D&;O – No Coverage Based Upon Consent and No Action Clauses in Policy After Insured Settles for Amount Greater Than Insurer’s Consent at Mediation

By | The D&O E&O Monitor | April 7, 2014
D&;O – No Coverage Based Upon Consent and No Action Clauses in Policy After Insured Settles for Amount Greater Than Insurer’s Consent at Mediation

These two clauses do not often come into issue in coverage litigation, but a Georgia federal court had little trouble in enforcing them to preclude coverage for a $4.9M settlement and a claim for coverage under an excess D&O policy. Piedmont Office Realty Trust, Inc. v. XL Specialty Ins. Co., 2014 U.S. Dist. LEXIS 42575 (N.D. Ga.  March 28, 2014).

First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

By | The D&O Diary | April 7, 2014
First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

In an interesting March 31, 2014 opinion (here), the Unites States Court of Appeals for the First Circuit, applying Puerto Rico law, affirmed a district court’s ruling that the D&O insurer for the failed Westernbank of Mayaguez, Puerto Rico must advance the bank’s former directors’ and officers’ expenses incurred in defending the FDIC’s suit against them in its capacity as the failed bank’s receiver.

UK – the Perils of Follow Clauses: A Following Underwriter May Have to Follow a Settlement Even if the Settlement Agreement Purports Not to Bind Them

By | Global Insurance Blog | April 7, 2014
UK – the Perils of Follow Clauses: A Following Underwriter May Have to Follow a Settlement Even if the Settlement Agreement Purports Not to Bind Them

In this case the Commercial Court held that the Aigaion, one of the insurers of a ship – the St. Efrem, was required to follow a settlement entered into by a group of Lloyd’s syndicates who were the lead insurers of the vessel under a separate policy, based on a proper construction of the follow clause in Aigaion’s policy.