Levy v. NAT. UNION FIRE INS. CO.

• Decision Date: 13 March 1989
• Docket Number: 88 Civ. 1518 (KTD).
• Citation: 710 F. Supp. 474
• Parties: Edmond LEVY, Eddy Antar, and Solomon E. Antar, Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant.
• Court: U.S. District Court — Southern District of New York

710 F. Supp. 474

Edmond LEVY, Eddy Antar, and Solomon E. Antar, Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant.

88 Civ. 1518 (KTD).

United States District Court, S.D. New York.

March 13, 1989.

Friedman & Kaplan, New York City, for plaintiffs; Andrew W. Goldwater, of counsel.

D'Amato & Lynch, New York City, for defendant; Mary Jo Barry, of counsel.

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, District Judge.

Plaintiffs Edmond Levy, Eddy Antar, and Solomon E. Antar (jointly the "former directors") move pursuant to Fed.R.Civ.P. 56 for summary judgment declaring defendant National union Fire Insurance Company of Pittsburgh ("National Union") liable under the Directors and Officers Liability and Corporation Reimbursement Policy (the "Policy") issued to Crazy Eddie, Inc. ("CEI"), for the expenses incurred by the former directors in defending themselves in Crazy Eddie, Inc. v. Eddie Antar, et al., No. 9378 (Del.Chan.1987) ("Delaware Action"). National Union cross-moves for summary judgment declaring that the costs incurred by the former directors in defending the Delaware Action are excluded from coverage under the Policy.

FACTS

Eddy and Solomon Antar were members of the board of officers and directors of CEI until November 6, 1986. Edmond Levy was a member until December 1, 1986. National Union does not dispute that each of the former directors are insureds under the Policy and that the Policy was in effect on November 6, 1986.

CEI filed the Delaware action on November 6, 1986, claiming that the former directors and others breached their fiduciary duty to CEI in agreeing to have CEI enter into certain employment agreements with officers and directors and in approving loans to officers and directors. The former directors timely notified National Union of the action and requested concurrent reimbursement under the policy for the costs of defending the action and any amounts that they would ultimately have to pay in the action.

DISCUSSION

The papers submitted by the parties on these motions dispute first, whether or not the Delaware action is excluded from coverage under the Policy and, second, if it is not excluded, whether or not National Union is obligated to pay the costs of defending the action as they are incurred by the former directors.

The argument regarding exclusion focuses on the proper interpretation of the following Policy language:

The Insurer shall not be liable to make any payment for Loss in connection with any claim or claims made against the Insureds:

....

(i) which are brought by, or on the behalf of, any other Insureds including but not limited to shareholders' derivative suits and/or representative class action suits, brought by one or more past, present or future Directors and/or Officers including their estates, beneficiaries, heirs, legal representatives, assigns and/or the Company against one or more past, present or future Directors or Officers;

....

Affidavit of Mary Jo Barry, Esq., in Support of National Union's Cross-Motion for Summary Judgment ("Barry Aff."), Exh. D, ¶ 4(i) (emphasis added).

The former directors focus on the language of subsection (i) preceding the word "including" and argue that...