Excess ‘Other Insurance’ Provision Does Not Relieve Insurer’s Duty To Defend

The United States District Court for the Central District of California, applying California law, has held that a D&O insurer cannot rely on an excess ‘other insurance’ provision to preclude a duty to defend. TriPacific Capital Advisors, LLC v. Fed. Ins. Co., 2021 WL 5316407 (C.D. Cal. Nov. 15, 2021).

The insured is a California-based financial services company that manages institutional capital for residential construction projects. In 2020, a former employee sued the company and the company’s president.

The company tendered the action to its D&O and EPL insurers. The EPL insurer agreed to provide a defense, but the company’s D&O insurer denied coverage, asserting, among other things, that its policy applied in excess of the EPL policy.

In the ensuing coverage action, the D&O insurer advanced several arguments to support its contention that it had no duty to defend.

First, it argued that the alleged wrongdoing by the company president occurred not in his capacity as a director and officer of the company, but as a joint venture partner, in which case the terms of the policy precluded coverage.