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Eleventh Circuit Denies Coverage for Wrongful Acts of Directors and Officers That Arose Out of Their Wrongful Acts as Trustees, an Uninsured Capacity

FC&S Legal: The Insurance Coverage Law Information Center

July 21, 2015

Authors: Thomas M. Spitaletto, James K. Thurston

Thomas M. Spitaletto (Partner-Dallas) and James K. Thurston (Partner-Chicago) co-authored “Eleventh Circuit Denies Coverage for Wrongful Acts of Directors and Officers That Arose Out of Their Wrongful Acts as Trustees, an Uninsured Capacity” in the July 21, 2015, issue of FC&S Legal. The case in question produced a pro-insurer decision applying the “but for” test to an exclusion for insureds’ acts “arising out of” or “based upon” acts in an uninsured capacity. Such exclusion applied to preclude coverage for the entire claim, including all causes of action against the insured individuals and the insured entity, even though the entity was not “acting” in a conflicted capacity. Tommy and Jim conclude that so long as acts committed in the uncovered capacity are the basis of the “claim,” all insureds (whether acting in a dual capacity or not) will fall within the purview of the exclusion.

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