Opinion ID: 1838947
Heading Depth: 1
Heading Rank: 1

Heading: background summary

Text: In this action, the plaintiffs sued a bank and its insurer, the St. Paul Insurance Company, who issued a directors' and officers' liability policy insuring the bank and its directors and officers against any claims made against the directors or officers caused by any bank directors' or officers' negligent act, error, omission, or breach of duty while acting in their capacities as directors and officers. Plaintiffs alleged that they suffered damages when a bank officer, who was also plaintiffs' business partner, negligently co-mingled their funds with funds belonging to other investors, including other officers and directors of the bank, and contrary to a previous agreement invested the funds in the futures market on a margin basis. The trial court granted the insurance company's peremptory exception of no right of action finding that Louisiana's Direct Action Statute did not apply to plaintiffs' claims. The court of appeal affirmed concluding that the policy at issue was an indemnity policy and therefore outside the scope of the Direct Action Statute, which the court held only applied to policies or contracts of liability insurance. 545 So.2d 1140 (La.App. 4th Cir.1989). We granted plaintiffs' writ application. 550 So.2d 637 (La.1989).