Pan Pacific Retail Properties, Inc. v. Gulf Insurance

Appellants Pan Pacific Retail Properties, Inc. (“Pan Pacific”) and Western Properties Trust (“Western”) challenge their insurers’ denial of coverage for an underlying shareholder class action. Pan Pacific and Western were each insured under a Directors’ and Officers’ Liability and Company Indemnification Policy (“D & 0 Policy”). Pan Pacific was insured by Appellee Gulf Insurance Company (“Gulf’). Western was insured by Appellee Twin City Fire Insurance Company (“Twin City”). Gulf and Twin City assert that all costs and expenses arising out of the underlying shareholder lawsuit were uninsurable as a matter of public policy because, according to the insurers, the suit only sought and recovered the disgorgement of additional consideration that the shareholders allege should have been paid by Pan Pacific to Western’s shareholders in the merger of Pan Pacific and Western. Twin City additionally contends that Western, its insured under the Twin City policy, may not recover any insurance proceeds because Pan Pacific had fully indemnified Western from any claims resulting from the merger.

We conclude that summary judgment was incorrect on the issue of whether the settlement paid by Pan…