Seventh Circuit Declares Insured Versus Insured Exclusion Applies In D&O Context

Biltmore Associates, LLC v. Twin City Fire Ins. Co.  (9th Cir. (Az.) July 10, 2009)

A bankrupt corporation assigned its claims to its creditors’ trust.  The trustee for the creditors’ committee sued the insurer under a directors and officers liability insurance policy that excluded from coverage various claims brought by the insured corporation against its own officers or directors.  The complaint was properly dismissed because a cause of action by a corporation against its officers or directors for mismanagement belongs to the

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Excess Insurer Seeks Declaration that Certain Sprint D&O “Claims” Are Unrelated

Old Republic Insurance Company has made a counterclaim against Sprint Nextel Corp. seeking a declaration that no coverage is owed under a 1999-2000 claims made policy for a 2003 securities lawsuit.

According to the counterclaim, in 1999, Sprint announced a proposed merger between it and MCI WorldCom, Inc. Shortly thereafter, it was sued in eight separate class action suits, alleging that Sprint gave preferential treatment to WorldCom, failed to seriously negotiate with other potential merger partners, and failed to use open auction procedures to ensure

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Madoff Related Suit Against Fairfield Greenwich Group for $3.5 billion

Irving Picard, trustee for Bernard Madoff's business and representatives of investors, sued the Connecticutbased company, Fairfield Greenwich Group (“FGG”) for $3.5 billion.  FGG was the largest feeder fund and the allegations are that it therefore should have been aware Madoff was engaged in fraud.  The monetary calculation of $3.5 billion represents money that FGG received from Madoff on behalf of clients.This suit is one of many brought or to be brought by the trustee in charge of liquidating the assets of

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D&O Policy Exclusion of Coverage for Claims Arising From a Contract Does Not Apply

S.J. Amoroso Construction Company, Inc. v. Executive Risk Indemnity, Inc.

(9th  Cir.(Cal.), April 30, 2009)

The underlying complaint alleged damages as a result of a third party’s misrepresentations that induced one party to contract with another. The theory of liability depended on the fact that the third party was not a party to the contract and had no liability under it. Therefore, the exclusion did not apply.

By Richard J. Cohen and Carrie P. Appler

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