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Markel off hook in D&O children’s program ruling

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Markel

A Markel Corp. unit does not have to indemnify the U.S. Space & Rocket Center in Huntsville, Alabama, under its directors and officers liability coverage in connection with a children’s program that lost its funding, a federal appeals court ruled Wednesday, in upholding a lower court ruling.

The Alabama Space Science Exhibition Commission in Huntsville, Alabama, which conducts business as the U.S. Space & Rocket Center, signed a memorandum of agreement with New York-based Space Race LLC in 2016 to produce a children’s television show, according to the ruling by the 11th U.S. Circuit Court of Appels in Atlanta in Alabama Space Science Exhibit Commission, d.b.a. U.S. Space & Rocket Center, v. Markel American Insurance Co., Deborah Barnhart, et al.

ASSEC promised to fund the project, a commitment of more than $4 million, provided it received a NASA grant for that purpose. About the same time, ASSEC entered into a “cooperative agreement” with NASA, which pledged $4.5 million to the project to be disbursed over three years.

While “Space Racers” was successfully launched, by 2018 ASSEC had stopped providing the promised funding. Space Race filed an arbitration demand in the matter against ASSEC.

An arbitration panel ruled ASSEC had “materially breached” its obligations under the memorandum and cooperative agreement with NASA. It ordered ASSEC to pay the rest of the amount promised in the memorandum, which was more than $1.3 million plus interest.

Markel unit Markel American Insurance refused to defend or indemnify ASSEC based on a breach-of-contract exclusion in its coverage.

ASSEC filed suit against Markel unit Markel American Insurance Co. in U.S. District Court in Huntsville, which granted the insurer summary judgment.

A three-judge appeals court panel affirmed the ruling. “Even when narrowly constructed, the plain language of the breach-of-contract exclusion still applies to Spec Race’s claims,” the decision said.

“The only basis for its allegations that ASSEC owed it $1.5 million was a ‘written or express contract or agreement’ as explicitly contemplated by the exclusion,” it said, in affirming the lower court ruling.

Attorneys in the case did not respond to requests for comments.