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A Delaware court ruled Monday that Sompo International Holdings Ltd. and American International Group Inc. units must cover the maker of Godiva chocolates under their directors and officers liability policies in the settlement of a dispute over the company’s Belgian origins.
The original storefront for chocolate sold by New York-based G-New Inc., which does business as Godiva Chocolatier Inc., was in Brussels, and because of this Godiva’s products display the phrase “Belgium 1926,” according to the ruling by the state court in G-New Inc. dba Godiva Chocolatier Inc. v. Endurance American Insurance Co. and National Union Fire Insurance Co. of Pittsburgh PA.
Sompo unit Endurance had provided Godiva with a private company D&O policy with a $10 million limit, while AIG unit National Union provided $20 million in coverage in excess of the $10 million in coverage that incorporated the same terms and conditions, according to the ruling.
In early 2019, two plaintiffs sued Godiva, asserting the Belgium 2016 label misled consumers. They filed litigation in 13 New York and California courts, charging violation of consumer protection statutes and common law. The cases were later consolidated in U.S. District Court in New York, according to the ruling.
Mediation resulted in a settlement whose terms included Godiva paying up to $15 million in monetary relief and $5 million in attorneys fees.
Sompo and AIG refused to cover the settlement, and Godiva filed suit in the Delaware court, alleging breach of contract and breach of the implied covenant of good faith and seeking coverage from the insurers for its settlement and defense costs.
In ruling the settlement agreement was a covered loss, the court said, “The Endurance Policy language provides broad coverage. It covers settlement and many types of damages.”
Attorneys in the case did not respond to requests for comment.