Florida Appellate Court Strictly Enforces Insured vs. Insured Exclusion
04.29.16
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(Article from Insurance Law Alert, April 2016)
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Previous Alerts have reported on decisions that address the parameters of an insured vs. insured exclusion, which bars coverage for claims made against an insured company or officer by an “Insured Person,” typically defined as “any past, present or future director, trustee, officer, employee or honorary or advisory director or trustee of the Company.” See January 2015 Alert, October and April 2014 Alerts. A majority of courts have deemed insured vs. insured exclusions unambiguous and enforceable as written. In a recent decision, a Florida appellate court joined this trend, finding that the exclusion barred coverage regardless of the capacity in which the former director brought suit. Durant v. James, 2016 WL 1295100 (Fla. Dist. Ct. App. Apr. 4, 2016).
Durant, a former director/shareholder, brought suit against James, the President and CEO of the insured company. Although each party met the definition of “Insured Person” in the exclusion, Durant argued that the exclusion did not apply because he was not suing James in his official capacity as former director, but rather in a personal capacity, in connection with a money judgment obtained in a personal civil action relating to overvalued stock. The court rejected this argument, stating that “the capacity in which the claimant sued the other officer or director in the first instance ha[s] no bearing on the bar on coverage under a D&O policy’s insured versus insured exclusion.”