Origis USA v. Great American Insurance:
Reconciling “No-Action” Clauses with Advancement Duties in Indemnity-Only D&O Policies

1. Introduction

In Origis USA LLC v. Great American Insurance Co., No. 461, 2024 (Del. Sup. Ct. July 23 2025), the Delaware Supreme Court confronted two recurring but rarely-reconciled features of directors’ and officers’ (“D&O”) insurance: (1) the No-Action clause, which bars an insured from suing its insurer until liability is finally determined, and (2) the Advancement/Allocation provisions, which oblige the insurer to advance defence costs as a claim moves forward. The Court also revisited the reach of Prior Acts exclusions, holding that allegations of a post-cut-off “cover-up” nevertheless “arise out of” the excluded earlier misconduct. The judgment partly affirmed the Superior Court (dismissing claims against the 2023 policy tower) but remanded the dispute involving the 2021 tower for a fuller contract-based analysis of the No-Action clause vis-à-vis advancement obligations.

2. Summary of the Judgment

• 2021 Tower (Great American et al.) – The Superior Court had dismissed the insureds’ suit as premature under the No-Action clause. The Supreme Court vacated and remanded, instructing the trial court to re-examine how the No-Action clause interacts with the policy’s express duty to advance defence costs and the parties’ “indemnity (no duty-to-defend) election.”
• 2023 Tower (Bridgeway & Excess Insurers) – The Court affirmed dismissal, holding that: (i) paragraphs 158–160 of the federal underlying complaint do not constitute a separate “Claim” under the policies; and (ii) even if they did, the Claim is barred by the Prior Acts exclusions because the alleged post-cut-off “information breach” indisputably “arises out of” the pre-cut-off buy-out scheme.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

• Wright Construction Co. v. St. Lawrence Fluorspar (Del. Super. 1969) – Historically limited Delaware precedent suggesting that No-Action clauses do not bar an insured’s declaratory action. The Superior Court rejected its force; the Supreme Court noted its obscurity but did not discredit it, choosing instead to remand for a fresh contract-interpretation analysis.
• First Solar, Inc. v. National Union, 274 A.3d 1006 (Del. 2022) – Clarified that related-claims questions must be answered by the policy text, not by a generic “fundamentally identical” test. Used here to analyse whether the post-cut-off information breach “arose out of” earlier acts.
• Ferrellgas Partners L.P. v. Zurich, 319 A.3d 849 (Del. 2024) – Addressed “run-off” exclusions. The Court relied on Ferrellgas to interpret the broad “based upon, arising out of, attributable to” lead-in language in the 2023 Prior Acts exclusions.
• Out-of-state decisions on advancement vs. No-Action conflicts (Paul Holt Drilling, Eureka Fed., Fight Against Coercive Tactics Network, etc.) were cited by the insureds. The Supreme Court acknowledged them but found that the record required a fact-sensitive contract analysis before adopting (or rejecting) their reasoning.

3.2 Court’s Legal Reasoning

a) The No-Action / Advancement Tension

The crux is a policy that: (i) indemnifies (no duty to defend), (ii) promises to advance “Costs of Defence … prior to final disposition,” yet (iii) prohibits “any action … until the insured’s obligation to pay has been finally determined.” The trial court enforced the No-Action clause categorically, viewing the advancement promise as conditioned on an agreed allocation or on what the insurer “believes to be covered.” The Supreme Court, however, found the record under-developed on:

• whether enforcing the No-Action clause would render the advancement promise “a nullity,” contrary to Delaware’s canon against surplusage;
• how the phrase “judicially determined” in the Allocation and Advancement provisions relates to a declaratory-judgment action itself;
• whether Great American’s unilateral 10 % allocation meets its duty to “use best efforts” and to confer with the insureds.

Accordingly, it remanded for a holistic construction of the inter-locking provisions, emphasising two Delaware principles: contracts are construed as a whole, and sophisticated parties are bound by their bargains absent ambiguity or strong public-policy concerns.

b) Prior Acts Exclusion & “Arising Out Of”

For the 2023 tower, the insureds pointed to three paragraphs alleging a post-November 18 2021 breach of information-access rights (the “Information Breach”). The Court held:

1. The paragraphs do not themselves constitute a “Claim” because they are not a separate demand for relief; they merely explain pleading limitations in the larger fraud action.
2. Even if a Claim, it would still “arise out of” the pre-cut-off buy-out scheme, likening a post-closing cover-up to the “classic example” of facts arising from earlier wrongful acts. Ferrellgas’ approach to broad exclusionary preambles controlled.

3.3 Potential Impact of the Judgment

• Advancement Litigation – Delaware trial courts now have explicit Supreme Court guidance to examine conflicts within the policy text—not simply to defer to a No-Action clause—when an indemnity-only D&O policy promises contemporaneous defence-cost funding. Expect more nuanced pleadings and discovery on allocation negotiations and insurer “beliefs.”
• Drafting Implications – Insurers may tighten language to clarify that advancement remains subject to No-Action clauses or, conversely, offer explicit carve-outs for advancement disputes to avoid remand-type uncertainties.
• Prior Acts / “Cover-Up” Theories – The affirmation cements that Delaware will read “arising out of” broadly; a later obstruction, concealment, or failure to cooperate will rarely reset the temporal bar.
• Forum Priority – By remanding rather than dismissing for forum non conveniens, the Court reinforced Delaware’s interest in resolving coverage disputes involving Delaware entities and underscores that Florida first-filed actions will not automatically displace Delaware proceedings.

4. Complex Concepts Simplified

• No-Action Clause
  A contractual provision barring lawsuits against the insurer until the insured’s liability is fixed by judgment or settlement. Historically aimed at blocking third-party claimants from suing the carrier directly. Its application by the insurer against its own insured is more controversial.
• Advancement vs. Indemnity
  “Advancement” means paying defence costs as they are incurred. “Indemnity” means reimbursing the insured only after liability is established. Here, the insureds chose an “Indemnity form” policy but negotiated an express advancement promise.
• Allocation
  When a complaint mixes covered and uncovered allegations, the policy may require the parties to allocate defence costs between them. Until agreement or judicial ruling, many policies oblige the insurer to advance the portion it “believes” is covered.
• Prior Acts Exclusion
  Also called “retroactive date” or “look-back” exclusion. Bars coverage for claims that relate, directly or indirectly, to wrongful acts occurring before a specified date. Delaware reads “arising out of” as “originating from” or “flowing naturally from,” a very broad standard.
• Duty to Defend vs. Duty to Indemnify
  Many liability policies impose a duty to defend (insurer hires and controls counsel) and an obligation to indemnify. A duty-to-defend clause usually triggers immediate defence; indemnity-only policies, like the one here, shift control and initial payment responsibility to the insured, with the insurer reimbursing according to the policy’s terms.

5. Conclusion

Origis USA v. Great American Insurance does not yet deliver a final answer on whether No-Action clauses trump advancement promises, but it marks a significant turning point in Delaware insurance jurisprudence. The Supreme Court signalled that traditional freedom-of-contract principles must be balanced against the policyholder’s bargained-for right to timely defence funding. Simultaneously, it reaffirmed the expansive reach of Prior Acts exclusions, warning policyholders that any post-cut-off “clean-up” or “concealment” effort will likely be yoked to the original pre-cut-off misconduct. On remand, the Superior Court’s task—now informed by the Supreme Court’s guidance—will shape how future D&O policies are litigated and drafted nationwide.