Stein v. AXIS Ins. Co.

A medical device company, Heart Tronics, purchased directors and officers liability insurance policies from AXIS and HCC. The AXIS policy has been exhausted. Plaintiff, Heart Tronics' de facto officer, filed suit against HCC, alleging it defrauded him and breached the 2007 policy by failing to pay his litigation expenses on appeal. Plaintiff also filed suit against AXIS, alleging that it conspired with HCC to defraud him. The district court sustained the insurers' demurrers without leave to amend and dismissed the action. The court concluded that the AXIS demurrer was properly sustained because AXIS was a stranger to the HCC policy and owed no duties connected with it; the HCC demurrer was improperly sustained because when a policy expressly provides coverage for litigation expenses on appeal, an exclusion requiring repayment to the insurer upon a "final determination" of the insured's culpability applies only after the insured's direct appeals have been exhausted; and thus the court reversed as to HCC, and affirmed as to Heart Tronics, HCC Global Financial Products, HCC Insurance Holdgins, Inc., and the AXIS defendants. View "Stein v. AXIS Ins. Co." on Justia Law