ML Direct, Inc. v. TIG Specialty Insurance

Plaintiffs ML Direct, Inc., and Nancy G. Shalek appeal from the summary judgment entered in favor of defendant TIG Specialty Insurance Co. in this insurance coverage declaratory relief action. For the reasons set forth below, we affirm the judgment.

Facts and Procedural History

Plaintiff and appellant ML Direct, Inc. (MLD), bought a directors and officers (D&O) policy (the policy) from defendant and respondent TIG Specialty Insurance Co. (TIG) for the one-year period starting March 11, 1997. The insureds under the policy were the directors and officers of MLD. The policy applied to claims made and reported during the policy period for various wrongful acts that the insureds might commit. Plaintiff and appellant Nancy G. Shalek was at all relevant times an officer and director of MLD and was therefore an insured under the policy.

The policy excluded from coverage claims based on or connected to preexisting litigation, administrative proceedings or other hearings. On June 27, 1997, a class action lawsuit was filed against appellants and others in a New York federal district court—Petit v. Sterling Foster & Co., CV 973775 (hereafter the Petit action). When TIG denied…