The Delaware Supreme Court's recent ruling that appraisal actions are not covered under director and officer liability policies — the second time the state high court has ruled on the issue — may not mark an end to appraisal action coverage disputes, insurance attorneys say.
Earlier this month, the Delaware high court upheld a lower court ruling that Jarden LLC's insurers do not have to pay for its legal fees or obey an order to pay $38 million in interest to stockholders who sued for an appraisal of their shares following the company's 2016 sale to Newell Rubbermaid Inc.
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"The lower court basically said that it believes that the parties were in the best position to supply the meaning of the word," said Raymond Mascia, a shareholder of Anderson Kill PC who represents policyholders. "The court's analysis is not a broad brush rule that appraisal actions can never be covered."
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Mascia of Anderson Kill, who represented policyholders, disagreed. "Policyholders don't need a coverage endorsement because appraisal proceedings are already covered. If an insurer does not want to provide coverage for an appraisal action, it should unambiguously exclude it as opposed to arguing that it's not a claim for a wrongful act and use the court as a post-loss underwriter."
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