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Allied World loses D&O costs due to ambiguous wording



A federal appeals court overturned a lower court's ruling in favor of an Allied World Assurance Co. unit on Tuesday in a director's trial, stating that the policy was ambiguous.

Seth Burgett, who founded St. Louis-based Verto Medical Solutions LLC, a headphone maker, sold the company to Stanford, Connecticut-based Harman International Industries Inc., according to the decision of the Eighth U.S. Circuit Court of Appeals in St. Louis. Louis Verto Medical Solutions, LLC v. Allied World Specialty Insurance Co.

In order to obtain the approval of Verto's investors, Burgett agreed to redistribute some of the payments made in connection with the transaction to them.

A dispute developed between Harman and Verto, which was resolved by a settlement agreement demanding a one-time payment to Verto of $ 3.5 million.

After Burgett had kept a large portion of the settlement money to himself, investors sued him in Iowa State Court on fees incl.

Verto's D&O Insurer, Allied World Assurance Unit Allied World Specialty, refused to defend or replace Verto in this lawsuit, and defending the lawsuit without Allied's assistance resulted in more than $ 600,000 in legal fees and expenses. domen.

Verto and Mr Burgett filed a counterclaim against the Allies. The American District Court in St. Louis ruled in favor of Allied World, but was overturned by a unanimous panel of three judges.

It is about political support. Allied's position was that one of the endorsements unequivocally excludes coverage, while Verto and Mr Burgett argued that this was ambiguous.

"If the insurance policy seems unclear, it is," the decision of the unanimous panel court said in three judgments. , which states that the policy is open to at least two reasonable constructions.

"The Missouri Act tells us what to do next," the decision said. "When there is an ambiguity, we must interpret it against the insurer, the insurer, even if there is extreme evidence of the parties' intent," it said, in the face of the lower court, and reconsideration of the case for further negotiation. [1

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Allied World's lawyers did not respond to a request for comment.

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