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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove

Indian Harbor Insurance Co. v. Zucker

Case Type:
Case Status:
16-1695/1697/1698 (6th Circuit, Jun 20,2017) Published
'Insured vs. Insured' exclusion in D&O insurance policy bars claims by a liquidating trustee against directors and officers of the company because such claims are brought by, on behalf of, or in the right of the company.
Procedural context:
Appeal from the final decision of the United States District Court for the Western District of Michigan at Grand Rapids.
Capitol Bancorp, a bank holding company, filed a chapter 11 petition in 2012. Prior to the bankruptcy and until plan confirmation, members of the Reid family served as the company's directors and officers. The company purchased a standard directors & officers insurance policy prior to the bankruptcy and extended that policy during the bankruptcy. A plan was eventually confirmed which limited the liability of the directors and officers for breach of fiduciary duty to pre-petition acts and limited recovery on such claims to the insurance policy. The claims themselves were assigned to a liquidating trust. The liquidating trust filed a lawsuit against the directors and officers and the insurance company filed a separate suit in federal court seeking a declaratory judgment that the policy's 'insured vs. insured' exclusion barred coverage.
Sutton, Daughtrey, and Donald (dissenting)

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