Jerry's Enterprises, Inc. v. U.S. Specialty Insurance Co., No. 15-3324 (8th Cir. 2017)
Annotate this CaseJEI filed suit against its liability insurance carrier, U.S. Specialty, alleging breach of contract and seeking a declaratory judgment related to U.S. Specialty's refusal to indemnify JEI for settlement of the underlying suit brought by a former JEI director. U.S. Specialty argued that the underlying suit was excluded from coverage based on the language in the directors' and officers' liability insurance policy. The district court granted summary judgment for U.S. Specialty. The court concluded that application of the insured vs. insured exclusion in this case demonstrates that U.S. Specialty does not owe coverage to JEI; the exclusion applied to Cheryl Sullivan, an insured person under the policy, and her two daughters; U.S. Specialty need only show that the exclusion clause applied to the suit as brought and it has done so; the allocation clause does not restore coverage for any part of the underlying suit where the allocation clause speaks generally to any claim brought with covered and uncovered matters; and the insured vs. insured exclusion speaks directly to lawsuits brought with the participation of insured persons. Accordingly, the court affirmed the district court's grant of summary judgment in favor of U.S. Specialty.
Court Description: Shepherd, Author, with Beam and Gruender, Circuit Judges] Civil case - Insurance. Under the provisions of the directors' and officers' liability policy defendant issued to plaintiff, the underlying suit by a former director of the company and her daughters was an action by an insured person (the former director) and the "insured v. insured' exclusion of the policy applied to her claims; the district court correctly determined that the exclusion applied to the daughters' claims, as well, since the action was brought by their mother, the former director, and any loss associated with the suit would be due to the presence of a former director as an active participant; the policy's allocation clause does not restore coverage for any part of the suit; while there may be some tension between the insured v. insured exclusion and the allocation clause, the insured v. insured exclusion speaks directly to lawsuits brought with the participation of insured persons while the allocation clause only speaks generally to any claim brought with covered and uncovered matters; under Minnesota law, specific contract language controls over general language, and the insured v. insured clause controls. [ January 10, 2017
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