Delaware Court Tells Wiring Manufacturer It’s Too Early and Too Late
Time 6 Minute Read
Categories: D&O, Excess

The decision of when to sue insurance companies, especially excess insurers, can be difficult, especially in disputes involving multiple claims, long timelines, and conflicting coverage positions between insurers. A recent federal court in Delaware, General Cable Corp. v. Scottsdale Indemnity Co., No, 1:24-CV-00797-TMH, 2025 WL 2576384, (D. Del. Sept. 5, 2025) underscores the timing risks in pursuing recovery in and out of litigation. In a word of warning to Delaware policyholders, the court dismissed a lawsuit against a manufacturer’s directors and officers excess liability insurers because its claims were either not ripe for adjudication or untimely filed.

Background

Between 2011 and 2016, a wiring manufacturer was insured under three layers of D&O insurance, with Scottsdale providing second-layer excess coverage. Starting in 2012, the manufacturer incurred defense costs while defending against government investigations into its accounting practices and lawsuits alleging violations of the Foreign Corrupt Practices Act (FCPA).

The manufacturer sought coverage for these defenses costs for the lawsuits which were resolved in April 2019. The primary insurer and first excess insurer agreed to pay for part of the loss, albeit based on different coverage rationales. One insurer took the position that the accounting investigations and FCPA lawsuits were a single related claim under its 2011 policy, while the other insurer took the position that the accounting investigations were one claim under the 2011 policy and the FCPA lawsuits were another claim under the 2012 policy. Despite recovering from two insurers, the manufacturer still had more than $32 million in outstanding defenses costs, which is continued to pursue from the insurers.

The manufacturer notified Scottsdale of the claims. While Scottsdale acknowledged the notice, it did not provide a coverage position and neither denied nor agreed to cover the claims. The manufacturer then began discussing mediation with the first two layers of coverage to resolve the coverage disputes. The manufacturer requested that Scottsdale participate in that mediation with the other insurers, but again Scottsdale failed to respond by providing a coverage position.

Delaware Federal Court Finds Coverage Claim Both Not Ripe and Too Late

The manufacturer filed suit against Scottsdale in 2024 for declaratory judgment and anticipatory breach of contract. The insurer moved to dismiss, arguing that the declaratory judgment claim and the anticipatory breach of contract claim were barred by Delaware’s three-year statute of limitations. Applying Delaware law, the court agreed and dismissed the lawsuit.

The court’s ruling on the policyholder’s anticipatory breach of contract claim turned on when the excess policy attached and required the insurer to cover the claims. A contract is not breached, the court explained, until the time for performance is expired.

In that regard, the excess policy provided that “[i]t is expressly agreed that liability shall attach to the Company only after the full amount of the Underlying Limits is paid in accordance with the terms of the Underlying Policies by any or all of the following . . .” The court found that this provision meant the excess insurer was entitled to wait out “good-faith coverage disputes” between the manufacturer and its other insurers without breaching its performance obligations.

Accordingly, the manufacturer’s anticipatory breach of contract claim was not yet ripe for adjudication until the underlying policies were paid, and consequently, the statute of limitations had not yet begun to run. The court dismissed the claim without prejudice.

As for the declaratory judgment claim, the court noted that, under Delaware law, insurance claims become ripe when an insured establishes that there is a “reasonable likelihood” that coverage under the disputed policies will be triggered. Delaware also has a three-year statute of limitations, which the court explained applies to any breach of contract action based on a promise, which includes declaratory judgment claims. The court emphasized that the manufacturer incurred significant defense costs of more than $32 million, which would implicate Scottsdale’s excess policy regardless of the other insurers’ coverage positions. Because Scottsdale insured the manufacturer for losses over $25 million, and because the manufacturer had incurred defense costs far above the policy’s attachment point.

The claim became ripe, the court concluded, the day that the underlying accounting investigations and FCPA lawsuits against the manufacturer were resolved in 2019. It was from that date that Delaware’s three-year statute of limitations for the declaratory judgment claim began to run. Unfortunately for the manufacturer, it waited over five years to bring the declaratory judgment action against the recalcitrant excess insurer. Accordingly, that cause of action was time barred and dismissed with prejudice.

Takeaways

The General Cable decision highlights an interesting dichotomy where some insurance coverage claims can be timed-barred while others are not yet ripe. This can create a challenging set of factors for policyholders to balance when considering whether and when to bring a coverage lawsuit.

The Importance of Attachment Provisions

A proactive evaluation of the so-called “attachment” provisions in excess policies can help prevent the “too early” outcome in General Cable. Attachment provisions guide when excess coverage comes into play and impact whether a coverage claim might be ripe.

Evaluating the attachment provisions in an excess policy throughout the claim timeline—especially in disputes involving multiple claims over many years involving different insurance towers—can help guide important decisions of when to pursue excess insurers that have not lived up to the terms of their policies.

The Clock Is Ticking

In what may seem like a draconian outcome to some, the court in General Cable strictly enforced Delaware’s three-year statute of limitations period for breach of contract based on a promise, including declaratory judgment claims. Every state has its own limitations period, with some states applying materially different standards to assess when those periods begin to run.

A subpart of the discussion is the threshold question of what state’s laws even apply, since policyholders need to know the applicable limitations period before deciding when suit needs to be filed. Many times choice of law is clear, including if a policy has a choice-of-law provision, but in other claims there can be material differences in law addressing limitations periods that lead to separate disputes over governing law.

The manufacturer’s predicament in General Cable is all too common. The company seemed to be doing everything right—timely submitting claims, defending and resolving underlying disputes, coordinating recoveries under different policies, and attempting to resolve coverage disputes outside of formal litigation—yet over many years was ignored and rebuffed by the excess insurer, which failed to substantively respond or take action to move the claims towards resolution.

But when the policyholder was forced into litigation, the insurer benefited from those significant delays in prevailing on a limitations defense. Tools like tolling agreements and similar formal agreements to preserve rights under policies while underlying claims or complicated insurance claims run their course can help avoid accidental forfeiture of coverage due to the passage of time.  

Conclusion

When to bring a coverage lawsuit is always a tough decision. Coordinating with coverage counsel, brokers, and risk professionals early and often to manage different claim timelines and limitations periods can help mitigate those risks.

  • Partner

    Geoff works closely with corporate policyholders and their directors and officers to resolve high-stakes insurance disputes. He leads the firm’s directors and officers (D&O) insurance and executive protection practice.

    As a ...

  • Associate

    Machaella focuses her practice on complex insurance litigation and advising policyholders in insurance coverage matters. Leveraging her past experience representing insurers, she guides policyholders in all phases of ...

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