In Law360’s discussion of the most significant D&O decisions in 2022, partner Thomas Breen, who represents insurers, discussed a case between Ceradyne and Liberty Mutual where the judge agreed with the insurers regarding the applicability of the bump-up exclusion clause. The court held that this exclusion in Ceradyne’s D&O policy precluded the coverage of 3M’s acquisition of Ceradyne. Tom agreed with the court’s ruling, commenting:
“The wording of the bump-up clause is sufficiently broad to apply to either situation, whether you acquired or are the acquirer…Ceradyne wanted to insert language into the bump-up clause that simply wasn’t there.”
In another case where a Delaware Superior Court found that insurers should cover Verizon Communications’s $95 million settlement against a fraudulent transfer suit, Tom warned of the vulnerability this case generates for Delaware insurers whose policyholders may face fraudulent transfer claims. However, he cautioned that the case may not be exemplary of all cases of fraudulent transfer claims, since the definition of “securities claims” here that triggered the coverage may not be the same in other cases:
“There’s no requirement that the claim itself alleged a breach of securities regulations.”
You can read the full article here.