Intelligent Dig. Sys., LLC v. Beazley Ins. Co., 16-3548-cv

IDS (owned/controlled by attorney Jay Edmond Russ) sold assets to VMS; Russ was to be added to VMS board and hired as a consultant; he attended meetings and was paid as a director.
Beazley issued a D&O insurance Policy to VMS covering directors and officers for Loss from Claims, but containing an insured-vs-insured exclusion (with a limited employment-related exception).
After Russ resigned and sued VMS and its directors over payment under the sale, Beazley denied coverage citing the insured-vs-insured exclusion; plaintiffs settled the underlying suit and obtained assignments of the directors’ Policy rights.
Plaintiffs sued Beazley for indemnification; district court narrowed trial issues to (1) applicability of the insured-vs-insured exclusion (i.e., whether Russ was an insured as a “duly elected or appointed” director) and (2) estoppel defense.
A jury found Russ was duly elected or appointed; district court entered judgment for Beazley; Second Circuit affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the insured-vs-insured exclusion applies to Russ’s claims	The clause is ambiguous and should be read to exclude only claims by directors in their official capacities, not individual/consultant claims	The exclusion plainly bars any claim by or on behalf of an Insured director (except employment-related claims) regardless of capacity	Exclusion applies on its face; not limited to claims in a director capacity; employment exception does not cover consultants, so exclusion bars Russ’s claim
Whether Russ was “duly elected or appointed” as a director under the Policy	Policy (and bylaws) ambiguous about process; bylaws required separate board vote to increase number of directors, so Russ was not duly elected/appointed	Russ was selected by unanimous board action, served, was paid, and was represented as a director — so he was duly elected/appointed	No ambiguity in Policy phrase; even if bylaws ambiguous, jury verdict that Russ was duly elected/appointed is supported by evidence and affirmed

Olin Corp. v. Am. Home Assurance Co., 704 F.3d 89 (2d Cir. 2012) (contracts interpreted to give effect to parties’ intent; plain meaning controls)
Morgan Stanley Grp. Inc. v. New England Ins. Co., 225 F.3d 270 (2d Cir. 2000) (court decides initial contract interpretation and whether terms are ambiguous)
U.S. Fid. & Guar. Co. v. Fendi Adele S.R.L., 823 F.3d 146 (2d Cir. 2016) (appellate review of contract interpretation is de novo)
Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377 (N.Y. 2003) (policy exclusions construed narrowly; ambiguities resolved against insurer)
Galardi v. Naples Polaris, LLC, 301 P.3d 364 (Nev. 2013) (contract ambiguity is a question of law; extrinsic evidence admissible if ambiguous)