A Delaware state court said more information is needed before it can issue a decision in directors and officers liability litigation filed by American International Group Inc., Chubb Ltd. and W.R. Berkley Corp. units and a Samsung Electronics America Inc. unit against one another involving a 2017 transaction.
Delaware Superior Court in Wilmington refused motions filed by both sides in the litigation, Harman International Industries Inc. v. Illinois National Insurance Co., Federal Insurance Co., and Berkley Insurance Co.
Illinois Insurance is an AIG unit and Federal Insurance is a Chubb unit.
AIG issued primary D&O coverage to Harman, which manufactured connected car technology, including lighting, audio design and analytics, for January 2016 through January 2017, with Chubb providing a first excess policy and Berkley second excess coverage, and together providing $40 million in coverage.
The coverage provided a “bump-up provision,” which precludes coverage for settlements of merger and acquisition litigation that “bump up” the amount paid to the shareholders of the target entity in the original M&A deal.
Harman and Ridgefield Park, New Jersey-based Samsung Electronics America Inc. announced a merger agreement in November 2016. In July 2017, Patricia B. Baum filed an amended class-action complaint in U.S. District Court in Hartford against Harman and other parties alleging violations of federal securities law, and asking for “compensatory and/or rescissory” damages.
The insurers denied coverage for the lawsuit, which was settled in June 2022 for $28 million, according to the ruling. The parties sued and countersued one another in the ensuing litigation.
The court denied the insurers’ motion to dismiss and Harman’s motion for summary judgment. “At this stage in the proceedings before any discovery has taken place the Court cannot affirmatively say whether the elements under this (or either of the parties’) formulation have been met,” it said.
Attorneys in the case did not respond to requests for comment.