United States District Court, D. Connecticut
J. GRAHAM ZAHORUIKO, Plaintiff,
FEDERAL INSURANCE COMPANY and CHUBB GROUP OF INSURANCE COMPANIES, Collectively and Individually, Defendants.
MEMORANDUM OF DECISION GRANTING DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT [DKT. 34]
Vanessa L. Bryant United States District Judge
J. Graham Zahoruiko brings this action for breach of
contract, unjust enrichment, conversion, and for declaratory
relief, against Defendants Federal Insurance Company
(“Federal”) and Chubb Group of Insurance
Companies, individually and collectively
(“Chubb”), for denying coverage under a directors
and officers (“D&O”) liability insurance
policy. Federal moved for summary judgment pursuant to
Federal Rule of Civil Procedure 56. [Dkt. 34]. For the
reasons that follow, the Court GRANTS Federal's motion.
was an officer of SpaceWeb Corporation
(“SpaceWeb”), which was later known as Refresh
Software Corporation (“Refresh”), while these
companies were insured under two Federal D&O policies.
[Dkt. 14 ¶¶ 7, 11; Dkt. 40 ¶¶ 4, 5, 7].
Federal issued SpaceWeb its first policy (the “SpaceWeb
Policy”) on October 1, 2000. [Dkt. 35 ¶ 5]. The
SpaceWeb Policy was canceled for non-payment of premium on or
about May 26, 2001. [Dkt. 35 ¶ 6]. Federal then issued a
new, separate policy to Refresh (the “Refresh
Policy”) effective December 14, 2002. [Dkt. 35 ¶
2]. The Refresh Policy remained effective until April 14,
2011. [Dkt. 35 ¶ 7].
policies are “claims-made” policies, which
provide coverage based on when a claim is first made rather
than when the events giving rise to the claim took place.
[Dkt. 35-1, Declarations, at 1; Dkt. 35-2, Declarations, at
1]. The SpaceWeb Policy states:
THIS IS A CLAIMS MADE POLICY. EXCEPT AS OTHERWISE PROVIDED
HEREIN, THIS POLICY COVERS ONLY CLAIMS FIRST MADE AGAINST THE
INSURED DURING THE POLICY PERIOD.
[Dkt. 35-1, Declarations, at 1]. The Refresh Policy states,
THIS COVERAGE SECTION PROVIDES CLAIMS MADE COVERAGE, WHICH
APPLIES ONLY TO “CLAIMS” FIRST MADE DURING THE
“POLICY PERIOD”, OR ANY EXTENDED REPORTING
[Dkt. 35-2, D&O Liability Coverage Section, at 1]. The
parties do not dispute that the Plaintiff was an
“insured person” under these policies. [Dkt. 34-1
at 9]. The Policies both define a D&O Claim as:
(a) a written demand for monetary damages;
(b) a civil proceeding commenced by the service of a
complaint or similar pleading
[Dkt. 35-1, Declarations, at 16; Dkt. 35-2, D&O Liability
Coverage Section, at 4]. A “Loss” under the
Refresh Policy was defined as:
[T]he total amount which an Insured becomes legally obligated
to pay as a result of any Claim made against any Insured for
Wrongful Acts,  including, but not limited to, damages
(including punitive or exemplary damages which has a
substantial relationship to the Insureds, the Company, this
Policy or the Claim and which is most favorable to the
insurability of such damages), judgments, settlements,
pre-judgment and post-judgment interest and Defense Costs.
Id. Additionally, to obtain coverage for losses
under the D&O policy, an insured could not:
[S]ettle any Claim, incur any Defense Costs, or otherwise
assume any contractual obligation or admit any liability with
respect to any Claim without [Federal's] written consent,
which shall not be unreasonably withheld. [Federal] shall not
be liable for any settlement, Defense Costs, assumed
obligation or admission to which it has not consented.
[Dkt. 35-2, General Terms and Conditions, at 9]. The policy
also required the insured to provide Federal “written
notice as soon as practicable of any Claim.”
Id. at 8. The Refresh Policy also provides that:
No coverage will be available under this Coverage Section for
any Claim against an Insured . . . based upon, arising from,
or in consequence of a written demand, suit, or other
proceeding pending, or order, decree or judgment entered for
or against any Insured on or prior to the applicable Pending
or Prior Litigation Date . . . or the same or any