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Breci v. St. Paul Mercury Ins. Co.

Supreme Court of Nebraska

July 25, 2014

FRED BRECI ET AL., APPELLANTS AND CROSS-APPELLEES,
v.
ST. PAUL MERCURY INSURANCE COMPANY, APPELLEE AND CROSS-APPELLANT, AND UNION PACIFIC STREAMLINER FEDERAL CREDIT UNION, INTERVENOR-APPELLANT AND CROSS-APPELLEE

Page 524

[Copyrighted Material Omitted]

Page 525

[Copyrighted Material Omitted]

Page 526

Appeal from the District Court for Douglas County: W. RUSSELL BOWIE III, Judge.

AFFIRMED.

Thomas M. White, C. Thomas White, and Amy S. Jorgensen, of White & Jorgensen, for appellants and intervenor-appellant.

Thomas A. Grennan and Abbie M. Schurman, of Gross & Welch, P.C., L.L.O., and J. Price Collins and Thomas M. Spitaletto, of Wilson, Elser, Moskowitz, Edelman & Dicker, L.L.P., for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ. STEPHAN, J., not participating.

OPINION

Page 527

[288 Neb. 627] Cassel, J.

I. INTRODUCTION

Former members of a credit union's board of directors, after having been sued by the credit union, sought a declaratory [288 Neb. 628] judgment that an insurance policy covered the credit union's claims. The district court first held in favor of the former directors, but reconsidered and later granted summary judgment to the insurer. While reconsideration was pending, the former directors settled with the credit union. On appeal, we resolve two broad issues. First, because the former directors did not establish that they were entitled to summary or declaratory judgment, the court did not abuse its discretion in vacating its initial judgment. Second, because the settlement potentially gave rise to new policy-based defenses that were not barred by equitable estoppel, the court did not abuse its discretion in permitting an amended answer. We affirm the court's summary judgment for the insurer.

II. BACKGROUND

1. Factual Background

(a) Credit Union

On February 16, 2006, the National Credit Union Administration (NCUA) placed Union Pacific Streamliner Federal Credit Union (credit union), a federally chartered credit union, under conservatorship. The conservatorship revoked the authority of the credit union's board of directors, which then included Fred Breci, William Gallo, Henry Kammerer, Michael Kros, Carl Launer, Steven Slater, and S. Anthony Siahpush (collectively former directors).

NCUA had previously recommended conservatorship for a number of reasons, including " [i]nsider abuse and preferential treatment towards certain members of the . . . board of directors." According to the recommendation, specific instances of preferential treatment included leasing office space in a building owned by a director and obtaining engineering and construction assistance from the director's firm.

(b) Insurance Policy

On September 12, 2006, the credit union signed an application for an insurance policy. St. Paul Mercury Insurance Company (St. Paul) later issued a policy effective from November 18, 2006, through November 18, 2009 (Policy). The [288 Neb. 629] management liability insuring agreement had a limit of liability of $2 million and provided directors and ...


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