Sunshine Shopping Center, which runs the Mall of St. Croix, has lost its bid to force its insurance company to pay legal costs in a shareholder dispute.
On September 21, the U.S. Court of Appeals for the Third Circuit upheld a lower court ruling in favour of Travelers Excess and Surplus Lines Company. The panel found that the company's directors and officers liability policy contained clear language excluding coverage for the shareholder claims.
Three Sunshine shareholders. Mustafa Yusuf, Hamad Yusuf and Shihadeh Qattum, filed suit in V.I. Superior Court in September 2023. They alleged that company directors and officers Yahya Yusuf, Hatim Yusuf and Safi Yusuf had embezzled funds, mismanaged the business and its assets, and caused financial damage through negligent practices. The shareholders also sought recovery of properties they said had been bought using stolen corporate money.
Travelers issued Sunshine a directors and officers policy running from June 13, 2023 to June 13, 2024. The contract included an Ownership Percentage Exclusion: Travelers would not cover claims brought by anyone holding more than 5 percent of Sunshine. Each of the three shareholders owned roughly 15 percent, well above that threshold.
Sunshine argued that since every shareholder exceeded 5 percent, the exclusion rendered the shareholder coverage section pointless. The appeals court disagreed. The panel said the policy could still protect against claims from shareholders owning 5 percent or less, and covered various other management-liability risks, so the insurance remained meaningful overall.
The decision leaves Sunshine and the individual directors and officers to pay their own legal bills in the Superior Court case without insurance backing. The appeals court ruling does not address whether the shareholders' embezzlement and mismanagement allegations are true; that dispute remains before the territorial court.
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