45 F. Supp. 3d 354
S.D.N.Y.2014Background
- Nomura Holding America, Inc. seeks coverage under three D&O policies from Federal Insurance for five RMBS-related lawsuits; policies are 2010-2013, with a $5M per-claim and per-period limit.
- Nomura Subs (NCCI, NAAC, NHELI, NSI) were involved in RMBS securitizations through 2007; they are insured persons/organization under the policies.
- The underlying actions (2011-2012 filings) allege misstatements in RMBS offering documents, asserting securities-law and state-law claims against Nomura, its subsidiaries, and Nomura D&O defendants.
- Two policy exclusions are pivotal: a manuscript Plumbers’ Union exclusion referencing the Plumbers’ Union CAC, and Section 13(g) treating related claims as a single claim.
- Plaintiff and defendant cross-moved for summary judgment; the court holds that the Plumbers’ Union Exclusion is unambiguous and applies to related claims, while Section 13(g) is unambiguous but does not render the underlying actions covered; Section 13(g) therefore bars coverage for the Underlying Actions, and the plaintiff’s motion is granted in part and denied in part, with the defendant’s motion granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Plumbers’ Union Exclusion bars coverage | Nomura argues the exclusion only covers claims based on or arising from the Amended Complaint and not the Underlying Actions. | Federal contends the exclusion covers claims substantially similar to the Plumbers’ Union Amended Complaint. | Yes; the exclusion is unambiguous and bars coverage for related claims. |
| Whether Section 13(g) limits coverage for all Related Claims | Nomura argues 13(g) caps liability for related claims but does not create an absolute exclusion; it should not defeat coverage. | Federal argues 13(g) deems related actions as first-made in 2008, outside the policy period. | Yes; 13(g) is unambiguous and, as applied, precludes coverage for the Underlying Actions. |
| Whether the Underlying Actions are Related Claims to Plumbers’ Union | Nomura contends the Underlying Actions are not sufficiently connected to Plumbers’ Union. | Federal contends there is a strong factual nexus making the Underlying Actions Related Claims to Plumbers’ Union. | Yes; the Underlying Actions share a strong factual nexus with Plumbers’ Union and are Related Claims. |
Key Cases Cited
- Int’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76 (2d Cir. 2002) (contract interpretation; ambiguous terms; exclusionary language treated narrowly)
- MBIA Inc. v. Fed. Ins. Co., 652 F.3d 152 (2d Cir. 2011) (burden-shifting on exclusions and related provisions; coverage allocation)
- Quanta Specialty Lines Ins. Co. v. Investors Capital Corp., 403 F. App’x 530 (2d Cir. 2010) (relatedness tests; interpretation of exclusion provisions)
- Cragg v. Allstate Indem. Co., 17 N.Y.3d 1 (N.Y. 2011) (strict and narrow construction of exclusions)
- Pioneer Tower Owners Ass’n v. State Farm Fire & Cas. Co., 12 N.Y.3d 302 (N.Y. 2009) (exclusions not to be extended by implication; interpret narrowly)