A federal appeals court has affirmed a lower court, ruling that a Hanover Insurance Group Inc. unit does not have to defend or indemnify a company under its directors’ and officers’ indemnity policy involving a family dispute, based on the timing of the claim.
Jane Dunteman, the matriarch of the family, had a minority interest in the Du-Kane Asphalt Co. and Crush Crete Inc., both based in Addison, Ill., which were owned and operated by her husband, Paul Dunteman Sr., and other family members, according to Monday’s ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Hanover Insurance Co. v. RW Dunteman Co., et al.
The couple divorced in 2009. Jane died in March 2017 and Mr. Dunteman six months later.
Hanover Insurance Co. had issued D&O liability insurance to the companies in 2017 and 2018.
Dunteman’s death led to litigation in state court over the size of her interest in the family business, with her estate, represented by daughter Audrey, claiming she owned 24% of the company, and her four brothers claiming less.
In August 2017, the estate filed a lawsuit in state court seeking a declaratory judgment against Du-Kane Asphalt, asking the court to void an improper reduction in Jane’s ownership interest.
In July 2018, the two companies and the Dunteman brothers – Paul Jr., Jeffrey, Roland and Matthew – notified Hanover of the estate’s lawsuit and sought coverage under the 2018 policy. Hanover denied the request, because the estate’s lawsuit was first filed during the 2017 policy period and the insureds had failed to notify it within the time required by the policy.
The insurer filed suit in US District Court in Chicago, seeking a declaration that it owed no defense or indemnification to the litigation. The district court ruled in favor of the insurer and was affirmed by a three-judge appeals panel.
Among the insureds’ arguments was that a second amended complaint, which added additional defendants, “created a distinct claim” first made during the 2018 policy period, the ruling said.
Under the policy’s “aggregation provisions, the new allegations against additional defendants clearly related to the claim first made during the 2017 policy period,” the ruling said, affirming the lower court’s decision.
Attorneys in the case did not respond to requests for comment.