HNRK Coverage Corner

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 ...

On February 3, 2020, Justice Sherwood of the New York County Commercial Division issued a decision in Alexander v. Starr Surplus Lines Ins. Co., 2020 NY Slip Op 30297(U), granting a preliminary injunction directing a D&O insurer to advance defense costs to a former corporate officer for an investor lawsuit alleging fraudulent inducement.

The insurer (Starr) argued that coverage was barred by a Major Shareholder Exclusion, which provided that the policy would not cover any claim “made by the individual(s) or entity(ies) that own or control . . . 10% or more of the outstanding voting ...