Crowley Maritime Corporation v. Federal Insurance Company

MEMORANDUM

Crowley Maritime Corporation (“Crowley”) brought suit against three insurers, Federal Insurance Company, Twin City Fire Insurance Company, and RLI Insurance Company (collectively “the Insurers”) seeking indemnity for payments made by Crowley to settle a securities action (“the Franklin Fund action”). At issue is whether the Insurers may deny coverage on the ground that Crowley entered into a settlement stipulation (the “Stipulation”) without the Insurers’ written consent. The district court granted the Insurers’ motion for summary judgment, and we affirm.

Crowley shareholders brought suit in 2004 in the Delaware Chancery Court. Crowley timely notified the Insurers of the claim. The Insurers acknowledged the claim, reserved the right to deny coverage, and Federal consented to Crowley’s retention of defense counsel. In late 2006, Crowley began negotiating to settle the Franklin Fund, action. Crowley entered into a Stipulation in March 2007, prior to requesting the Insurers’ written consent, which was never provided. The Stipulation purported to settle the Franklin Fmid action through a tender offer subject to certain conditions, including the approval of the Delaware…