Reporting Requirement Not Triggered
Operators of a real estate investment trust and development firm sued their directors and officers (D&O) liability insurer to recover for breach of contract when it failed to defend them against an investor's claim to recover on certain promissory notes. Before the relevant policy period, an investor had made a written demand pertaining to promissory notes and threatened litigation if the notes were not paid. The demand did not allege or assert any misconduct by the insureds aside from a failure to pay. The Ninth Circuit applied California law and held the policy application did not require the insureds to disclose a claim that did not assert any “wrongful acts” as defined by the express language of the policy. The demand was for money which arguably may not have been covered under the policy.