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The Delaware Supreme Court on Thursday affirmed a lower court ruling in favor of American International Group Inc., Chubb Ltd. and QBE Insurance Group Ltd. in directors and officers litigation filed by a mining company.
Littleton, Colorado-based Stillwater Mining Co., whose principal place of business is Stillwater County, Montana, unsuccessfully argued, following an earlier Delaware ruling in another case, that Montana law rather than Delaware law should apply on the issue of whether it could recover expenses it incurred in defending a Delaware stockholder appraisal action, according to the unanimous ruling by the Delaware Supreme Court in Stillwater Mining Co. v. National Union Fire Insurance Co. of Pittsburgh, PA, Ace American Insurance Co. and QBE Insurance Corp.
Stillwater was publicly traded until 2017, when Sibanye Gold Ltd., a South African mining company, acquired it and took it private, according to the ruling. After the merger, some Stillwater stockholders filed an appraisal action in Delaware’s Court of Chancery seeking the stock’s fair value.
After its D&O insurers did not pay its defense costs in the case, Stillwater sued them in Delaware state court. The court granted the insurers’ motion to dismiss the case based on the Delaware Supreme Court’s October 2020 ruling in In re: Solera Insurance Coverage Appeals, in which it held that costs associated with a stock appraisal sought by shareholders in connection with a merger are not insurable under D&O coverage.
Stillwater had originally argued that Delaware law applied to the D&O policies’ interpretation but, in an amended complaint after the Solera decision, reversed position and said Montana law applied.
“The main issue on appeal is whether Delaware or Montana law applies to the claims in Stillwater’s amended complaint,” the Supreme Court ruling said.
Stillwater argued in its amended complaint that the lower court should have applied Montana law, because it has the most significant relationship to the dispute and the parties, and, if that is the case, it can recover its defense costs under that state’s law.
The state’s high court disagreed. “In our view, Stillwater’s amended claims raise the same Delaware interests that Stillwater identified in its original complaint,” it said, in affirming the lower court.
Attorneys in the case had no comment or did not respond to a request for comment.