Nicholas v. National Union Fire Insurance Co. of Pittsburgh, PA

Summary

The Delaware Supreme Court reversed dismissal of claims by former Broadcom directors and officers against insurers for alleged bad faith and tortious interference. It held that the relevant provisions of the 2011 Settlement Agreement were reasonably susceptible to more than one interpretation regarding whether the claims were barred. Because the agreement was ambiguous, extrinsic evidence of the parties’ intent was necessary, and the matter was remanded for further proceedings.

Holdings

1. The 2011 Settlement Agreement did not unambiguously and as a matter of law preclude the plaintiffs from asserting the claims at issue. The plaintiffs' interpretation—that the agreement barred claims seeking to invalidate or void the Insurance Agreement but permitted noncoverage bad-faith and tort claims not triggering Broadcom's indemnity obligation—was reasonable.
2. The parties' intent concerning the meaning of the second sentence of provision F.15 was a factual question requiring discovery and possible consideration of extrinsic evidence, making resolution on a Rule 12(b)(6) motion improper.
3. If the Superior Court determined after discovery that the 2011 Settlement Agreement did not bar the claims, it was required to determine whether the claims were reasonably conceivable so as to withstand the insurers' Rule 12(b)(6) motions.

Questions Presented

1. Whether the 2011 Settlement Agreement unambiguously barred the plaintiffs' bad-faith and tortious-interference claims as an impermissible collateral attack on the 2009 Insurance Agreement.
2. Whether the interpretation of the 2011 Settlement Agreement required consideration of extrinsic evidence and therefore could not be resolved on a Rule 12(b)(6) motion.
3. If the settlement did not bar the claims, whether the complaint's claims were reasonably conceivable under Rule 12(b)(6).

Disposition

reversed_and_remanded