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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

BEAZLEY INSURANCE COMPANY, INC. v. ACE AMERICAN INSURANCE COMPANY et al

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:15-cv-05119 Search Pacer
ACE Group party(s): 
Opposing Party: 
Beazley Insurance Company, Inc.
Court Type: 
Federal
US District Court: 
Southern District of New York
Date Filed: 
Jun 30 2015

Plaintiff Beazley Insurance Company, Inc. (“Beazley”), by its attorneys, Troutman
Sanders LLP, as and for its Complaint against the above-named defendants, alleges as follows:

NATURE OF THE ACTION

1.    This matter is an insurance coverage dispute pertaining to an underlying class
action filed against, among others, NASDAQ OMX Group, Inc. and NASDAQ Stock Market,
LLC (collectively, “NASDAQ”) by past and current shareholders of Facebook, Inc.
2.    Notice of the class action was provided on behalf of NASDAQ and the two
NASDAQ officers named as defendants in the class action, Robert Greifeld and Anna Ewing
(the “NASDAQ Officers”), to several insurers, including Beazley and Defendants ACE
American Insurance Company (“ACE”) and Illinois National Insurance Company (“Illinois
National”). NASDAQ and the NASDAQ Officers are collectively referred to as the “NASDAQ
Parties.” ACE and Illinois National are collectively referred to as the “Defendants.”
3.    Beazley responded to that notice by issuing a reservation of rights letter which
outlined potential coverage issues under the policy it had issued to NASDAQ OMX Group, Inc.
It did so even though it believed that most, if not all, of the claims against the NASDAQ Parties
in the underlying class action were not covered by its policy.
4.    Conversely, ACE denied coverage for the NASDAQ Parties despite the fact that
all or most of the claims in the underlying class action fall squarely within the Insuring
Agreements of its policy and are not subject to any exclusion. Beazley is informed and believes
that Illinois National followed the decision of ACE and that it also did not defend or indemnify
the NASDAQ Parties in connection with the class action.
5.    Given the denials of coverage, when the NASDAQ Parties approached Beazley
regarding an opportunity to settle the class action, Beazley entered into an agreement with the
NASDAQ Parties whereby it agreed to fund part of the settlement by paying the full $15 million
limits of liability of its policy. In connection with this agreement, the NASDAQ Parties assigned
all contractual and extra-contractual claims they have against ACE and Illinois National in
connection with their respective denials of coverage for the underlying class action.
6.    Accordingly, through this action, Beazley seeks an adjudication that the
NASDAQ Parties are entitled to coverage for the underlying class action under the ACE and
Illinois National insurance policies and it seeks repayment from ACE and Illinois National for all
amounts Beazley has or will pay on behalf of the NASDAQ Parties in connection with the
underlying class action.

PARTIES

7.    Plaintiff Beazley is a Connecticut corporation with its principal place of business
in the state of Connecticut.
8.    Defendant ACE is a Pennsylvania corporation with its principal place of business
in the state of Pennsylvania. ACE transacts the business of insurance in the state of New York.
Case l:15-cv-05119-JSR Document 2 Filed 06/30/15 Page 3 of 20
9.    Defendant Illinois National is an Illinois corporation with its principal place of
business in the state of Illinois. Illinois National transacts the business of insurance in the state
of New York.

JURISDICTION AND VENUE

10.    This Court has diversity jurisdiction over this action pursuant to 28 U.S.C. §
1332. Complete diversity of citizenship exists between the parties, as Beazley is a citizen of
Connecticut and ACE and Illinois National are citizens of Pennsylvania and Illinois,
respectively. The amount in controversy exceeds the minimum $75,000, exclusive of interest
and costs, and an actual controversy within the meaning of 28 U.S.C. § 2201 exists between the
parties.
11.    This Court has personal jurisdiction over the Defendants in that the Defendants
transact substantial business, including business relevant to the dispute at issue in this matter, in
the state of New York. Among other things, Defendants issued their respective insurance
policies at issue in this matter to NASDAQ OMX Group, Inc. in the state of New York.
12.    Venue is proper in this Court because the underlying action upon which this
matter is based is pending in this Court, and the insurance policies at issue were issued to
NASDAQ OMX Group, Inc., who resides in this district.

FACTUAL BACKGROUND
The Consolidated Class Action

13.    This action pertains to the insurance coverage available for the NASDAQ Parties
in connection with a class action lawsuit captioned In re Facebook, Inc. Securities and
Derivative Litigation, NASDAQ Actions; MDL No. 12-2389 (S.D.N.Y.) (the “Consolidated Class
Case l:15-cv-05119-JSR Document 2 Filed 06/30/15 Page 4 of 20
Action”).  The operative version of the Complaint in the Consolidated Class Action is the
Consolidated Amended Complaint (the “CAC”). A copy of the CAC is attached hereto as
Exhibit “A” and incorporated herein by reference.
14.    The CAC is comprised of two classes, one asserting claims for securities fraud
(the “Securities Class”) and one asserting claims based on negligence (the “Negligence Class”).
The claims of each class relate to the NASDAQ Parties’ alleged acts and omissions relating to
the initial public offering of Facebook, Inc.’s stock (the “Facebook IPO”).
15.    The CAC was filed on behalf of a putative class of all persons “that entered pre-
market and aftermarket orders to purchase and/or sell the common stock of Facebook Inc. on
May 18, 2012 in connection with [the Facebook IPO] and who suffered monetary losses” as a
result of the NASDAQ Parties’ alleged acts and omissions.
16.    In the CAC, the plaintiffs assert various claims for securities fraud and negligence
based on the NASDAQ Parties’ alleged statements and advertisements related to the capabilities
of NASDAQ’s trading platform and related services and/or the inadequate performance of
NASDAQ’s technology and trading platform during the Facebook IPO.
17.    The plaintiffs claim that the NASDAQ Parties’ alleged acts and omissions, before
and during the Facebook IPO, caused the class plaintiffs losses in excess of $500 million
18.    With regard to the Securities Class, the CAC alleges that the NASDAQ Parties
committed securities fraud based on statements and/or omissions made both in the months
preceding the Facebook IPO and during the IPO. The CAC specifically provides that, during the
period before the IPO, which included the period in which NASDAQ “aggressively competed”
with the New York Stock Exchange to list Facebook, NASDAQ made material statements that
its technology and trading platform were “robust, reliable, and completely capable of properly
handling the Facebook IPO.”
19.    According to the plaintiffs, these and other similar statements by the NASDAQ
Parties were materially false or misleading because, based on technical problems revealed during
testing, they knew or recklessly disregarded the possibility that NASDAQ’s software systems
“could not properly handle the trading volume expected for the Facebook IPO.”
20.    The CAC also contains allegations that the NASDAQ Parties failed to correct
these materially false or misleading statements after becoming aware of the “significant technical
problems long before the [Facebook IPO].” They also allege that, as a “scheme” to defraud and
deceive, materially false and misleading statements and omissions of material facts were made
during the Facebook IPO, which included the failure to disclose technical and software-related
issues and NASDAQ’s decision to switch to an inadequate back-up system.
21.    Based on these allegations, the Securities Class asserts two securities fraud
counts; one asserted against NASDAQ and the NASDAQ officers pursuant to section 10(b) of
the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated
thereunder and a second asserted against the NASDAQ Officers as “controlling persons” under
section 20(a) of the Exchange Act.
22.    On information and belief, NASDAQ is fully indemnifying the two NASDAQ
Officers named as defendants in the CAC
23.    Like the Securities Class, the Negligence Class bases its negligence claims against
NASDAQ on alleged acts and/or omissions both during the period leading up to the Facebook
IPO and during the Facebook IPO. The CAC includes allegations that NASDAQ was negligent
in designing trading software before trading began. As for NASDAQ’s allegedly negligent
conduct during the Facebook IPO, the CAC provides, among other things, that NASDAQ was
negligent in its decision not to halt the Facebook IPO when trading issues arose, and in its
negligent decision to utilize an inadequate backup system.
24.    While the Negligence Class does not join in the fraud allegations of the Securities
Class, the Negligence Class asserts that they relied on the NASDAQ Parties’ alleged statements
related to the purported capabilities of the NASDAQ trading platform and claim that these
statements established a standard of care, which was allegedly breached.
25.    The Negligence Class asserts eight counts of negligence in the CAC - two on
behalf of the entire class and six on behalf of sub-classes.
The Errors and Omissions Liability Policies
26.    Beazley issued Excess Insurance Policy No. V15NOP120401 to NASDAQ OMX
Group, Inc. for the Policy Period from January 31, 2012 to January 31, 2013 (the “Beazley
Excess Policy”). Subject to the Beazley Excess Policy’s terms, conditions and exclusions, each
of the NASDAQ Parties is an Insured under the Beazley Excess Policy. Subject to its terms,
conditions and exclusions, the Beazley Excess Policy provides errors and omissions coverage
and has a $15 million Limit of Liability, which is excess of the $15 million limits of liability of a
primary policy, discussed below, and also excess of the primary policy’s applicable retention. A
copy of the Beazley Excess Policy is attached hereto as Exhibit “B” and incorporated herein by
reference.
27.    The Beazley Excess Policy sits above (i.e., in excess of) a primary errors and
omissions insurance policy, policy No. 01-554-10-86, issued by Chartis Specialty Insurance
Company (“Chartis”) to NASDAQ OMX Group, Inc. for the Policy Period from January 31,
2012 to January 31, 2013 (the “Primary E&O Policy”). Subject to the Primary E&O Policy’s
terms, conditions and exclusions, each of the NASDAQ Parties is an Insured under the Primary
E&O Policy. The Primary E&O Policy has a $15 million Limit of Liability. A copy of the
Primary E&O Policy is attached hereto as Exhibit “C” and incorporated herein by reference.
28.    With regard to the coverage relevant to this matter, subject to their terms,
conditions and exclusions, both the Beazley Excess Policy and the Primary E&O Policy provide
coverage for the NASDAQ Parties only for Claims arising “solely in rendering or failing to
render Professional Services...” (See Primary E&O Policy, Section 1.1).
The ACE and Illinois National D&O Policies
29.    ACE issued ACE Advantage Management Protection Policy No. DON
G21666944 010 to NASDAQ OMX Group, Inc. for the Policy Period of January 31, 2013 to
January 31, 2014 (the “ACE D&O Policy”). Each of the NASDAQ Parties is an Insured under
the ACE D&O Policy. The ACE D&O Policy is a primary Directors and Officers Liability
Policy with a $15 million Limit of Liability. A copy of the ACE D&O Policy is attached hereto
as Exhibit “D” and incorporated herein by reference.
30.    Insuring Agreement B and Insuring Agreement C of the ACE D&O Policy
provide as follows:
B. Company Reimbursement
The Insurer shall pay on behalf of the Company all Loss for
which the Company has indemnified the Insured Persons and
which the Insured Persons have become legally obligated to pay
by reason of a Claim first made against the Insured Persons
during the Policy Period or, if elected, the Extended Reporting
-7-
Period, and reported to the Insurer pursuant to the terms of this
Policy, for any Wrongful Acts taking place prior to the end of the
Policy Period.
C. Company Liability
The Insurer shall pay on behalf of the Company all Loss for
which the Company becomes legally obligated to pay by reason of
a Securities Claim first made against the Company during the
Policy Period or, if elected, the Extended Reporting Period, and
reported to the Insurer pursuant to the terms of this Policy, for any
Wrongful Acts taking place prior to the end of the Policy Period.
[ACE D&O Policy, Section I],
31.    The ACE D&O Policy defines “Claim” to include a “written demand for
monetary damages” and a “civil ... proceeding ... for monetary damages.” [ACE D&O Policy,
Section, II.B, as amended by Endorsement No. 19],
32.    “Securities Claim” is defined by the ACE D&O Policy as follows:
any Claim, other than a civil, criminal, administrative or
regulatory investigation of a Company, which in whole or in part,
is:
1.    brought by one or more securities holders of the
Company, in their capacity as such, including
derivative actions brought by one or more
shareholders to enforce a right of the Company; or
2.    alleging a violation of any federal, state, local or
foreign regulation, rule or statute, or any common
law, regulating securities, including but not limited
to the purchase or sale of, or offer to purchase or
sell, or solicitation of any offer to purchase or sell,
any securities issued by the Company, whether
such purchase, sale, offer or solicitation involves a
transaction with the Company or occurs in the open
market, including any such Claim brought by the
Securities and Exchange Commission or any other
claimant.
The foregoing Definition of Securities Claim shall not
include any Claim brought by any director, officer,
governor, trustee, general counsel, risk manager, manager,
member of the board of managers, executive or employee
of a Company alleging, arising out of, based upon or
attributable to the loss of, or failure to receive or obtain, the
benefit of stock, stock warrants, stock options or other
securities of a Company.
[ACE D&O Policy, Section HO, as amended by Endorsement No. 12],
33.    While the ACE D&O Policy contains a professional services exclusion, the
exclusion only applies to “ that portion of Loss on account of any Claim ... by or on behalf of a
customer or client of the Company, alleging, based upon, arising out of, or attributable to the
rendering of or failure to render professional services.” [ACE D&O Policy, Section III, as
amended by Endorsements Nos. 10 and 19, emphasis added].
34.    Illinois National issued Excess Edge Policy No. 01-656-32-59 to NASDAQ for
the Policy Period of January 31, 2013 to January 31, 2014 (the “Illinois National D&O Policy”).
Each of the NASDAQ Defendants is an Insured under the Illinois National Policy. The Illinois
National D&O Policy includes a $15 million Limit of Liability, which is excess of the Limits of
Liability and the retention of the ACE D&O Policy. A copy of the Illinois National D&O Policy
is attached hereto as Exhibit “E” and incorporated herein by reference.
The Insurance Companies’ Coverage Positions
35.    Notice of the CAC was provided on behalf of the NASDAQ Parties to, among
other insurers, Chartis, Beazley, ACE and Illinois National.
36.    In response to the notice, Chartis issued a reservation of rights letter and agreed to
advance defense costs in connection with the CAC under the Primary E&O Policy.
37.    Similarly, Beazley responded to the notice by issuing a reservation of rights letter
which noted, among other things, the excess position of the Beazley Excess Policy. In addition,
Beazley noted that, with regard to the CAC and subject to the Beazley Excess Policy’s other
terms, conditions and exclusions, coverage was limited to Claims for Wrongful Acts committed
“solely in rendering or failing to render Professional Services....”
38.    ACE, on the other hand, denied the NASDAQ Parties’ request for coverage under
the ACE D&O Policy. A copy of its initial denial letter dated October 8, 2013 is attached as
Exhibit “F” and incorporated herein by reference. When Beazley obtained a copy of the October
8, 2013 letter and a copy of the ACE D&O Policy, it recognized ACE had wrongfully denied
coverage for the CAC and Beazley’s counsel wrote a January 26, 2015 letter to Jeffrey Winn
with ACE explaining why ACE’s denial of coverage was improper. A copy of the January 26,
2015 letter (without enclosures) is attached as Exhibit “G” and incorporated herein by reference.
ACE responded to January 26, 2015 letter through its counsel in a letter dated February 27, 2015.
In its February 27, 2015 letter, ACE continued to wrongfully deny coverage for the CAC. An
accurate copy of ACE’s February 27, 2015 letter as well as an accurate copy of Beazley’s further
response, through counsel, to that letter dated March 9, 2015 are attached as Exhibits “H” and
“I,” respectively, and are incorporated herein by reference.
39.    ACE bases its denial of coverage on the following grounds: (1) some or all of the
claims asserted in the CAC do not come within the insuring agreements of the ACE Primary
D&O Policy and (2) the claims are subject to a professional services exclusion. Both arguments
are without merit.
40.    In asserting that the CAC does not fall within the insuring agreements, ACE
argues that the Consolidated Class Action is not a Securities Claim, as that term is defined in the
ACE D&O Policy, and that coverage under its policy is limited to Loss arising out of a
Securities Claim. This argument is incorrect and completely ignores Insuring Agreement B of
the ACE D&O Policy, as well as the plain language of the defined term “Securities Claim”
under Insuring Agreement C of the ACE D&O Policy.
41.    As noted above, Insuring Agreement B of the ACE D&O Policy provides
coverage for all “Loss for which [NASDAQ] has indemnified the Insured Persons and which
the Insured Persons have become legally obligated to pay by reason of a Claim ... for any
Wrongful Acts ...” The coverage available under Insuring Agreement B is not limited to
“Securities Claims.” Instead, coverage is available for any “Claim,” which is broadly defined
to include, among other things, a “written demand for monetary damages” and a “civil ...
proceeding.” Given the claims asserted against the NASDAQ Officers in the CAC, it cannot be
reasonably disputed that Insuring Agreement B is implicated by the CAC.
42.    ACE’s position that Insuring Agreement C, which provides so-called entity
coverage for “all Loss for which the Company becomes legally obligated to pay by reason of a
Securities Claim,” is not implicated is also incorrect. As noted above, the ACE D&O Policy
expressly defines “Securities Claim” to include any Claim “alleging a violation of any federal,
state, local or foreign regulation, rule or statute, or any common law, regulating securities” and it
cannot be reasonably disputed that the two Exchange Act claims against NASDAQ in the CAC
are such claims. Thus, in addition to Insuring Agreement B, Insuring Agreement C of the ACE
Primary D&O Policy is implicated by the CAC. Notably, ACE implicitly acknowledged that
Insuring Agreement C was implicated by the CAC in its October 8, 2013 denial letter when it
stated only that counts III to X of the CAC did not involve “Securities Claim.” (October 8,
2014 letter, p. 2, Exhibit “F”) In other words, by not referencing counts I and II - which are the
counts in the CAC based on sections 10(b) and 20(a) of the Exchange Act - when discussing
what claims were not “Securities Claim,” ACE essentially conceded that, at a minimum, counts
I and II qualified as “Securities Claim.”
43.    Likewise, ACE’s argument that coverage for the CAC is precluded by the
professional services exclusion, which simply provides coverage is not available for “for that
portion of Loss on account of any Claim ... by or on behalf of a customer or client of
[NASDAQ], alleging, based upon, arising out of, or attributable to the rendering of or failure to
render professional services,” is also without merit. [ACE D&O Policy, Section IE, as amended
by Endorsements Nos. 10 and 19, emphasis added]. The vast majority, if not all, of the claims
asserted in the CAC do not fall within this exclusion because, among other reasons, they are not
claims by or on behalf of a customer or client of NASDAQ and because they are based on
alleged actions the NASDAQ Parties took to advertise or promote NASDAQ’s alleged
capabilities which are not professional services.
44.    Beazley is informed and believes that Elinois National followed the decision of
ACE and that it also did not defend or indemnify the NASDAQ Parties in connection with the
class action.
The Settlement of the CAC
45.    Throughout February, March and April of 2015, the parties to the Consolidated
Class Action engaged in settlement discussions. In the course of those discussions, the
NASDAQ Parties requested settlement authority that implicated the limits of liability of the
Beazley Excess Policy. The settlement authority requested would have also implicated the limits
of liability of ACE D&O Policy had ACE not denied and continued to deny coverage for the
Consolidated Class Action. Beazley advised ACE of the requests for authority that would have
implicated the limits of liability of the ACE D&O Policy but for the wrongful denial. ACE,
however, continued to deny coverage and refused to contribute toward the defense or
indemnification of the NASDAQ Parties.
46.    Beazley is informed and believes that Illinois National, which had also failed to
accept potential coverage for the claims asserted against the NASDAQ Parties in the CAC,
improperly failed to contribute toward the defense or indemnification of the NASDAQ Parties.
47.    On or about April 22, 2015, the parties to the Consolidated Class Action entered
into a Memorandum of Understanding for the settlement of the Consolidated Class Action.
Thereafter, on or about May 22, 2015, a Stipulation of Settlement was filed with the court in the
Consolidated Class Action. In connection with the settlement of the Consolidated Class Action,
in order to protect the interests of the NASDAQ Parties, Beazley agreed to pay the full $15
million limits of liability of the Beazley Excess Policy toward the settlement. ACE has not paid
or agreed to pay anything under the ACE D&O Policy toward the settlement, and Illinois
National has not paid or agreed to pay anything under the Illinois National D&O Policy toward
the settlement.

FIRST CAUSE OF ACTION
(Declaratory Relief - Defense Cost Coverage)

48.    Beazley repeats and realleges each and every allegation contained in Paragraphs 1
through 47 of this Complaint as if fully set forth herein.
49.    It is Beazley’s position that the NASDAQ Parties are entitled to coverage under
the ACE D&O Policy and/or the Illinois National D&O Policy for Defense Costs they have or
will incur in connection with the CAC, including amounts incurred by NASDAQ to indemnify
the NASDAQ officers named as defendants in the CAC for Defense Costs those officers have or
will incur. Defendants contend that no such coverage is available under their respective policies,
and have denied coverage for the NASDAQ Parties.
50.    By virtue of the Defendants’ improper denials of coverage, the Limits of Liability
for the Beazley Excess Policy have been implicated and eroded. Had the Defendants agreed to
fulfill their obligations to reimburse Defense Costs incurred by the NASDAQ Parties in
connection with the CAC, the Limits of Liability of the Beazley Excess Policy would not have
been implicated or eroded, or would be implicated or eroded to a lesser degree.
51.    An actual and judiciable controversy exists between Beazley and the Defendants
regarding whether coverage for Defense Costs is available for the NASDAQ Parties under the
ACE D&O Policy and/or the Illinois National D&O Policy in connection with the CAC.
52.    Accordingly, Beazley is entitled to a judicial declaration that the NASDAQ
Parties are entitled to coverage for Defense Costs they have or will incur in connection with the
CAC under the ACE D&O Policy and the Illinois National D&O Policy.

SECOND CAUSE OF ACTION
(Declaratory Relief - Indemnity Coverage)

53.    Beazley repeats and realleges each and every allegation contained in Paragraphs 1
through 52 of this Complaint as if fully set forth herein.
54.    It is Beazley’s position that the NASDAQ Parties are entitled to indemnity
coverage under the ACE D&O Policy and/or the Illinois National D&O Policy for any settlement
or judgment reached in connection with the CAC, including amounts incurred by NASDAQ to
indemnify the NASDAQ officers for settlements and judgments associated with the Consolidated
Class Action. The Defendants contend that no such coverage is available under their respective
policies, and have denied coverage to the NASDAQ Parties.
55.    By virtue of the Defendants’ improper denials of coverage, the full Limits of
Liability for the Beazley Excess Policy have been or soon will be paid in connection with
settlements and/or judgments related to the CAC. Had the Defendants agreed to fulfill their
respective indemnity obligations, including payments of settlements and/or judgments associated
with the CAC, the Limits of Liability of the Beazley Excess Policy would not be implicated or
eroded, or would have been implicated or eroded to a lesser degree.
56.    An actual and judiciable controversy exists between Beazley and the Defendants
regarding whether indemnity coverage is available to the NASDAQ Parties under the ACE D&O
Policy and the Illinois National D&O Policy in connection with the CAC.
57.    Accordingly, Beazley is entitled to a judicial declaration that that the NASDAQ
Parties are entitled to indemnity coverage in connection with the CAC under the ACE D&O
Policy and the Illinois National D&O Policy.

THIRD CAUSE OF ACTION
(Implied/Common Law Indemnity)

58.    Beazley repeats and realleges each and every allegation contained in Paragraphs 1
through 57 of this Complaint as if fully set forth herein.
59.    Pursuant to the terms of their respective policies, ACE and Illinois National are
obligated to pay Defense Costs, settlements and judgments on behalf of the NASDAQ Parties in
connection with the CAC.
60.    Despite these obligations, ACE and Illinois National have denied coverage to the
NASDAQ Parties in connection with the CAC.
61.    By virtue of the positions taken by ACE and Illinois National, Beazley has paid or
agreed to pay amounts on behalf of the NASDAQ Parties, the mutual Insureds of Beazley and
the Defendants, for which the Defendants, individually or collectively, are principally liable.
62.    Beazley is therefore entitled to indemnification from ACE and/or Illinois National
for amounts Beazley incurs in connection with the CAC that should have been paid by ACE
and/or Illinois National.

FOURTH CAUSE OF ACTION
(Contribution)

63.    Beazley repeats and realleges each and every allegation contained in Paragraphs 1
through 62 of this Complaint as if fully set forth herein.
64.    While it is Beazley’s position that it has no obligation to the NASDAQ Parties
under the Beazley Policy in connection with the CAC, in the alternative, Beazley avers that
Beazley and the Defendants insured the same risk in that they both are obligated to pay defense
costs and indemnify the NASDAQ Parties in connection with the CAC.
65.    The Beazley Policy contains an “other insurance” provision stating that it is
excess to the ACE D&O Policy and the Illinois National D&O Policy, while the ACE D&O
Policy and the Illinois National D&O Policy contain an “other insurance” provision stating that
they are excess to the Beazley Policy.
66.    Beazley has or will pay amounts on behalf of the NASDAQ Parties in connection
with the CAC for which ACE and/or Illinois National share a mutual obligation.
67.    Beazley is entitled to contribution from ACE and/or Illinois National for the
amounts it has or will pay on behalf of the NASDAQ Parties in connection with the CAC.

FIFTH CAUSE OF ACTION
(Breach of Contract)

68.    Beazley repeats and realleges each and every allegation contained in Paragraphs 1
through 67 of this Complaint as if fully set forth herein.
69.    The NASDAQ Parties have assigned Beazley their contractual rights and extra-
contractual rights against ACE and Illinois National related to the Consolidated Class Action.
70.    The ACE D&O Policy and the Illinois National D&O Policy are valid and
enforceable written contracts that afford insurance coverage to the NASDAQ Parties for the
claims asserted in the Consolidated Class Action.
71.    The NASDAQ Parties and Beazley have made written demands that ACE
acknowledge coverage under the ACE D&O Policy for the claims asserted against the NASDAQ
Parties in the Consolidated Class Action,. The NASDAQ Parties have also made written
demand(s) that Illinois National acknowledge coverage under the Illinois National D&O Policy
for the claims asserted against the NASDAQ Parties in the Consolidated Class Action.
72.    The NASDAQ Parties have satisfied all terms and conditions of the ACE D&O
Policy and the Illinois National D&O Policy that apply to them, except to the extent that ACE
and/or Illinois National prevented them from performing and/or they were excused from
performing under the ACE D&O Policy and/or the Illinois National D&O Policy.
73.    ACE has breached the ACE D&O Policy and Illinois National has breached the
Illinois National D&O Policy by, among other things, wrongfully:
a.    Delaying and refusing payment of the NASDAQ Parties’ Defense Costs
associated with the Consolidated Class Action;
b.    Asserting that they are not required to fund the NASDAQ Parties’ defense
and/or to indemnify the NASDAQ Parties with regard to the claims
asserted against the NASDAQ Parties in the Consolidated Class Action;
c.    Denying the NASDAQ Parties the right to the benefits to which they are
entitled under the ACE D&O Policy and the Illinois National D&O Policy,
respectively;
d.    Taking coverage positions with regard to the Consolidated Class Action
that are contrary to controlling law;
e.    Preferring their own interests over the interests of the NASDAQ Parties;
f.    Basing their respective claim-handling decisions on the desire to reduce or
avoid their obligations to the NASDAQ Parties; and
g.    Failing to properly investigate the claims asserted against the NASDAQ
Parties in the Consolidated Class Action and the availability of coverage
for those claims under the ACE D&O Policy and the Illinois National
D&O Policy, respectively.
74.    By breaching the ACE D&O Policy and the Illinois National D&O Policy, ACE
and Illinois National, respectively, waived and/or are estopped from asserting their rights under
their respective policies.
75.    Asa direct and proximate result of ACE’s breaches of the ACE D&O Policy and
Illinois National’s breaches of the Illinois National D&O Policy, the NASDAQ Parties have been
damaged in an amount to be proven at trial, but in no event less than $75,000, exclusive of
interest and costs.

PRAYER FOR RELIEF

WHEREFORE, Beazley requests that the Court enter judgment in its favor against
Defendants as follows:
A.    On the First Cause of Action, a judicial declaration that the ACE D&O Policy and
the Illinois National D&O Policy provide Defense Cost coverage to the NASDAQ Parties in
connection with the CAC;
B.    On the Second Cause of Action, a judicial declaration that the ACE D&O Policy
and the Illinois National D&O Policy provide indemnity coverage to the NASDAQ Parties for
settlements and/or judgments reached in connection with the CAC;
C.    On the Third Cause of Action, indemnity from ACE and/or Illinois National for
some or all of the amounts incurred by Beazley on behalf of the NASDAQ Parties in connection
with the CAC in an amount to be proven at trial, but in no event less than $75,000, exclusive of
interest and costs;
D.    On the Fourth Cause of Action, contribution from ACE and/or Illinois National
for their rightful shares of all amounts incurred by Beazley on behalf of the NASDAQ Parties in
connection with the CAC in an amount to be proven at trial, but in no event less than $75,000,
exclusive of interest and costs;
E.    On the Fifth Cause of Action, general, consequential, and compensatory damages
in an amount to be proven at trial, but in no event less than $75,000, exclusive of interest and
costs;
F.    Prejudgment interest;
G.    Costs of suit and attorneys’ fees; and
H.    Such other and further relief as this Court deems just and proper.

JURY DEMAND

Beazley demands a jury trial for all claims properly tried to a jury
 

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.