1

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE 

G-NEW, INC. DBA GODIVA 

CHOCOLATIER, INC.,

 

 Plaintiff, 

 

 v.

ENDURANCE AMERICAN 

INSURANCE COMPANY, and 

NATIONAL UNION FIRE INSURANCE 

COMPANY OF PITTSBURGH, PA.,

 

 Defendants. 

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Submitted: June 16, 2022

Decided: September 12, 2022

On Defendants’ Motions to Dismiss

GRANTED IN PART, DENIED IN PART

On the Parties’ Cross-Motions for Partial Summary Judgement

GRANTED IN PART, DENIED IN PART
2

OPINION

Jennifer C. Wasson, Esq., Carla M. Jones, Esq., Potter Anderson & Corroon LLP, 

Wilmington, DE, Vivek Chopra, Esq., Jonathan G. Hardin, Esq. (Argued), Perkins 

Coie LLP, Washington, DC, Attorneys for Plaintiff

Marc S. Casarino, Esq., Kennedys CMK LLP, Wilmington, DE, Michael L. 

Zigelman, Esq. (Argued), Kristina I. Duffy, Esq. (Argued), Kaufman Dolowich & 

Voluck, LLP, New York, NY, Attorneys for Defendant Endurance American 

Insurance Company

Kurt M. Heyman, Esq., Aaron M. Nelson, Esq., (Argued), Heyman Enerio Gattuso 

& Hirzel LLP, Wilmington, DE, Scott B. Schreiber, Esq., Arthur Luk, Esq., 

Matthew Bemis, Esq., Elliot Rosenwald, Esq., Arnold & Porter Kaye Scholer LLP, 

Washington, DC, Attorneys for Defendant National Union Fire Insurance 

Company of Pittsburgh, Pa.

JOHNSTON, J. 

FACTUAL AND PROCEDURAL CONTEXT

Plaintiff G-New, Inc. d/b/a Godiva Chocolatier, Inc. (“Godiva”) is a Delaware 

incorporated chocolate manufacturer. Defendant Endurance American Insurance

Company (“Endurance”) is an insurer incorporated in Delaware. Defendant 

National Union Fire Insurance Company of Pittsburgh, PA. is a subsidiary of 

American International Group (“National Union”), incorporated in Pennsylvania. 

National Union is licensed to do business in Delaware. This insurance coverage 
3

action arises from primary and excess insurance policies issued by Defendants1to 

Plaintiff. 

The Insurance Policies

Godiva purchased from Endurance a “Primary Management Liability 

Insurance for Private Companies” policy covering the period from June 30, 2018

through June 30, 2019 (the “Endurance Policy”). The Endurance Policy obligates 

Endurance to indemnify Godiva for Losses resulting from a Claim made against 

Godiva during the Policy Period for Wrongful Acts, including Directors and Officers 

(“D&O”) Liability Coverage. The Endurance Policy provides a $10 million limit on 

liability. Godiva also purchased an excess policy through National Union that 

incorporates all of the same terms and conditions of the Endurance Policy and 

provides coverage for “Loss” (as defined in Endurance Policy) in excess of $10 

million up to $20 million. 

The Underlying Dispute

Godiva’s original storefront was located in Brussels, Belgium. Because of 

this connection to Belgium, Godiva’s products exhibit the phrase “Belgium 1926.” 

In early 2019, Adam Buxbaum and Steven Hesse sued Godiva, asserting that the 

“Belgium 1926” label on its products misled consumers. Buxbaum and Hesse 

1 Defendant Endurance National Union are collectively referred to as 

“Defendants.”
4

alleged thirteen counts against Godiva for violations of New York and California

consumer protection statutes, and common law. The suits were consolidated in the 

U.S. District Court for the Southern District of New York (“Class Action”). 

Godiva, Buxbaum, and Hesse engaged in mediation. Mediation resulted in a 

settlement that obligates Godiva to pay: (i) a maximum of $15 million in monetary 

relief; (ii) a maximum of $5 million in attorneys’ fees; (iii) all settlement notice and 

administration costs; and (iv) up to $10,000 in class representative service awards 

(the “Settlement”). On September 23, 2021, a Settlement Agreement was executed, 

reflecting the terms of mediation. The Settlement Agreement is pending the final 

approval of the Judge for the Southern District of New York.

Endurance and National Union were notified of the Class Action and the 

Settlement Agreement, but declined to extend coverage to Godiva. Godiva seeks 

insurance coverage from Endurance and National Union for the Settlement and 

defense costs. 

On October 13, 2022, Godiva brought this action, alleging breach of contract 

and breach of the implied covenant of good faith a fair dealing. Godiva also requests

declaratory judgment confirming Defendants’ obligations to indemnify Godiva 

under the policies. On December 22, 2021, Defendants jointly moved to dismiss 

Godiva’s Complaint with prejudice. On February 25, 2022, Godiva filed a CrossMotion for Partial Summary Judgment.
5

The main issue before this Court is whether Godiva has alleged facts which, 

if true, would establish that the Settlement Agreement amounts and defense costs in 

connection with the Class Action are covered by the Endurance and/or Excess 

Policies.

STANDARD OF REVIEW

Motion to Dismiss

A party may move to dismiss under this Court’s Civil Rule 12(b)(6) for failure 

to state a claim upon which relief can be granted. In resolving a Rule 12(b)(6) 

motion, the standard is well settled: (i) all well-pleaded factual allegations are 

accepted as true; (ii) even vague allegations are “well-pleaded” if they give the 

opposing party notice of the claim; (iii) the Court must draw all reasonable 

inferences in favor of the non-moving party; and (iv) dismissal is inappropriate 

unless the plaintiff would not be entitled to recover under any reasonably 

conceivable set of circumstances susceptible to proof.3

The Court need not accept a plaintiff’s “conclusory allegations unsupported 

by specific facts,” or “draw unreasonable inferences in the plaintiff’s favor.”4 Nor 

must the Court adopt “every strained interpretation of the allegations the plaintiff 

proposes. However, even with those cautions in mind, Delaware’s pleading standard 

3

Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002).

4 Windsor I, LLC v. CW Capital Asset Mgmt. LLC, 238 A.2d 863, 871 (Del. 1968). 
6

is “minimal” and “plaintiff friendly.”5 The operative test is one of reasonable 

conceivability, which asks whether there is a possibility of recovery.6

Summary Judgment

Under Rule 56, “summary judgment should be entered when there is no 

dispute of material fact, and the moving party is entitled to judgment as a matter of 

law.”7“The trial court shall examine the factual record and make reasonable 

inferences therefrom in the light most favorable to the nonmoving party to determine 

if there is any dispute of material fact.”8 Summary judgment should not be granted 

when the record indicates that there is a reasonable “material fact ... in dispute.”9 

The non-moving party “must set forth specific facts showing that there is a genuine 

issue for trial” in order to overcome a motion for summary judgment.10 

When demonstrating a genuine issue of material facts, “an adverse party may 

not rest upon the mere allegations or denials of the adverse party’s pleading,” but 

instead must “set forth specific facts showing that there is a genuine issue for trial.”11 

5 Tygon Peak Capital Mgmt, LLC v. Mobile Investco, LLC, 2022 WL 34688, at *11 (Del. Ch.). 

6 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 1942). 

7 Nash v. Connell, 99 A.2d 242, 243 (Del. Ch. 1953).

8 Motorola, Inc. v. Amkor Tech., Inc., 849 A.2d 931, 935 (Del. 2004) (citing Rhudy v. 

BottleCaps, Inc., 830 A.2d 402, 405 (Del. 2003)).

9 Burris v. Penn Mart Supermarkets, Inc. 2006 WL 2329373, at *3 (Del. Super.)(citing Ebersole 

v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962); see also Cross v. Hair, 258 A.2d 277, 279

(Del. 1969). 

10 Carriere v. Peninsula Ins. Co., 810 A.2d 349, at *2 n.7 (Del. 2002)(citing Del. Super. Ct. Civ. 

R. 56(e)). 

11 Id. 
7

Ultimately, unless there is a reasonable certainty that there is no triable issue, the 

Court has discretion to decline to decide the case in summary judgment and instead 

push the case to trial.12

To the extent genuine issues of material fact are not raised, the Court will treat 

the motions as cross-motions on the issues presented. Superior Court Rule 56(h) 

provides:

Where the parties have filed cross motions for summary judgment and 

have not presented argument to the Court that there is an issue of fact 

material to the disposition of either motion, the Court shall deem the 

motions to be the equivalent of a stipulation for decision on the merits 

based on the record submitted with the motions.13 

The Court will evaluate any contested facts pursuant to Rule 56(c). All facts 

are viewed in a light most favorable to the non-moving party.14 The Court will 

evaluate the facts relating to each precise issue. The Court will take all reasonable 

inferences into consideration.

12 Cross, 258 A.2d at 278.

13 Super. Ct. Civ. R. 56.

14 Burkhart v. Davies, 602 A.2d 56, 58–59 (Del. 1991).
8

ANALYSIS

Parties’ Requests for Relief

Godiva has moved for partial summary judgement. Godiva requests that the 

Court find:

1. Delaware law applies to this D&O coverage dispute; 

2. Godiva’s Settlement and Defense Costs come within the definition 

of insured “Loss;”

3. Exclusion IV.B.6 (“matters uninsurable under the law”) does not

apply; 

4. Exclusion IV.A.12.e (anti-competitive conduct) does not apply; and 

5. Exclusion IV.B.2 (“fines and penalties”) does not apply.

First, Godiva asserts that Endurance’s choice-of-law analysis contradicts 

Delaware Supreme Court precedent set forth in Certain Underwriters at Lloyds, 

London v. Chemtura Corporation15 and RSUI Indemnity Company v. Murdock.

16

Godiva relies on Murdock, arguing that Delaware law applies unless the “contacts 

in this particular instance are sufficient to tip the balance toward”17 New York. 

Godiva further relies on Chemtura, arguing that contacts associated with the 

underlying claims in this action are irrelevant to the choice-of-law analysis. Godiva 

asserts that the facts in this action support a finding that Delaware law applies to this 

claim.

15 160 A.3d 457 (Del. 2017).

16 248 A.3d 887 (Del. 2021).

17 Id. at 901.
9

Next, Godiva contends that the Settlement Agreement and defense costs in 

the Underlying Action are covered losses under the terms of the Endurance Policy 

because: (1) insurance policies “should be interpreted as providing broad coverage 

to align with the insured's reasonable expectations;”18 and (2) exclusions are 

“construed narrowly in favor of coverage.”19

Godiva also asserts that Exclusion IV.B.6 does not apply. Godiva argues that 

Delaware law permits coverage for restitution and disgorgement. Therefore, 

Exclusion IV.B.6 (matters uninsurable under the law) cannot bar coverage for the 

Settlement Agreement. Godiva further asserts that the Settlement Agreement is not 

uninsurable disgorgement even if New York law applies because: (1) there has been 

no final, non-appealable judgment that Godiva’s gains were “ill-gotten;” and (2)

because the trial court in the underlying action could not possibly have awarded 

restitution or disgorgement had the case gone to trial.

Godiva further argues that Exclusion IV.A.12.e does not apply because it is 

an antitrust exclusion focused on violations of anti-competition statutes. Godiva 

contends that this antitrust exclusion bears no relation to the Underlying Action, 

which alleges improper advertising under consumer protection statutes and the 

common law.

18 Id. at 906.

19 Ferrellgas Partners L.P. v. Zurich Am. Ins. Co., 2020 WL 363677, at *13 (Del. Super.).
10

Finally, Godiva asserts that Exclusion IV.B.2 (fines and penalties) bars 

coverage because: (1) the Settlement is not a “penalty;” (2) Godiva did not 

knowingly or willfully violate any law; and (3) there is no final judgment or 

admission establishing liability.

In response, Defendants Endurance and National Union have jointly moved 

to dismiss Godiva’s complaint. Defendants request the following.

First, Endurance contends that contends that the Chemtura standard mandates 

that New York law applies. 

Second, Endurance contends that Godiva has not satisfied it burden of 

proving the claim constitutes a “Loss” under the Insuring Agreements. Under the 

Insuring Agreement, “Loss” is defined, in pertinent part, as:

The total amount the Insureds become legally obligated to pay on 

account of Claims made against them for Wrongful Acts for which 

coverage applies, including, but not limited to, damages (including 

punitive, exemplary or multiple damages), judgments, any awards of 

prejudgment and post-judgment interest with respect to covered 

damages, settlements, Defense Costs and civil money penalties 

assessed against an Insured pursuant to Section 2(g)(2)(B) of the 

Foreign Corrupt Practices Act, 15 U.S.C. §78dd-2(g)(2)(B) or for a 

violation of any other federal, state, local or foreign law if such law

violation is not knowing or willful.21

Third, Endurance asserts that the claim is excluded from coverage by 

Exclusion IV.A.12.e (unfair trade practices), which provides:

21 Def. Ex. 4 Part 2 at p. 7.
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A. The Insurer shall not be liable under the Coverage Section for Loss 

on account of that portion of any Claim made against any Insured:...

***

12. solely with respect to Insuring Clause C:... 

***

e. based upon, arising out of or attributable to an actual or 

alleged violation of... any other federal, state, local, 

common or foreign laws involving... unfair trade 

practices...22

Fourth, Endurance claims that Exclusion IV.B.2 excludes coverage for fines 

or penalties imposed by law, provides that “Loss does not include...”

2. fines or penalties imposed by law, other than civil money

penalties expressly referenced in the definition of Loss

above,

***

6. matters uninsurable under the law pursuant to which the

Policy is construed, provided

Fifth, Endurance contends that Godiva’s breach of the covenant of good faith 

and fair dealing and bad faith claims must be dismissed because:

(1) the claim for breach of the covenant of good faith and fair dealing 

is duplicative of the breach of contract claim because both claims 

are premised upon Endurance’s denial of coverage for both the 

defense costs and settlement in the Underlying Lawsuit; and

(2) the bad faith claim fails to state a cause of action. 

22 Def. Endurance Op. Br. at 12 (emphasis in original).
12

National Union also asserts that Godiva’s cross-motion for partial summary 

judgment should be denied. National Union has moved to join Endurance’s Motion 

to Dismiss Count I (Breach of the Excess Policy) and Count II (Breach of the Implied 

Covenant of Good Faith and Fair Dealing) of Godiva’s complaint, adding the

additional reason that Godiva has not incurred any covered Loss reaching National 

Union’s excess policy. National Union also asserts that the provisions of Godiva’s 

policies foreclosing coverage are unambiguous. National Union argues that: (1) 

under the choice-of-law analysis, New York law applies; (2) under New York law, 

insurance of disgorgement or restitution for ill-gotten gains retained by the insured

is prohibited; and (3) the policy language is unambiguous and precludes coverage 

for the Settlement in the underlying action.

Insurance Contract Interpretation

In Delaware, it is well established that insurance policies are contracts.23

Contract interpretation is a question of law.24

The Court must give effect to the parties’ mutual intent at the time of 

contracting. The Court should interpret contract language as it “would 

be understood by any objective, reasonable third party.” Absent 

ambiguity, contract terms should be accorded their plain, ordinary 

meaning. Ambiguity exists when the disputed term “is fairly or 

reasonably susceptible to more than one meaning.”

25

23 Zurich Am. Ins. Co. v. Syngenta Crop Prot., LLC, 2020 WL 5237318, at *4 (Del. Super.).

24 Id.

25 Id.
13

Generally, insurance policies are adhesion contracts that are not the 

result of arms-length negotiations.26 Therefore, the rules of construction 

“differ from those applied to most other contracts.”27

Where policy language is ambiguous, the doctrine of contra 

proferentem requires the Court to interpret the policy in favor of the 

insured because the insurer drafted the policy. The Court, pursuant to 

this doctrine, looks to “the reasonable expectations of the insured at the 

time when [the insured] entered the contract[.]” The Court 

will only apply this doctrine where the policy is ambiguous. When the 

policy language is “clear and unambiguous[,] a Delaware court will not 

destroy or twist the words under the guise of construing them” and each 

party “will be bound by its plain meaning.”28

“The insured bears the burden of proving that a claim is covered by an 

insurance policy.”29 Once coverage is found, the burden shifts to the insurer to prove 

an exclusion precludes coverage.30

Choice of Law

The parties dispute whether Delaware law or New York law applies. 

Defendants argue that New York has most significant relationship to this 

dispute. Defendants assert that there is an actual conflict between the relevant laws, 

26 Id.

27 Id. (internal citations omitted).

28 Id.

29 Id. at 5.

30 Id. See also Northrop Grumman Innovation Sys., Inc. v. Zurich Am. Ins. Co., 2021 WL 

347015, at *9 (Del. Super.).
14

warranting an analysis pursuant to (Restatement) Second Conflict of Laws Sections

193 and 188.31 Defendants rely primarily on Section 193. 

In Chemtura, the Delaware Supreme Court, explains that the Restatement

§193 “provides a presumption for insurance contracts, that, as a general matter, the 

law of the state ‘which the parties understood was to be the principal location of the 

insured risk’ should be applied because that state will typically have the most 

significant relationship.”32 Defendants further rely on the five factors in Section 188 

to determine which state has the most significant relationship:

a) the place of contracting,

b) the place of negotiation of the contract,

c) the place of performance,

d) the location of the subject matter of the contract, and

e) the domicile, residence, nationality, place of incorporation and place 

of business of the parties33

Specifically, Defendants argue:

i. The place of contracting is New York;

ii. The corporate representatives responsible for negotiating and 

approving the Endurance Policy were either located in or required 

approval from New York employees;

iii. The Endurance Policy was negotiated in New York;

iv. The Endurance Policy states it was executed and issued in New 

York;

v. Godiva’s world headquarters is in New York and the Underlying 

litigation involves decisions made by employees working at 

headquarters;

31 Restatement (Second) of Conflict of Laws §§ 188, 193 (1971).

32 Chemtura, 160 A.3d at 465 (citing Rest. (Second) of Conflict of Laws at § 193).

33Id.
15

vi. The Endurance Policy specifically provides that all notices are to be 

sent to Endurance’s New York offices, such that Endurance 

receives, processes, and adjusts its claims in New York;

vii. Godiva is currently seeking a declaratory judgment that Endurance 

must provide coverage for the Underlying Lawsuit, venued in the 

Southern District of New York; and 

viii. The principal place of business for both Godiva and Endurance is 

New York;

Goliva contends that Delaware has the most significant relationship to this 

dispute. Plaintiff primarily argues that Section 193 does not apply. Plaintiff relies 

on Murdock, in which the Delaware Court of Delaware opined: 

[W]e also recognized that, if the facts of a case don't fit the Second 

Restatement’s presumptions—such as when the insurance contract is 

part of a comprehensive program insuring risks that are not confined to 

a single jurisdiction—we must look at ‘broader subject-matter-specific 

factors’ that bear on the significance of the different states’ relationship

to the contract.34

Godiva argues that the Court should look to the broader factors in Section 188 

because: (1) the parties did not make an “effective choice of law through their 

contract” because the Policies do not contain a choice of law provision; (2) there is 

no actual conflict between Delaware and New York law; and (3) Delaware has the 

most significant relationship to the dispute. Godiva cites the following Delaware 

contacts:

i. Godiva and Endurance are both incorporated in Delaware; and

ii. The Policies in this action provide Directors and Officers Liability 

Coverage—which was issued to Godiva’s office in Wilmington, 

Delaware.

34 Murdock, 248 A.3d 887, at 896 (quoting Chemtura 160 A.3d at 465).
16

Godiva further reasons that there are multiple contacts throughout various states.

Originally, in January 2019, the Underlying Action was brought in California 

and New York.35 Subsequently, the California action was voluntarily dismissed and 

consolidated into an action brought in the Southern District of New York.36 The 

Underlying Action remains in the New York District Court.

The Court finds the reasoning in Mills Limited Partnership v. Liberty Mutual 

Insurance Company persuasive. “In a case like this, where the insured risk is the 

conduct of directors and officers located in states throughout the world, 

Comment b and § 193 itself, are less pertinent than § 188.”37 Section 193 does not 

rigidly apply to determine choice of law in the context of a complex multistate 

insurance program.38 The Court finds that this litigation could have been brought in 

35 National Union Br. at 6. (“On January 31, 2019, two putative class actions were filed against 

Godiva: Hesse v. Godiva Chocolatier, Inc., No. 1:19-cv-00972- AJN in the Southern District of 

New York, and (2) Buxbaum v. Godiva Chocolatier, Inc., No. 3:19-cv-00558-DMR, in the 

Northern District of California.”).

36 Id.

37 Mills Ltd. P'ship v. Liberty Mut. Ins. Co., 2010 WL 8250837, at *5 (Del. Super.). See 

Restatement (Second) of Conflict of Laws § 188 cmt. B (“An insured risk, namely the object or 

activity which is the subject matter of the insurance, has its principal location, in the sense here 

used, in the state where it will be during at least the major portion of the insurance period.... And 

where the honesty and fidelity of a particular person is the subject of the insurance, the parties 

will usually know beforehand where he will spend most of his time during the life of the 

policy.... The location of the insured risk will be given greater weight than any other single 

contact in determining the state of the applicable law provided that the risk can be located, at 

least principally, in a single state. Situations where this cannot be done, and where the location of 

the risk has less significance, include (1) where the insured object will be more or less constantly 

on the move from state to state during the term of the policy and (2) where the policy covers a 

group of risks that are scattered throughout two or more states.”)

38 Chemtura Corp., 160 A.3d at 466.
17

numerous jurisdictions, therefore the “significant contacts” factor cannot be 

determinative.

It is well established that Delaware law generally applies to directors and 

officers (“D&O”) coverage. “[I]n the vast majority of cases, Delaware law governs 

the duties of the directors and officers of Delaware corporation[s] to the corporation, 

its stockholders, and its investors.”40 “When the insured risk is the directors' and 

officers' ‘honesty and fidelity’ to the corporation, and the choice of law is between 

headquarters or the state of incorporation, the state of incorporation has the most 

significant relationship.”

41

 Delaware law applies to D&O coverage where the state 

of incorporation is centrally-implicated. Delaware courts consistently have found 

that Delaware law applies to insurance coverage disputes regarding D&O policies

where the insured companies are Delaware corporations.42

The dispute in Chemtura involved insured risk in operations around the world, 

obviously in multiple jurisdictions. The Chemtura Court conducted a three-part 

analysis: (1) determining if the parties made an effective choice of law through their 

contract; (2) if not, determining if there is an actual conflict between the laws of the 

different states each party urges should apply; and (3) if so, analyzing which state 

40 Murdock, 248 A.3d at 900–01.

41 Mills, 2010 WL 8250837, at *6.

42 Ferrellgas, 2020 WL 363677, at *4.
18

has the most significant relationship.43 If there is no agreed central location for the 

dispute, the Court must look at other factors to determine the center of gravity.44 In 

the context of an insurance contract, the Court considers the expectations of the 

parties in the contract dispute and the insurance contract itself, not the underlying 

litigation.45 The Court also looks to the factors set forth in Section 188 of the 

Restatement. Section 188 factors are meant to be considered in conjunction with the

factors set forth in Section 6.46

Liggett Group Incorporated v. Affiliated LM Insurance Company47 also 

involved an insurance dispute affecting consumers nationwide. This Court 

recognized that where nationwide liability claims are involved, there is no single 

principal location of the risks. 48 When evaluating the dispute, the Court has held that 

“the most significant factor for conflict of laws analysis in a complex insurance case 

with multiple insurers and multiple risks is the principal place of business of the 

43 Chemtura, 160 A.3d 457, at 464.

44 Id. at 466.

45Id. at 467 (“In analyzing the contacts relevant to determining the most significant relationship, 

we focus on the reality that this is a contract dispute and that the important purpose of fulfilling 

the justified expectations of the parties in contract disputes is best served by providing terms in the 

contract with a meaning that does not vary based on the happenstance of the locations of a 

particular claim.”).

46 Id. at 468. See Rest. (Second) Conflict of Laws §6 ((a) the needs of the interstate and international 

systems; (b) the relevant policies of the forum; (c) the relevant policies of other interested states 

and the relative interests of those states in the determination of the particular issue; (d) the 

protection of justified expectations; (e) the basic policies underlying the particular field of law; (f) 

certainty, predictability and uniformity of result, and (g) ease in the determination and application 

of the law to be applied.).

47 788 A.2d 134 (Del. Super. 2001).

48 Id. at 138.
19

insured because it is ‘the situs which link[s] all the parties together.’”

49

 Although 

this Court found that North Carolina had the most significant relationship to the 

transaction, no party argued that Delaware law should apply to the case.

Defendants argue that this action is not a traditional D&O insurance coverage 

dispute. Endurance alleges that the Endurance Policy is not a public company D&O 

policy, rather it is a private company management liability policy. Endurance 

attempts to distinguish Murdock from this action, arguing that Murdock pertains to 

claims against individual directors and officers for breach of their fiduciary duties 

resulting in harm to corporate shareholders, whereas the consumer fraud claims 

against Godiva originated from Godiva’s New York headquarters to impact 

consumers throughout the nation. National Union asserts that the Underlying Action 

does not include any allegations of an individual director’s or officer’s wrongdoing, 

or breach of fiduciary duty owed to a Delaware corporation.

The choice-of-law analysis in this instant action impacts two issues: 

disgorgement; and bad faith.

49 Id. (internal citations omitted).
20

Disgorgement/Restitution

Disgorgement is defined as "the act of giving up something (such as illegally 

obtained profits) on demand or by legal compulsion.”

51 New York courts opine that 

the purpose of disgorgement is “to deprive a party of ill-gotten gains and to deter 

improper conduct.”

52

Restitution occurs where a party is “restored to the position, he formerly 

occupied either by the return of something which he formerly had or by the receipt 

of its equivalent in money. Ordinarily, the measure of restitution is the amount of 

enrichment received....”53 “A person who has been unjustly enriched at the expense 

of another is required to make restitution to the other.”

54

 In order for the Court to 

order restitution, the Court must find that the Defendants were unjustly enriched.55

Under Delaware law, disgorgement may be insurable if permitted by statute. 

Losses are uninsurable as against public policy only if the legislature so provides.56 

Public policy is the domain of the General Assembly.57 This Court has declined to 

51 TIAA-CREF Individual & Institutional Servs., LLC v. Illinois Nat'l Ins. Co., 2016 WL 6534271, 

at *10 (Del. Super.)(internal citations omitted).

52 Id. at *10 (quoting Vigilant Ins. Co. v. Credit Suisse First Boston Corp., 2003 WL 24009803, 

at *4 (N.Y. Sup. Ct.).

53 Restatement (First) of Restitution § 1 (1937).

54 Restatement (First) of Restitution § 1 (1937).

55 Schock v. Nash, 732 A.2d 217, 232 (Del. 1999).

56 Sycamore Partners Mgmt., L.P. v. Endurance Am. Ins. Co., 2021 WL 761639, at *11 (Del. 

Super.).

57 Id. See also Murdock, 248 A.3d 887, at 905 (“[I]n the absence of clear guidance from the General 

Assembly to the contrary, we must reject RSUI's invitation to void its contractual obligations on 

public-policy grounds.).
21

legislate from the bench by applying “judicially fashioned policy limitations.”58

Thus, “the Court will not hold that restitution or disgorgement is uninsurable as a 

matter of Delaware public policy unless a Delaware statute commands it to do so.”

59

 

The parties have not identified any Delaware case law or Delaware statute 

articulating public policy regarding insurability of disgorgement.

Under New York law, disgorgement is not insurable if it results in ill-gotten 

gains retained by the insured.60 It is well established in New York that “one may not 

insure against the risk of being ordered to return money or property that has been 

wrongfully acquired. Such orders do not award ‘damages’ as that term is used in 

insurance policies.”61 In Reliance Group Holdings, Incorporated v. National Union 

Fire Insurance Company of Pittsburgh, PA, the Appellate Division for the New York 

Supreme Court reasoned that “the D & O policy covers corporate indemnification 

of directors and officers for their incurred liability, not the corporation's own 

liability.”

62

Defendants rely on J.P. Morgan Securities Incorporated v. Vigilant Insurance

Company, where the New York Court of Appeals held that the “policy rationale for 

58 Id.

59 Id.

60 Vigilant Ins. Co. v. Credit Suisse First Boston Corp., 782 N.Y.S.2d 19, 20 (App. Div. 2004).

61 Reliance Grp. Holdings, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 594 N.Y.S.2d 20,

24 N.Y. (N.Y. App. Div. 1993)(quoting Bank of the W. v. Superior Court, 833 P.2d 545, 553 

(Cal. 1992)).

62 Id. at *56 (emphasis in original).
22

precluding indemnity for disgorgement” is to prevent the “unjust enrichment of the 

insured by allowing it to, in effect, retain the ill-gotten gains by transferring the loss 

to its carrier.”

63

 However, the J.P. Morgan Court used this rationale to distinguish 

cases relied upon by the insurers where the “insured was barred from obtaining 

coverage for SEC-ordered disgorgement because the SEC's findings ‘conclusively 

link[ed]’ the disgorgement payment to improperly acquired funds in the hands of the 

insured.”64 J.P. Morgan involved regulatory proceedings for actions that resulted in 

“ill-gotten gains” and “improperly acquired funds.”

The J.P. Morgan dispute arose from the monetary settlement of an SEC 

proceeding and related litigation predicted on violation of federal securities laws. 

The J.P. Morgan insured settled and agreed to pay separate amounts specified as 

“disgorgement” and “civil penalty.” The insured sought indemnification from 

insurers, conceding that it is “reasonable to preclude an insured from obtaining 

indemnity for the disgorgement of its own ill-gotten gains.” The insured argued that

a portion of the disgorgement was not unjust enrichment because the portion was 

attributable to the profits of its customers.

In In re TIAA-CREF Insurance Appeals,

65 the Delaware Supreme Court held:

The New York cases upon which [the insurers] principally rely involve 

regulatory proceedings which resulted in settlements ordering the 

63 J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., 992 N.E.2d 1076, 1083 (N.Y. 2013).

64 Id.

65 192 A.3d 554 (Del. 2018)(internal citations omitted).
23

insured to pay disgorgement damages. It appears that the principle 

which emerges from these cases is that New York public policy 

prohibits enforcement of insurance agreements in cases involving 

disgorgement where the payment is conclusively linked, in some 

fashion, to improperly acquired funds in the hands of the insured. In 

this case, TIAA disputed and defended itself against the claims asserted 

in the class actions, repeatedly asserting that the procedures that 

resulted in TFE and its treatment were proper and lawful. No finding 

that the TFE was ill-gotten gain was made in any forum. Nor could one 

have been.... Under these circumstances, we conclude that the Superior 

Court was correct in distinguishing the New York cases barring 

insurability, which proscribe it in situations in which the insured's 

wrongdoing resulted in ill-gotten gains, and finding that TIAA 

established that New York's public policy against enforcing insurance 

agreements in cases of disgorgement does not apply to the facts of this 

case.66

The Settlement Agreement in the Underlying Action does not reference the 

terms “disgorgement” or “restitution.” Additionally, in the Settlement Agreement, 

Godiva explicitly “continu[es] to deny all allegations of wrong-doing,” “disclaim[s] 

all liability with respect to all claims,” and settles “without any admission or 

concession of liability or wrongdoing or the lack of merit of any defense whatsoever 

by Godiva.”

67

 There has been no order of disgorgement, no admission of 

wrongdoing, and no gain for personal profit or remuneration. Essentially, the 

Settlement Agreement represents the approximate difference in value, that is, the 

value of the product (if properly advertised) versus the value of the product as falsely

advertised.

66 In re TIAA-CREF Ins. Appeals, 2018 WL 3620873, at *2 (Del.).

67 Pl’s Ex. E ¶¶ 17-18.
24

The Court finds that the Settlement Agreement in the Underlying Action does

not involve disgorgement. Therefore, the Court need not resolve any choice-of-law 

conflict between New York and Delaware law on this issue.

Bad Faith

New York and Delaware laws differ as they pertain to bad faith claims.

Defendants rely on Fishberg v. State Farm Fire and Casualty Company, 

arguing that New York does not recognize an independent cause of action for bad 

faith denial of insurance coverage.68 Defendants further assert that Godiva’s claim 

is duplicative of its breach of contract claim because both claims are premised upon 

Endurance’s denial of coverage for Defense Costs and the Settlement in the 

Underlying Lawsuit.

Godiva contends that Defendants misapply Fishberg. Godiva argues that the 

full proposition recognized in Fishberg is that “except in cases where an insurance 

company refuses to defend or settle a claim brought by a third party against an 

insured, ‘New York law does not recognize an independent cause of action for bad 

faith denial of insurance coverage.’”

69

 Godiva asserts that Fishberg actually refused

to dismiss an insured’s separate cause of action for bad faith. Godiva further argues 

that the bad faith cause of action in this instant litigation should survive under New 

68 2021 WL 3077478, at *3 (S.D.N.Y.)

69 Id. (quoting Vitrano v. State Farm Ins. Co., 2008 WL 2696156, at *3 (S.D.N.Y.))(emphasis 

added).
25

York law because Defendants refused to defend or settle class action lawsuits 

brought by third parties against Godiva.

“New York law ... does not recognize a separate cause of action for breach of 

the implied covenant of good faith and fair dealing when a breach of contract claim, 

based upon the same facts, is also pled.”70 However, “New York courts do recognize 

that an insurance company's handling of a claim can give rise to a breach of the duty 

of good faith and fair dealing.”

71

Godiva contends that its bad faith claim is not entirely duplicative. Godiva 

argues the claim could be plead independently even in New York because it includes 

factual allegations of bad faith that are separate and distinct from its breach of 

contract claim. Godiva provides one example in the Complaint where Godiva

alleged that “Endurance violated its good-faith obligations by unreasonably denying 

defense cost reimbursement after Endurance acknowledged defense costs 

coverage.”72 

Defendants argue that the claim also must be dismissed under Delaware law. 

Defendants rely on Dunlap v. State Farm Fire & Casualty Company, where the 

Delaware Supreme Court found that “the implied covenant requires ‘a party in a 

contractual relationship to refrain from arbitrary or unreasonable conduct which has 

70 Id. (internal quotations omitted).

71 Id.

72 Compl. at ¶ 44.
26

the effect of preventing the other party to the contract from receiving the fruits of 

the bargain.”

73

 Defendants primarily assert that: (1) Godiva’s Complaint never 

alleges that Endurance exercised any measure of control over the underlying 

litigation; and (2) the Complaint makes no mention of conduct amounting to gross 

disregard on the part of Endurance, let alone a pattern of behavior.

Godiva contends that there is no conflict between Delaware and New York 

law, therefore Delaware law should apply. Godiva provides minimal citations to the 

record or judicial authority in response to Defendant’s arguments.

The Court finds that Godiva has failed to present facts supporting a separate 

and distinct cause of action for bad faith. Therefore, the Court finds that Godiva has 

failed to establish a prima facie case for bad faith failure to settle. Thus, it is 

irrelevant whether New York or Delaware law applies.

“Loss”

Under the Endurance Policy, “Loss,” is defined to mean:

The total amount the Insureds become legally obligated to pay on 

account of Claims made against them for Wrongful Acts for which 

coverage applies, including, but not limited to, damages (including 

punitive, exemplary or multiple damages), judgments, any awards of 

prejudgment and post-judgment interest with respect to covered 

damages, settlements, Defense Costs and civil money penalties 

assessed against an Insured pursuant to Section 2(g)(2)(B) of the 

Foreign Corrupt Practices Act, 15 U.S.C. §78dd-2(g)(2)(B) or for a 

violation of any other federal, state, local or foreign law if such law

violation is not knowing or willful.

73 878 A.2d 434, 442 (Del. 2005).
27

The Endurance Policy defines “Wrongful Act” to mean:

1. any error, misstatement, misleading statement, act, omission, 

neglect, or breach of duty actually or allegedly committed or 

attempted by any of the Insured Persons in their capacity as such. 

Or in an Outside Position, or with respect to Insuring Agreement 

C, by the Company, or

2. any matter claimed against the Insured Persons solely by reason of 

their serving in such capacity or in an Outside Position.

Defendants argue that Godiva did not allege facts sufficient to show that 

Godiva’s action were not knowing and willful. 

Godiva argues that coverage broadly encompasses both intentional and 

unintentional conduct. Godiva primarily relies on Charter Twp. of Shelby v. 

Argonaut Insurance Company, where the Michigan Court of Appeals held: “To 

contend...that the alleged wrongful acts are not covered under the policy because 

the claimants alleged ‘knowing, intentional, and purposeful acts’ that do not 

constitute ‘negligence, mistake or error’ is misplaced, as the policy does not limit 

the definition of wrongful acts to acts performed negligently or mistakenly.” 76 In 

Charter, the policy's definition of “wrongful act” included policy language that 

states, in pertinent part “any act, error or omission flowing from or originating out 

of [the activity].” 

76 2015 WL 9392727, at *8 (Mich. Ct. App.). See also Amos ex rel. Amos v. Campbell, 593 N.W.2d 

263, 266 (Minn. Ct. App. 1999)(“The term ‘wrongful act’ has ordinarily been understood to 

encompass intentional as well as negligent misconduct.”).
28

Godiva further contends that the “knowing or willful” language is 

inapplicable here because the case does not involve civil money penalties. 

Alternatively, Godiva argues that the civil money penalty is still an insurable “Loss” 

unless Defendants prove “knowing” or “willful” violation of false advertising laws.

To avoid coverage with regard to civil money penalties, there needs to be 

some evidence or admission that the violation of law was knowing or willful. 

Defendants have failed to present such evidence. The Endurance Policy language 

provides broad coverage. It covers settlement and many types of damages. The 

Court finds that the Settlement Agreement is a covered loss within the meaning of 

the term “Loss” as explicitly defined to include settlements in the Policy.

Exclusion IV.A.12.e (Unfair Trade Practices)

Exclusions IV.A.12.e—the Antitrust Exclusion—excludes claims

based upon, arising out of or attributable to an actual or alleged 

violation of the Sherman Anti-Trust Act, the Clayton Act or the Federal 

Trade Commission Act, as amended, or any other federal, state, local, 

common or foreign laws involving anti-trust, monopoly, price fixing, 

price discrimination, predatory pricing, restraint of trade, unfair trade 

practices or tortious interference with another’s actual or prospective 

business or contractual relationships or opportunities77

The issue is whether “unfair trade practices” includes consumer protection 

and false advertising. “Unfair trade practices” is not defined. No authority has been 

presented by either party specifically resolving this issue. Generally, consumer 

77 Pl.’s Ex. A p. 23 (emphasis added).
29

protection involves violations of statutes, regulations, and common law standards. 

The Endurance Policy does not explicitly exclude consumer protection actions from 

coverage.

Plaintiff relies on James River Insurance Company v. Rawlings Sporting 

Goods Company, Incorporated, where the United States District Court for the 

Central District of California found that “other than the ambiguous term ‘unfair trade 

practices,’ all of the excluding conduct identified in the Anti-Trust Exclusion refer[s]

to anti-competitive business practices and not to any conduct directed at 

consumers.”

78 The Rawlings court reasoned that the “Anti-Trust Exclusion similarly 

fails to mention anything – other than “unfair trade practices” – that would suggest 

consumer protection claims. The Court stated that it would be odd to include a 

consumer-protection component in an exclusion titled “Anti-Trust Exclusion”

without mentioning words such as “fraud” or “misrepresentation’” or “consumer 

protection.”

79

Defendants assert that the remaining counts in the Underlying Litigation

fundamentally establish a consumer fraud case. The underlying complaint alleges 

“misleading, false, unfair, and fraudulent” trade practices.82 Essentially, the 

78 2021 WL 346418, at *7 (C.D. Cal.).

79 Id.

82 Pl’s Ex. C ¶¶ 13, 14, 37, 54.
30

underlying complaint alleges that the product is mis-labeled—which Defendants

assert is deceptive— resulting in what Defendants characterize as “ill-gotten gains.” 

The Court questions whether unfair trade practices are the equivalent of 

consumer fraud. Defendant insurers have presented no authority demonstrating that 

these terms are interchangeable or legally equivalent.

Godiva argues that this litigation really involves statutory violations of 

consumer protection laws which do not trigger an exclusion. The alleged statutory 

violations are not classified as anti-competition or unfair trade practices. Godiva 

asserts that Exclusion IV.A.12.e is an Antitrust Exclusion focused on violation of 

anti-competition statute, which bears no relation to the Underlying Class Action—

which Godiva asserts is consumer protection based. Godiva further asserts that 

Exclusion IV.A.12.e is not an Unfair Trade Practices Exclusion as Defendants 

contend. 

The Court finds that the Settlement Agreement does not contain language 

specifically stating that the agreed “monetary relief” is for unfair trade practices. 

The Court has found that the broad definition of Loss results in a finding that the 

Settlement is covered. To the extent that some of the underlying statutory and 

regulatory allegations reasonably can be interpreted as relating to or governing 

unfair trade practices, it is possible that some the Settlement could be allocated to 

amounts subject to Exclusion IV.A.12.e. Endorsement One allocates costs for both 
31

covered and non-covered claims. The Court finds that this Exclusion does not apply 

to prevent coverage of the entire Settlement.

Exclusion IV.B.2 (Fines or Penalties)

Exclusion IV.B.2 (fines or penalties) provides that “Loss” does not include 

“fines or penalties imposed by law, other than civil money penalties expressly 

referenced in the definition of Loss above....”

Defendants assert that Exclusion IV.B.2 applies to exclude coverage because 

the Settlement constitutes “fines or penalties imposed by law,” which are not 

covered. However, Endurance conceded at oral argument that a genuine issue of 

material fact exists about whether the entire Settlement constitutes “penalties.” 

Endurance suggests that discovery is necessary to determine the portion of 

Settlement attributable to penalties.

Godiva contends that the Underlying Action alleges violations of state law as 

referenced in the definition of covered Loss. Godiva argues that the Settlement can 

only constitute a penalty if Defendants prove: (1) the Settlement actually constitutes 

a “penalty;” (2) Godiva committed a knowing or willful violation of state law, and 

(3) such willful violation of law has been established by a final and non-appealable 

judgment in the underlying Class Action or by a written admission under oath—

pursuant to Exclusion IV.A.6.
32

Godiva asserts that Exclusion IV.B.2 does not apply because the Settlement 

Agreement is not a penalty. Godiva relies on Delaware Bay Surgical Services, P.A. 

v. Swier, where the Delaware Supreme Court defined “penalty” as “a sum inserted 

into a contract that serves as a punishment for default, rather than a measure of 

compensation for its breach. In other words, it is an agreement to pay a stipulated 

sum upon breach, irrespective of the damage sustained.”

86

The Settlement Agreement uses the term “monetary relief,” not “damages,” 

“penalties,” or “restitution.” The Settlement Agreement does not specifically state 

that relief is for “civil money penalties assessed.” Defendants conceded at oral 

argument that not all statutes and regulations in the underlying complaint involved 

“penalties.” 

In the Settlement Agreement, Godiva did not acknowledge any knowing or 

willful violation of law. Godiva alleges that the Settlement Agreement represents 

the approximate difference between the price of the falsely-advertised product as 

sold, and the value of the product if there had been no false advertising. Godiva 

alleges that this amount is compensatory in nature, not punitive. 

Exclusion IV.A.6 provides: 

The Insurer shall not be liable under this Coverage Section for Loss on 

account of that portion of any Claim made against any Insured ... 

based upon, arising out of, or attributable to such Insured having 

86900 A.2d 646, 650 (Del. 2006).
33

gained any personal profit or remuneration to which such Insured was 

not legally entitled or having committed any deliberate fraud or willful 

violation of law, if a final and non-appealable judgment or adjudication 

adverse to such Insured in any proceeding not brought by the Insurer, 

or if a written admission under oath by such Insured, establishes that 

such Insured in fact gained any such personal profit or remuneration 

or committed such deliberate fraud or willful violation of law....

Godiva argues that there has been no final, non-appealable judgment or 

admission establishing a willful violation of law. Godiva relies on Gallup, 

Incorporated v. Greenwich Insurance Company.

88

 The Gallup plaintiff argued that 

a fraud/ill-gotten gains exclusions—which required final adjudication—did not 

apply because the settlement was not a final adjudication. The Gallup contract 

contained a similar exclusion to the Exclusion at issue in his case.

89

 This Court found 

that:

this provision shows that Defendant contemplated coverage for 

restitution and specifically decided that reimbursement for restitution 

would only be precluded upon a final adjudication that the money 

Plaintiff received was actually restitution. As the drafter of the Policy, 

Defendant could have precluded coverage of all settlements but it did 

not. Instead, Defendant drafted the Policy to explicitly include 

“settlements” under the definition of “Loss” subject to the Policy's other 

exclusions.

88 2015 WL 1201518 (Del. Super.).

89 Id. at *2. (The Gallup exclusions 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:

(1) 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 (‘Fraud/Ill–Gotten Gains Exclusion’)”).
34

Additionally, because Defendant drafted the Fraud/Ill–Gotten Gains 

Exclusion to require a final adjudication and Defendant has not 

received a final adjudication that the Settlement is for restitution, the 

Court need not decide whether or not public policy prevents 

reimbursement. If the Court were to find that the Settlement is not for 

restitution then the Settlement is covered under the definition of “Loss” 

under the terms of the Policy. Alternatively, if the Court were to find 

that the Settlement is for restitution, the Fraud/Ill–Gotten Gains 

Exclusion requires that there be a “final adjudication in the underlying

action or in a separate action or proceeding.” 90

The Court finds that the Settlement Agreement is not for “fines or penalties 

imposed by law.” Some portion of the Settlement may amount to “civil money 

penalties,” which are explicitly omitted from Exclusion IV.B.2. Therefore, the Court 

finds that Exclusion IV.B.2 does not apply to prevent coverage of the entire 

Settlement.

Implied Covenant of Good Faith and Fair Dealing

The implied covenant of good faith and fair dealing is inherent in all contracts. 

The purpose of the implied covenant of good faith and fair dealing is to fill 

unanticipated contractual gaps.91 The doctrine “operates only in that narrow band of 

cases where the contract as a whole speaks sufficiently to suggest an obligation and 

point to a result, but does not speak directly enough to provide an explicit answer.”92 

“Generally, a plaintiff cannot base a claim for breach of the implied covenant on 

90 Id. at *10.

91 Buck v. Viking Holding Mgmt. Co. LLC, 2021 WL 673459, at *5 (Del. Super.).

92 Airborne Health, Inc. v. Squid Soap, LP, 984 A.2d 126, 146 (Del. Ch. 2009).
35

conduct authorized by the terms of the agreement.”

93

 The implied covenant is 

properly used to fill gaps only when a contract truly is silent on the disputed issue.94 

Merely repeating the defendant's allegedly improper acts or omissions 

already the subject of a separate breach of contract claim is insufficient 

to support a claim for breach of the implied covenant of good faith and 

fair dealing. Where the contract specifically addresses the alleged 

misconduct, its terms will be applied, and an implied covenant claim 

will not stand. There cannot be a separate implied covenant claim 

involving the same conduct as the breach of contract claim.95

Godiva’s claim for breach of the covenant of good faith and fair dealing is 

premised on the denial of coverage. Godiva alleged that “Endurance violated its 

good-faith obligations by unreasonably denying defense cost reimbursement after 

Endurance acknowledged defense costs coverage.” Godiva concedes that some of 

the allegations are duplicative of its breach of contract claim.

The Court finds that the contract covers the subject matter at issue. Therefore, 

Godiva’s claim for breach of the implied covenant of good faith and fair dealing 

must be dismissed.

CONCLUSION

The Court finds that the Settlement is not disgorgement, therefore the Court 

need not conduct a choice-of-law analysis between New York and Delaware law. 

93Trumbull Radiologists, Inc. v. Premier Imaging Tri Holdings LLC, 2021 WL 5577249, at *5 

(Del. Super.) (citing Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 441 (Del. 2005)).

94 Buck, 2021 WL 673459, at *5.

95 Trumbull, 2021 WL 5577249, at *6.
36

Because the Settlement is not for a matter uninsurable as a matter of Delaware 

or New York law, Exclusion IV.B.6 (matters uninsurable under the law) cannot bar 

coverage.

The Court finds that Godiva has failed to present facts supporting a separate 

and distinct cause of action for bad faith. Therefore, the Court finds that Godiva has 

failed to establish a prima facie case for bad faith failure to settle, and that claim is

hereby dismissed.

The Court finds that the Settlement Agreement is a covered loss within the 

meaning of the term “Loss” as explicitly defined to include settlements in the Policy. 

The Court finds that Exclusion IV.A.12.e does not apply to prevent coverage 

of the entire Settlement. To the extent that some of the underlying statutory and 

regulatory allegations reasonably can be interpreted as relating to or governing 

unfair trade practices, it is possible that some the Settlement could be allocated as

costs for both covered and non-covered claims. 

The Court finds that the settlement is not for “fines or penalties imposed by 

law.” Some portion of the Settlement may amount to “civil money penalties,” which 

are explicitly omitted from Exclusion IV.B.2. Therefore, the Court finds that 

Exclusion IV.B.2 does not apply to prevent coverage of the entire Settlement.
37

The Court finds that the contract covers the subject matter at issue. Therefore, 

Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing is 

dismissed.

THEREFORE, Defendants’ Motions to Dismiss are hereby GRANTED IN 

PART and DENIED IN PART. The Parties’ Cross-Motions for Partial Summary 

Judgement are hereby GRANTED IN PART and DENIED IN PART.

IT IS SO ORDERED.

/s/ Mary M. Johnston

The Honorable Mary M. Johnston