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Genesis Ins. Co. v. Crowley

United States District Court for the District of Colorado

June 25, 2007, Decided; June 25, 2007, Filed

Civil Action No. 05-cv-00335-WDM-PAC

Opinion

 [*1111]  ORDER ON MOTIONS FOR SUMMARY JUDGMENT

Miller, J.

This matter is before the court on the Motion for Summary Judgment Based on the Expiration of the Relevant Policy Period and Discovery Period (doc no 151)  [**3] filed by Plaintiff Genesis Insurance Company ("Genesis"), Motion for Partial Summary Judgment (doc no 148), filed by Defendant Daniel D. Crowley ("Crowley"), Motion for Partial Summary Judgment regarding Insurance Coverage of Outside Directors Under the Genesis Policy (doc no 153) filed by Arlin M. Adams, Chapter 11 Trustee of the Bankruptcy Estates of Coram Healthcare Corporation and Coram, Inc. ("Trustee"), and Motion for Partial Summary Judgment as to Coverage for the Settlement in the Underlying Action (doc no 131) filed by Genesis. After review of the parties' written arguments and tendered evidence, I conclude oral argument is not required. For the reasons that follow, summary judgment will enter against Genesis and in favor of Crowley and Trustee in part; specifically, I conclude that insurance coverage for the underlying litigation is not precluded by the expiration of the policy, but that coverage extends only to claims and losses arising out of conduct of the defendants occurring before January 27, 2001. The motions are further granted in part and denied in part as described below.

Factual Background

This case has its origins in the bankruptcy proceedings of two entities, Coram  [**4] Healthcare Corporation and its wholly owned subsidiary, Coram, Inc. (collectively "Coram"), in the United States Bankruptcy  [*1112]  Court for the District of Delaware. Crowley is the former CEO and Chairman of Coram. Defendant Arlin M. Adams is the Trustee of the bankruptcy estates of Coram. On December 29, 2004, Trustee filed an action against Crowley and several other defendants, all outside directors of Coram (the "Outside Directors"), in the United States District Court for the District of Delaware, alleging that the defendants had breached their fiduciary duties to Coram (the "Underlying Lawsuit"). Crowley and the Outside Directors sought coverage for the defense of the Underlying Lawsuit on a Directors' and Officers' Liability Policy purchased by Coram from Genesis. Genesis then filed this action against Crowley and the Outside Directors seeking a declaration that the policy does not provide coverage for the claims asserted by Trustee in the Underlying Lawsuit. The Outside Directors asserted a counterclaim against Genesis for breach of contract (for failing to provide coverage in the Underlying Lawsuit). Thereafter, the Outside Directors settled with Trustee in the Underlying Lawsuit  [**5] and Trustee was substituted for the Outside Directors in this action.

The primary issue in the motions for summary judgment filed by the parties is whether coverage for the claim asserted in the Underlying Lawsuit, or part of it, is precluded because the lawsuit was filed after the expiration of the policy period, as extended by a one-year "discovery period." If not, the parties then seek summary judgment on whether coverage is barred by other exclusions in the policy. Finally, Genesis seeks a determination on whether the settlement by the Outside Directors is a "Loss" under the policy, assuming that the Underlying Lawsuit is otherwise covered.

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495 F. Supp. 2d 1110 *; 2007 U.S. Dist. LEXIS 45878 **

GENESIS INSURANCE COMPANY, a Connecticut corporation, Plaintiff and Counter-Defendant, v. DANIEL D. CROWLEY, Defendant, ARLIN M. ADAMS, Chapter 11 Trustee of the Bankruptcy Estates of Coram Healthcare Corporation and Coram, Inc., Defendant and Counter-Claimant.

Prior History: Genesis Ins. Co. v. Crowley, 2007 U.S. Dist. LEXIS 7362 (D. Colo., Feb. 1, 2007)

CORE TERMS

coverage, notice, outside director, Lawsuit, insured, settlement, policy period, wrongful act, summary judgment, Discovery, occurring, parties, circumstances, expiration, conflicting interest, Shareholder, passengers, reorganization, disclose, argues, potential claim, single claim, give rise, Confirmation, indemnity, execute, reasons, legally obligated to pay, summary judgment motion, bankruptcy proceedings

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, General Overview, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Entire Contract, Ambiguous Terms, Ordinary & Usual Meanings, Plain Language, Liability & Performance Standards, Notice to Insurers, Loss Payees, Bad Faith & Extracontractual Liability, Assignment of Claims, Covenants Not to Execute, Settlements