Category: Directors and Officers

Hartford Steam Boiler Group v. SVB Underwriting Ltd., Case No: 3:04cv2127 (D. Conn. 2011)

Hartford Steam Boiler Group, Inc. (HSB) is one of the largest equipment and machinery insurers in the United States. HSB specializes in equipment breakdown policies. Clara Barton purchased an insurance policy from HSB that provided coverage for losses resulting from a boiler explosion. Under the policy HSB was required to reimburse Clara Barton for property damage and lost income caused by such an explosion. Tragically, on November 1999 an explosion occurred …

Houston Cas. Co. v. Sprint Nextel Corp., Case No. 09-CV-1387 (E.D.Va, November 22, 2010)

This coverage dispute arose out of an underlying securities action. In 2004, Sprint discontinued one line of stock. The shareholders whose stock was converted filed a securities action accusing Sprint of undervaluing their stock. Eventually, a settlement was reached in the amount of $57.5 Million.

At the time of the conversion, Sprint was insured under a number of D&O policies providing $100 Million in coverage, including an excess policy issued by …

The Sydow Firm v. Certain Underwriters of Lloyd’s (D.C. Texas November 12, 2010)

The Sydow Firm, the firm retained to represent alleged Ponzi scheme mastermind Allen Stanford has filed a petition seeking payment of nearly $650,000 in legal fees. The petition filed in Texas Federal District Court says that Lloyd’s and Akin Gump are refusing to pay the fees owed under three separate policies insuring Stanford.

While Lloyd’s cannot choose counsel and agreed to the Sydow Firm, Lloyd’s and Akin Gump have reserved the right …

Goerner v. Axis Reinsurance Co., No. 09-55385, 2010 U.S. App. LEXIS 21624 (9^th Cir. 2010).

Axis Reinsurance issued a D&O policy requiring it to defend and indemnify claims against the insured company’s officers for “any actual or alleged error” committed by an officer “in [his] capacity as such.” A lawsuit filed against the former CEO did not specifically allege the plaintiff’s damages stemmed from actions by the former CEO while acting in his capacity as such. The insurer argued, because the allegations did not …

General Star v. Mid-Atlantic Youth Services et al  (M.D. Penn. September 27, 2010)

Last year, news outlets across the country picked up a story about the administrator of a juvenile detention facility paying county judges for sending teens to the facility. The insurer issued three insurance policies to the Mid-Atlantic Youth Services Corp providing a variety of coverage, including professional liability coverage. Subsequent to the scheme being discovered numerous individuals and class actions were field against Mid-Atlantic seeking damages and alleging that the judge’s improperly …

Isilon Systems v. Twin City

(W.D. Wash. August 27, 2010)

Ex-Executives of Isilon Systems Inc. have filed suit against Twin City Fire Insurance Company contending that the insurer wrongly denied coverage for losses arising out of an accounting fraud action started by the SEC. The SEC action was on the heels of two shareholder actions. While Isilon had nearly $20 Million in underlying coverage, the underlying policies have been exhausted, with defense costs reaching $75 Million.

The complaint seeks damages based upon breach …

Macy v. Carolina Cas. Ins. Co.

(2^nd Cir. (Conn.) June 30, 2010)

This dispute hinged on the sordid corporate history of Community Research Associates, a homeland security consulting firm. The underlying dispute alleged that a merger with CRA Acquisitions left “legacy shareholders” without any interests in the new company. The “legacy shareholders” alleged the board of directors breached their fiduciary duty. The claim was settled for $3Million prompting the instant action against Carolina Casualty Insurance Company.

The District Court ruled that the …

Appel et. al. v. Lexington Ins. Co.

(Florida Court of Appeals, February 26, 2010)

Appellants challenged the dismissal of their complaint and summary judgment in favor of insurer where the trial court held that the complaint failed to state a case of action even after the insurer defaulted.  The appellants, a group of creditors, fell victim to a Ponzi scheme when they invested in a company known as SOS Industries.  The creditors filed suit against SOS and its two directors for breaching …

Pendergest-Holt v. Certain Underwriters at Lloyd's of London

(S.D. Tex. January 26, 2010)

The directors and officers of a corporation were indicted for involvement in an alleged Ponzi scheme, and the Securities and Exchange Commission commenced a civil action alleging that the insureds conspired to deceive investors and sold sham certificates of deposits ("CDs").  As an initial matter, the Court noted that the policy's Fraud Exclusion could not be a valid basis for the insurer's refusal to pay defense costs because the Fraud Exclusion explicitly requires a "final …

Apartment Investment & Mgmt. Co. (“AIMCO”) v. Nutmeg Ins. Co.

(10^th Cir. (Colo.) Feb. 2, 2010)

The Tenth Circuit Court of Appeals recently held that an insurer has a duty to defend its insured based on allegations contained in several separate but factually-related complaints. The policyholder, AIMCO, self-managed a real estate investment trust that provided property management services. Included within the services AIMCO offered was selection and procurement of necessary insurance coverage for the managed properties. AIMCO, in turn, retained an independent contractor …