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A federal appeals court on Wednesday partially overturned a lower court ruling and held that a Starr Insurance Cos. unit must provide a defense in a dispute stemming over a real estate investment, but does not have a duty to indemnify under its directors and officers liability coverage.
The dispute in Starr Indemnity & Liability Co. v. Point Ruston, LLC, et al. centers on the alleged mismanagement of entities involved in the “Point Ruston Project,” a 90-acre housing commercial development near Tacoma, Washington, in which the underlying plaintiffs had invested, according to court papers.
Starr Indemnity filed suit in U.S. District Court in Seattle against the defendants in the case, seeking a judicial declaration that Starr had no duty to defend or indemnify Point Ruston and others in the litigation.
The district court ruled that Starr had a duty to defend and indemnify the defendants. The 9th U.S. Circuit Court of Appeals in San Francisco, agreed with the lower court that Starr had a duty to defend in the case, but held it had no duty to indemnify.
“Neither Appellant’s motion for summary judgment nor the Appellees’ cross-motion for partial summary made substantive arguments regarding the duty to indemnify,” a three-judge appeals court panel said.
“The district court, without requesting briefing on the issue…did not give (Starr) reasonable notice to develop facts to oppose this portion of the summary judgment order,” the ruling said, in partially reversing the lower court ruling.
Attorneys in the case had no comment, or did not respond to a request for comment.