McCullough v. Fidelity & Deposit Co.

Fidelity and Deposit Company (F&D) (defendant) issued directors' and officers' liability policies to a bank and its subsidiaries, covering claims if the insured gave written notice of a claim or potential claim during the policy period. The banks sent F&D financial reports describing loan losses, a worsening financial condition, and a regulatory cease-and-desist order against one subsidiary, but never identified specific directors, officers, wrongful acts, or potential claimants. F&D cancelled the policies; the banks later became insolvent, and the FDIC, as receiver, sued the banks' directors and officers for improper lending. F&D denied coverage, and the FDIC brought a declaratory judgment action; the district court found no coverage because F&D never received proper notice, granting F&D summary judgment.