IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
CLEAR CHANNEL OUTDOOR ) HOLDINGS, INC., ) ) Plaintiff, ) v. ) C.A. No. N24C-02-208 PAW CCLD ) ILLINOIS NATIONAL INSURANCE ) COMPANY, STARR INDEMNITY & ) LIABILITY COMPANY, QBE ) INSURANCE CORPORATION, and ) ACE AMERICAN INSURANCE ) COMPANY, ) ) Defendants. )
Submitted: March 2, 2025 Decided: June 30, 2025
MEMORANDUM OPINION
Upon Consideration of Plaintiff’s Motion for Partial Summary Judgment;
DENIED.
David J. Baldwin, Esq.; Peter C. McGivney, Esq.; and Periann Doko, Esq., of Berger McDermott LLP; Lynda A. Bennett, Esq.; Thomas E. Redburn, Esq.; Jade Sobh, Esq.; Rasmeet K. Chahil, Esq.; and Alexander B. Corson, Esq., of Lowenstein Sandler LLP, Attorneys for Plaintiff.
Kurt M. Heyman, Esq.; Aaron M. Nelson, Esq.; and Brendan Patrick McDonnell, Esq., of Heyman Enerio Gattuso & Hirzel LLP; Scott B. Shreiber, Esq.; and Arthur Luk, Esq., of Arnold & Porter Kaye Scholer LLP, Attorneys for Defendant Illinois National Insurance Company.
WINSTON, J. I. INTRODUCTION
Plaintiff Clear Channel Outdoor Holdings, Inc. (“Clear Channel”) seeks
insurance coverage1 for response costs it incurred after receiving a tolling request
(the “Tolling Request”) from the U.S. Securities and Exchange Commission
(“SEC”). The insurance policy at issue provides corporate liability coverage for loss
arising from any “Securities Claims” for any “Wrongful Acts.” Although the insurer
does not dispute that the Tolling Request is a “Claim” under the terms of the policy,
it argues other language in the policy language precludes coverage.
The pending partial motion for summary judgment requires the Court to
answer the following question: whether Clear Channel’s response costs “arise from
any Securities Claim for any Wrongful Acts.” Based on the policy language, the
Court concludes: (i) the Tolling Request is not a Securities Claim; and (ii) even if
the Tolling Request is a Securities Claim, it does not seek redress in response to any
corporate act. Accordingly, Clear Channel’s Motion for Partial Summary Judgment
is DENIED.
1 Clear Channel brought this action for breach of contract against Illinois National Insurance Company (“AIG”), Starr Indemnity & Liability Company (“Starr”), QBE Insurance Corporation (“QBE”), and ACE American Insurance Company (“Chubb”) (collectively, the “Insurers”). Complaint (hereinafter “Compl.”) ¶ 1. Clear Channel has reached settlement agreements in principle with Defendants Starr, QBE, and Chubb. D.I. 138. Accordingly, Clear Channel’s Motion proceeds against Defendant AIG only. 2 II. FACTUAL AND PROCEDURAL BACKGROUND
A. THE INSURANCE POLICIES
From August 30, 2017, to May 1, 2019, AIG issued a $20 million directors’
and officers’ liability policy2 (the “Policy”) to iHeartMedia, Inc., covering its
controlled entities, including Clear Channel.3 The Policy provides coverage for two
pertinent types of Insureds—individuals and organizations. As to an Insured
Person,4 coverage is afforded for Loss arising from a Claim made against an
Insured Person and for Pre-Claim Inquiry Costs arising from a Pre-Claim
Inquiry.5 Loss includes Defense Costs, which in turn include “reasonable fees,
costs and expenses.”6 Claim includes “a written demand for monetary, non-
monetary or injunctive relief (including, but not limited to . . . any written request to
toll or waive an appliable statute of limitations).”7 Pre-Claim Inquiry includes
certain “verifiable request[s] for an Insured Person (a) to appear at a meeting or
2 D.I. 61 (hereinafter “Op. Br.”), Ex. E (hereinafter “AIG Policy”). 3 Compl. ¶¶ 38-42. 4 Bolded and capitalized terms are defined terms within the Policy. 5 AIG Policy § 1(A), (B)(ii). 6 Id. § 2(k), (dd). 7 Id. § 2(e)(1). 3 interview; or (b) produce documents,” and Pre-Claim Inquiry Costs includes
certain costs for responding to a Pre-Claim Inquiry.8
As to an Organization, the Policy affords coverage for Loss “arising from
any Securities Claim made against such Organization for any Wrongful Act of
such Organization.”9 Securities Claim is defined as “a Claim, other than an
investigation of an Organization . . . alleging a violation of any federal, state, local
or foreign regulation, rule, regulating securities.”10 The definition of Securities
Claim continues, in pertinent part:
Notwithstanding the foregoing, the term “Securities Claim” shall:
(i) Include a civil lawsuit, enforcement action or administrative or regulatory proceeding brought by the Securities & Exchange Commission (SEC) or similar federal, state or local authority; or a criminal proceeding brought by the Department of Justice or similar federal, state or local authority against an Organization, anywhere in the world alleging a violation of any securities law, regulation or rule, whether statutory or common law, alleging, arising out of, based upon or attributable to the purchase or sale or offer or solicitation of an offer to purchase or sell any securities of an Organization;
(ii) Not include any (A) investigation of an Organization or (B) any Claim brought by any
8 Id. §2(q), (u), (bb), (kk). 9 Id. § 1(B)(i)(1). 10 AIG Policy § 2(uu). 4 Executive or Employee of [a] Company alleging, arising out of, based upon or attributable to the loss of, or failure to receive or obtain, stock, stock warrants, stock options or other securities of a Company.11 As noted above, Claim includes any written request to toll or waive an
appliable statute of limitations. And Wrongful Act includes “any actual or alleged
breach of duty, neglect, error, misstatement, misleading statement, omission or
act.”12 The Policy further defines Insured to include any “Organization, but only
with respect to a Securities Claim.”13
B. THE SEC INVESTIGATION AND TOLLING AGREEMENT In January 2018, Clear Channel discovered that an employee of its then-
majority-owned subsidiary, Clear Media Limited (“Clear Media”), had
misappropriated funds.14 In response, Clear Channel and Clear Media initiated
internal investigations.15 Clear Channel notified the SEC in March 2018 that its
annual report would be delayed due to the ongoing internal investigations.16
11 Id. 12 AIG Policy § 2(yy). 13 Id. § 2(aa). 14 Op. Br. at 2. 15 Id. at 3. 16 Id.; see also Compl. ¶ 15. 5 The SEC initiated a formal investigation in August 2018 arising out of Clear
Channel’s alleged failure to prevent suspected wrongdoing by certain employees at
Clear Media (the “Underlying Investigation”).17 Via the Tolling Request, the SEC
requested that Clear Channel toll the statute of limitations for any enforcement
action, which Clear Channel agreed (the “Tolling Agreement”).18 In September
2023, the Underlying Investigation resulted in the settlement of the SEC’s claims
with no admission of wrongdoing by Clear Channel (the “SEC Settlement”).19 Over
the course of the Underlying Investigation, Clear Channel incurred legal fees and
expenses, and ultimately paid over $26 million in connection with the SEC
Settlement.20
C. CLEAR CHANNEL’S INSURANCE CLAIM
On November 2, 2018, Clear Channel notified AIG of the SEC’s request for,
and its entry into, the Tolling Agreement.21 Clear Channel informed AIG that the
SEC had been investigating Clear Channel after the disclosure of suspected
wrongdoing at Clear Media, and at least four Clear Channel executives were
17 Op. Br. at 3; see also Compl. ¶ 1. 18 Op. Br. at 3; see also Op. Br., Ex. B (hereinafter “Tolling Request”); see also Op. Br., Ex. C (hereinafter “Tolling Agreement”). 19 Op. Br. at 3. 20 Compl. ¶ 2. 21 Op. Br. at 6. 6 interviewed by the SEC.22 Clear Channel sought coverage for all response costs
incurred after and as a result of the Tolling Request.23 AIG denied coverage, arguing
that the matter was “only an investigation” and not a Securities Claim, as defined
by the Policy.24
Clear Channel posits that a substantial portion of the amount incurred to
respond to the Underlying Investigation constitutes insurable Loss under the
Policy.25 Thus, Clear Channel alleges that AIG has “improperly withheld payment
for a vast majority of such Loss in contravention of their contractual obligations”
under the Policy.26 The parties dispute whether the Tolling Request qualifies as a
Securities Claim, as defined under the Policy. Clear Channel argues the Tolling
Request triggers coverage because it is a Claim, as defined under the Policy, and
Securities Claims are defined as Claims. AIG contends the Tolling Request is part
of a SEC investigation and is not a claim for “violation” of any federal, state, or local
statute, regulation, rule, or law regulating securities. AIG separately argues that the
22 Id. at 7. 23 Id. at 15; D.I. 75 (hereinafter “Ans. Br.”) at 13; see also D.I. 126 (hereinafter “Reply Br.”) at 2 n.2. 24 Op. Br. at 1. 25 Compl. ¶ 2. 26 Id. 7 Tolling Request is not for a Wrongful Act because it does not seek redress in
response to any conduct by Clear Channel.
III. STANDARD OF REVIEW
Summary judgment is appropriate “when the record shows that there is no
genuine issue of material fact, and the moving party is entitled to judgment as a
matter of law.”27 The moving party bears the burden of demonstrating the
undisputed facts entitle it to judgment as a matter of law.28 When the moving party
sustains the initial burden of showing the nonexistence of any material issues of fact,
the burden shifts to the non-moving party to substantiate its adverse claim by
showing that there are material issues of fact in dispute.29 If the facts permit
reasonable persons to draw from them but one inference, the question is ripe for
summary judgment.30
CONTRACT INTERPRETATION The Delaware Supreme Court has set forth the principles that govern
interpretation of an insurance policy:
Insurance contracts, like all contracts, ‘are construed as a whole, to give effect to the intentions of the parties.’ 27 Super. Ct. Civ. R. 56(c). 28 Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979). 29 Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995) (citing Moore, 405 A.2d 679, 680). 30 Brzoska, 668 A.2d at 1364 (citing Wootten v. Kiger, 226 A.2d 238 (Del. Super. 1967)). 8 Proper interpretation of an insurance contract will not render any provision ‘illusory or meaningless.’ If the contract language is ‘clear and unambiguous, the parties’ intent is ascertained by giving the language its ordinary and usual meaning.’ Where the language is ambiguous, the contract is to ‘be construed most strongly against the insurance company that drafted it.’ A contract is not ambiguous simply because the parties do not agree on the proper construction. ‘Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.’
Insurance contracts should be interpreted as providing broad coverage to align with the insured’s reasonable expectations. ‘Generally, an insured’s burden is to establish that a claim falls within the basic scope of coverage, while an insurer’s burden is to establish that a claim is specifically excluded.’ Courts will interpret exclusionary clauses with ‘a strict and narrow construction . . . [and] give effect to such exclusionary language [only] where it is found to be ‘specific,’ ‘clear,’ ‘plain,’ ‘conspicuous,’ and ‘not contrary to public policy.’31
IV. ANALYSIS
A. THE TOLLING REQUEST IS NOT A SECURITIES CLAIM.
Clear Channel moves for summary judgment in its favor, seeking coverage
for all response costs incurred after and as a result of the Tolling Request.32 The
31 RSU Indemnity Co. v. Murdock, 246 A.3d 887, 905-06 (Del. 2021) (internal citations omitted). 32 Op. Br. at 18-19, 23-24. 9 Policy does not afford coverage for response costs unless the Tolling Request
constitutes a Securities Claim, as defined under the Policy.
1. INVESTIGATION
Clear Channel argues that the Tolling Request qualifies as a Securities Claim
because it is a “written request to toll . . . [the] statute of limitations” for entry into a
tolling agreement, which is expressly covered under the Policy.33 AIG counters that
the Tolling Request was part of an investigation of Clear Channel, an Organization,
which is expressly excluded from coverage.34
Clear Channel asserts that AIG’s interpretation of “investigation” is overly
broad and renders the Policy language regarding tolling agreements meaningless.35
Thus, Clear Channel argues that its interpretation of the Policy—which limits the
“investigation” exclusion—follows the rules of construction regarding ambiguities
in insurance policies and accomplishes the goal of giving all policy terms meaning.36
Under Clear Channel’s interpretation, the response costs incurred in connection with
the “investigation” before the Tolling Request would be excluded, while the
response costs incurred after the Tolling Request would be covered.37 Thus, the
33 Id. at 18-19. 34 Ans. Br. at 24-25. 35 Reply Br. at 1. 36 Id. at 12. 37 Id. at 1. 10 Court must determine whether a Claim that is part of an investigation against an
Organization is a Securities Claim.
Under the Policy, the definition of a Securities Claim includes a Claim,38
which is defined separately to expressly include “any written request to toll or waive
an applicable statute of limitations.”39 Directly following the inclusion of Claim,
the definition of a Securities Claim continues: “other than an investigation of an
Organization” and “Notwithstanding the foregoing, the term ‘Securities Claim’
shall . . . Not include any [] investigation of an Organization.”40
Because a Securities Claim under the Policy must be a “Claim, other than an
investigation of an Organization, made against the Insured,”41 a claim can qualify
as both a Claim and a Securities Claim. Thus, although an insured must have a
Claim as defined under the Policy to have a Securities Claim, not every Claim
qualifies as a Securities Claim, if it is an investigation of an Organization. This
means, Securities Claims are limited to a subset of Claims—ones that are not
investigations.
38 AIG Policy § 2(uu). 39 Id. § 2(e). 40 Id. § 2(uu). 41 Id. 11 The term “investigation” is not defined within the Policy.42 The Court will
interpret clear and unambiguous terms according to their ordinary meaning.43
Importantly, however, the Court must read a contract as a whole and give each
provision and term effect, so as not to render any part of the contract mere
surplusage.44 The Court will not read a contract to render a provision or term
“meaningless or illusory.”45
The Tolling Request undisputedly qualifies as “a written request to toll” the
statute of limitations, which falls under the definition of a Claim. Therefore, Clear
Channel argues that the Policy does not properly consider the situation at hand, in
which a Tolling Request is part of an ongoing investigation.46 Thus, Clear Channel
contends for the purposes of the Policy, the Tolling Request constitutes a Securities
Claim which is explicitly covered under the Policy.47 AIG’s proposed interpretation
42 See AIG Policy § 2. 43 GMG Capital Investments, 36 A.3d at 780 (internal citations omitted). 44 Aearo Technologies LLC v. ACE American Insurance Company, 2024 WL 3495121 at *6 (Del. Super. July 16, 2024) (citing Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010)). 45 Id. (citing Osborn ex rel. Osborn v. Kemp, 991 A.2d at 1159). 46 Op. Br. at 18. At oral argument, Clear Channel acknowledged that the Tolling Request is part of and did not end the SEC investigation, and that investigations are excluded under the Policy. 47 Id. at 16-18. 12 of the Policy would result in surplusage and render the grant of coverage for tolling
request claims “meaningless or illusory.”48
AIG maintains that Clear Channel intentionally ignores the difference
between the definitions of Claims and Securities Claims under the Policy.49 The
definitions of Claim and Securities Claim are different by design.50 The Policy
covers “the Loss of an insured individual resulting from a Claim, but coverage for
the Loss of an insured entity is limited to a Securities Claim.”51 Accordingly,
coverage for written tolling requests is provided for individuals, and is thus not
illusory or meaningless.52 Hence, AIG asserts that the Tolling Request is a Claim,
potentially triggering coverage for individuals, but is not a Securities Claim,
triggering coverage for entities.53
As explained above, “[i]n upholding the intentions of the parties, a court must
construe the agreement as a whole, giving effect to all provisions therein.”54
Construing the agreement as a whole, the Court finds that AIG’s proposed
48 Id. at 18. 49 Ans. Br. at 26. 50 Id. 51 Id. 52 Id. 53 Id. GMG Capital Investments, 36 A.3d at 779 (quoting E.I. du Pont de Nemours and 54
Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (1985)). 13 interpretation of the Policy gives effect to all provisions and does not result in
surplusage. The Policy contains a separate subsection within the definition of Claim
to address “investigations” (including investigations by the SEC) that may qualify
as a Claim for insured individuals.55 The plain language of the Policy provides
coverage for such Claims against insured individuals, despite excluding coverage
for insured Organizations. Clear Channel’s interpretation would render the term
“other than an investigation of an Organization” meaningless.
In addition, the term “notwithstanding” is defined by Black’s Law Dictionary
to mean “despite; in spite of.”56 The only reasonable interpretation of this provision,
using the plain meaning of notwithstanding, is that Claims that may have fallen
within the definition of a Securities Claim, in spite of qualifying as a Securities
Claim under the first half of the definition, cannot constitute a Securities Claim
under the Policy if said Claim involves “an investigation of an Organization.”
Accordingly, even if the Tolling Request constitutes a Claim under the Policy, Clear
Channel, an Organization, is not permitted to recover under the explicit terms of
the Policy if the costs incurred are the result of an investigation.57
55 AIG Policy § 2(e)(3). 56 BLACK’S LAW DICTIONARY (12th ed. 2024). 57 See Hertz Global Holdings, Inc. v. Nat. Union Fire Ins. Co. of Pittsburgh, 530 F. Supp. 3d 447, 457 (interpreting an insurance policy with the same language as the Policy at issue to mean that “‘Securities Claims’ does include ‘Claims,’ but only if
14 2. ALLEGING A VIOLATION OF ANY LAW REGULATING SECURITIES
Setting aside the investigation issue, a Securities Claim must also allege a
“violation of” any law regulating securities.58 Clear Channel posits that a Claim,
here the Tolling Request, need not include any allegation because “Clear Channel
was not required to prove it had been ‘accuse[d]’ of wrongdoing.”59 All that is
required is that the Tolling Request arise out of alleged violations of federal
securities laws which in turn gives rise to a Securities Claim.60 Clear Channel is
correct in one respect, but also seems to confuse the definition of Securities Claim
and Loss. First, Clear Channel need not prove it had been accused of wrongdoing,
but under the Policy a Securities Claim, which includes a written request for tolling,
must include an allegation of wrongdoing. Clear Channel’s interpretation would
render the word “alleging” meaningless. Second, it is the Loss, here the response
costs, that must arise from any wrongdoing, not the Tolling Request.
AIG contends “alleging,” a variant of the verb “allege,” which means “[t]o
assert as true, esp[ecially] that someone has done something wrong, though no
they [] (a) are not ‘investigation[s]’ and (b) allege violations of securities laws . . . . Therefore, to the extent a “Claim” is an investigation . . . [an Organization] is expressly barred from recovering under the policy.”) (emphasis in original). 58 AIG Policy § 2(uu). 59 Reply Br. at 5. (emphasis in original). 60 Op. Br. at 23. 15 occasion for definitive proof has yet occurred.”61 The SEC Tolling Request states:
“the Staff would like to enter into an agreement with Clear Channel Outdoor
Holdings, Inc. to toll the running of the statute of limitations applicable to any
enforcement action against Clear Channel for one year.”62 Applying the plain
meaning of words, the Tolling Request fails to allege any violation of securities law.
* * *
The Court is bound to interpret clear and unambiguous terms according to
their ordinary meaning as long as such an interpretation gives each provision and
term effect, so as not to render any part of the contract mere surplusage.63 Applying
the principles of contract interpretation to this case, the Court concludes that the
Policy is unambiguous, even though the parties do not agree on its proper
construction,64 because only one interpretation may reasonably be ascribed to it.
Considering language within the definition of Securities Claim, the only reasonable
interpretation is that it excludes coverage of investigations of Organizations,
including any written request to toll or waive an applicable statute of limitations
61 Id. at 31 (citing Allege, Black’s Law Dictionary (12th ed. 2024). Clear Channel does not dispute this definition. 62 Tolling Request at 1. 63 Aearo Technologies LLC v. ACE American Insurance Company, 2024 WL 3495121 at *6 (Del. Super. July 16, 2024) (citing Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010)). 64 See GMG Capital Investments, 36 A.3d at 780. 16 made as part of an investigation, and must allege a violation of securities law.65 For
these reasons, the Tolling Request is not a Securities Claim as defined in the Policy.
B. THE TOLLING REQUEST DOES NOT SEEK RELIEF “FOR ANY WRONGFUL ACT.”
Even if the Tolling Request is a Securities Claim, it still would not trigger
coverage. Under the Policy, AIG agreed to pay for Clear Channel’s Losses arising
from any Securities Claim “for any Wrongful Act.”66 Accordingly, to qualify for
coverage, Clear Channel’s response costs must result from a Securities Claim “for
any Wrongful Act of [Clear Channel].” The Tolling Request does not meet this
requirement.
AIG contends, and Clear Channel does not dispute, that in order for a
Securities Claim to be “for” a Wrongful Act, it must seek redress or relief in
response to any corporate act. As noted above, the SEC Tolling Request states: “the
Staff would like to enter into an agreement with Clear Channel Outdoor Holdings,
Inc. to toll the running of the statute of limitations applicable to any enforcement
action against Clear Channel for one year.”67 Not only are there no allegations of
wrongdoing, but the Tolling Request does also not seek redress or relief for any
65 Because the Court finds the Policy is unambiguous, the Court need not consider the Declaration of Paul Atkins and, thus, Clear Channel’s Motion to Strike the Declaration of Paul Atkins is moot. 66 AIG Policy § 1(B)(i). 67 Tolling Request at 1. 17 corporate act. The SEC sought to toll the statute of limitations so that it could
determine whether Clear Channel had committed any “corporate act.”68
The Policy here provides coverage for Securities Claims only if that
Securities Claim is for any Wrongful Act of Clear Channel. Therefore, even if the
Tolling Request qualifies as a Securities Claim, because the Tolling Request does
seek relief for any Wrongful Act, the Tolling Response does not trigger AIG’s duty
to pay Clear Channel’s response costs.
V. CONCLUSION
In conclusion, the Tolling Request does not trigger AIG’s duty to advance
defense costs. Accordingly, the Court DENIES Clear Channel’s Motion for Partial
Summary Judgment.
IT IS SO ORDERED.
/s/ Patricia A. Winston Patricia A. Winston, Judge
68 Clear Channel noted in its papers and at oral argument that its Motion only seeks a determination that the AIG breached the Policy by failing to acknowledge the SEC’s Tolling Request triggered AIG’s duty to pay Clear Channel’s response costs. Reply Br. at 2 n.2. Clear Channel further states that it has not abandoned its right to seek a determination, in the alternative, that another coverage-triggering event obligated AIG to begin paying response costs at a later point in time. Accordingly, the Court will not determine whether the Tolling Agreement, the Formal Order, or any other event triggered AIG’s duty to pay response costs. 18