In W Holding Co. v. Chartis Insurance Co. - Puerto Rico, No. 11-2271 (D.P.R. Oct. 23, 2012), the United States District Court for the District of Puerto Rico determined that an Insured v. Insured (“IvI”) exclusion in several directors and officers (“D&Os”) insurance policies did not preclude coverage for claims brought by the FDIC against D&Os of Westernbank. After the FDIC assumed receivership of Westernbank, it alleged Westernbank’s D&Os violated federal and Puerto Rico law regarding various loan approvals and transactions. The D&Os sought coverage from their insurers for the FDIC’s allegations, eventually bringing suit to enforce coverage. The FDIC intervened in that suit, and the insurers moved to dismiss the FDIC’s claims as well as the claims of the D&Os based on the IvI exclusion present in the policies. The IvI exclusion was applicable when a claim was brought against an insured by another insured, including Westernbank. The court denied such motions to dismiss, reasoning that the applicability of the IvI exclusion was ambiguous when claims were brought by the FDIC as a regulatory agency on behalf of both the regulated entity (an insured) and third-party interests. The court recognized a split of authority on the applicability of an IvI exclusion in such context but determined that a majority of the better-reasoned decisions hold that such exclusion is inapplicable. The court considered it important that the purpose of an IvI exclusion is to prevent collusive suits amongst insureds – a concern that is not present when the FDIC brings suit. The court went further, holding that even though the IvI exclusion here stated it applied whether or not there was collusion, the exclusion did not apply because the FDIC brought claims on behalf of non-insureds, namely depositors, account holders, and a depleted insurance fund.