First Solar, Inc. v. National Union Fire Insurance Co. of Pittsburgh, PA
N20C-10-156 MMJ CCLD
| Del. Super. Ct. | Jun 23, 2021Background:
- First Solar sought coverage for a settled opt-out securities suit (the "Maverick Action") under primary and excess directors-and-officers policies issued by National Union (Primary Policy) and XL Specialty (follow-form XL Policy).
- The Maverick plaintiffs had originally been part of a larger class action ("Smilovits Action," filed 2012) and later opted out and filed the Maverick Action (filed 2015) covering May–Dec 2011; First Solar settled Maverick for $19 million.
- National Union had previously provided coverage (and exhausted a policy) for the Smilovits Action; National Union and XL denied coverage for Maverick, asserting it related back to Smilovits and thus was a claim first made before the policies’ inception.
- The Primary Policy contains a relation-back clause treating any "Related Claim" as first made when the earlier reported claim was first made, and excludes claims first made before the policy inception; the XL Policy follows form to the Primary Policy.
- First Solar sued for breach of contract and declaratory relief; insurers moved to dismiss and First Solar moved for partial summary judgment on relatedness. The court granted the insurers’ motions and denied First Solar’s partial summary judgment.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Maverick Action is "Related" to the Smilovits Action (i.e., whether it "relates back") | The two suits are not fundamentally identical: different plaintiffs, different claims/relief, different class periods and operative facts | Maverick derives from the same facts/Wrongful Acts alleged in Smilovits and thus is a Related Claim that must be deemed first made with Smilovits | Court: Maverick and Smilovits are fundamentally identical (substantial factual overlap, same subject, overlapping disclosures); Maverick relates back to Smilovits and is deemed first made in 2012. |
| Whether a claim deemed first made in 2012 is excluded because it predates the policies’ inception | First Solar: Maverick is not the same claim and therefore falls within the 2013–2015 policy periods | Insurers: Relation-back makes Maverick a 2012 claim, and policies exclude claims first made before inception | Court: Because Maverick relates back to 2012, the Primary and XL Policies (which preclude pre-inception claims) provide no coverage. |
| Applicability of the Special Matter Exclusion (Event-specific exclusion naming Smilovits) | First Solar: Not argued as the primary basis; contends claims are covered if not related | Defendants: Exclusion bars coverage for any Claim related to Smilovits or interrelated wrongful acts | Court: Did not reach or decide this argument after resolving relatedness in insurers’ favor. |
| Whether First Solar breached notice or consent-to-settle provisions | First Solar: Provided notice and did not need insurer consent to settle | Defendants: First Solar failed to comply with notice and consent conditions, which would bar coverage | Court: Did not address these arguments because it found no coverage on relation-back/pre-inception grounds. |
Key Cases Cited
- Spence v. Funk, 396 A.2d 967 (Del. 1978) (standard for Rule 12(b)(6) dismissal)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard on directed factual showings)
- Intel Corp. v. American Guarantee & Liability Ins. Co., 51 A.3d 442 (Del. 2012) (insurance-policy interpretation is a question of law)
- Viking Pump, Inc. v. Century Indemnity Co., 2 A.3d 76 (Del. Ch. 2009) (policies read as a whole; unambiguous terms enforceable)
- Hallowell v. State Farm Mutual Auto. Ins. Co., 443 A.2d 925 (Del. 1982) (no creation of ambiguity where none exists)
- Fimbres v. Fireman’s Fund Ins. Co., 708 P.2d 756 (Ariz. Ct. App. 1985) ("arising out of" implies causation in relatedness analyses)