A $9.5 million D&O insurance battle over uBiome’s ex-executives has been paused as a Delaware court awaits a related federal case in California.
On October 16, 2025, the Superior Court of Delaware’s Complex Commercial Litigation Division decided to stay, but not dismiss, a lawsuit brought by A-R Litigation Trust against Evanston Insurance Company, Wesco Insurance Company, and Great American Insurance Company. The case centers on whether these insurers must provide coverage under directors and officers (D&O) insurance policies for defense and indemnity costs related to multiple lawsuits against Dr. Jessica Richman and Dr. Zachary Apte, the co-founders of uBiome, Inc.
The underlying actions include a civil complaint by the Securities and Exchange Commission, a federal criminal indictment, a civil forfeiture proceeding involving property, and an adversarial bankruptcy proceeding. The primary D&O policy, issued by Starstone Specialty Insurance Company, has already paid out its $3 million limit. The Trust is now seeking coverage under excess D&O policies issued by Evanston, Wesco, and Great American, which together provide an additional $9.5 million in coverage.
The insurers have denied coverage, citing several policy provisions and defenses. A key clause at issue is the “No Action” clause, which states that no action can be brought against the insurer unless the insureds have fully complied with all policy terms and their obligations have been finally determined by judgment or agreement. Evanston argued that the insureds were aware of potential claims at the time of the insurance application. Wesco raised issues regarding notice and standing, while Great American pointed to a government claims exclusion.
Before the Delaware action was filed, Evanston had already initiated a declaratory judgment lawsuit in the U.S. District Court for the Northern District of California, seeking a ruling that it owed no coverage to the former uBiome executives. Because the California action was filed first and involves the same parties and issues, the Delaware court applied the McWane doctrine, which favors staying a later-filed case in favor of the first-filed action.
Judge Eric M. Davis granted the motion to stay the Delaware proceedings but denied dismissal. The court noted that the California federal court’s jurisdiction over Dr. Richman and Dr. Apte – who now reside in Germany – remains unresolved. If the California court determines it lacks jurisdiction, the parties may return to Delaware and resume the litigation.
The Delaware action is now stayed, pending further developments in the California federal case. The outcome will be closely watched by insurance professionals, as it addresses the application of D&O policy clauses and the coordination of parallel proceedings in different jurisdictions.
