Applicants sought a declaration that their insurer owed a duty to defend and indemnify them under a Directors and Officers liability policy in relation to an action by a contractor alleging breach of contract, unjust enrichment, and quantum meruit for unpaid construction work.
The court applied established duty-to-defend principles requiring a broad interpretation of coverage and examination of the pleadings to determine whether a potentially covered wrongful act was alleged.
It held that the essence of the underlying action was a collection claim for unpaid invoices and did not constitute a “wrongful act” within the meaning of the policy.
The court further held that the unjust enrichment and quantum meruit claims were derivative of the breach of contract claim and therefore caught by the contractual exclusion.
The application for declaratory relief was dismissed.
