Gallup, Inc. v. Greenwich Insurance Company

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

GALLUP, INC., )
)
Plaintiff, )

) C.A. No. N14C-02-136 FWW
v. )
)
GREENWICH INSURANCE )
COMPANY, )
)
Defendant. )

Submitted: October 10, 2016
Decided: January 30, 2017

Upon Plaintiff` s Motion for Summary Judgment on Counts V and VI of
Defendant’s Counterclaimsz
DENIED.

MEMORANDUM OPINION

Brian M. Rostocki, Esquire, Diana Rabeh, Esquire, Reed Smith LLP, 1201 Market
Street, Suite 1500, Wilmington, Delaware 19801; Carolyn H. Rosenberg, Esquire,
Mark S. Hersh, Esquire, Reed Smith LLP, 10 South Wacker Drive, 40th Floor,
Chica'go, Illinois 60606; Attorneys for Plaintiff.

Carmella P. Keener, Esquire, Rosenthal, Monhait & Goddess, P.A., 919 North
Market Street, Suite 1401, Wilmington, Delaware 19801; Jonathan A. Constine,
Esquire, Stacey L. McGraW, Esquire, Brandon D. Almond, Esquire, Troutman
Sanders LLP, 401 9th Street, N.W., Suite 1000, Washington, D.C. 20004-2134;
Attorneys for Defendant.

WHARTON, J.

I. INTRODUCTION

In 2012, the United States Department of Justice initiated a lawsuit against
Gallup, Inc. (“Gallup”) alleging that Gallup defrauded the federal government
Gallup and the government eventually settled the litigation, Without Gallup
admitting any Wrongdoing. Greenwich Insurance Company (“Greenwich”),
Gallup’s insurer, paid a portion of Gallup’s defense costs associated With that
litigation. HoWever, GreenWich has refused to cover Gallup’s settlement payment
and other defense costs for various reasons under the insurance policy (“Policy”).

In this Motion, Gallup seeks summary judgment as to two of Greenwich’s
counterclaims Gallup contends that GreenWich cannot bring those claims because
the fraud exclusion in the Policy does not permit Greenwich to bring a coverage
action against Gallup to determine Whether Gallup defrauded the federal
government Greenwich argues that it need not pay Gallup’s settlement payment
and defense costs because the fraud exclusion Within the Policy removes coverage.
Although Gallup settled the underlying litigation Without admitting any liability,
GreenWich argues that the Policy’s fraud exclusion allows Greenwich to bring a
coverage action in order to prove that Gallup actually defrauded the government
In doing so, Greenwich seeks to trigger the Policy’s fraud exclusion, thereby

voiding its responsibility to pay Gallup.

Applying Superior Court Civil Rule 56(c) to Gallup’s Motion for Summary
Judgment, the Court finds that the Policy’s fraud exclusion unambiguously permits
Greenwich to pursue a coverage action against Gallup in order to determine
Greenwich’s financial responsibilities to Gallup under the Policy. Furthermore,
the Court finds that Greenwich is not precluded from pursuing a coverage action
against Gallup because Greenwich reserved its right to do so in letters it sent to
Gallup. Finally, Gallup’s claim that Greenwich Was privy to confidential
information in the underlying litigation is insufficient to bar Greenwich’s coverage
action. Therefore, Gallup’s Motion for Summary Judgment With respect to Counts
V and VI of Greenwich’s counterclaims is DENIED.

II. FACTUAL AND PROCEDURAL CONTEXT

Greenwich issued the Policy to Gallup covering Gallup from January l,
2010 to January 1, 2011.1 The Policy consists of three separate coverage
categories, one of Which is the Management Liability and Company
Reimbursement category.2 The Policy provides for a 315 million maximum
aggregate limit of liability under all three categories.3

In October 2009, Gallup Was sued by a former employee in a qui tam action,

and in November 2012, the United States Department of Justice intervened in the

1 Jt. Facts., D.I. 22, at 11 i.
2 See D.I. 2, at Ex. 1.
3 See id.

lavvsuit.4 The Department of Justice’s complaint alleged that Gallup defrauded the
federal government When Gallup allegedly overbilled eight federal agencies for
polling services that Gallup rendered.5 On July l2, 2013, however, Gallup and the
government reached a settlement6 Pursuant to the settlement agreement Gallup
agreed to pay $10.58 million to the government7 The settlement agreement also
provided that Gallup did not make any admissions of liability.8

Given the costs associated With the qui iam litigation, Gallup sought
coverage under the Management Liability and Company Reimbursement category
of the Policy. Specifically, Gallup sought to be reimbursed by Greenwich for
Gallup’s settlement payment and defense expenses.9 To date, Greenwich has
reimbursed Gallup approximately $8.7 million in connection With the underlying
litigation, “leaving approximately $6.3 million remaining on the $15 million limits

le

of the Policy. HoWever, Greenwich has refused to pay the settlement payment
and other defense expenses associated With the underlying litigation.

On February 14, 2014, Gallup filed a Complaint against Greenwich

requesting declaratory relief that the settlement payment and defense expenses be

4 D.I. 22, at 111 6~7.

5 gee id. ar116.

Gsee zd. ar'n 13.

’See :d. az1il4.

3 See mt

9 See id. at 11 16-18. Of any remaining defense costs allegedly incurred in connection With the
underlying litigation, the parties agree that the amount in dispute is less than $600,000. See id. at
1117.

10 See zd. at‘n 18.

covered up to the Policy’s limits.11 Furthermore, Gallup’s Complaint contends that
Greenwich breached its contract With Gallup by refusing to pay Gallup up to the
aggregate amount of the Policy.12
On April 17, 2014, Greenwich denied the allegations in the Complaint and
pleaded thirty-six affirmative defenses and four counterclaims13 On January 20,
2016, Greenwich amended its Answer to add two additional counterclaims14
Specifically, under Count V, Greenwich seeks a declaratory judgment that
coverage for the underlying litigation, including the settlement payment, is barred
by the Fraud and Improper Profit Exclusion (“Exclusion”).15 The Exclusion
provides:
The Insurer shall not be liable to make any payment for
Loss, and shall have no duty to defend or pay Defense
Expenses, in connection With any Claim made against an
Insured:
(A) brought about or contributed to in fact by any:
(l) intentionally dishonest fraudulent or
criminal act or omission or any Williill
violation of any statute, rule or law; or
(2) profit or remunerations gained by any

Insured to Which such Insured is not legally
entitled;

11 See Pi.’s Compi., D.I. 1, at 1111 36_45.

12 See id.

13 See Def.’s Answer & Countercls., D.I. 10.

14 See Def.’s Amended Answer & Countercls., D.I. 94.
15 See id.

as determined by a final adjudication in the underlying
action or in a separate action or proceeding.l(’

Under Count VI, Greenwich seeks reimbursement of all defense costs it paid
on behalf of Gallup in the underlying litigation and related investigations pursuant
to the Exclusion.17 The Exclusion provides that “[e]ach Insured agrees that, if the
Insurer has no liability to an Insured for Loss as a result of a Claim by reason of
this EXCLUSION (A), such Insured Will repay Insurer upon demand all Defense
Expenses paid on behalf of such Insured in connection With such Claim.”18
Greenwich asserts that it is entitled to $3,229,344.88 plus pre-judgment interest19

On March 29, 2016, Gallup moved for summary judgment With respect to
Count V and Count VI of Greenwich’s counterclaims20 Gallup contends that the
Exclusion does not permit Greenwich to bring a coverage action against it in order
to determine Whether Gallup defrauded the federal government21

On May 16, 2016, Greenwich answered, arguing that the unambiguous
language of the Exclusion permits Greenwich to bring a coverage action against

Gallup.22 Gallup replied on June 2, 2016,23 and the parties appeared before the

Court for oral argument on October 10, 2016.

16 See D.I. l, at Ex. 1 (emphasis added).

17 See D.I. 94.

18 See D.I. 1, at Ex. l (emphasis in original).
19 See D.I. 94.

10 See D.I. 103.

21 Id_

22 See D.I. 109.

III. THE PARTIES’ CONTENTIONS

In Gallup’s Motion for Summary Judgment, Gallup raises three arguments
First, Greenwich cannot trigger the Exclusion by initiating a coverage action
against Gallup. Second, even if Greenwich could bring a coverage action under
the Exclusion, Greenwich is precluded from doing so because Greenwich failed to
diligently pursue its claim against Gallup. Third, Greenwich may not pursue a
coverage action against Gallup because Greenwich received privileged information
from Gallup about the underlying litigation.

(A) Can Greenwich Trigger the Exclusion by Initiating a Coverage Action
Against Gallup?

The Exclusion applies only if the insured’s fraud or other prohibited conduct
is “determined by a final adjudication in the underlying action or in a separate

”24 While Greenwich argues that “a separate action or

action or proceeding.
proceeding” includes a coverage action, Gallup argues that basic principles of
contract interpretation do not lead to such a result25 Specifically, Gallup first

argues that exclusionary provisions within insurance policies must be narrowly

construed, as this Court has previously stated.26 Gallup argues that a narrow

23 See D.I. 110.

24 See D.I. l, at Ex. 1; Pl.’s Opening Br., D.I. 103, at 9.
25 D.I. 103, at 10.

26 Id_

reading of the Exclusion would not permit Greenwich to initiate a coverage action
against the party it insures.27

Second, Gallup asserts that “all policy provisions must be construed in light
of the reasonable expectations of the insured, if the language permits.”28 Given
this interpretive principle, Gallup asserts that no insured would reasonably expect
that the phrase “a separate action or proceeding” includes a coverage action “in
which its own insurer adopts the allegations made against the insured and seeks to
prove them itself.”29

Third, Gallup argues that, if Greenwich wanted “a separate action or
proceeding” to include a coverage action, Greenwich should have explicitly
included such language in the Exclusion.30 Because Greenwich failed to explicitly
define what constitutes “a separate action or proceeding,” Gallup argues that
Greenwich “should not get the benefit of any doubt about its meaning.”31

Fourth, the Exclusion is triggered by a final adjudication in “a separate

action or proceeding”32 Gallup asserts that Greenwich’s use of “a,” as opposed to

27 lai

28 Id. ar 11.

29 jdl

301¢1. ar 12.

31161l

32 Ia'. at 13 (emphasis added).

¢¢ 73

“any,” does not permit a broad construction because a is not synonymous with
“any.”33

Fifth, and finally, Gallup argues that Greenwich’s interpretation of the
Exclusion undermines the overall purpose of an insurance contract34 Indeed,
Gallup states that “[w]hile it is not uncommon for an insurer to seek a judicial
declaration of no coverage, Greenwich is doing more than that: it is adopting as its
own the same allegations against Gallup for which it had agreed to cover Gallup
under the Policy.”35 Gallup contends that allowing such an interpretation neglects
its reasonable expectations as an insured entity.

In response, Greenwich states that the Exclusion unambiguously permits
Greenwich to bring a coverage action against Gallup.36 Greenwich notes that
insurance policies must be interpreted in accordance with their plain and ordinary
meaning.37 As such, Greenwich contends that a coverage action is an “action or

9338

proceeding Also, a coverage action is a “separate” proceeding from “the

underlying action” because a coverage action “is distinct from and independent of

the underlying action.”39

33 lai

241¢1. at6,14_15.

351¢1. at 6.

36 Def.’s Answering Br., D.I. 109, at 6.
2716!. at 5_6.

31 1a at 7.

391d

Greenwich contends that the above conclusion is further supported by the
fact that the phrase “separate action or proceeding” is not limited in any way.40
Contrary to Gallup’s argument, the phrase is preceded by the word “a,” which is a

”41 As a result, the Exclusion permits an adjudication in any

synonym for “any.
“separate action or proceeding,” without limitation to any particular forum or type
of action.42

In addition, Greenwich argues that Gallup’s non-textual arguments are
irrelevant because the Exclusion’s language is unambiguous43 According to
Greenwich, other considerations, such as extrinsic evidence, cannot be used to

interpret a contract when the contract’s language is clear.44

(B) Did Greenwich Fail to Promptly and Diligently Pursue Its Claim Under
the Exclusion?

Gallup argues that every insurer has a duty to promptly and fully investigate
claims against its insured, and a failure to do so is a breach of the implied covenant
of good faith and fair dealing.45 In this case, Gallup contends that Greenwich had
five years to evaluate its coverage under the Exclusion, but “Greenwich

nevertheless decided not to investigate the allegations of fraud against Gallup until

401¢1. at 7-8.
411d_

42 ld-

43 Id. at13_14.
441d

45 D.I. 103, a124.

10

it had lost on its other coverage defenses.”46 As a result, Greenwich is either
estopped from pursuing or has waived its right to pursue this coverage action
because Greenwich did not diligently pursue its claim under the Exclusion.47
Similarly, Gallup argues that Greenwich is precluded from pursuing a coverage
action because Greenwich’s “reservation of rights letters did not reserve any right
to seek a final adjudication of fraud against Gallup in a coverage action.”48

In response, Greenwich contends that it expressly reserved its right to deny
coverage under the Exclusion. In particular, once Greenwich received notice of
the government’s investigation of Gallup, Greenwich wrote a letter identifying a
number of Policy provisions that may limit or bar coverage, including the

Exclusion.49

Greenwich thereafter issued two additional coverage letters, both of
which reaffirmed the rights stated in the initial letter.50 Therefore, Greenwich
argues that it properly reserved its right to rely on the Exclusion.51

Greenwich also notes that the Exclusion was properly raised as an

affirmative defense when Gallup filed the lawsuit52 Greenwich asserts that it

promptly notified Gallup that it would rely on the Exclusion.53

“Mmm.

47la ac26_27.
“Mmm.
49111.109,a122_24.
50 ld-

511611l

”Mmm.

53 Id

11

(C) Did Greenwich Receive Privileged Information from Gallup About the
Underlying Litigation so as to Preclude It from Bringing a Coverage
Action?

Gallup argues that, when an “insured has shared confidential and privileged
strategic information about a significant claim with its insurer,” the insurer should
not be allowed to use that information against the insured in a subsequent lawsuit54
Here, Gallup contends that Greenwich has obtained confidential information
regarding the merits of the government’s allegations against Gallup in the
underlying litigation, and it should not be able to use this information in a separate
action to avoid coverage.55

Greenwich argues that Gallup has not cited “one single case in support” of
its argument56 Furthermore, Greenwich asserts that Gallup has not identified “a
single item of privileged information that it provided Greenwich, much less
explained how that privileged information would somehow provide an unfair
advantage to Greenwich.”57 Thus, Greenwich contends that Gallup has failed to
show that it is entitled to summary judgment on this basis.

IV. STANDARD OF REVIEW

Superior Court Civil Rule 56(c) provides that summary judgment is

appropriate when there is “no genuine issue as to any material fact” and “the

54 D.I. 103,3133.
55 Id

55 D.I. 109, at 34.
57 Id. at 35.

l2

moving party is entitled to a judgment as a matter of law.” When considering a
motion for summary judgment the Court’s function is to examine the record to
determine whether genuine issues of material fact exist “but not to decide such

issues.”58

The moving party bears the initial burden of demonstrating that the
undisputed facts support his claims or defenses.59 If the moving party meets its
burden, then the burden shifts to the non-moving party to demonstrate that there
are material issues of fact to be resolved by the ultimate fact-finder.60

Summary judgment will be granted if, after viewing the record in the light
most favorable to the non-moving party, no genuine issues of material fact exist

1 If the record

and the moving party is entitled to judgment as a matter of law.6
reveals that material facts are in dispute, or if the factual record has not been
developed thoroughly enough to allow the Court to apply the law to the factual
record, then summary judgment is inappropriate62

V. DISCUSSION

(A) The Exclusion Unambiguously Permits Greenwich To Pursue a
Coverage Action Against Gallup.

In relevant part the Exclusion contains the following provisions:

55 Merrill v. Crorhall-Am., Inc., 606 A.zd 96, 99 (De1. 1992).

59 Moore v. Sizemore, 405 A.2d 679, 681 (Del. 1979).

511 Brzoska v. alson, 668 A.2d 1355, 1364 (Dei. 1995).

51 Memll, 606 A.2d at 99_100.

62 See C00k v. Cilfy of Harrington, 1990 WL 35244, at *3 (Del. Super. Feb. 22, 1990) (“Summary
judgment will not be granted under any circumstances when the record indicates . . . that it is
desirable to inquire more thoroughly into the facts in order to clarify the application of law to the
circumstances.”).

13

The Insurer shall not be liable to make any payment for
Loss, and shall have no duty to defend or pay Defense
Expenses, in connection with any Claim made against an
Insured:

(A) brought about or contributed to in fact by any:

(l) intentionally dishonest fraudulent or
criminal act or omission or any willful
violation of any statute, rule or law; or

(2) profit or remunerations gained by any
Insured to which such Insured is not legally
entitled;

as determined by a final adjudication in the underlying
action or in a separate action or proceeding.63

In this Motion, the Court must determine whether “a separate action or
proceeding” includes a coverage action. The Court previously determined that it
need not decide whether Delaware or Nebraska law applies because there is no
conflict of law with respect to contract interpretation between these two
jurisdictions64 Accordingly, the Court will apply general principles of contract
interpretation to ascertain the meaning of the Exclusion.65

In both Delaware and Nebraska, an insurance policy should be given its

ordinary and usual meaning when the provisions contained therein are clear and

63 See D.I. 1, at Ex. 1 (emphasis in original).

54 Gallup, Inc. v. Greenwich Ins. CO., 2015 wL 1201518, at *9(D61. super Feb. 25, 2015).

65 Id. (citing Eon Labs Mfg., Inc. v. Reliance Ins. Co., 756 A.2d 889, 892 (Del. 2000); Sun-Times
Mea'ia Grp., 2007 WL 1811265, at *9 (Del. Super. June 20, 2007)).

14

unambiguous66 When the language of an insurance policy is clear and
unambiguous, “a party will be bound by its plain meaning because creating an
ambiguity where none exists could, in effect create a new contract with rights,
liabilities and duties to which the parties had not assented.”67

Moreover, courts in these jurisdictions have found that an insurance policy is
not “rendered ambiguous simply because the parties do not agree upon its proper

2768

construction An insurance policy is ambiguous only “if a word, phrase, or

provision in the instrument has, or is susceptible of, at least two reasonable but

2969

conflicting interpretations or meanings. “The fact that parties to a document

have or suggest opposing interpretations of the document does not necessarily, or
by itself, compel the conclusion that the document is ambiguous.”70
Construing the Exclusion in accordance with its ordinary and usual meaning,

the Court finds that the phrase “a separate action or proceeding” necessarily

. . 1 . . . .
includes a coverage action.7 A coverage action 1s an “action or proceedmg.”

66 See Rhone-Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196
(Del. 1992) (citing Johnston v. T ally Ho, Inc., 303 A.2d 677, 679 (Del. Super. 1973)); American
Fa)niiy Mut. Ins. Co. v. Hadley, 648 N.W.2d 769, 775 (Neb. 2002).

67 Rhone-Poulenc, 616 A.2d at 1195-96 (quoting Hallowell v. State Farm Mut. Auto. Ins. Co.,
443 A.2d 925, 926 (Del. 1982)).

55 1a 611196.

59 Moller v. stare Farm Mu¢. Auzo. Ins. Co., 566 N.w.2d 382, 382 (Neb. 1997) (citing Daehnke
v. Nebraska Dept. ofSoc. Serv., 557 N.W.2d 17 (Neb. 1996); Krzycki v. Genoa Nat. Bank, 496
N.W.2d 916 (Neb. 1993); Knox v. Cook, 446 N.W.2d 1 (Neb. 1989)); Rhone-Poulenc, 616 A.2d
at 1196 (citing Haiiowell, 443 A.2d at 926).

70 Mozzer, 566 N.W.2d at 726 (quoring Kmx, 446 N,W.zd at 4).

71 Because the Court finds that the Exclusion is unambiguous, the Court will not consider the
multitude of arguments in Gallup’s brief regarding policy considerations and extrinsic evidence.

15

Furthermore, a coverage action is “separate” from “the underlying action,” since a
coverage action is independent of the underlying action. In this case, a coverage
action by Greenwich against Gallup is entirely separate from Gallup’s litigation
with the federal government Finally, the Exclusion does not place any restrictions
on who may bring “a separate action or proceeding” Thus, Gallup’s argument that
the Exclusion prohibits an insurer from bringing a coverage action against its
insured is without merit

Gallup argues that such an interpretation is incorrect because exclusionary
provisions must be narrowly construed in the insured’s favor.72 In Gallup’s view,
the phrase “a separate action or proceeding” is limited to “criminal and civil cases
[that] arise from the same set of facts and run parallel to each other.”73 Gallup
contends that the intent of the phrase is to allow a final adjudication of prohibited
conduct in one case to trigger the Exclusion in the “parallel” case.74 For example,
if a final adjudication in a criminal case renders the insured guilty of committing
fraudulent behavior, then the Exclusion would be triggered in the parallel civil

case.75 However, a coverage action initiated by an insurer, Gallup argues, is not

“parallel to the one for which coverage is sought.”76

72 D.l.103,6111.
751¢1. 6110_11.
74 lai

751d. 6111.

751¢1. 6110.

16

The Court finds that Gallup’s narrow interpretation of the Exclusion is
unpersuasive Indeed, the language set forth in the Exclusion is clear, and there is
nothing within it that would suggest that the phrase “a separate action or
proceeding” is solely limited to “parallel” actions77

Gallup cites to several cases where courts “have rejected similar efforts by
insurers to trigger fraud exclusions in their policies in a coverage action.”78
However, as Gallup readily admits, the policy language at issue in the cases it cites
is significantly different from the language present here.79 Given that the courts’

decisions in those cases were driven by the specific policy language in the policies

at issue, the Court finds them distinguishable80

77 Similarly, Gallup argues that all policy provisions must be construed in light of the reasonable
expectations of the insured, so long as the language permits See State Farm Mut. Auto Ins. Co.,
443 A.2d 925, 927 (Del. 1982). In Gallup’s view, no insured would reasonably expect that the
Exclusion “includes a coverage action in which its own insurer adopts the allegations made
against the insured and seeks to prove them itself.” D.I. 103, at 11. Again, the Court finds
Gallup’s argument to be unpersuasive First, the interpretive principle set forth by Gallup only
applies “if the language permits,” and here, the Exclusion’s language does not permit such a
construction because it is unambiguous Second, an insured, in the Court’s view, would
reasonably expect an insurer to take steps to avoid paying for the insured’s underlying litigation
costs when it has reason to believe that the underlying litigation resulted from the insured’s
fraudulent conduct

75 D.I. 103, 617. see, e.g., sr Paul Mercw»y lns. Co. v. Fosrer, 268 F. supp. 26 1035, 1045416
(C.D. Ill. 2003); Mt. Hawley Ins. co. v. Fea’. Sav. & Loan Ins. Corp., 695 F. Supp. 469, 475 (C.D.
Cal. 1987); Nat’l Union Fire Ins. v. Seafz`rst Corp., 662 F. Supp. 36, 38-39 (W.D. Wash. 1986);
PepsiCo, Inc. v. Cont’l Cas. Co., 640 F. Supp. 656, 660 (S.D.N.Y. 1986).

151 D.I. 103, 617.

80 For example, in Atlantic Permanent Fea’. Sav. & Loan Ass’n v. American Cas. Co., 670 F.
Supp. 168 (E.D. Va. 1986), a]j"a’, 839 F.2d 212 (4th Cir. 1988), the court had to determine
whether the phrase “unless a judgment or other final adjudication thereof’ in an exclusionary
provision permitted the insurer to bring a coverage action against the insured. The court
ultimately held that the insurer could not bring a coverage action based upon the court’s
interpretation of the word “thereof” in the exclusion. See ia’. at 172. See also PepsiCo, Inc., 640

17

(B) Greenwich Reserved Its Right To Pursue a Coverage Action
Under the Exclusion In Its Reservation of Rights Letters to Plaintiff.

Gallup argues that Greenwich is either estopped from pursuing or has
waived its right to pursue a coverage action because Greenwich “waited too long”
to rely on the Exclusion.81 Additionally, Gallup claims that Greenwich’s
reservation of rights letters did not inform Gallup that the Exclusion permitted
Greenwich to bring a coverage action against Gallup.

Generally, courts have established that an insurer’s reservation of rights
letter to an insured must clearly communicate all of the insurer’s rights to contest
the policy’s applicability, including policy exclusions82 Courts have also
established that an insurer must promptly provide its reservation of rights letter to
an insured.83 If an insurer fails to abide by these standards, then the doctrines of

waiver and estoppel may prevent an insurer from relying on policy defenses84

F. Supp. at 659_60 (interpreting whether the phrase “unless a judgment or other final
adjudication thereof” in an exclusionary provision permitted the insurer to pursue a separate
coverage action against its insured); Nat’l Union Fire Ins. , 662 F. Supp. at 38-39 (same).

811).1. 103,61 30.

52 See, e.g., Weszem Herimge Ins. Co. v. Love, 24 F. supp. 3d 866, 877-878 (W.D. Mo. 2014);
Harleysville Lake States Ins. Co. v. Granite Ria’ge Buila’ers, Inc., 2008 WL 4935974, at *5-6
(N.D. Ind. Nov. 17, 2008); Canal Ins. Co. v. Flores, 524 F. Supp. 2d 828, 834 (W.D. Tex. 2007);
All Am. Ins. Co. v. Broeren Russo Constr., Inc., 112 F. Supp. 2d 723, 729-730 (C.D. Ill. 2000).
See generally 14 Couch on lns. § 202:47: Sufficiency of Reservation of Rights (3d ed.).

83 See, e.g., Western Heritage Ins. Co., 24 F. Supp. 3d at 878; Greenwich Ins. Co. v. BBUServs.,
Inc., 2013 WL 2430787, at *1 (W.D. Pa. June 4, 2013); All Am. Ins. Co., 112 F. Supp. 2d at 729
(citing Am. States Ins. Co. v. Nat’l Cycle, Inc., 631 N.E.2d 1292, 1297 (Ill. App. Ct. 1994)). See
§enerah'y 14 Couch on Ins. § 202:46: Timeliness (3d ed.).

4 See, e.g., Nat’l Surety Corp. v. Dustex Corp., 2015 WL 1057506, at *10 (N.D. Iowa Mar. 10,
2015); Breci v. St. Paul Ins. Co., 288 Neb. 626, 641-42 (2014); First United Bank of Bellevue v.
First Am. Title Ins. Co., 242 Neb. 640, 647-48 (1993). See also 14 Couch on lns. §§ 202:46-47.

18

After reviewing the record, the Court finds that Greenwich clearly and
timely reserved its right to pursue a coverage action against Gallup. After
receiving notice of the federal government’s investigation of Gallup, Greenwich
wrote to Gallup on August 4, 2010.85 In this letter, Greenwich specifically detailed
the Policy provisions that “may limit or bar coverage,” including the Exclusion.86
Greenwich set forth the Exclusion’s unambiguous language in this letter and
reserved its right to deny coverage under this provision.87 In two subsequent letters
sent to Gallup, Greenwich again set forth the Exclusion’s language in full.88
Greenwich also stated in these two letters that it “reserves its rights to deny
coverage for Loss to the extent it is finally determined in the underlying action or
in a separate action or proceeding” that Gallup’s conduct was fraudulent89 Given
that Greenwich promptly and clearly notified Gallup in multiple letters of its right
to deny coverage under the Exclusion, it cannot be said that Greenwich waived its
right to pursue a coverage action against Gallup.90
(C) Greenwich Is Not Precluded from Pursuing a Coverage Action

Against Gallup Merely Because Greenwich May Have Received
Conf"ldential Information from Gallup.

55 D.I. 103, at Ex. C.

86 Id_

87 Id_

55 181 at Exs. A, B.

89 Id_

90 Also, the fact that Greenwich did not initially raise the Exclusion as one of its counterclaims is
of no moment because one of Greenwich’s affirmative defenses is the Exclusion. See D.I. 10, at
17. Greenwich has maintained that the Exclusion would be a basis to deny coverage since this
litigation arose.

19

Gallup argues that Greenwich should not be able to bring a coverage action
against it because Greenwich received confidential information from Gallup
regarding the underlying litigation. While it is possible that Greenwich cannot use
certain information that it received from Gallup in the coverage action, Gallup has
not cited to one source of authority that suggests Greenwich is altogether precluded
from bringing a coverage action on this basis As a result Gallup’s argument is
unpersuasive

VI. CONCLUSION

The Court finds that the Exclusion unambiguously permits Greenwich to
pursue a coverage action against Gallup. In addition, the Court finds that
Greenwich properly reserved its right to pursue a coverage action against Gallup in
the letters Greenwich sent to Gallup. Further, hypothetical privilege concerns are
insufficient to bar a coverage action. Accordingly, Gallup’s Motion for Summary
Judgment with respect to Counts V and VI of Greenwich’s counterclaims is

DENIED.

IT IS SO ORDERED.

Ferris [W. Whai‘ton, Judge

20