A unit in the Hartford Financial Services Group Inc. is not required to defend or indemnify a corporate official under its liability insurance for board members and officers based on the coverage exclusion of "insured vs. insured," a federal appellate court said Monday. a lower court decision.
Joshua Donald Tarter, who had management responsibilities in a company founded and run by his family, Dunnville, Kentucky-based Tarter Cos., formed with two others a Chinese shell company, Hong Kong QMC Industry Co. . Ltd., according to Monday's ruling of the 6th U.S. Circuit Court of Appeals in Cincinnati in Joshua Donald Tarter v. Navigators Insurance Co.
A lawsuit filed by the plaintiff including other family members who accused the three of a lawsuit by selling Tarter Cos. Supplies from China at very high prices and by embezzling Tarter's trade secrets, according to the judgment.
Mr. Tarter called on Tarter's D & O insurer, the Hartford unit Navigators, to defend and replace him, which the insurer denied based on an insurance provision that excludes coverage for any civil proceedings brought against any insured under its insurance.
Mr. Tarter sued the Navigators in the U.S. District Court in Lexington, Kentucky, who ruled in favor of the insurer, arguing that the exclusion was not applicable because one of the plaintiffs in the underlying lawsuit against Mr. Tarter was an insured under its insurance.
The decision was upheld by a unanimous panel of three judges of the Court of Appeal. Mr. Tarter argued that the insured versus the insured exclusion was not applicable by "holding on to the fact that one of the named plaintiffs" in the underlying lawsuit "was not an insured party."
The panel held with. with the lower court, however, that the exclusion was applicable. "When the district court delivered its opinion in this litigation, the district court carefully considered the relevant case law and skilfully formulated the reasons why they should be convicted in favor of the Navigators," it said, confirming the lower court. respond to requests for comment.