A-5951-06T3
12-12-08
In this case, we examined whether a directors and officers
(D&O) insurance policy affords coverage for defense costs and damages arising from a suit alleging misrepresentations regarding contingent liabilities for pollution claims made in connection with a multi-step transaction to reorganize and merge businesses. We held that, based on the "substantial nexus" standard set forth in Am. Motorists Ins. Co. v. L-C-A Sales Co., 155, N.J. 29, 35 (1998), the complaint clearly arose from alleged violations of the Securities Exchange Act of 1934 and the rules promulgated there under, and not from intentional pollution. We found that the language of the pollution exclusion in the applicable insurance policy, as well as the reasonable expectations of the insured, prevented the insurer from disclaiming coverage.
