Jarden, LLC v. ACE American Insurance Company

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

JARDEN, LLC f/k/a and as successor by
)
merger to JARDEN CORPORATION, )
) C.A. No. N20C-03-112 AML CCLD
Plaintiff, )
)
v. )
)
ACE AMERICAN INSURANCE ) TRIAL BY JURY OF
COMPANY, ALLIED WORLD ) TWELVE DEMANDED
NATIONAL ASSURANCE COMPANY, )
BERKLEY INSURANCE COMPANY, )
ENDURANCE AMERICAN INSURANCE )
COMPANY, ILLINOIS NATIONAL )
INSURANCE COMPANY, )
NAVIGATORS INSURANCE COMPANY, )
)
Defendants. )

Submitted: April 20, 2021
Decided: July 30, 2021

MEMORANDUM OPINION

Upon Defendants’ Motion to Dismiss: GRANTED

David Baldwin, Esquire of BERGER HARRIS Wilmington, Delaware, Attorney for
Plaintiff Jarden LLC

Robert J. Katzenstein, Esquire of SMITH KATZENSTEIN & JENKINS LLP,
Wilmington, Delaware, Michael R. Goodstein, Esquire of BAILEY CAVALIERI
LLC, Columbus, Ohio, David H. Topol, Esquire, and Matthew W. Beato, Esquire,
of WILEY REIN LLP, Washington, D.C., Attorneys for Defendants ACE American
Insurance Company and Navigators Insurance Company
Marc S. Casarino, Esquire of WHITE & WILLIAMS LLP, Wilmington, Delaware,
Maurice Pesso, Esquire, and William J. Brennan, Esquire of KENNEDYS CMK
LLP, New York, New York, Attorneys for Defendant Allied World National
Assurance Company

Joanna J. Cline, Esquire, Emily L. Wheatley, Esquire of TROUTMAN PEPPER
HAMILTON SANDERS LLP, Wilmington, Delaware, Jennifer Mathis, Esquire of
TROUTMAN PEPPER HAMILTON SANDERS LLP, San Francisco, California,
and Brandon D. Almond, Esquire of TROUTMAN PEPPER HAMILTON
SANDERS LLP, Washington, D.C., Attorneys for Defendant Berkley Insurance
Company

Kurt M. Heyman, Esquire, Aaron M. Nelson, Esquire of HEYMAN ENERIO
GATTUSO & HIRZEL LLP, Wilmington, Delaware, Scott B. Schreiber, Esquire,
William C. Perdue, Esquire of ARNOLD & PORTER KAYE SCHOLER LLP,
Washington D.C., Attorneys for Defendant Illinois National Insurance Company

Carmella P. Keener, Esquire of COOCH AND TAYLOR, P.A., Wilmington,
Delaware, Ronald P. Schiller, Esquire, and Daniel J. Layden, Esquire of HANGLEY
ARONCHICK SEGAL PUDLIN & SCHILLER, Philadelphia, Pennsylvania,
Attorneys for Defendant Endurance Assurance Corporation as successor-in-interest
to Endurance Reinsurance Corporation of America

LEGROW, J.

2
 The plaintiff, a Delaware corporation that was acquired in a merger in 2016,

seeks insurance coverage for the defense costs and pre-judgment and post-judgment

interest it incurred in connection with an appraisal proceeding filed by the plaintiff’s

dissenting stockholders after the merger. The insurance policies at issue provide a

tower of corporate liability coverage for “Securities Claims” brought “for any

Wrongful Acts” taking place before the Run-Off Date, which was the date the

merger closed. Although the insurers concede the appraisal action was a “Securities

Claim” under the terms of the policies, they argue the plaintiff’s coverage claims

must be dismissed because other language in the policy precludes coverage.

The pending motion to dismiss requires the Court to answer two questions.

First, given the parties’ agreement that the phrase “for a Wrongful Act” means that

the claim at issue must seek redress or reprisal for an act, does an appraisal action

seek redress for any corporate act? Second, if an appraisal action seeks redress or

reprisal for an act of the merged corporation, is that act one that occurred before the

merger closed. I conclude that (i) an appraisal action is a statutory proceeding that

does not seek redress in response to any corporate act, and (ii) even if an appraisal

action does arise from or seek redress for a corporate act, that act necessarily is the

merger’s effectuation, which did not occur before the Run-Off Date. Accordingly,

the insurers’ motion to dismiss is granted.
 BACKGROUND

Unless otherwise noted, the following facts are drawn from the Amended

Complaint and the documents it incorporates by reference, drawing all reasonable

inferences in the plaintiff’s favor.

A. The Merger

Jarden LLC, f/k/a and as successor by merger to Jarden Corporation

(“Jarden”), is a Delaware limited liability company with its principal place of

business in Florida. Jarden was a holding company whose portfolio included 120

consumer-product brands, including Coleman sporting goods, Crock-Pot appliances,

Sunbeam, and Yankee Candle.1 On December 13, 2015, Jarden entered into an

Agreement and Plan of Merger (the “Merger Agreement”) with Newell Rubbermaid,

Inc. (“Newell”). The merger price included a combination of cash and Newell stock

valued at $59.21 per share as of the closing date.2

Jarden filed a proxy statement with the Securities and Exchange Commission

on March 18, 2016, which provided information about the proposed merger with

Newell. The proxy statement also gave Jarden’s stockholders notice that a special

meeting would be held on April 15, 2016 at 8 a.m. EST to allow Jarden’s

1
Am. Compl. ¶ 15.
2
Id. ¶ 1.
2
stockholders to vote on the proposed merger.3 Between April 7, 2016 and April 14,

2016, Cede & Co., nominee for the Depository Trust Company and the holder of

record of the shares, delivered to Jarden several written appraisal demands on behalf

of several Jarden stockholders (the “Appraisal Demands”). The Appraisal Demands

were delivered to Jarden before the special meeting. On April 15, 2016, a majority

of Jarden’s stockholders approved the proposed merger, and the merger closed that

day. As a result of the merger, Jarden became one of Newell’s wholly owned

subsidiaries.

B. The Appraisal Action

After the merger closed, several Jarden stockholders who voted against the

merger and submitted the Appraisal Demands filed appraisal petitions in the

Delaware Court of Chancery under 8 Del. C. § 262. The various appraisal actions

later were consolidated and recaptioned In re Appraisal of Jarden Corporation, C.A.

No 12456-VCS (the “Appraisal Action”). During discovery and trial, the appraisal

petitioners alleged the sales process leading up to the merger was flawed and unfair

to Jarden’s stockholders.4 The Court of Chancery ultimately agreed with the

3
Id. ¶¶ 1, 17; Jarden Corp., Schedule 14A Definitive Proxy Statement dtd Mar. 18, 2016, available
at https://www.sec.gov/Archives/edgar (hereinafter cited as “Proxy Statement”) at 61. The Court
may take judicial notice of the Proxy Statement, which is a publicly available document referenced
in the Amended Complaint and not subject to reasonable dispute as to the matters referenced. Am.
Compl. ¶ 17; In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 169 (Del. 2006); In re
Gardner Denver, Inc. S’holder Litig., 2014 WL 715705, at *2-4, n.21 (Del. Ch. Feb. 21, 2014).
4
Appraisal of Jarden Corp., 2019 WL 3244085, at *3 (Del. Ch. July 19, 2019).
3
petitioners’ contention that the sales process was less-than-perfect, concluding that

(i) Jarden’s lead negotiator “got way out in front” of its board and financial advisors,

(ii) there was no pre-signing or post-signing market check, and (iii) there were

challenges associated with valuing the synergies arising from the deal.5 For those

reasons, the Court of Chancery ascribed little weight to the negotiated deal price for

purposes of determining Jarden’s fair value under Section 262.

After trial, the Court of Chancery concluded Jarden’s fair value at the time of

the merger was $48.31 per share, nearly $11 below the merger price.6 The Court

also held the petitioners were entitled to pre-judgment and post-judgment interest.

The Court ordered Jarden to pay a judgment of $177,406,216.48, consisting of the

fair value of the petitioners’ shares plus interest.7 Jarden paid the final judgment,

and the Delaware Supreme Court affirmed the Court of Chancery’s decision on July

9, 2020.8

C. The Insurance Policies

The defendants in this action issued primary and/or excess executive and

corporate liability insurance to Jarden for the period of April 12, 2015 to April 12,

2022. ACE American Insurance Company (“ACE”) issued the primary policy (the

5
Id.
6
Id. at *2.
7
Am. Compl. ¶ 26.
8
Id. ¶ 27.
4
“Primary Policy”), and a tower of excess policies (the “Excess Policies” and

collectively with the Primary Policy, the “D&O Policies”) were issued by Allied

World National Assurance Company (“Allied World”), Berkley Insurance Company

(“Berkley”), Illinois National Insurance Company (“Illinois National”), Endurance

Assurance Company (“Endurance”),9 and Navigators Insurance Company

“(“Navigators” and collectively with ACE, Allied World, Berkley, Illinois National,

and Endurance, the “Insurers”). The Excess Policies generally follow form to the

Primary Policy, and there are no material differences between the Primary Policy

and the Excess Policies for purposes of this coverage dispute.

Relevant to this litigation, the D&O Policies provide coverage for “Company

Liability” as follows:

The Insurer shall pay on behalf of the Company all Loss for which the
Company, or the Successor Company, solely in its capacity as
successor-in-interest to the Company, becomes legally obligated to pay
by reason of a Securities Claim first made against the Company during
the Run-Off Period, and reported to the Insurer pursuant to the terms of
this Policy, for any Wrongful Acts taking place before the Run-Off
Date. In no event shall there be any coverage under this Insuring
Agreement for Wrongful Acts of the Successor Company, except as set
forth in the Run-Off Exclusion.10

9
The Amended Complaint identifies Endurance as Endurance American Insurance Company. The
policy was issued by Endurance Reinsurance Corporation of America, which has since changed
its name to Endurance Assurance Corporation. See Defs.’ Opening Br. in Supp. of Mot. to Dismiss
at 1, n.1.
10
Am. Compl. Ex. 7, Endorsement 26. Unless otherwise noted, all citations to the D&O Policies
are to the Primary Policy, which is attached as Exhibit 7 to the Amended Complaint.
5
 Jarden and its subsidiaries are the “Company” under the terms of the D&O

Policies. Those policies define a “Securities Claim” to include “any Claim, other

than a civil, criminal, administrative or regulatory investigation of a Company,

which, in whole or in part, is: [] brought by one or more securities holders of the

Company, in their capacity as such, including derivative actions brought by one or

more shareholders to enforce a right of the Company.”11 A “Claim” includes “a

written demand for monetary damages or non-monetary or injunctive relief, [and] a

civil . . . proceeding for monetary damages or non-monetary or injunctive relief,

commenced by . . . service of a complaint or similar pleading . . . .”12 The policies

define “Wrongful Act” as “any error, misstatement, misleading statement, act,

omission, neglect, or breach of duty, . . . actually or allegedly committed or

attempted by . . . the Company.”13

Under the terms of the policy, coverage is afforded for Securities Claims first

made “during the Run-Off Period” for Wrongful Acts “taking place before the Run-

Off Date.”14 The Run-Off Date was April 15, 2016, while the Run-Off Period was

12:01 a.m. on April 15, 2016 to 12:01 a.m. on April 15, 2022.15

11
Am. Compl., Ex. 7, §II(O)(1).
12
Id., Ex. 7, §II(B)(2).
13
Id., Ex. 7, §II(Q)(2). This definition applies solely to a Securities Claim. Id.
14
Id., Ex. 7, Endorsement 26.
15
Id.
6
 D. This Coverage Action

Jarden filed this action on March 12, 2020, seeking coverage for the interest

award and defense costs that Jarden incurred in the Appraisal Action.16 In its original

complaint, Jarden claimed the Appraisal Action was a “Securities Claim” under the

D&O Policies, relying in part on this Court’s decision in Solera Holdings, Inc. v. XL

Specialty Insurance Co. (“Solera I”),17 which at that time was on appeal to the

Delaware Supreme Court. The parties jointly moved to stay the proceedings in this

case pending resolution of the Solera I appeal. On October 23, 2020, the Delaware

Supreme Court reversed Solera I, holding that an appraisal action was not “for a

violation of law” and therefore did not fit the definition of a “securities claim” under

the policy at issue in that case (“Solera II”).18

On December 10, 2020, Jarden filed its Amended Complaint in this action.

Jarden’s Amended Complaint includes claims for declaratory judgment and breach

of contract relating to the Insurers’ refusal to cover the defense costs and interest

award incurred in the Appraisal Action. The Insurers moved to dismiss the

Amended Complaint. The parties briefed and argued that motion, and the Court took

the motion under advisement after oral argument.

16
The D&O Policies define “Loss” as including “any award of pre-judgment and post-judgment
interest” and “Defense Costs.” Am. Compl. Ex. 7, §II(I). Jarden contends both the interest award
and Jarden’s defense costs constitute a “Loss” under the terms of the policy, but that issue is not
before the Court for purposes of the present motion.
17
213 A.3d 1249 (Del. Super. Ct. 2019).
18
In re Solera Insur. Coverage Appeals, 240 A.3d 1121 (Del. 2020)
7
 PARTIES’ CONTENTIONS

The Insurers advance two arguments in favor of dismissal.19 First, although

the Insurers concede that the Appraisal Action is a “Securities Claim” under the

D&O Policies at issue in this case, they contend no coverage was afforded under the

policies because Insuring Agreement I.C. provides that every claim, including a

Securities Claim, must be “for” a Wrongful Act. The Insurers argue this means that

the Claim must “‘seek redress in response to, or as requital of’” a Wrongful Act.20

Because an appraisal action does not, under the Delaware Supreme Court’s

reasoning in Solera II, seek redress for any conduct by the insured, Defendants

contend the Appraisal Action cannot be one “for” a Wrongful Act.

Second, the Insurers argue that, even if the Appraisal Action seeks redress in

response to a Wrongful Act, any such act is not one that occurred “before the Run-

Off Date,” as required under Insuring Agreement I.C. The Insurers argue the only

“Wrongful Act” for which an Appraisal Action arguably sought redress was the

execution of the merger itself, which did not occur before the Run-Off Date.

Jarden responds that Solera II does not govern this case because the policy at

issue in Solera II contained a different, narrower definition of “Securities Claim,”

19
Defendants also argue the Appraisal Action was not a claim for an act “committed by Jarden,”
pointing out that the Appraisal Action alleged Newell paid less than fair value for the petitioners’
shares and that Newell later paid the judgment entered by the Court, consistent with Section 262(i).
The Court does not reach this alternative argument in light of its conclusion that dismissal is
warranted for independent reasons.
20
Defs.’ Opening Br. 17-18.
8
and the Delaware Supreme Court in Solera II only addressed whether an appraisal

action constitutes a claim involving a “violation of law.” Jarden argues the Supreme

Court’s conclusion that an appraisal action is not a claim for a “violation of law” is

materially different from the question of whether an appraisal action is “for a

Wrongful Act.” In support of this argument, Jarden relies on the D&O Policies’

broad definition of the term Wrongful Act. As to the Insurers’ argument that the

Appraisal Action is not based on conduct occurring before the Run-Off Date, Jarden

relies on the Appraisal Demands that were submitted to Jarden before the Run-Off

Date, as well as the fact that the appraisal petitioners challenged various aspects of

the pre-closing deal process.

ANALYSIS

A claim must be dismissed under Superior Court Civil Rule 12(b)(6) if the

complaint fails “to state a claim upon which relief can be granted.”21 Under this

standard, the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts

even vague allegations as well-pleaded if they give the opposing party notice of the

claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv)

only dismisses a case where the plaintiff would not be entitled to recover under any

21
Del. Super. Ct. Civ. R. 12(b)(6).
9
reasonably conceivable set of circumstances.22 The Court, however, must “ignore

conclusory allegations that lack specific supporting factual allegations.”23

Interpreting an unambiguous contract, including an insurance policy, is a

question of law that appropriately may be resolved on the pleadings.24 When a

contract only is susceptible of one interpretation, and that interpretation effectively

negates the claim as a matter of law, a motion to dismiss should be granted.25

The Delaware Supreme Court recently reaffirmed the settled principles of

Delaware law governing interpretation of insurance contracts:

Insurance contracts, like all contracts, ‘are construed as a whole, to give
effect to the intentions of the parties.’ Proper interpretation of an
insurance contract will not render any provision ‘illusory or
meaningless.’ If the contract language is ‘clear and unambiguous, the
parties’ intent is ascertained by giving the language its ordinary and
usual meaning.’ Where the language is ambiguous, the contract is to
‘be construed most strongly against the insurance company that drafted
it.’ A contract is not ambiguous simply because the parties do not agree
on the proper construction. ‘Rather, a contract is ambiguous only when
the provisions in controversy are reasonably or fairly susceptible of
different interpretations or may have two or more different meanings.’
Insurance contracts should be interpreted as providing broad coverage
to align with the insured’s reasonable expectations. ‘Generally, an
insured’s burden is to establish that a claim falls within the basic scope
of coverage, while an insurer’s burden is to establish that a claim is
specifically excluded.’ Courts will interpret exclusionary clauses with
‘a strict and narrow construction . . . [and] give effect to such

22
See Central Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 535
(Del. 2011); Doe v. Cedar Academy, 2010 WL 5825343, at *3 (Del. Super. Ct. Oct. 27, 2010).
23
Rammuno v. Crawley, 705 A.2d 1029, 1034 (Del. 1998).
24
RSUI Indemnity Co. v. Murdock, 248 A.3d 887, 905 (Del. 2021); Vinton v. Grayson, 189 A.3d
695, 699-700 (Del. Super. Ct. 2018).
25
See VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 614-15 (Del. 2003).
10
 exclusionary language [only] where it is found to be ‘specific,’ ‘clear,’
‘plain,’ ‘conspicuous,’ and ‘not contrary to public policy.’26
A. The Appraisal Action is not a claim “for a Wrongful Act.”

The Insurers first contend Jarden’s coverage claims must be dismissed

because the Appraisal Action was not a claim “for a Wrongful Act.” Under the

Primary Policy, the Insurers agreed to pay for Losses Jarden incurred by reason of a

Securities Claim first made during the Run-Off Period “for any Wrongful Acts”

taking place before the Run-Off Date.27 Although the Insurers concede that the

Appraisal Action was a “Securities Claim” under the terms of the D&O Policies,

they argue it was not “for” a “Wrongful Act.” Jarden disagrees, arguing the D&O

Policies broadly define Wrongful Act to include, among other things, any “act . . .

actually or allegedly committed or attempted by . . . the Company.”28

Although the D&O Policies define “Wrongful Act” to include any “act”

committed or attempted by Jarden, the Securities Claim also must be “for” that act.

The Insurers argued in their briefs and at oral argument that in order for a claim to

be “for” a wrongful act, it must “seek redress in response to, or as requital of,” that

act.29 Jarden did not squarely address the meaning of “for” in its brief, but agreed at

26
Murdock, 248 A.3d at 905-06 (internal citations omitted).
27
Am. Compl. Ex. 7, Endorsement 26 (emphasis added).
28
Id., Ex. 7, §II(Q)(2). This definition applies solely to a Securities Claim. Id.
29
Defs.’ Opening Br. 18 (citing RSUI Indem. Co. v. Desai, 2014 WL 4347821, at *4 (M.D. Fla.
Sept. 2, 2014)); Defs.’ Reply Br. 7-8.
11
oral argument that “for” as used in the D&O Policies has the meaning advocated by

the Insurers.

That concession is fatal to Jarden’s coverage claim. Even if, as Jarden argues,

a “Wrongful Act” means any act Jarden committed, an appraisal action does not seek

redress in response to, or as reprisal of, an act. Accordingly, giving the term “for”

the meaning the parties jointly ascribe to it, there is no coverage under the D&O

Policies.30

This conclusion is the logical extension of the Delaware Supreme Court’s

decision in Solera II and other cases interpreting Section 262. An appraisal claim

purely is a creature of statute.31 The appraisal statute imposes limited duties on the

corporation, namely (i) providing notice to stockholders, (ii) keeping and supplying

records of the number of shares not voted in favor of the merger and the number of

holders of such shares, and (iii) filing with the Register in Chancery a verified

petition listing the stockholders who demanded appraisal and did not later reach an

agreement with the surviving corporation as to the value of their shares.32 The

30
Because the parties did not dispute the meaning of “for” in the D&O Policies, the Court was not
called upon to interpret it. The parties have not cited, and the Court has not identified, any
Delaware case directly addressing the meaning of “for” in this context. Given the parties’
agreement that “for” means “seeking redress or reprisal of,” the Court need not interpret the phrase,
and simply can apply the parties’ agreed-upon interpretation. Making an interpretive ruling that
may have precedential value is better left to a court that has the benefit of the parties’ adversarial
presentations on the issue.
31
Dell, Inc. v. Magnetar Global Even Driven Master Fund Ltd., 177 A.3d 1, 20 (Del. 2017).
32
8 Del. C. § 262(d)-(f).
12
appraisal proceeding itself, however, is “neutral in nature” and requires the Court of

Chancery to determine the fair value of the dissenting stockholder’s shares.33 Both

sides bear the burden of proving their respective valuation positions by a

preponderance of the evidence.34

Importantly, as the Delaware Supreme Court reemphasized in Solera II, an

appraisal proceeding “does not involve any inquiry into claims of wrongdoing.”35

The only issue before the appraising court is the value of the dissenting stockholder’s

shares on the date of the merger.36 In fact, it is possible for the Court of Chancery

to conclude that the value of the petitioner’s shares is less than the negotiated deal

price.37 That possibility actually transpired in this case. These features of appraisal

33
In re Solera Insur. Coverage Appeals, 240 A.3d 1121, 1135-36 (Del. 2020).
34
M.G. Bancorp. Inc. v. Le Beau, 737 A.2d 513, 520 (Del. 1999).
35
In re Solera Insur. Coverage Appeals, 240 A.3d at 1136. The Delaware Supreme Court has held
that the trial court should accord “considerable weight” to the deal price absent deficiencies in the
deal process. Verition P’rs Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d 128, 137-140
(Del. 2019).
36
In re Solera Insur. Coverage Appeals, 240 A.3d at 1137. Jarden insists Solera II is not
dispositive of the issues before this Court, or even helpful to the analysis, because Solera II
involved an interpretation of the phrase “violation of law,” not a “Wrongful Act.” Although Jarden
is correct that the Solera II Court was not interpreting the phrase “for a Wrongful Act,” the Court’s
explanation and analysis of the purpose and scope of an appraisal action is relevant to, and in my
view dispositive of, the question of whether an appraisal action seeks redress in response to, or as
reprisal of, an “act” of the appraised corporation.
37
See Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice in the
Delaware Court of Chancery, § 9.11[d][1] at 9-273 (Citing cases and explaining that “[o]f the 71
post-Weinberger common stock appraisals decided through February 2018 in which the merger
consideration was reflected in the record, only 20 have resulted in judicial appraisal values at or
below the market price.”).
13
confirm that an appraisal proceeding is not one that seeks redress or reprisal for any

“act” of the insured corporation.

Jarden argues the D&O Policies’ broad definition of Wrongful Act

encompasses “not just the merger at issue in the Appraisal Action, but also the

underlying complained-of process . . . .”38 But the appraisal petitioners’ challenges

to the merger’s negotiation or other aspects of the process leading up to the merger’s

effectuation does not change the above analysis. Although evidence of a flawed

negotiation process generally is admissible in an appraisal proceeding, that evidence

is relevant to what weight, if any, the Court accords the negotiated merger price.39

An appraisal petitioner need not plead or establish a flawed process in order to seek

appraisal. Instead, the admission of that evidence simply allows the appraisal

petitioner to challenge the reliability of the negotiated deal price as indicative of fair

value.40

Finally, the D&O Policies’ inclusion of a “Merger Objection Claim” within

the definition of a “Claim” or a “Securities Claim” does not change the analysis.

Although an appraisal action may fit the definition of a Merger Objection Claim in

the same way that it fits the definition of a Securities Claim, the D&O Policies’

coverage nevertheless only applies to a claim “for” a Wrongful Act. In other words,

38
Pl.’s Answering Br. at 18.
39
In re Solera Insur. Coverage Appeals, 240 A.3d at 1138.
40
Id.
14
the requirement that an action be “for” a Wrongful Act applies whether the claim is

a Merger Objection Claim or any other type of Securities Claim, and the same

analysis therefore applies and defeats coverage for the Appraisal Action.

B. Even if the Appraisal Action was a claim “for” a Wrongful Act, it did
not arise out of act committed before the Run-Off Date.

The Insurers separately argue that, even if the Appraisal Action was “for” a

Wrongful Act, it was not for an act committed or attempted by Jarden before the

April 15, 2016 Run-Off Date. The Insurers, citing Solera II, argue that the act that

confers appraisal litigation rights is the execution of the merger, and since the merger

did not close before the Run-Off Date, the Appraisal Action did not fall within the

D&O Policies’ coverage.41 Jarden, on the other hand, argues the merger was

announced in December 2015 and was explained in detail in the proxy statement

filed in March 2016. Jarden maintains that the Appraisal Action was initiated by the

Appraisal Demands, all of which were lodged before the Run-Off Date, and those

demands were in response to the Merger Agreement, the proxy statement, and the

merger price.42 Jarden argues these pre-closing claims were based on flaws in the

deal process and were sufficient to give rise to a claim under the D&O Policies.

Jarden contends the Appraisal Demands were a “Claim” under the policies, and the

41
Defs.’ Opening Br. 21-22; Defs.’ Reply Br. 17-18.
42
Pl.’s Answering Br. 20-21.
15
legal process for the Appraisal Action began well in advance of the merger closing

and the Run-Off Date.43

Jarden’s argument is unavailing. Even if the Appraisal Demands were a

“Claim” under the Policies,44 the Appraisal Action was not for an act that occurred

before the Run-Off Date. This conclusion is compelled by the simple fact that,

without the merger’s execution, no appraisal right exists. If the merger had not

closed, none of the dissenting stockholders who submitted Appraisal Demands

would have had standing to pursue appraisal.45 Additionally, the Appraisal Action

could not be filed until after the merger was executed.46 And, the fair value ascribed

to the shares was the fair value as of the merger’s effective date.47 Accordingly, if

the Appraisal Action was for any act, the only act from which it arose or for which

it sought redress was the merger’s execution.

The Texas Court of Appeals reached the same conclusion in Zale Corporation

v. Berkley Insurance Co., a recent insurance coverage case in which the insured

43
Id. at 22-23.
44
The Insurers argue the Appraisal Demands were not a “claim” as the D&O Policies define that
term. The Court need not reach that issue because, even if they were a “claim,” which is unlikely,
the demands were not for an act of the corporation taking place before the Run-Off Date.
45
See 8 Del. C. § 262(a) (providing that a stockholder who holds stock on the date a demand is
made and continuously holds the stock through the effective date of the merger is entitled to
appraisal under the statute).
46
8 Del. C. § 262(e) (providing that a corporation or a stockholder who complies with Section
262(d) may commence an appraisal proceeding in the Court of Chancery “[w]ithin 120 days after
the effective date of the merger or consolidation.”).
47
In re Solera Insur. Coverage Appeals, 240 A.3d at 1135
16
corporation sought coverage for a Delaware appraisal proceeding.48 The Texas

appellate court reasoned that the policies at issue did not cover the appraisal action

or the resulting settlement because the policies limited coverage to claims based on

acts occurring before the merger date, and the “instrumental act that confers

appraisal litigation rights is not the merger process but the execution of the

merger.”49 Although not binding on this Court, the Zale court’s reasoning is

persuasive and was cited with approval by the Delaware Supreme Court in Solera

II.50

The fact that Jarden’s dissenting shareholders lodged appraisal demands with

the corporation before the Run-Off Date does not change the analysis. Those

appraisal demands statutorily were required in order to perfect the petitioners’

appraisal rights, but the demands themselves were not acts of the corporation, and

the Appraisal Action did not arise from the demands nor seek redress for the

demands. Similarly, as explained above, the fact that the appraisal petitioners

challenged aspects of the merger negotiation process, which took place before the

Run-Off Date, does not tie the Appraisal Action to an act committed before the Run-

Off Date. Those challenges to the deal process related to the weight the trial court

gave to the negotiated deal price in determining fair value. The Court’s fair value

48
Zale Corp. v. Berkley Ins. Co., 2020 WL 4361942 (Tex. Ct. App. 2020).
49
Id. at *6 (cited with approval in In re Solera Insur. Coverage Appeals, 240 A.3d at 1135, n. 90).
50
In re Solera Insur. Coverage Appeals, 240 A.3d at 1135, n. 90.
17
award did not compensate the appraisal petitioners for any defects in the sale

process, and the petitioners’ standing to bring the Appraisal Action did not in any

way depend on those flaws in the deal process.

CONCLUSION

For the reasons set forth herein, Defendants’ Motion to Dismiss the Amended

Complaint is GRANTED. Because the pleading deficiencies are not ones that can

be cured through further amendment to the complaint, this case is dismissed with

prejudice.51 IT IS SO ORDERED.

51
See Infomedia Grp., Inc. v. Orange Health Sols., Inc., 2020 WL 4384087, at * 10 (Del. Super.
Ct. July 31, 2020); Mooney v. E.I. du Pont de Nemours & Co., 2017 WL 5713308, at * 8 (Del.
Super. Ct. Nov. 28, 2017); aff’d 192 A.3d 557 (Del. 2018) (check cite)
18