“Insured v. Insured” Exclusion Precludes Coverage for Officers and Directors in Chapter 11 Bankruptcy Proceeding

Debtors in a Chapter 11 reorganization may have a more difficult time recovering insurance proceeds on claims asserted against former officers and directors.  Biltmore Associates v. Twin City Fire Ins. Co., _ F.3d _ (9th Cir. July 10, 2009).   

Most directors and officers policies exclude coverage for claims brought by one insured against another (with some limited exceptions, such as derivative claims).  In Biltmore Associates, the Ninth Circuit held that claims for malfeasance asserted by the insured as debtor in possession of its Chapter 11 bankruptcy estate against former officers and directors still fall within this exclusion.  In at least one prior instance, the Ninth Circuit had held that a reasonable person seeking coverage would not understand the trustee of a bankruptcy estate to be the same as the pre-bankruptcy insured entity for purposes of this exclusion.  See Unified W. Grocers, Inc. v. Twin City Fire Ins. Co., 457 F.3d 1106, 1117 (9th Cir. 2006).  Read More

Notice-Prejudice Rule Does Not Apply to Reporting Requirements in Pollution “Buy-Back” Clause

An insured failed to report a pollution occurrence within sixty days of becoming aware of the same, as required by a pollution buy-back provision in the policy.  Accordingly, it forfeited coverage for liability arising out of those incidents.  Venoco, Inc. v. Gulf Underwriters Ins. Co., __ Cal. App. 4th __ (July 1, 2009).

Venoco, an oil company, operated oil wells near Beverly Hills High School (the “School”).  In 2003, Venoco was sued by individuals claiming to have been exposed to toxic chemicals while they attended or were employed at the School.  The exposures allegedly occurred from 1976 onward.  Read More 

FOR ADDITIONAL INFORMATION ON THIS ISSUE, CONTACT:

Amy B. Briggs Ms. Briggs’ complex business litigation practice focuses on insurance coverage and bad faith disputes.  Ms. Briggs has represented numerous policyholders, including financial institutions, large real estate entities, public retirement systems throughout California, pharmaceutical and medical device manufacturers, and nonprofit organizations in coverage disputes.  She has successfully litigated first- and third-party coverage and bad faith claims arising under commercial general liability, property, fiduciary liability, employers’ liability, and D&O and E&O policies.  She has appeared and argued before the California Court of Appeal on multiple occasions.