IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

CVR REFINING, LP, et al., 

Plaintiffs,

 v. 

XL SPECIALTY INSURANCE COMPANY, et 

al.,

Defendants.

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) C.A. No. N21C-01-260 EMD CCLD

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Submitted: July 7, 2021

Decided: November 23, 2021

Upon Plaintiffs’ Motion for Partial Summary Judgment on Count I

GRANTED

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

Wilmington, Delaware, Robin L. Cohen, Esquire, Alexander M. Sugzda, Esquire, Cohen Ziffer 

Frenchman & McKenna, New York, New York. Attorneys for Plaintiffs CVR Refining, LP, CVR 

Refining GP, LLC, CVR Refining Holdings, LLC, CVR Energy, Inc. and David Lamp 

Herbert Beigel, Esquire, Law Offices of Herbert Beigel, Tucson, Arizona. Attorney for Plaintiffs 

Carl C. Icahn and Icahn Enterprises L.P.

Robert J. Katzenstein, Esquire, Smith Katzenstein & Jenkins LLP, Wilmington, Delaware, 

Leland H. Jones, Esquire, Chiara Tondi Resta, Esquire, Wiley Rein LLP, Washington, D.C. 

Attorneys for Defendant XL Specialty Insurance Company.

John C. Phillips, Jr., Esquire, David Bilson, Esquire, Phillips McLaughlin & Hall, P.A., 

Wilmington, Delaware, Michael P. Duffy, Esquire, Scarlett M. Rajbanshi, Esquire, Boston, 

Massachusetts. Attorneys for Defendant Twin City Fire Insurance Company.

John C. Phillips, Jr., Esquire, David Bilson, Esquire, Phillips McLaughlin & Hall, P.A., 

Wilmington, Delaware, Erica J. Kerstein, Esquire, Robinson & Cole LLP, New York, New 

York. Attorneys for Defendant Allianz Global Risk US Insurance Company.

John C. Phillips, Jr., Esquire, David Bilson, Esquire, Phillips McLaughlin & Hall, P.A., 

Wilmington, Delaware, Geoffrey W. Heineman, Esquire, Ropers Majeski, P.C. Attorneys for 

Defendant Argonaut Insurance Company.
2

DAVIS, J. 

I. INTRODUCTION

This insurance coverage dispute is assigned to the Complex Commercial Litigation 

Division of the Court. Plaintiffs CVR Refining, LP (“CVR Refining”), CVR Refining GP, LLC 

(the “General Partner”), CVR Refining Holdings, LLC (“CVR Holdings”), CVR Energy, Inc. 

(“CVR Energy”), Icahn Enterprises, LP (“IELP”), Carl. C. Icahn, and David L. Lamp 

(collectively, the “Insureds” or “Plaintiffs”) assert claims against Defendants XL Specialty 

Insurance Company (“XL”), Twin City Fire Insurance Company (“Twin City”), Allianz Global 

Risks US Insurance Company (“Allianz”), Argonaut Insurance Company (“Argonaut”), and 

Allied World National Assurance Company (“AWAC”) (collectively, the “Insurers”). 

Specifically, Plaintiffs allege that: (i) all the Insurers anticipatorily breached insurance policies

by denying defense costs coverage for Mr. Icahn, IELP and CVR Energy (“Count I”); (ii) all the 

Insurers anticipatorily breached the policy by denying coverage of Plaintiffs’ indemnity costs

(“Count II”); and (iii) the Insurers breached the implied covenant of good faith and fair dealing 

by refusing to cooperate with Plaintiffs prior to a mediation or to provide coverage for any 

settlement reached at that mediation (“Count III”). 

The Insurers moved to dismiss, or alternatively, to stay this action under McWane1(the 

“McWane Motion”). In addition, Plaintiffs moved for summary judgment on Count I of the 

Complaint (the “Partial SJ Motion”). The Court held a hearing on the McWane Motion and the 

Partial SJ Motion on July 7, 2021. After the hearing, the Court took both matters under 

advisement. On August 11, 2021, the Court issued a decision denying the McWane Motion.

For the reasons set forth below, the Court will GRANT the Partial SJ Motion. 

1 McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281 (Del. 1970).
3

II. RELEVANT FACTS

A. THE PARTIES

All five corporate plaintiffs are Delaware entities. CVR Refining is an oil refiner and 

marketer of transportation fuels organized as a limited partnership in Delaware.2 CVR 

Refining’s principal place of business is Texas.3 The General Partner is a Delaware LLC and is 

an indirectly wholly owned subsidiary of CVR Energy through CVR Holdings.4 The General 

Partner is the general partner of CVR Refining, and has direct responsibility for CVR Refining’s 

business and operation management.

5

 CVR Holdings is a Delaware LLC and is an indirectly 

wholly owned subsidiary of CVR Energy.6 CVR Energy is a Delaware corporation with its 

principal place of business in Texas.7 Finally, IELP is a Delaware limited partnership.8

There are two individual plaintiffs—Mr. Icahn and Mr. Lamp. Mr. Icahn served as the 

General Partner’s chairman from January 2013 to July 2018, as well as CVR Energy’s chairman

from June 2012 to July 2018.9 At all relevant times, Mr. Icahn, directly or indirectly, wholly 

owned the general partner of IELP and owned approximately 91% of IELP’s outstanding 

depositary units.10 Mr. Lamp has been a director of CVR Energy and the General Partner since 

January 2018.11 Since December 2017, Mr. Lamp has also been the president and CEO of both 

CVR Energy and the General Partner.12

2 Compl. ¶ 11. 

3

Id.

4

Id. ¶ 12. 

5

Id.

6

Id. ¶ 13. 

7

Id. ¶ 14. 

8

Id. ¶ 15. 

9

Id. ¶ 16. 

10 Id.

11 Id. ¶ 17.

12 Id.
4

The Defendants are all insurers. XL is a Delaware corporation with its principal place of 

business in Connecticut.13 XL is an insurance company licensed to do business in the state of 

Delaware.14 Twin City is an Indiana corporation with its principal place of business in 

Connecticut and is an insurance company licensed to do business in Delaware.15 Allianz and 

Argonaust are Illinois corporations and are licensed to do business in Delaware.16 Allianz has its 

principal place of business in Illinois.

17

 Argonaust has Texas as its principal place of business.18 

AWAC is a New Hampshire corporation with its principal place of business in New York and is 

an insurance company licensed to do business in Delaware, among other states.19

B. THE POLICIES20

XL issued Executive and Corporate Securities Liability Insurance ELU159007-18 (the 

“XL Primary Policy” or “Policy”) to CVR Energy.21

The Policy requires, in part, for XL to advance defense costs:

(C) Upon the written request of:

(1) the Company (or with respect to a Claim or Interview to which 

Insuring Agreements (A) or (D) apply, an Insured Person), the 

Insurer will advance Defense Expenses, no later than 60 days after 

the Insurer’s receipt of invoices and any additional information 

reasonably requested by the Insurer documenting such Defense 

Expenses, in excess of the applicable Retention, if any, before the 

disposition of the Claim, Interview or Investigation Demand for 

which this Policy provides coverage; or

(2) an Insured Person with respect to a Claim or Interview to which 

Insuring Agreements (B) or (C) apply (or would apply but for the 

13 Id. ¶ 18. 

14 Id.

15 Id. ¶ 19. 

16 Id. ¶¶ 20 and 21.

17 Id. ¶ 20.

18 Id. ¶ 21. 

19 Id. ¶ 22. 

20 The Policies are not directly at issue in the McWane Motion. The Court is discussing the Policies in depth to 

provide context as to the coverage dispute between Plaintiffs and the Insurers.

21 Id. ¶ 26. 
5

Company’s failure or refusal to pay Defense Expenses on behalf of 

such Insured Person), solely in the event that the Company fails or 

refuses to indemnify the Insured Person for Defense Expenses 

within 60 days of a written request of the Insured Person, the Insurer 

will advance Defense Expenses on a current basis, but not later than 

60 days, after the Insurer’s receipt of invoices and any additional 

information reasonably requested by the Insurer documenting such 

Defense Expenses, in excess of the applicable Retention, before the

disposition of the Claim or Interview for which this Policy provides 

coverage, subject in all events to Section VI. General Condition (G) 

of this Policy.22

The Policy sets out the Limit of Liability:

Item 3. Limit of Liability:23

(A) $1,000,000 Maximum Aggregate Sublimit of Liability each Policy 

Period for all Investigation Demands

(B) $10,000,000 Maximum Aggregate Limit of Liability each Policy Period

(including Defense Expenses) for all Loss from all Claims, 

Investigation Demands, and Interviews.

24

The Policy also specifies the Retentions:

Item 4. Retentions:

$0 Each Insured Person under INSURING AGREEMENT I (A) or 

(D)

$1,000,000 each Claim, other than a Securities Claim, under INSURING 

AGREEMENT I (B) or (C). 

$1,000,000 each Securities Claim under INSURING AGREEMENT I (B) or 

(C)

$0 each Investigation Demand under INSURING AGREEMENT I 

(F)25

22 Bourne Decl. Ex. 1 (hereinafter “XL Primary Policy”) Endorsement No. 26.

23 Words in bold appear in bold in the XL Primary Policy.

24 Id. Item 3.

25 Id. Item 4. 
6

Under the XL Primary Policy, XL provided $10 million in coverage in excess of a $1 

million retention. Endorsement No. 23, however, provides a higher retention limit for claims 

arising from mergers and acquisitions:

. . . solely with respect to any Claim based upon, arising out of, directly or indirectly 

resulting from, in consequence of, or in any way involving any: (a) acquisition, 

assumption, merger, consolidation or otherwise of any entity, asset, Subsidiary or 

liability described in Section VI General Conditions (D)(1) and (2); or (b) Change 

in Control, Item 4 of the Declarations is amended to read in its entirety as follows:

Item 4. Retentions

$0 each Insured Person under Insuring Agreement I (A) or (D)

$2,500,000 each Claim, other than Securities Claim, under INSURING 

AGREEMENT I (B) OR (E)

$2,500,00 each Securities Claim under INSURING AGREEMENT I (B) OR 

(C)

$0 each Investigation Demand under INSURING AGREEMENT I 

(F)26

Endorsement 23 is entitled “Mergers & Acquisitions Endorsement” and is augmented by Section 

VI(D) of the Policy.

Section VI General Conditions (D) is titled “Mergers and Acquisitions (Changes in 

Exposure or Control)” Section VI(D), in relevant part, provides: 

(1) If during the Policy Period the Company acquires any entity by merger, 

consolidation or otherwise such that the entity becomes a Subsidiary, 

coverage shall be provided for any Loss involving a Claim, Interview or 

Investigation Demand for a Wrongful Act occurring after the 

consummation of the transaction. 

(2) If, however, by reason of the transaction (or series of transactions) described 

in (D)(1) above, the assets or liabilities so acquired or so assumed as a result 

of such acquisition, exceed forty percent (40%) of the total assets or 

liabilities, respectively, of the Company, as represented in the Company's 

most recent audited consolidated financial statements, coverage under this 

Policy shall be provided for a period of ninety (90) days or to the Expiration 

Date, whichever occurs first, for any Loss involving a Claim, Interview or 

Investigation Demand for a Wrongful Act that occurred after the transaction 

26 Id. Endorsement No. 23. 
7

has been consummated. Coverage beyond such period will be provided only 

if: 

(a) the Insurer receives written notice containing full details of the 

transaction(s); and 

(b) the Insurer at its sole discretion, agrees to provide such additional 

coverage upon such terms, conditions, limitations, and additional 

premium that it deems appropriate.27

Sections VI(D)(1) and (2) seems to relate to those situations where the originally anticipated risk 

of loss is greater due to a merger or acquisition and, therefore, the retention gets adjusted 

upward.

There are three potentially applicable Insuring Agreements:

(A) The Insurer shall pay on behalf of the Insured Persons Loss resulting from 

a Claim first made against the Insured Person during the Policy Period

for a Wrongful Act, except for Loss which the Company is permitted or 

required to pay on behalf of the Insured Persons as indemnification.

(B) The Insurer shall pay on behalf of the Company Loss resulting from a 

Claim first made against the Insured Persons during the Policy Period for 

a Wrongful Act to the extent the Company is required or permitted to pay 

on behalf of the Insured Persons as indemnification.

(C) The Insurer shall pay on behalf of the Company Loss resulting solely from 

any Securities Claim first made against the Company during the Policy 

Period for a Wrongful Act.

...28

“Loss” is a defined term:

“Loss” means damages, judgments, settlements, pre-judgment and post-judgment 

interest or other amounts (including punitive, exemplary or multiplied damages, 

where insurable by law) that any Insured is legally obligated to pay and Defense 

Expenses, including that portion of any settlement which represents the claimant’s 

attorneys’ fees.29

The definition of Loss also has certain exclusions:

27 Id. § VI(D)(1) and (2). 

28 Id. § I. 

29 Id. § II(O).
8

. . . Loss will not include that portion which constitutes:

(3) any amount which is uninsurable under the law pursuant to which 

this Policy is construed; provided that the Insurer will not assert that 

the portion of any settlement or judgment in a Claim arising from 

an initial or subsequent public offering of the Company’s securities 

constitutes uninsurable loss due to the alleged violations of Section 

11 and/or 12 of the Securities Act of 1933 as amended (including 

alleged violations of Section 11 and/or 12 of the Securities Act of 

1933 by a Controlling Person pursuant to Section 15 of the 

Securities Act of 1933);

. . . 

(5) any amount which represents or is substantially equivalent to an 

increase in the consideration paid, or proposed to be paid, by the 

Company in connection with its purchase of any securities or assets 

of any person, group of persons, or entity

. . .

30

“Defense Expenses” are defined as:

“Defense Expenses” means reasonable and necessary legal fees, expenses and 

other costs (including experts’ fees):

(1) Incurred in the investigation, adjustment, settlement, defense and/or appeal 

of any Claim . . .

31

“Claim” is defined under Endorsement 25:

Section II Definitions (C)(2) of the Policy is amended to read in its entirety as 

follows:

(2) any civil, criminal, judicial, administrative or regulatory proceeding 

commenced by:

(a) service of a complaint or similar pleading;

. . .

32

“Securities Claim,” by contrast, is defined:

30 Id. §§ II(O)(3) and II(O)(5).

31 Id. § II(F)(1). 

32 Id. Endorsement No. 25 (Amend Definition of Claim). 
9

“Securities Claim” means a Claim, other than an administrative or regulatory 

proceeding against or investigation of the Company:

(1) made against an Insured for any actual or alleged violation of any federal, 

state or local statute, regulation, or rule or common law regulating securities, 

including but not limited to the purchase or sale of, or offer to purchase or sell, 

securities, which is:

(a) brought by any person or entity resulting from, the purchase or sale 

of, or offer to purchase or sell securities of the Company; or

(b) brought by a security holder of the Company with respect to such 

security holder’s interest in securities of the Company.

. . . 

33

 

Endorsement No. 42 amends the definition of “Securities Claim”:

“. . .‘Securities Claim,’ as defined in Section II Definitions (S) of the Policy, is 

amended to include any Claim, other than an administrative or regulatory 

proceeding against or investigation of the Company, made against any Insured for 

any actual or alleged act, error, omission, misstatement, misleading statement or 

breach of duty arising from or in connection with the purchase or sale of, or offer 

to purchase or sell any securities issued by the Company, whether such purchase, 

sale or offer involves a transaction with the Company or occurs in the open 

market.34

“Insured” means the Insured Persons and the Company.

35

“Insured Person” is defined:

“Insured Person” means:

(1) any past, present or future natural person director or officer, or member or 

manager of the board of managers, of the Company and those persons 

serving in a functionally equivalent role for the Parent Company or any 

Subsidiary operating or incorporated outside the United States.36

Endorsement No. 46 further amends the definition of “Insured Person”:

33 Id. § II(S)(1).

34 Id. Endorsement No. 42. 

35 Id. § II(I).

36 Id. § II(J).
10

(2) any past, present or future natural person employee or intern of the 

Company (other than an individual described in (J)(1) above) to the extent 

any Claim is: (a) a Securities Claim, or (b) made and maintained against 

both such employee and an Insured Person as defined in (J)(1) above;”37

Endorsement No. 23 of the Policy increased the retention to $2.5 million for claims 

related to Mergers and Acquisitions.

“Company” is defined:

“Company” means the Parent Company and any Subsidiary created or acquired 

on or before the Inception Date set forth in ITEM 2 of the Declarations or during 

the Policy Period, subject to GENERAL CONDITIONS VI (D). The term 

Company shall include any such entity as a debtor in possession, as such term is 

used in Chapter 11 of the United States Bankruptcy Code or any equivalent 

provision in any foreign jurisdiction.38

“Parent Company” means the entity named in ITEM 1 of the Declarations.39

ITEM 1 names CVR Energy as the Company.40

“Subsidiary” is defined:

“Subsidiary” means any entity during any time in which the Parent Company

holds directly or indirectly:

(1) more than fifty percent (50%) of the voting rights or issued share capital of 

such entity.

. . .

41

“Wrongful Act” means: 

(1) any actual or alleged act, error, omission, misstatement, misleading 

statement, neglect, or breach of duty by an Insured Person while acting in 

his or her capacity as such or due to his or her status as such;

. . . 

37 Id. Endorsement No. 46. 

38 Id. § II(D). 

39 Id. § II(Q).

40 Id. Item 1. 

41 Id. § II(T). 
11

(3) solely with respect to Insuring Agreement (C) of the Policy, any actual or 

alleged act, error, omission, misstatement, misleading statement, neglect, or 

breach of duty by the Company;

. . .

42

The XL Primary Policy also contains an allocation provision:

If both Loss covered by this Policy and loss not covered by this Policy are incurred, 

either because a Claim, Interview or Investigation Demand made against the 

Insured contains both covered and uncovered matters, or because a Claim, 

Interview or Investigation Demand is made against both the Insured and others 

(including the Company for Claims other than Securities Claims) not insured 

under this Policy, the Insured and the Insurer will use their best efforts to determine 

a fair and appropriate allocation of Loss between that portion of Loss that is 

covered under this Policy and that portion of loss that is not covered under this 

Policy. Additionally, the Insured and the Insurer agree that in determining a fair 

and appropriate allocation of Loss, the parties will take into account the relative 

legal and financial exposures of, and relative benefits obtained in connection with 

the defense and/or settlement of the Claim, Interview or Investigation Demand

by, the Insured and others.43

Twin City, Allianz, Argonaut and AWAC issued excess insurance policies (collectively

with XL Primary Policy, the “Policies”) creating an insurance coverage tower.44 The Policies 

follow form to the XL Primary Policy.45 

C. THE UNDERLYING ACTIONS46

The coverage dispute between Plaintiffs and the Insureds arises out of two putative class 

action lawsuits. Certain plaintiffs filed a lawsuit against CVR Refining in the Court of 

Chancery, In re CVR Refining, LP Unitholder Litigation, No. 2019-0062-KSJM (the “Delaware 

Litigation”).

47

 In addition, certain other plaintiffs initiated a lawsuit in the Southern District of 

New York, White Pine Investments v. CVR Refining, LP, No. 1:20-cv-02863 (the “White Pine 

42 Id. § II(U). 

43 Id. § V(D). 

44 See Compl. ¶¶ 41-44.

45 See id.; see also Bourne Decl. Exs. 2-5. 

46 The complaints in the Underlying Actions have been provided to the Court. See Compl. Ex. F, and Bourne Decl. 

Exs. 6 and 7.

47 Compl. Ex. F
12

Action”) (collectively, the “Underlying Actions”).48 The factual allegations of both lawsuits are 

substantially similar.49 The Underlying Actions contend that Plaintiffs, acting through various 

entities, improperly used a call right in CVR Refining’s limited partnership agreement to buy out 

CVR Refining’s public common unit holders.50 The Delaware Litigation plaintiffs alleged that 

CVR manipulated the price of CVR Refining’s stock to enable CVR Energy to call the plaintiffs’ 

common units at an artificially depressed price.51 The plaintiffs in the Underlying Actions are 

not parties to this civil proceeding. 

The Delaware Litigation complaint names CVR Energy, CVR Refining, CVR Holdings, 

the General Partner, and Mr. Icahn and various individual directors and officers.52 The Delaware 

Litigation alleges breach of contract against the CVR entities, breach of the implied covenant of 

good faith and fair dealing against the CVR entities, and tortious interference against CVR 

Energy and Mr. Icahn.53

The White Pine Action complaint names as defendants CVR Energy, CVR Refining, 

CVR Holdings, the General Partner, IELP, and Mr. Lamp.54 The White Pine Action alleges 

violations of Section 10(b) of the Exchange Act and Rule 10b-5; and Section 20(a) of the 

Exchange Act.55 

The Court has reviewed the Underlying Actions’ complaints. The Court notes that the 

complained of transaction involves the purchase of CVR Refining’s own common units through 

a multi-step process involving exchange offers, call rights, etc. The transaction does not involve 

48 See id. ¶ 45. According to Plaintiffs, the White Pine Action has been voluntarily dismissed without prejudice. See

Partial SJ Mot. Reply Br. at 1, fn. 2.

49 Id. 

50 See, e.g., Ex. 6 ¶¶ 1-12.

51 Id. ¶ 46.

52 Id. ¶ 51. 

53 Id. ¶ 52. 

54 Id. ¶ 53. 

55 Id. ¶ 54. 
13

the purchase of any entity or the consolidation of an entity into CVR Refining. The Underlying 

Actions contend that Plaintiffs improperly obtained the units at a depressed price. 

Plaintiffs gave notice of the Underlying Actions to the Insurers.56 On March 25, 2019, 

XL contacted CVR Energy regarding coverage.57 XL stated the Delaware Litigation constituted 

a Claim against Insured Persons for Wrongful Acts and constituted a Securities Claim against 

CVR Energy, CVR Refining, CVR Holdings and the General Partner.58 XL denied coverage as 

to Mr. Icahn and IELP.59

D. THE INSURERS DENY COVERAGE.

Mediation for the Delaware Litigation was scheduled for February 17, 2021.60 

On January 8, 2021, XL sent a letter to CVR Energy, noting that coverage may not be 

available in the Delaware Litigation.61 First, XL argued that the “relief sought in the Litigation 

may not constitute covered Loss” because (1) the damages are based solely on contractual 

obligations, (2) it is “any amount which represents or is substantially equivalent to an increase in 

the consideration paid, or proposed to be paid, by the Company in connection with its purchase 

of securities or assets of any person, group of persons, or entity,” and (3) the amount may be 

uninsurable under Texas law.62 Furthermore, XL took the position that coverage was 

unavailable for IEP and Mr. Icahn because IELP was not an Insured and that Mr. Icahn was not 

being sued in his capacity as an Insured Person.

63

 

56 Id. ¶ 55. 

57 Id. ¶ 56. 

58 Id.

59 Id.

60 Id. ¶ 57. 

61 McWane Mot. Reply Br. Ex. K (January 8 XL Letter). 

62 Id.

63 Id.
14

On January 15, 2021, CVR Energy responded, setting out its position on why there was 

coverage under the Policies.

64

 CVR requested that XL confirm by February 3, 2021 that XL 

“will provide coverage for any settlement reached at mediation...scheduled for February 17, 

2021.”

65

 Instead of responding to the January 15, 2021 letter, the Insurers filed suit in Texas.

E. PROCEDURAL POSTURE

The Insurers filed a petition in Texas District Court on January 27, 2021 (the “Texas 

Action”).66 The Insureds then filed the Complaint in this litigation on January 30, 2021 seeking 

recovery for (1) Count I—anticipatory breach of contract regarding the Insurers’ denial of 

coverage for defense costs to Mr. Icahn, IELP, and CVR Energy; (2) Count II—anticipatory 

breach of contract for denying indemnity costs (Count II); and (3) Count III—breach of the 

implied covenant of good faith and fair dealing (Count III).

67

 

The Insureds moved for partial summary judgment on Count I—XL’s duty to advance 

defense costs on March 12, 2021.68 The Insureds are only moving on Count I as to CVR 

Refining, the General Partner, CVR Holdings, CVR Energy, and Mr. Lamp. The Insureds are 

not, currently, moving for summary judgment as to IELP and Mr. Icahn. The Insurers oppose 

partial summary judgment. The Court held a hearing on the Partial SJ Motion on July 7, 2021. 

At the conclusion of the hearing, the Court took the Partial SJ Motion under advisement. 

III. PARTIES’ CONTENTIONS

The Insureds argue that the Underlying Actions are covered claims subject to a $1 million 

retention under Endorsement No. 26 of the XL Primary Policy. The Insureds also claim that 

64 McWane Mot. Op. Br. at 9.

65 McWane Mot. Reply Br. Ex. L (January 15 CVR Letter)

66 McWane Mot. Op. Br. Ex. A (Insurers’ Texas Petition).

67 D.I. No. 1. 

68 D.I. No. 24. 
15

Endorsement No. 23 of the XL Primary Policy, which provides for a $2.5 million retention, does 

not apply because it is subject to Section VI General Conditions (D)(1) and (2). Therefore, the 

Insurers contend that the Insurers owe a duty to defend the Insureds under the plain language of 

the contract. 

The Insurers oppose the relief sought. The Insurers argue that the Partial SJ Motion is 

not based on a pleaded claim and, therefore, should be dismissed without prejudice. The Insurers 

also contend that Endorsement No. 23 of the XL Primary Policy applies to the Underlying 

Actions so the applicable retention is $2.5 million. The Insurers assert that Endorsement No. 23 

is not subject to Section VI General Conditions (D)(1) and (2) because, otherwise, the 

endorsement would be meaningless. 

IV. STANDARD OF REVIEW

The Court will grant summary judgment if, after viewing the record in a light most 

favorable to the non-moving party, no genuine issues of material fact exist and the movant is 

entitled to judgment as a matter of law.69 In ruling on a summary judgment motion, the Court (i) 

construes the record in the light most favorable to the non-moving party;70 (ii) detects, but does 

not decide, genuine issues of material fact;71 and (iii) denies the motion if a material fact is in 

dispute.72 The movant bears the initial burden of demonstrating its motion is supported by 

undisputed material facts.73 If that burden is met, the non-movant must show there are material 

issues of fact to be resolved by a fact-finder.74

69 Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99-100 (Del. 1992); see Del. Super. Civ. R. 56.

70 Judah v. Del. Tr. Co., 378 A.2d 624, 632 (Del. 1977).

71 Merrill, 606 A.2d at 99.

72 Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962).

73 Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).

74 Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
16

Although Summary judgment is “encouraged when possible;”75 however, there is no 

“right” to summary judgment.76 The Court may deny summary judgment if the Court is not 

reasonably certain that there is no triable fact issue.77 The Court may deny summary judgment if 

the Court concludes a more thorough inquiry into, or development of, the facts, would clarify the 

law or its application.78 

V. DISCUSSION

The parties do not contest choice of law in their papers. Although the factual record is 

not fully developed on choice of law, there is a very good chance that Delaware law will apply to 

the Policies.79 Insurance policies are contracts.80 The interpretation of contractual language, 

including in insurance policies, “is a question of law.”81 The principles governing the 

interpretation of an insurance contract are well-settled. In attempting to resolve a dispute over 

the proper interpretation of an insurance policy, “a court should first seek to determine the 

parties’ intent from the language of the insurance contract itself.”82 In reviewing the terms of an 

75 AeroGlobal Cap. Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 443 (Del. 2005); see Unbound Partners Ltd. 

P’ship v. Invoy Holdings Inc., 2021 WL 1016442, at *4 (Del. Super. Mar. 17, 2021) (“[A] matter should be disposed 

of by summary judgment whenever . . . a trial is unnecessary.” (internal quotation marks omitted) (quoting Jeffries v. 

Kent Cty. Vocational Tech. Sch. Dist. Bd. of Educ., 743 A.2d 675, 677 (Del. Super. Ct. 1999))).

76 Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002) (internal quotation marks and citation omitted).

77 Cross v. Hair, 258 A.2d 277, 278 (Del. 1969).

78 Alexander Indus., Inc. v. Hill, 211 A.2d 917, 918-19 (Del. 1965); see Cerberus Int’l, Ltd. v. Apollo Mgmt., L.P., 

794 A.2d 1141, 1150 (Del. 2002) (“The trial court may deny summary judgment in a case where there is reason to 

believe that the better course would be to proceed to a full trial.” (cleaned up)).

79 See RSUI Indem. Co. v. Murdock, 248 A.3d 887, 896-901 (Del. 2021).

80 Northrop Grumman Innovation Sys., Inc. v. Zurich Am. Ins. Co., 2021 WL 347015, at *7 (Del. Super. Feb. 2, 

2021) (citation omitted).

81 O’Brien v. Progressive N. Ins. Co., 785 A.2d 281, 286 (Del. 2001); see Eagle Force Holdings, LLC v. Campbell, 

187 A.3d 1209, 1232 (Del. 2018) (“Whether [a] contract’s material terms are sufficiently definite [is] mostly, if not 

entirely, a question of law.” (citation omitted)); Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 

1262, 1232 (Del. 2017) (same).

82 Alstrin v. St. Paul Mercury Ins. Co., 179 F. Supp. 2d 376, 388 (D. Del. 2002); see also Emmons v. Hartford 

Underwriters Ins. Co., 697 A.2d 742, 745 (Del. 1997) (“The scope of an insurance policy's coverage . . . is 

prescribed by the language of the policy.”) (citing Rhone–Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 

A.2d 1192, 1195–96 (Del. 1992); Playtex FP, Inc. v. Columbia Cas. Co., 622 A.2d 1074, 1076–77 (Del. Super. 

1992) (citing E.I. du Pont de Nemours & Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985)); Kaiser 

Aluminum Corp. v. Matheson, 681 A.2d 392, 395 (Del. 1996).
17

insurance policy, the Court considers “the reasonable expectations of the insured at the time of 

entering into the contract to see if the policy terms are ambiguous or conflicting, contain a 

hidden trap or pitfall, or if the fine print takes away that which has been provided by the large 

print.”83 Ambiguity exists when the disputed term “is fairly or reasonably susceptible to more 

than one meaning.”84 Absent any ambiguity, contract terms should be accorded their plain, 

ordinary meaning.85 If an insurance policy contains an ambiguous term, then the policy is to be 

construed in favor of the insured to further the contract’s purpose and against the insurer, as the 

insurer drafts the policy and controls coverage.86

In Delaware, “[i]t is well settled that an insurer’s duty to defend is broader than its duty to 

indemnify.”87 “The duty to defend is determined by comparing the allegations contained in the 

underlying complaint with the terms of the policy.”88 If there is a possibility that “the underlying 

complaint, read as a whole, alleges a risk within the coverage of the policy,” then the insured 

owes a duty to defend.89

To determine if an insurer has a duty to defend an action against its insured, a court

should use the following principles: 

83 E.I. du Pont de Nemours & Co. v. Admiral Ins. Co., 1996 WL 111205, at *2 (Del. Super. Jan. 30, 1996) (citation 

omitted); see Steigler v. Ins. Co. of N. Am., 384 A.2d 398, 401 (Del. 1978) (“[A]n insurance contract should be read 

to accord with the reasonable expectations of the purchaser so far as the language will permit.”) (quoting State Farm 

Mut. Auto. Ins. Co. v. Johnson, 320 A.2d 345, 345 (Del. 1974) (internal quotation marks omitted)).

84 Alta Berkeley VIC. V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).

85 See id.; see also Goggin v. Nat'l Union Fire Ins. Co. of Pittsburgh, 2018 WL 6266195, at *4 (Del. Super. Nov. 30, 

2018); IDT Corp. v. U.S. Specialty Ins. Co., 2019 WL 413694, at *7 (Del. Super. Jan. 31, 2019).

86 See Alstrin, 179 F. Supp. 2d at 390 (“Generally speaking, however, Delaware . . . courts continue to strictly 

construe ambiguities within insurance contracts against the insurer and in favor of the insured in situations where the 

insurer drafted the language that is being interpreted regardless of whether the insured is a large sophisticated 

company.”) (citations omitted); Nat’l Union Fire Ins. Co. v. Rhone–Poulenc Basic Chems. Co., 1992 WL 22690, at 

*8 (Del. Super. Jan. 16, 1992) (“Application of the [contra proferentem] doctrine turns not on the size or 

sophistication of the insured, but rather on the fact that the policy language at issue is drafted by the insurer and is 

not negotiated.” (citation omitted)).

87 Rhone-Poulenc, 1992 WL 22690 at *5. 

88 Id.

89 Id. 
18

(a) where there exists some doubt as to whether the complaint against the insured 

alleges a risk insured against, that doubt should be resolved in favor of the insured;

(b) any ambiguity in the pleadings should be resolved against the carrier; and 

(c) if even one count or theory of plaintiff’s complaint lies within the coverage of 

the policy, the duty to defend arises.90

In Delaware, the insurer’s duty to defend an insured arises as soon as the allegations of 

the underlying complaint “show a potential that liability within coverage will be established.”91 

An insurer then can be excused from its duty to defend only if it can be determined as a matter of 

law that there is no possible factual or legal basis upon which the insurer might eventually be 

obligated to indemnify the insured.”92 Therefore, an insurer must show that the allegations of the 

underlying complaint are “solely and entirely within specific and unambiguous exclusions from 

coverage.”93 

A. THE SJ MOTION IS NOT PROCEDURALLY DEFICIENT BECAUSE THE MOTION RELATES TO 

A PLEADED CLAIM. 

The Insurers argue that the Partial SJ Motion is procedurally deficient because it is based 

on a claim not pleaded in the plaintiff’s complaint.94 Count I is cause of action for anticipatory 

breach of contract regarding the Policy’s duty to defend. The Insureds allege that their claim 

under the policy relating to the Underlying Actions constitutes a cover claim implicating 

indemnification for “Defense Expenses.”95 The Insureds contend that no “conditions, 

exclusions, or provisions of the [Policy] bar coverage for any Defense Expenses relating to the 

Underlying Actions.”96

90 Continental Casualty Co. v. Alexis I. du Pont School Dist., 317 A.2d 101, 105 (Del. 1974). 

91 Rhone-Poulenc, 1992 WL 22690 at *7. 

92 Id.

93 Id. (quoting Avondale Indus., Inc. v. The Travelers Indem. Co., 887 F.2d 1200, 1204 (2d Cir. 1989)). 

94 Partial SJ Mot. Answer. Br. 12. 

95 Compl. ¶ 64,

96 Id. ¶ 67.
19

“The function of pleading is to give notice.”97 The Court’s rules “encourage notice 

pleading and do not require pleading of technical exactitude.”98 The Insurers claim that the 

Partial SJ Motion requires the Court to rule on an unpled claim, i.e., that Endorsement No. 23 

does not apply to the claims based on the Underlying Actions, and therefore a $1 million 

retention applies. 

The Partial SJ Motion, however, is based on the claim that the Insurers must advance 

defense costs.99 The Complaint alleges that no provisions of the Policy bar coverage for defense 

costs. Endorsement No. 23 is a provision of the Policy. XL raised the retention issue by 

claiming it applies so that XL does not have to advance defense costs. XL also claimed that the 

$2.5 million retention applied on March 25, 2019.100 Therefore, XL had notice that Endorsement 

No. 23’s applicability would be an issue when determining its liabilities under the XL Primary 

Policy. The Court finds that the Partial SJ Motion is not procedurally deficient.

B. THE POLICY IS NOT AMBIGUOUS, AND THE INSUREDS ARE ENTITLED TO SUMMARY 

JUDGMENT ON COUNT I AS TO THE DUTY TO DEFEND.

Whether Endorsement No. 23 applies is a question of contract interpretation. A threshold 

inquiry, however, when presented with a contract dispute on a motion for summary judgment is 

whether the contract is ambiguous.101 “[W]here reasonable minds could differ as to the 

contract’s meaning, a factual dispute results and the fact-finder must consider admissible 

extrinsic evidence.” 102 Ambiguity exists “when the provisions in controversy are fairly 

97 Mut. Ben. Life Ins. Co. of Newark, N.J. v. Bailey, 190 A.2d 757, 760 (Del. 1963). 

98 Deluca v. Martelli, 200 A.2d 825, 828 (Del. Super. 1964). 

99 Partial SJ Mot. Op. Br. 14. 

100 Bourne Decl. Ex. 8. 

101 United Rentals, Inc. v. RAM Holdings, Inc., 937 A.2d 810, 830 (Del.Ch. 2007).

102 GMC Capital Invest., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783 (Del. 2012); see also Eagle 

Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997) (reversing a grant of summary 

judgment where two parties had conflicting but reasonable interpretations of a contract’s indemnification provision 

and extrinsic evidence was needed to resolve the dispute). 
20

susceptible to different interpretations or may have two different meanings.”103 In these cases, 

summary judgment is improper because the Court must look to extrinsic evidence to resolve the 

interpretation dispute.104 The Court does not find Endorsement No. 23 to be ambiguous.

The parties disagree whether Endorsement No. 23 applies to the claims related to the 

Underlying Actions. Endorsement No. 23 provides for a $2.5 million retention limit:

. . . solely with respect to any Claim based upon, arising out of, directly or indirectly 

resulting from, in consequence of, or in any way involving any: (a) acquisition, 

assumption, merger, consolidation or otherwise of any entity, asset, Subsidiary or 

liability described in Section VI General Conditions (D)(1) and (2); or (b) Change 

in Control, Item 4 of the Declarations is amended to read in its entirety as follows:

Item 4. Retentions

$0 each Insured Person under Insuring Agreement I (A) or (D)

$2,500,000 each Claim, other than Securities Claim, under INSURING 

AGREEMENT I (B) OR (E)

$2,500,00 each Securities Claim under INSURING AGREEMENT I (B) OR 

(C)

$0 each Investigation Demand under INSURING AGREEMENT I 

(F)105

Subsection (a) involves a situation where the Insured increases the risk of loss through a 

merger or acquisition. Section VI General Conditions (D)(1) provides:

(1) If during the Policy Period the Company acquires any entity by merger, 

consolidation or otherwise such that the entity becomes a Subsidiary, 

coverage shall be provided for any Loss involving a Claim, Interview or 

Investigation Demand for a Wrongful Act occurring after the 

consummation of the transaction.106

Section VI General Conditions (D)(2) provides for the same type of transaction but one that 

results in the acquired assets or liabilities exceeding 40% of the Company’s total assets or 

103 Id.

104 GMC Capital Invest., 36 A.3d at 780. 

105 Id. Endorsement No. 23. 

106 Id. § VI(D)(1).
21

liabilities.107 Subsection (b) does not apply here as the situation does not involve a “Change of 

Control.”

The Insurers argue that Endorsement No. 23 applies because the Underlying Actions “in 

any way” involve the acquisition of any entity or asset.108 Essentially, the Insurers argue that 

Endorsement No. 23 applies when a claim involves acquiring (i) an entity, (ii) an asset, (iii) a 

Subsidiary or (iv) a liability described in Section VI General Conditions D(1) and (2). This 

seems like a reasonable interpretation based on the provision’s ordinary meaning except it does 

not faithfully include all the language of the endorsement. 

The Insurers seem to make Section VI General Conditions into a number of separate 

transactions; however, Section VI General Conditions D(1) and (2) are there to create two 

categories of transactions in subsection (a) that would increase the deductible—one involving 

acquisition of a Subsidiary and one where the Company assets or liabilities by 40%. Moreover, 

that is the most sensible way to read Endorsement No. 23. The purpose of Endorsement No. 23

is to increase the deductible in those situations where the insurable risk is increased, i.e., where 

entities have been added or assets and liabilities have increased due to acquisition. 

The Insureds argue that Endorsement No. 23 does not apply because it is limited to 

situations described in Section VI General Conditions (D)(1) and (2).109 The Insureds interpret 

Endorsement No. 23 to apply when a claim involves acquiring an entity, an asset, a Subsidiary or 

a liability described in Section VI General Conditions D(1) and (2). The Court finds that the 

Insureds position tracks the unambiguous language of Endorsement No. 23.

107 See id. §V(D)(2). 

108 Partial SJ Mot. Answer. Br. 15.

109 Partial SJ Mot. Op. Br. 15.
22

Therefore, the Court finds that the plain and unambiguous language of Endorsement No. 

23 limits the increase in deductible to Securities Claims arising from mergers or acquisitions as 

“described in Section VI General Conditions (D)(1) and (2).” The Underlying Actions challenge 

a transaction that does not involving acquisition of a subsidiary so (D)(1) does not apply. In 

addition, (D)(2) is not involved as the buyback does not involve a situation where assets or 

liabilities were acquired let alone assets or liabilities that exceed 40% of the total assets or 

liabilities of CVR Refining. Accordingly, the Court will grant the Partial SJ Motion. 

VI. CONCLUSION

For the reasons set forth above, the Court finds that no genuine issues of material fact 

exist, and Plaintiffs are entitled to partial summary judgment on Count I of the Complaint. The 

summary judgment on Count I only applies to CVR Refining, the General Partner, CVR 

Holding, CVR Energy and Mr. Lamp. 

Dated: November 23, 2021

Wilmington, Delaware

/s/ Eric M. Davis

Eric M. Davis, Judge

cc: File&ServeXpress