Document: AT&T Corp. v. Clarendon Am. Ins. Co., No. 567, 2006, Jacobs, J. (Del. July 2, 2007)
The Delaware Supreme Court reversed the decision of the Superior Court dismissing, for failure to state a claim, an action to recover settlement amounts and attorneys’ fees the plaintiff claimed it was owed under certain directors and officers insurance policies issued by the defendants (the “Policies”). The Court held that, under California law, the directors suffered a “loss” as defined in the Policies, although the stockholder plaintiff who had nominated the directors covered under the Polices, had paid the settlement amounts and attorneys’ fees owed by such directors, and that the complaint stated a claim for equitable subrogation, finding the plaintiff stockholder was not a “volunteer” under California law where the stockholder had an interest in protecting its employees whom it had appointed as directors of the corporation.