D&O Insurance – Untimely Notice

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7^th Circuit Court of Appeals

Case Name: Hanover Insurance Company v. Paul Dunteman, Jr.

Case No.: 20-1830

Officials: Sykes, Chief Judge, and Wood and Hamilton, Circuit Judges.

Focus: D&O Insurance – Untimely Notice

This insurance-coverage dispute arises from a conflict among family members over ownership interests in the family’s construction business located in Addison, Illinois. Jane Dunteman, the matriarch, held a minority stake in Du-Kane Asphalt Company and Crush Crete, Inc., two companies owned and operated by her husband, Paul Dunteman Sr., and other family members. The couple divorced in 2009, and Jane died in March 2017. Paul died six months later.

Jane’s death spawned litigation in state court over the size of her interest in the family business; her estate sued the companies and her sons, Paul Jr., Jeffrey, Roland, and Matthew Dunteman. The four Dunteman brothers are the majority shareholders and officers and directors of the companies. Their sister, Audrey, as the personal representative of her mother’s estate, alleged that Jane’s ownership interest was wrongfully diluted after their parents divorced.

The codefendants were insured under consecutive “claims made” liability policies issued in 2017 and 2018 by The Hanover Insurance Company to R.W. Dunteman Company, an affiliated family business. The distinguishing feature of “claims made” insurance, as the name suggests, is that the insured must notify the insurer of a “claim” in the same policy period in which it is first “made.” If a claim goes unreported in the relevant policy period, then the insurer owes no duty to defend or indemnify.

After denying coverage, Hanover filed suit in federal court seeking a declaration that it owes no defense or indemnity. The insureds counterclaimed for breach of contract. The district court entered judgment for Hanover. This court affirms. The estate’s original complaint triggered a reportable claim during the 2017 policy period. Subsequent amendments to that complaint did not commence a new and distinct claim first made in 2018. The insureds’ notice to Hanover was therefore untimely and no coverage is owed.

Affirmed.

Decided 10/24/22

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