A Delaware court on Monday refused a motion to dismiss directors and officers liability litigation filed by insurers against an energy company that is being sued in connection with a merger.

Dallas-based Energy Transfer Equity L.P., which has one of the largest portfolios of energy assets in the United States, merged with Dallas-based Regency GP LP; both were sued in June 2015 for allegedly violating Regency’s limited partnership agreement because of undisclosed conflicts of interest in the merger approval process, among other issues, according to Monday’s ruling by the Delaware Superior Court in New Castle in Energy Transfer Equity L.P. et al. v. Twin City Fire Insurance Co.

The plaintiffs in the litigation are seeking about $2 billion in damages, interest and fees, the ruling said.

Energy Transfer’s D&O insurance coverage tower, which was in effect from February 2014 to February 2015, provided $170 million of Side C, entity coverage in 16 layers of insurance that were above a $3.5 million self-insured retention, which all flowed from the primary insurer, Hartford Insurance Group’s Twin City Fire Insurance Co., which is not a party to the lawsuit. Energy Transfer filed suit against the 17 insurers in November 2019, according to the ruling. In January 2020, six of the defendants, ACE Insurance Co., Travelers Casualty and Surety Co. of America, Old Republic Insurance Co., Pinnacle National Insurance Co., RSUI Indemnity Co. and Beazley Insurance Co. Inc., filed a motion to dismiss the case.

The insureds allege that the underlying litigation constitutes a securities claim within the policies’ meaning, because the underlying claims are brought by investors in Regency, which is a defined entity under the Twin City policy, among other assertions, the ruling said.

The insurers that filed the lawsuit “contend that the Insureds fail to meet their burden to prove there is a ripe controversy for adjudication that would invoke the duty to indemnify,” the ruling said.

In ruling in the insureds’ favor, the court said, “The court must … take into consideration the legitimate interests of the Insureds in a prompt resolution, the hardship of delay, the prospect of future developments that might affect the determination made and the need to conserve scarce resources.”

The court added that it “finds it highly unlikely that the court will be entering judgment on indemnification under the Policies before the Insurers’ rights, if any, to indemnification will have matured,” the ruling said, in denying the insurers’ motion.

ACE attorney Robert J. Katzenstein, a partner with Smith Katzenstein & Jenkins LLP, Wilmington, Delaware, said he does not comment on pending litigation. Energy Transfer’s attorney did not respond to a request for comment.