In a case of first impression in New Jersey, the New Jersey Appellate Division Affirmed the Granting of Summary Judgment in favor of National Union,  in a case interpreting an  “insured vs. insured” exclusion in a directors and officers  (D&O) liability policy, and rejected the contention that proof of collusion is a prerequisite to applying the exclusion. In Abboud v. Nation Union Fire Insurance Company of Pittsburgh, PA ,( A-3434-14T1)(June 21, 2017),  Plaintiff Michael Abboud initially sued Monarch Medical PET Services  LLC  and four of its members and managers, alleging that they tried to remove him from Monarch’s board of managers and his position as its Chief Executive Officer. In their responsive pleadings, Monarch and the individual defendants asserted various counterclaims against Abboud.  Abboud then sought indemnity and a defense in connection with counterclaims made against him from defendant National Union. National Union subsequently denied coverage based upon the insured vs. insured exclusion. Abboud filed a Declaratory Judgment action against National Union which resulted in a Summary Judgment dismissal in favor of National Union, and this appeal followed. In affirming the decision below the Appellate Division  considered the “ insured vs. insured” exclusion, and  held that  despite the historical underpinnings of the development of this exclusion, proof of collusion is not a pre-requisite to applying the exclusion. Furthermore, the Court  reinforced  an important rule of policy construction, to wit, if the plain language of a policy exclusion is clear and unambiguous, it will be enforced as written.

Obtained a favorable unanimous decision on February 11, 2016, before New Jersey’s Supreme Court on behalf of National Union Fire Insurance Company of Pittsburgh, Pa., in the matter of  Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 2016 N.J. LEXIS 144.  The New Jersey Supreme Court held that because the National Union Directors and Officers “claims made” policy was not a contract of adhesion but was agreed to by sophisticated parties, National Union was not required to demonstrate appreciable prejudice before disclaiming coverage due to the insured’s failure to give notice of the claim “as soon as practicable.”  Prior decisions had enforced the “as soon as practicable” reporting condition without requiring an insurer to demonstrate “appreciable prejudice”  from an untimely reported claim, but those decisions all involved circumstances where the claim had been reported outside of the policy period.  Templo addressed a novel issue because first notice of the claim had been given within the policy period, but not “as soon as practicable.”  In Templo the New Jersey Supreme Court found the term “as soon as practicable” was clear and unambiguous and accordingly should be interpreted as written absent a compelling public policy to ignore its otherwise unambiguous meaning.   The decision focused and turned upon the plain and unambiguous terms of a negotiated Directors and Officers insurance contract entered into between sophisticated business entities.”  Templo, 2016 N.J. LEXIS at *35. The Templo decision represents an expanded application of the “as soon as practicable” reporting requirement of “claims made” policies to situations where the claim is first made and reported during the policy period but nonetheless is not reported to the carrier as soon as practicable. 

Obtained Summary Judgment in a Declaratory Judgment action in which the plaintiff sought coverage in defense of certain counterclaims in an underlying action for wrongful termination, breach of fiduciary duty and similar claims. The plaintiff sought coverage under the D & O portion of his policy and was seeking significant damages consisting of reimbursement of defense costs, indemnification and counsel fees which may be awarded to a successful litigant in a DJ action. The plaintiff had previously held the position of CEO and member of the Board of Directors of the defendant’s company in the underlying litigation. The underlying defendant company and individual counterclaimants were all individual insured’s under the subject policy. The Court ultimately agreed that the “Insured v. Insured” exclusion in the policy applied to bar coverage, it rejected the plaintiff’s estoppel argument, and determined that there was no requirement under the policy to demonstrate collusion between the parties in order for the exclusion to apply.