Former Modell’s CEO Loses Insurance Row Over Officer Legal Costs

Bloomberg Law
02/09/2024

  • Insurer correctly provided legal defense costs to one director
  • Policy doesn’t require other directors’ consent, court says

An Argo Group International Holdings Inc. unit won a directors and officers insurance dispute against the former head of a New York sporting goods company that had filed for bankruptcy after a federal judge in Manhattan ruled the carrier never breached its insurance contract.

Mitchell B. Modell, former CEO of Modell’s Sporting Goods Inc., failed to show Argonaut Insurance Co. wrongfully provided legal defense and settlement payments to Eric Spiel, the sports retailer’s former chief financial officer, the US District Court for the Southern District of New York said Thursday. The court granted a motion from the insurer and Spiel to dismiss the case.

The dispute hinges on whether Argonaut breached the insurance contract by providing directors and officers benefits to one insured executive without the others’ consent.

“All D&O policyholders should take note of this holding that any given policyholder under a D&O policy does not have an inherent right to consent to another policyholder’s settlement,” said Diana Shafter Gliedman, a counsel at Anderson Kill who represents Spiel.

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