exclusion, and reversed the trial court's denial of National Union's motion for summary judgment based on the Prior Acts Exclusion, and remanded with instructions to the trial court to enter summary judgment in favor of National Union.

 

Full post as published by Delaware Corporate and Commercial Litigation Blog on April 26, 2010 (boomark / email).