A recent decision from the Third Circuit has some rather interesting things to say about the reasonable expectations standard of policy interpretation. In G-I Holdings, Inc. v. Reliance Insurance Co., 586 F.3d 247 (3rd Cir. 2009), the Court rejected a rather novel invocation of the reasonable expectations doctrine as a means to circumvent the interrelated wrongful acts provision in a D&O policy (unfortunately we cannot provide page citations in this post because there is no pagination in the Westlaw publication of the decision).

The decision arises in a rather unusual context. In February 2000, G-I Holdings purchased from Reliance a D&O policy covering claims made against G-I’s directors and officers between July 1, 1999 and July 1, 2002. The coverage limit…

The federal appellate courts dispose of approximately 80 percent of their cases by nonprecedential opinions. Therefore, it comes as a surprise that a decidedly fatuous coverage claim elicited a published opinion from the First Circuit addressing the scope of Side B D&O liability insurance coverage. We trust that this observation will not appear churlish because it is always a delight to read the work of the inimitable prose stylist, Judge Bruce Selya.

In Medical Mutual Insurance Company of Maine v. Indian Harbor Insurance Company, 2009 WL 3210599 (1st Cir. 2009), Medical Mutual sought reimbursement under the Side B coverage of its D&O liability insurance policy for a settlement paid to its former CEO, Patrick Dowling, to resolve an employment discrimination claim.…

It is always refreshing to find that the principle of separation of powers is alive and well in our state courts. In State of Nebraska v. United National Insurance Co., 761 N.W.2d 916 (Neb. 2009), the court held that the regulatory exclusion in National Union’s D&O insurance policy excluded coverage for a claim brought by the Nebraska Director of Insurance against the directors and officers of Amwest Surety Insurance Company, an insolvent Nebraska insurance company.

The United National Regulatory Exclusion provided:

This Policy does not apply to any claims brought by or on behalf of any insurance regulatory agency or supervisory authority, including but not limited to any state or local insurance department or Commission or any state or local Insurance Guaranty or Insolvency…