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Insurance Recovery Law - July 2015

In the Context of a Bad Faith Claim, Insurer’s Defense That Coverage Denial Was Reasonable Put at Issue Otherwise Protected Attorney-Client and Work Product Communications - Why it matters: Recognizing the “conflicting...more

Eleventh Circuit Holds No Duty to Defend Directors Serving in Mixed Capacities

On June 22, 2015, the 11th Circuit affirmed a Georgia federal court decision that there was no coverage under a director’s and officer’s (D&O) insurance policy for claims asserted by beneficiaries of a family trust against a...more

Eleventh Circuit Denies Coverage for Wrongful Acts of Directors and Officers That Arose Out of Their Wrongful Acts as Trustees, an...

On Monday, June 22, 2015, the Eleventh Circuit, in The Langdale Company v. National Union Fire Insurance Company of Pittsburgh, PA, No. 14-12723 (11th Cir. 2015), ruled for the insurer on a “capacity” exclusion in a director...more

Superior Court Extends Jurisdiction Under The Director Long Arm Statute

It is conventional wisdom that the director long arm statute only confers jurisdiction for breaches of fiduciary duty. Yet as this decision points out, that limitation is not firmly grounded in the words of the statute....more

Eleventh Circuit Affirms Summary Judgment for Insurer Based on "Other Capacity" Exclusion

On June 22, the Eleventh Circuit affirmed the grant of summary judgment in favor of National Union Insurance Company of Pittsburgh, Pa., in an action where the insured sought $10 million in coverage under a D&O policy. The...more

Delaware Bars Fee-Shifting Bylaws Provisions but Allows Delaware Forum Selection Clauses in Intracorporate Litigation

On June 24, 2015, Delaware Governor Jack Markell signed into law Senate Bill No. 75, “An Act to Amend Title 8 of the Delaware Code Relating to the General Corporation Law.” The law prohibits a Delaware stock corporation from...more

To Be or Not to Be – an Insured Contract: Coverage for Breach of Warranty Claims

In Bituminous Casualty Corporation v. Plano Molding Company, 2015 IL App (2d) 140292, the Illinois Appellate Court tackled one of the most misunderstood issues in the commercial general liability policy: does an obligation to...more

Connecticut Court Possesses Personal Jurisdiction Over “Demonologist” Publisher

In the District of Connecticut, an out of state publisher with no alleged direct contacts with Connecticut recently lost its bid to have a case against it dismissed for lack of personal jurisdiction. Gerald Brittle sued...more

Florida Supreme Court Holds Insurer Immune from Bad Faith Claims

On May 14, 2015, the Florida Supreme Court held that a government-created insurance company, Citizens Property Insurance Corporation, was immune from statutory first-party bad faith claims. The Florida Legislature created...more

When $16.5 Million Is Not Enough: Insurer And Reinsurer Battle Over Fronting Arrangement

Lincoln General Insurance Company (“Lincoln”) appealed a district court judgment, despite it having won a $16.5 million dollar tortious interference verdict, to the Fifth Circuit Court of Appeals. Lincoln alleged that the...more

NC Business Court Says That Bank Didn't Owe A Fiduciary Duty To Its Customer, But Recognizes New Cause Of Action: Breach Of A Duty...

Were you thinking that the Business Court might, one day, find that a bank owed a fiduciary duty to its customer? That seemed like it might happen eventually, as the NC Supreme Court seemed to hold out that possibility last...more

Attorney Fees in 75-1.1 Cases and Unwarranted Refusals to Settle

A party who shows a violation of N.C. Gen. Stat. § 75-1.1 can sometimes recover attorney fees under N.C. Gen. Stat. § 75-16.1(1). Section 75-16.1(1), however, imposes two substantive conditions on such a fee award...more

Citizens Property Insurance Corporation Immune to Statutory Bad Faith Claims

The Florida Supreme Court has decided unanimously that the Florida legislature did not intend for Citizens Property Insurance Corporation (a state-created entity that provides property insurance) to be liable for statutory,...more

Courts Say There’s No Claim for “Reverse Bad Faith.” Could They Be Wrong?

Last month, in State Auto Property & Casualty Ins. Co. v. Hargis, No. 13-5020 (6th Cir. May 6, 2015), the U.S. Court of Appeals for the Sixth Circuit predicted that the Kentucky Supreme Court would not allow insurers to sue...more

Seventh Circuit Reverses $2.46 Billion Judgment in Securities-Fraud Class Action

The Court of Appeals for the Seventh Circuit last week reversed a $2.46 billion judgment in a long-running securities-fraud class action against Household International and granted a new trial on limited issues. The opinion...more

Northstar v. Schwab: The Ninth Circuit’s End Run Around Derivative Lawsuits in the Mutual Fund Context

It is well recognized that only investors have standing to sue a mutual fund on behalf of a class of investors and that a fiduciary duty claim accusing fund trustees of mismanagement is the property of the fund, and not of...more

Violation of Corporate Charter: Breach of Contract, Fiduciary Duties or Both

When a company takes action through its board in violation of its certificate of incorporation, may a plaintiff stockholder bring suit against the company directly for breach of its certificate—the most important of corporate...more

Delaware Supreme Court Clarifies That Section 102(b)(7) Charter Provisions May Be Basis For Dismissal At The Pleading Stage In...

On May 14, 2015, the Delaware Supreme Court clarified that, even in conflict-of-interest transactions subject to "entire fairness" review, breach of fiduciary duty claims against independent, disinterested directors should be...more

Delaware Supreme Court Confirms Exculpatory Clauses Have Teeth, and Can Be Used By Director Defendants At The Pleading Stage

In a decision with important implications for directors of public companies, the Delaware Supreme Court overturned two Chancery Court opinions and ruled that independent directors facing breach of duty of care claims arising...more

An Exercise of Business Judgment: Chancery Court Dismisses Shareholder Derivative Demand-Refused Case

Last week, Vice Chancellor Glasscock released an important decision dismissing a case under Rule 23.1 that was brought by a DuPont shareholder who alleged that the board improperly refused a demand to sue DuPont’s officers...more

Delaware Supremes Give Independent Directors a Way Out

In an opinion Thursday, the Delaware Supreme Court held that independent directors should be dismissed from shareholder derivative litigation – even over transactions presumptively subject to “entire fairness” review – unless...more

Sixth Circuit Refuses to Create a Cause of Action for Reverse Bad Faith

In an opinion handed down last week, the Sixth Circuit Court of Appeals refused to adopt a new cause of action under Kentucky law for a reverse bad faith claim by an insurer against its insured where the Kentucky Supreme...more

Allegations of Purposeful Data Withholding Do Not Trigger Cyber E&O Coverage

In Travelers Property Casualty Co. of America v. Federal Recovery Servs., Inc., Case No. 2:14-CV-170 TS (D. Utah May 11, 2015), the United States District Court for the District of Utah held that where a cyber liability...more

Middle District of Pennsylvania: Possibility of Bad Faith Exists Despite Payment of Claim Where Insured Alleges Untimely Claims...

Scheirer v. Nationwide Ins. Co. of Am., No. 3:13-CV-1397, 2015 WL 1013986 (M.D. Pa. Mar. 9, 2015). Middle District of Pennsylvania denies cross-motions for summary judgment on bad faith claim, holding that material...more

Franchisees Flatline in Case Against Doctors Express

On April 1, 2015, the U.S. Court of Appeals for the Third Circuit thoroughly shot down claims brought by franchisees of Doctors Express Franchising. Those claims asserted that Doctors Express misrepresented initial start-up...more

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