On May 15, 2014, the Superior Court for the District of Columbia granted a motion to dismiss filed by several D&O and E&O insurers, holding that a professional services exclusion relating to one of the insured's affiliated companies barred coverage entirely for the various underlying matters. Carlyle Inv. Mgmt., L.L.C. v. ACE Am. Ins. Co., Case No. 2013 CA 003190 B (D.C. Super. Ct. May 15, 2014). In 2006, the private equity firm TC Group and its affiliates organized a new company called Carlyle Capital Corporation ("CCC"). CCC's principal investments were in heavily leveraged mortgage-backed securities. During the economic crisis of 2008, those assets became toxic, and the investments collapsed. CCC could not meet its margin calls, defaulted on its loan repurchase agreements, and filed for bankruptcy. Various liquidators, investors, bondholders, and shareholders filed lawsuits against CCC, TC Group, and certain of its directors and officers in Guernsey, Delaware and the District of Columbia. The suits all alleged various forms of misrepresentation and mismanagement that led to the financial collapse of CCC. The underlying suits were noticed to TC Group's insurance tower, consisting of policies providing D&O and E&O coverage. Importantly, the policies were issued to TC Group, not CCC. The insurers denied coverage based on a professional services exclusion. The exclusion was called the "Carlyle Capital Corp Exclusion" and barred coverage for "Loss in connection with any Professional Services Claim arising from Professional Services provided to Carlyle Capital Corp." The gravamen of all of the underlying complaints was that TC Group and its affiliates enticed investors into unsafe investments with false promises of high returns, failed to warn investors about risks, and mismanaged the investments. The court held that all of the underlying allegations arose from some form of "Professional Services" by TC Group and its affiliates to CCC. The court rejected arguments by TC Group that the Carlyle Capital Corp Exclusion was intended only to exclude "professional services" claims, not "mismanagement claims." TC Group had argued that at least some coverage must be provided because the underlying complaints alleged "mismanagement." In TC Group's view, based on insurance industry practice, the exclusion was intended to exclude only strictly "professional services" claims, not management liability claims. The court rejected this argument, citing the broad wording of the exclusion and noting that the allegations as pled fell squarely within the exclusion. The court noted that the exclusion barred coverage for "investment management services" as well as any "advisory, consulting, management, monitoring ... or other services." Given that the underlying claims all alleged that TC Group and its affiliates essentially made misrepresentations about and/or mismanaged CCC, the court agreed with the insurers, granting their motion to dismiss TC Group's complaint. Ommid C. Farashahi and Andrew W. Smith represented two of the insurers in the litigation.