Excess Insurers Gain Another Ally On Exhaustion Question

Law360, New York (November 14, 2013, 8:58 PM ET) -- A Washington state appeals court on Tuesday slammed the door to excess coverage for Quellos Group LLC's $240 million tax fraud scheme because an underlying insurer did not pay full policy limits, joining a growing number of courts to strictly interpret exhaustion language despite policyholders' insistence that these terms violate public policy.

Quellos had sued several of its insurers over coverage for $35 million in settlements with investors and $45 million in defense and other costs associated with government investigations.

In Tuesday's published ruling, a Washington...
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