Delaware Judge Bars Insurers from Recovering $50M NYU Settlement and $27M Zayo Shareholder Payout

A Delaware Superior Court judge, Paul R. Wallace, issued two rulings that limit insurers' ability to recoup settlement payments. In the Turner Construction case, AIG insurers Lexington and National Union were found to have no contractual right to recover the $50 million they advanced to settle New York University’s lawsuit over Superstorm Sandy damage at the university’s medical center. The judge noted the policies lacked any recoupment language for such settlements.

In a separate case involving Zayo Group Holdings, Wallace granted summary judgment to National Union and other insurers, holding that a $27 million shareholder settlement tied to Zayo’s 2019 take‑private acquisition was not covered because the payout effectively increased the acquisition consideration, triggering the “bump‑up” exclusion common in directors‑and‑officers policies.