California Court Dismisses Motion to Stay, Possible FDIC Litigation Not Enough to Hold Up Coverage Dispute
The Eastern District of California denied a motion to stay d/o coverage proceedings to wait for possible FDIC litigation. The issue arose when Progressive disclaimed coverage for the directors and officers of failed Pacific State Bank, citing that the definition of “loss” in the policy as well as the “insured vs. insured” exclusion precluded coverage. The Court denied the motion, finding that there was not a conflict between the coverage dispute and the potential FDIC litigation. The Court also noted that the possible FDIC suit, which is still in the investigation phase, will not be resolved within a reasonable amount of time.