Insurance coverage

Family feud over gate manufacturing company throws D&O insurance coverage into question: Risk and Insurance

This is the story of how a Kentucky gate-making family business turned into a D&O legal debacle.

This is the story of how a Kentucky gate-making family business turned into a D&O legal debacle.

Founded in 1945, Tarter Gate manufactured and sold wooden gates in central Kentucky. Over the years, the company grew into a much larger company that manufactured both farm and ranch equipment, known collectively as the Tarter Companies. The property goes to two brothers.

Yet it was the children of these brothers who could not continue to agree.

Joshua Tarter, a cousin and partial owner of the company, decided to set up a shell company in China that would eventually sell supplies to Tarter Companies. Anna Lou Tarter, her aunt and two cousins ​​filed charges against Joshua.

They claimed that his shell company was responsible not only for selling supplies to the Tarter companies at grossly inflated prices, but also for misappropriating trade secrets from the Tarter companies.

They said that Joshua “used [his] position with the Tarter Companies to overcharge the Tarter Companies at least $20,000,000 over the life of the program with a supplier.

With that lawsuit in hand, Joshua contacted Tarter Companies’ directors and officers’ insurer, Navigators Insurance Company, for his defense. However, Navigators declined, noting that its D&O policy excludes coverage where “any claim made against an insured…by or on behalf of an insured.”

Joshua sued the browsers.

Mariners have defined the word “claim” as “a civil proceeding…brought against any insured seeking monetary or non-monetary relief and commenced by service of a complaint”.

With that definition in hand, Navigators said it would not defend what the court deemed “a high-stakes family dispute.”

The district court granted Navigator’s motion to dismiss the lawsuit. In the superior court, the motion was upheld.

Scorecard: Joshua Tarter will not be covered by Navigators. He will have to face his family.

Carry: Insurance can be taken out in family matters. When it comes to family owned and operated businesses, it’s good practice to review what’s covered in case a dispute arises and call the insurance involved. &

Autumn Demberger is content strategist at Risk & Insurance®. She can be reached at [email protected]