Insurer Moves for Summary Judgment in a D&O Declaratory Judgment Action on the Basis of Lack of Notice and that the Claim was Not Made During the Policy Period

Cox Communications, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA

(N.D. Georgia, November 12, 2009)

Insurer moves for summary judgment of declaratory judgment action seeking damages under a claims made Directors, Officers and Corporate Liability policy. Plaintiff's damages include reimbursement of certain costs associated with an $80 million settlement of an underlying action, with approximately an additional $8 million in legal fees and expenses. The insurer's motion seeks relief on three grounds: the claim was not "first made" during the policy and that the prior notice and insured v. insured exclusions, respectively, apply.

The allegations in the complaint indicate that plaintiff seeks coverage payments allegedly made on behalf of an executive for breach of fiduciary claims, while he served as plaintiff's representative on an outside entity's Board of Directors. The allegations in the underlying action alleged the executive unfairly transferred control of the board in exchange for "puts" worth billions of dollars while negotiating an agreement in 2000. Thereafter, the outside entity filed for bankruptcy and a trust was appointed to prosecute the claims arising from the 2000 Agreements arguing they were derivative claims that belonged to the estate.

The insurer argues that the same breach of fiduciary claims were asserted in separate actions commenced in 2000 and reported under the D&O policies effective at that time. As such, the insurer argues the claims were made prior to inception of its 2002 policy. For this same reason, the insurer argues that the prior claims constitute prior notice, triggering an exclusion in the policy. Finally, the insured argues because the claims arose from alleged wrongful actions while serving as an executive of an outside entity, brought by the outside entity, triggers another excluded in the policy. The Insurance and Reinsurance Report will continue to monitor this case as it develops.

A copy of the defendant Insurer's motion for summary judgment can be found here

Kimberly Whistler and Sharon Angelino

http://www.goldbergsegalla.com/attorneys/Whistler.html

http://www.goldbergsegalla.com/attorneys/Angelino.html