(dissenting in part and concurring in part). Because, in my opinion, defendant Loral Space did not sustain a “loss,” I must respectfully dissent from that part of the majority opinion finding that plaintiff insurers are obligated to indemnify defendant for attorneys’ fees in the underlying derivative action.
The following facts are not disputed: during the policy period, Loral entered into a transaction with a controlling shareholder, MHR Fund Management LLC (MHR), which resulted in the filing of two lawsuits in the Delaware Chancery Court. The lawsuit at issue in this dissent is the derivative action commenced by a group of shareholders led by BlackRock Corporate High Yield Fund, Inc. The group (hereinafter referred to as either the de*118rivative plaintiffs or plaintiff shareholders) sought rescission of the transaction which it alleged “operates as an unfair transfer of wealth to a controlling shareholder.” This action and a class action by another shareholder, Highland Crusader Offshore Partners, L.P, seeking monetary damages were consolidated by the Delaware Chancery Court, and tried together.
After trial, the Chancery Court, applying the “entire fairness standard” of review, held that the transaction was unfair to Loral. It found essentially that MHR had underpaid for what it received. The court devised an equitable remedy that reformed the transaction by greatly reducing the nature and number of Loral securities that MHR had ostensibly purchased for $300 million. The court entered a final judgment “in favor of Loral and against MHR.” (In re Loral Space & Communications Inc., 2008 WL 4293781, *39, 2008 Del Ch LEXIS 136, *151 [2008].)
Thereafter, counsel for BlackRock and counsel for Highland applied for awards of attorneys’ fees. Loral stipulated to an award of approximately $8.7 million for BlackRock’s counsel in the derivative action. The language of the stipulation made it clear that Loral was paying the fee “[i]n consideration of the results achieved by the derivative plaintiffs in this action.”
Loral could not reach a similar agreement with Highland, but using the lodestar method to calculate the fees the Chancery Court awarded Highland’s counsel about $10.7 million for fees and expenses. The court found that the litigation had produced a substantial benefit to the company, thus warranting an award of fees under the corporate benefit doctrine; that award was affirmed on appeal. (Loral Space & Communications, Inc. v Highland Crusader Offshore Partners, L.P., 977 A2d 867, 870 [Del 2009].)
Loral satisfied the final order in the , Delaware action by paying the full amount of the attorneys’ fees awards. Loral then sought to have the plaintiff insurers in the instant action reimburse the funds pursuant to their insurance policy. The plaintiff insurers notified Loral that the fee awards were not covered by the policy. Plaintiff insurers then filed this declaratory judgment action seeking a declaration that the fee award is not a covered loss under the policy. Cross motions for summary judgment followed.
Subsequently, the court granted Loral’s motion for partial summary judgment, finding that the fees paid to the attorneys in the underlying litigation are covered by the subject insurance policy. For the reasons set forth below, I part company with the *119majority in its affirmance of that part of the decision that declares the fee award in the derivative action is covered under the subject policy.
Under the Management Liability and Company Reimbursement policy issued by the plaintiff insurers to defendant Loral, the relevant provision states that plaintiff insurers will pay “on behalf of the CompanyU Loss resulting solely from any Securities Claim first made against the Company during the Policy Period . . . for a Company Wrongful Act.”
The policy defines “[l]oss” as “damages, judgments, settlements or other amounts (including punitive or exemplary damages where insurable by law) and Defense Expenses in excess of the Retention that the Insured is legally obligated to pay.” It defines “Securities Claim” as either a derivative claim brought by a shareholder, or a claim made against the Company “for a violation of any federal, state, local regulation, statute or rule regulating securities.” It defines “Company Wrongful Act” as “any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty by the Company in connection with a Securities Claim.”
The majority characterizes the attorneys’ fees award as a loss, finding that it falls within the category of “other amounts . . . that the Insured is legally obligated to pay.” In my opinion, the policy definition of loss is not as broad as the majority perceives it to be. As a threshold matter, the subject matter of the adjectival clause “legally obligated to pay” is “the Retention,” that is, the self-insured deductible portion of the defense expenses that Loral agreed to pay, and not “other amounts.” Indeed, it is undisputed that the plaintiff insurers funded the defense costs and paid out approximately $9 million in excess of the $5 million that Loral paid as the retention portion of those expenses.
Second, “[l]oss” as defined in the provision is clearly meant to arise from payments in the form of damages whether awarded by judgment in cases of a proven wrongful act by the company, or negotiated in a settlement in the case of a wrongful act that has not been proved, but has been alleged. “[Ojther amounts” is characterized as including punitive or exemplary damages. In other words other types of damages that are insurable by law. In my opinion, plaintiff insurers correctly assert that the motion court erred because it ignored the linking phrases of the provision which require a covered loss to be “[damages] resulting solely from any [securities [c]laim first made against the *120Company during the Policy Period . . . for a Company Wrongful Act.” In this case, it is undisputed that the Delaware court did not award monetary damages against any party; it found no wrongdoing by Loral, but ordered the remedy against a third party (MHR), and the resulting restructure provided a benefit to Loral.
In that regard, I believe the motion court’s error lies in further ignoring the well-established principle that a covered loss must be an actual loss, and not an expense or the cost of doing business. (See Safeway Stores, Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., 64 F3d 1282, 1286 n 8 [1995] [“(t)he plain meaning of the term Toss’ requires that (a company) suffer a financial detriment”].)* As the plaintiff insurers assert, the court cannot ignore the plain and ordinary meaning of the word “Q]oss.” (See Reliance Group Holdings v National Union Fire Ins. Co. of Pittsburgh, Pa., 188 AD2d 47, 54-56 [1st Dept 1993], lv dismissed in part, denied in part 82 NY2d 704 [1993] [no loss because Reliance ended up with gain of $74 million even though it had to pay $21 million to settle claims against it].) The majority takes the position that this Court’s decision in Reliance stands merely for the proposition that disgorgement of wrongfully acquired funds is not an insurable loss. However, I agree with plaintiff insurers that, while Reliance indeed reiterates that proposition, it is enunciated as part of the broader principle that there must be an actual loss. In other words, the purported loss must be viewed in the context of an entire transaction. In Reliance, this Court makes the tautological link concluding, “Reliance sustained no Toss’ as defined in the policy, but rather realized a profit of approximately $74 million.” (188 AD2d at 55.)
Similarly, in this case Loral did not sustain a loss but rather benefitted from the judgment. The Delaware Chancery Court concluded that the “MHR Financing was unfair and that a final judgment should be entered in favor of Loral and against MHR.” (2008 WL 4293781, *39, 2008 Del Ch LEXIS 136, *151.) The Delaware Chancery Court reformed the terms of the MHR financing. In return for its original $300 million investment, *121MHR was to receive nonvoting common stock instead of convertible preferred stock. In other words, the reformation eliminated the massive dilution of convertible stock and conversion rights, and all other terms of the transaction were voided. As the Chancery Court observed, “conversion rights, payment in kind, dividends and close voting all have financial value to a publicly traded corporation.” It concluded that the reformation was “clearly a hugely substantial benefit [to Loral].”
The fact that the benefit is not precisely quantifiable because there was no monetary judgment awarded is irrelevant. It is well established that attorneys’ fee awards in shareholder derivative suits are awarded either from a “common fund” where shareholder litigation results in a money judgment, or the fees are awarded pursuant to the “corporate benefit doctrine.” (See Fletcher v A.J. Indus. Inc., 266 Cal App 2d 313, 72 Cal Rptr 146 [1968].) Hence, the corporate benefit doctrine evidences the fact that some successful derivative litigation does not result in monetary gain but in intangible benefits to the corporation. (See In re First Interstate Bancorp. Consol. Shareholder Litig., 756 A2d 353, 357 [Del Ch Ct 1999], affd sub nom. First Interstate Bancorp v Williamson, 755 A2d 388 [Del 2000] [corporate benefit doctrine comes into play when tangible monetary benefit is not conferred but some other valuable benefit is].)
The majority footnotes its acknowledgment of this, yet fails to draw the logical conclusion. Instead, while conceding that Loral may have received a benefit because “it no longer had to suffer harm,” the majority nevertheless observes that “it does not follow that Loral actually made a tangible profit” and therefore Loral’s “benefit is illusory.” Loral’s minority shareholders may beg to differ.
Indeed, Loral, in stipulating to the award of more than $8.7 million in attorneys’ fees, agreed that it was “[i]n consideration of the results achieved by the derivative plaintiffs in this action.” Moreover, while I do not address the issue of the attorneys’ fees award in the class action suit because the majority finds that the award is not a loss as defined by the policy, the finding of the Chancery Court that it should be awarded pursuant to the corporate benefit doctrine is instructive. Further, the Delaware Supreme Court affirmed the award and the finding of the trial court that the attorneys had “conferred a benefit in excess of $100 million, plus a substantial therapeutic benefit.” (977 A2d at 870.)
Finally, it should be noted that the rationale that supports the exception to the American rule in awarding attorneys’ fees *122in derivative litigation also explains why payment of such fees cannot be characterized as a loss according to any plain and ordinary meaning of the word. The rationale for such exception is that the expense of litigating what ultimately results in a benefit to the corporation should not rest entirely on the shoulders of a few plaintiff shareholders, but should be spread among all shareholders of the company for whose benefit the shareholder brought suit. (See Mills v Electric Auto-Lite Co., 396 US 375, 392 [1970]; see also Richman v DeVal Aerodynamics, Inc., 40 Del Ch 548, 550, 185 A2d 884, 885 [1962].) In the latter seminal case, the court found that attorneys’ fees are to be awarded where benefits accrue to that class of shareholders of which derivative plaintiff is a member “such as to require, in equity, payment by the class as a whole.” (40 Del Ch at 552, 185 A2d at 886 [emphasis added].)
For this reason, the attorneys’ fees award is essentially viewed as the equitable entitlement of the successful derivative plaintiff to recover the expense of his/her attorneys’ fees from all the shareholders of the corporation on whose behalf the suit was brought. (Mills, 396 US at 392.) In that case, the United States Supreme Court recognized that “allowing] others to obtain full benefit from the plaintiff’s [shareholder’s] efforts without contributing equally to the litigation expenses would be to enrich the others unjustly at the plaintiffs expense.” (Mills, 396 US at 392.) Clearly, if not spreading the cost of attorneys’ fees sounds in unjust enrichment, the obvious corollary is that shifting the cost to shareholders as a group cannot be characterized as a loss. (See generally Reliance Group Holdings, 188 AD2d at 54-56.)
Tom, J.E, and Andrias, J., concur with Moskowitz, J.; Catterson and Acosta, JJ., dissent in part and concur in part in a separate opinion by Catterson, J.
Order, Supreme Court, New York County, entered on or about February 16, 2010, modified, on the law, to grant plaintiffs’ motion to the extent of declaring that plaintiffs are not obligated to indemnify defendant for the part of the fee award that directed defendant to pay fees to Abrams & Laster LLP as counsel for the class action plaintiffs, and to deny defendant’s cross motion to the same extent, and otherwise affirmed, without costs.
In my opinion, the majority’s reliance on Safeway for holding that the attorneys’ fees awards in this case are a covered “out-of-pocket loss” is misplaced as it is entirely distinguishable on the facts: Safeway was not a derivative suit, but a series of class action suits in which the company defended and indemnified its directors for breach of fiduciary duty. The attorneys’ fees were a covered loss under its directors and officers liability policy. In any event, they were a negotiated part of the settlement. (Safeway at 1287.)