McLaughlin

Tills is an appeal from a multimillion dollar judgment in a bad faith action brought by 13 investors in Technical Equities Corporation (Technical Equities) against the company’s primary insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union). Technical Equities, a diversified investment services company, financially collapsed in February 1986. Finding their investments substantially worthless after the company’s demise, hundreds of investors successfully sued the officers and directors of Technical Equities for fraud, negligent misrepresentation, breach of fiduciary duty and negligence.

National Union insured Technical Equities under a directors and officers liability policy (D & O policy) as well as a comprehensive general liability policy (CGL policy). From the inception of the investor litigation, National Union took the position that (1) there was coverage only for the second year of the three-year D & O Policy, and (2) the policy itself was a wasting asset so that defense costs were included within the annual policy limits. Certain plaintiff investors filed a test case for declaratory relief to challenge this interpretation.…