MIAMI —Rivero Mestre has obtained an order requiring Chartis Insurance Company and other insurers to advance defense costs for six of Westernbank of Puerto Rico’s former directors and officers, in W Holding Company, Inc. v. Chartis Insurance Company of Puerto Rico.
On July 3, 2012, the United States District Court for the District of Puerto Rico ordered Chartis to advance the costs of defending the directors and officers in a suit brought by the Federal Deposit Insurance Corporation, which took over the bank in 2010.
Chartis denied coverage and defended against the advancement motion on the basis of an “insured v. insured” exclusion in the relevant policies. Insurance coverage disputes, often involving “insured v. insured” exclusions, are a growing concern for bank directors and officers, and this case might be a bellwether on such issues.
The directors and officers asked Chartis to advance defense costs and cover purported gross negligence claims brought by the FDIC. Chartis denied coverage and refused to advance costs, even though the D&O policies Chartis drafted require advancement of defense costs, forcing the directors and officers to seek a declaratory judgment.
The directors and officers filed a motion with the court requesting advancement of defense costs prior to an ultimate coverage determination. The court granted that motion and ordered Chartis to comply with Puerto Rico law, which required Chartis to advance defense costs. Click here to see the district court order.
About Rivero Mestre LLP
Rivero Mestre, from its offices in Miami and New York, represents clients from investigation to verdict and appeal in complex business disputes in U.S. federal courts, state courts, and domestic and international arbitration proceedings. The firm’s practice focuses primarily on representing corporate and institutional clients in a broad range of complex commercial disputes including financial institution matters, intellectual property disputes, and litigation and arbitration relating to Latin American trade and investment. For more information, visit www.riveromestre.com.