Delaware Public Policy Does Not Favor D&O Insurers
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Delaware Public Policy Does Not Favor D&O Insurers

The Delaware Superior Court’s complex commercial litigation division considered a coverage dispute related to an action for fraud brought by shareholders against Dole Food’s directors and officers. The parties settled the underlying litigation following the court’s finding that the defendants breached their fiduciary duty by manipulating the company’s trading price downward prior to the transaction, which the court considered fraudulent conduct. The court upheld the D&O coverage reasoning that absent a contrary choice of law clause, Delaware law applies to Delaware corporations’ D&O insurance policies. Adhering to Delaware’s commitment to a party’s freedom to contract, the court found Delaware public policy does not prohibit insuring losses from insureds’ breaching their fiduciary duty through fraudulent conduct.

Arch Insurance Co v Murdock