Federal and state courts have issued noteworthy decisions this year addressing important issues concerning corporate indemnification rights and directors and officers liability insurance policies. This column examines recent decisions addressing: (i) indemnification rights after corporate insolvency or a change of control; (ii) the circumstances under which a D&O policy requires an insurer to fund defense costs on a current basis; (iii) when an insurer may rescind a D&O policy even as to “innocent” insureds based on misrepresentations in the insurance application; and (iv) whether a demand for plaintiffs’ attorneys’ fees may constitute covered damages arising from an underlying claim for non-monetary relief. The 9th U.S. Circuit Court of Appeals’ opinion on covered damages highlights the risk to insurers of defining key policy terms in serpentine sentences that impair clear expression.
INDEMNIFICATION AFTER INSOLVENCY
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