Ruling on an issue of national first impression, a Delaware judge held that an appraisal action is a covered securities claim under a directors and officers insurance policy, allowing Pillsbury client Solera Holdings Inc. to continue pursuing $39 million in coverage for costs it incurred in a stockholders' challenge to its buyout by Vista Equity Partners LP.

According to Law360, Delaware Superior Court Judge Abigail LeGrow denied a motion for summary judgment brought by a host of Solera's excess D&O insurers, including Chubb Ltd. units Federal Insurance Co. and Ace American Insurance Co. Solera is looking to force the carriers to cover its costs to defend the stockholders' appraisal action, as well as interest charged on the judgment entered against the company in that case.

The excess insurers had argued that an appraisal action — which provides a company's stockholders an avenue to challenge a deal price — is not a securities claim, which is defined in the policies as a claim made against Solera for "any actual or alleged violation of any federal, state or local statute, regulation or rule or common law regulating securities." More specifically, they asserted that a violation "must involve wrongdoing," and appraisal actions don't have to allege any wrongdoing by a company.

However, Solera countered and Judge LeGrow agreed, that a suit doesn't have to allege wrongdoing to constitute a securities claim under the policies. Instead, the judge found, the term "violation" can encompass an appraisal action's accusation that a company breached its legal obligation to provide stockholders fair value for their shares in certain types of transactions.

Solera is represented by Pillsbury Insurance Recovery & Advisory partners Peter Gillon and Alexander Hardiman in New York, and counsel Tamara Bruno in Houston.