A court in Delaware ruled on Monday that the entities Sompo International Holdings Ltd. and American International Group Inc. must cover the maker of Godiva chocolate under their directors’ and officers’ liability policies in resolving a dispute over the company’s Belgian origins.
The original storefront for chocolate sold by New York-based G-New Inc., which does business as Godiva Chocolatier Inc., was in Brussels, and because of this, Godiva’s products display the phrase “Belgium 1926,” according to the state court ruling in G-New Inc. dba Godiva Chocolatier Inc. v. Endurance American Insurance Co. and National Union Fire Insurance Co. in Pittsburgh PA.
Sompo unit Endurance had provided Godiva with a private company D&O policy with a $10 million limit, while AIG unit National Union provided $20 million in coverage in addition to the $10 million in coverage that contained the same terms, according to the ruling.
In early 2019, two plaintiffs sued Godiva, claiming that the Belgian label misled consumers in 2016. They filed lawsuits in 13 courts in New York and California, alleging violations of consumer protection statutes and common law. The cases were later consolidated in US District Court in New York, according to the ruling.
Mediation resulted in a settlement whose terms included Godiva paying up to $15 million in monetary relief and $5 million in attorneys’ fees.
Sompo and AIG refused to cover the settlement, and Godiva sued in Delaware court, alleging breach of contract and breach of the implied covenant of good faith and seeking coverage from the insurers for its settlement and defense costs.
In holding that the settlement agreement was a covered loss, the court said: “The Endurance Policy language provides broad coverage. It covers settlement and many types of damages.”
Attorneys in the case did not respond to requests for comment.