District Court Rules that D&O Dispute Involving a Defunct Tax Shelter is Ripe and Allowed to Proceed Forward

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Sprint Nextel Corp. v.  Executive Risk Indemn et. al.

(District Court of Kansas, September, 1, 2009)


Sprint Nextel Corporation has filed suit against a number of insurers providing Directors and Officers coverage seeking a declaration of rights under the respective policies for losses arising out of a 2003 securities litigation. Sprint Nextel has expended in excess of $2Million in costs resulting from the derivative action. 


The coverage dispute concerns, in part, which insurer is on the risk for the 2000 and 2001 derivative claims arising out of a defunct “tax shelter” scheme in 1999. Travelers Indemnity Company and St. Paul Mercury Insurance Company made a motion to dismiss arguing the coverage action should await a determination in the underlying action.

Judge Murguia of the U.S. District Court for the District of Kansas disagreed noting the substantial amount of expenses Sprint Nextel has incurred in the underlying litigation and concluded that the coverage dispute was “ripe” for trial. 


For a copy of the decision, click here


Brian R. Biggie and Sharon Angelino