The Delaware Supreme Court on Thursday upheld a lower court decision in favor of American International Group Inc., Chubb Ltd. and QBE Insurance Group Ltd. in litigation for directors and officers brought by a mining company.
Littleton, Colo.-based Stillwater Mining Co., whose principal place of business is in Stillwater County, Montana, unsuccessfully argued, following an earlier Delaware ruling in another case, that Montana law rather than Delaware law should apply on the question of whether it could recover expenses it incurred in defending a shareholder appraisal action in Delaware, according to the unanimous decision of the Delaware Supreme Court in Stillwater Mining Co. v. National Union Fire Insurance Co . of Pittsburgh, PA, Ace American Insurance Co. and QBE Insurance Corp.
Stillwater was publicly traded until 2017, when Sibanye Gold Ltd., a South African mining company, acquired it and took it private, according to the ruling. After the merger, some Stillwater stockholders filed an appraisal action in Delaware’s Court of Chancery seeking the fair value of the stock.
After its D&O insurers failed to pay their defense costs in the case, Stillwater sued them in Delaware state court. The court granted the insurers’ motion to dismiss the case based on the Delaware Supreme Court’s October 2020 ruling in In re: Solera Insurance Coverage Appeals, where it held it costs associated with a stock valuation sought by stockholders in connection with a merger are not insurable under D&O coverage.
Stillwater had originally argued that Delaware law applied to the interpretation of the D&O policies, but in an amended complaint after Solerate decision, reversed position and said Montana law applied.
“The central issue on appeal is whether Delaware or Montana law applies to the allegations in Stillwater’s amended complaint,” the Supreme Court ruling said.
Stillwater argued in its amended complaint that the lower court should have applied Montana law because it has the most significant relationship to the litigation and the parties, and if so, it could be awarded its defense costs under that state’s law.
The state Supreme Court disagreed. “In our view, Stillwater’s amended allegations raise the same Delaware interests identified by Stillwater in its original complaint,” it said, affirming the lower court.
Attorneys in the case had no comment or did not respond to a request for comment.