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Why Choose VGD in Dallas?

Vargas Gonzalez Delombard LLP represents executives, board members, and companies throughout Texas in high-stakes insurance disputes, including complex Directors & Officers (D&O) coverage litigation. With offices across the state and a litigation team that includes former in-house insurance counsel, nationally recognized trial attorneys, and appellate advocates, we are known for our ability to take on the largest carriers—and win. Clients particularly trust us in Dallas’s energy, private equity, real estate, and emerging tech sectors, where executive liability risks are closely tied to fast-moving regulatory, financial, and shareholder scrutiny.

Executive Liability and D&O Protection in the Dallas Business Environment

Dallas is a hub of corporate growth and complexity, home to many public companies, private equity firms, real estate developers, and rapidly scaling healthcare and logistics operations.

With that growth comes risk. Directors and officers face exposure to:

  • Shareholder lawsuits
  • DOJ or SEC investigations
  • Whistleblower claims
  • Internal governance disputes

These challenges demand more than generic protection—yet many D&O insurance policies contain ambiguous exclusions, underdeveloped indemnity language, or inadequate Side A coverage, leaving executives personally exposed when they most need protection.

Directors and Officers (D&O) Insurance is specialized liability coverage designed to protect individuals in leadership positions—board members, executives, and officers—from personal financial loss resulting from decisions made in their corporate roles. It also protects the company when it is required to indemnify those individuals.

In Texas, corporate indemnification is governed by the Texas Business Organizations Code (§ 8.101–8.104). Corporations may indemnify directors and officers who acted in good faith and reasonably believed they were acting in the company's best interests. However, indemnification is barred in cases involving bad faith, intentional misconduct, or receipt of an improper personal benefit.

When indemnification is unavailable or insufficient, D&O insurance becomes the executive’s first line of defense. Coverage is typically structured in three tiers:

  • Side A: Provides direct personal protection for executives when the company cannot indemnify, such as in bankruptcy, derivative suits, or regulatory actions.
  • Side B: Reimburses the company when it has indemnified a director or officer.
  • Side C: Offers entity-level protection, particularly in securities litigation or when the company itself is named in the claim.
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Common D&O Claims in Texas

Texas courts see frequent internal governance disputes, especially in LLCs and closely held corporations, which can raise unique indemnification and insurance allocation challenges. Other common claims include:

  • Breach of fiduciary duty in M&A or capital raise processes
  • Alleged misstatements in investor or lender disclosures
  • Regulatory enforcement by the SEC, FINRA, or the Texas Department of Insurance
  • Cybersecurity oversight failures
  • Mismanagement allegations in oil & gas, healthcare, or financial services

Laws That Govern D&O Claims in Texas

Texas law provides flexibility for businesses, but that freedom creates potential for coverage gaps when corporate bylaws, indemnity agreements, or insurance policies aren’t aligned. Such laws include:

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Common D&O Insurance Disputes in Texas

In Texas, insurance carriers are subject to statutory bad faith rules under Chapters 541 and 542 of the Insurance Code, which can create leverage in D&O recovery disputes. Other examples of disputes include:

  • “Prior acts” or “known loss” exclusions used to deny coverage
  • Delays in defense cost advancement
  • Denials in regulatory investigations not deemed formal “claims”
  • Allocation disputes across covered and non-covered parties
  • Bad faith failure to settle under the Texas Insurance Code

How Dallas Companies Can Minimize D&O Risk

  1. Review indemnification provisions in bylaws and employment contracts
  2. Layer Side A-only coverage for insolvency or derivative suits
  3. Clarify “claim” and “loss” definitions in policy language
  4. Ensure policies comply with Texas governing law
  5. Work with experienced coverage counsel pre-renewal, not just post-claim
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What VGD Offers in Dallas

Tailored Policy Review

  • We conduct a comprehensive analysis of your entire D&O insurance tower—primary, excess, and Side A-only layers—through the lens of Texas law and your organization’s unique risk profile
  • Our attorneys identify weaknesses such as vague exclusions, narrow definitions of “claim,” and limitations on regulatory coverage, and we advise on how to amend or renegotiate terms to ensure enforceability in Texas courts
  • Whether you’re navigating SEC scrutiny, shareholder claims, or internal investigations, our reviews are designed to proactively strengthen your protection before disputes arise

Independent Legal Advice

  • We are not brokers, risk consultants, or coverage monitors—we are insurance litigators who represent policyholders exclusively
  • We do not sell insurance or receive commissions, which means our guidance is conflict-free and fully aligned with your interests
  • From private equity firms and C-suite executives to general counsel navigating leadership transitions, we offer clear, strategic counsel on how to interpret, enforce, and optimize your D&O protections under Texas’s complex legal framework

Aggressive Litigation and Negotiation

  • When insurers delay, deny, or underpay D&O claims, we take immediate and forceful action
  • Our team files declaratory judgment suits, breach of contract claims, and bad faith actions in Texas state and federal courts, including the U.S. District Court for the Northern District of Texas
  • We pursue full reimbursement of defense costs, settlements, judgments, attorneys’ fees, and statutory interest, and we engage in negotiations or mediation from a position of litigation strength

Types of Damages Recoverable in Texas

  • Reimbursement for defense costs and settlements
  • Statutory penalties for bad faith denials (Tex. Ins. Code § 541 & 542)
  • Attorney’s fees and court costs in coverage litigation
  • Potential interest penalties for delayed payment of claims
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FAQ's

Can Texas-based companies indemnify officers for regulatory fines?

Are Side A-only policies important for Dallas-based companies?

Are private company directors commonly sued in Texas?

Does D&O insurance cover SEC investigations in Texas?

Are LLC managers and officers covered by D&O insurance in Texas?

Can a D&O insurer deny coverage based on a "capacity" exclusion?

What role do “change in control” provisions play in Texas D&O coverage?

Can a D&O claim be triggered by internal investigations?

Is cyber liability ever covered under D&O policies in Texas?

Can Texas-based companies indemnify officers for regulatory fines?

Generally, no—especially where fines are personal or result from knowing violations. D&O policies may cover defense costs, but not penalties themselves.

Are Side A-only policies important for Dallas-based companies?

Side A-only policies offer non-indemnifiable personal protection triggered in bankruptcy or derivative litigation. In industries like oil and gas or healthcare, these policies provide essential last-resort coverage, protecting them from company claims.

Are private company directors commonly sued in Texas?

Yes—especially in shareholder disputes, real estate partnerships, and business divorces. D&O insurance is critical for privately held corporations in Texas.

Does D&O insurance cover SEC investigations in Texas?

It can, but many policies only trigger coverage once a subpoena or Wells Notice is issued. We help clients negotiate better definitions of “claim” to trigger earlier coverage.

Are LLC managers and officers covered by D&O insurance in Texas?

Often, yes—but only if specifically named or included in the insured definition. Texas LLCs should not assume default protection applies.

Can a D&O insurer deny coverage based on a "capacity" exclusion?

Insurers may claim a director or officer wasn’t acting in their “insured capacity” during alleged misconduct, especially in dual-role situations. We help executives ensure their D&O policies clearly protect multi-capacity service, often seen in Texas’s private equity and joint venture landscape.

What role do “change in control” provisions play in Texas D&O coverage?

Many D&O policies in Texas have restrictive “change in control” clauses that can limit coverage after a merger or acquisition. If not properly negotiated, these clauses may leave executives uncovered during transitions. We assist Dallas companies in structuring their policies to safeguard both the organization and its leadership during M&A activities.

Can a D&O claim be triggered by internal investigations?

Many policies cover formal external investigations (like SEC inquiries), but coverage for internal investigations depends on the definition of “claim” and if costs qualify as a “loss.” VGD assesses these areas early to maximize protections.

Is cyber liability ever covered under D&O policies in Texas?

Most D&O policies exclude direct cyber events, but board-level failures to oversee cybersecurity can lead to claims. We assist Dallas companies in aligning cyber and D&O protections to minimize the risk of governance claims from data breaches.

Protection Isn’t a Luxury—It’s a Legal Strategy

Directors & Officers (D&O) Insurance is a strategic asset that protects your leadership, preserves your company’s integrity, and ensures continuity when disputes arise. At Vargas Gonzalez Delombard LLP, our team includes former in-house insurance counsel, nationally recognized trial lawyers, and policyholder advocates with deep experience in Texas courts and boardrooms alike.

Let’s ensure your coverage is as strong as your leadership. Book a confidential case evaluation with VGD today.

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