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Directors'
and Officers' Liability Insurance
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Directors' and Officers' Liability Coverage Not Available When
Policyholder Committed No "Wrongful Act" against Third Party
PNY Techs., Inc. v. Twin City Fire Ins. Co., 2014 U.S. Dist.
LEXIS 96489 (D.N.J. July 16, 2014)
The District Court of New Jersey granted
summary judgment to an insurer because the policyholder corporation's bad
foreign exchange deal was not an "entity claim for a wrongful act,"
as the "entity
claims" were traceable to a legitimate contract rather than a
"wrongful act" committed by the policyholder.
The former CFO of the
insured corporation entered into several foreign exchange transactions with
four banks. The deals eventually exposed the insured to demands
from those banks. The insured in turn submitted claims to its
directors' and officers' liability insurer, who denied coverage
responsibility in relation to the transactions.
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Reasonableness
of Underlying Settlements
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Settlement
Agreement Upheld as Reasonable under Griggs Standard
Travelers
Prop. Cas. Co. Am. v. USA Container Co., 2014 U.S.
Dist. LEXIS 99635 (D.N.J. July 21, 2014)
Judge Linares found in a New Jersey District Court opinion that
an insurer challenging the reasonableness of its insured's underlying
settlement did not meet its burden under Griggs by questioning the
structure of the deal and pointing out that the insurer failed to provide an
expert report.
The insured -- a company engaged in the
business of supplying industrial containers, logistical services, and
warehousing -- subcontracted with a third party to transfer corn syrup from
rail cars to drums. The subcontractor overheated the corn syrup,
thereby causing the insured's client to incur approximately $700,000 in
damages. The client in turn demanded that the insured compensate it for
its loss.
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Insurance
Coverage - Proper Forum
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Insurer's Fraudulent Joinder Argument Ineffective in
Preventing Remand to State Court
Family, LLC v.
Loud 2014 U.S. Dist. LEXIS 88366 (D.N.J. June 30, 2014)
District Court Judge Joel Pisano
remanded this insurance coverage dispute to New Jersey state court, as he
found Plaintiff had not fraudulently joined a non-diverse Defendant for the
sole purpose of defeating federal jurisdiction.
The insured's Seaside Heights commercial
buildings were damaged by wind and flooding during Superstorm Sandy. The
insurer denied each of the insured's resultant claims, including one based on
lost business income. The insured then filed an insurance coverage action in
New Jersey Superior Court. The insurer in response removed the dispute to
federal court on the basis of diversity jurisdiction.
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Privilege
- Claim Files
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Claim Documents Prepared by Attorney May Be Discoverable
Where Counsel Primarily Engaged in Claims Handling
National
Union Fire Ins. Co. Pittsburgh, Pa. TransCanada Energy
USA, Inc., 2014 N.Y. App. . LEXIS 5536 (N.Y.
App. . 1st Dep't July 31,
2014)
First Department Appellate Division affirms trial court's ruling
that insurers could not satisfy of demonstrating
that certain documents prepared by in-house lawyers were privileged under the
attorney-client privilege or work-product privilege.
A group of insurers sought reconsideration of a special
discovery masters finding that documents that pre-date a claim rejection are
not protected from disclosure. The insurers collectively argued that
the documents sought were protected by the attorney-client privilege, the
work-product doctrine, and the common-interest doctrine. The lower court,
after an in camera review, found that the only documents that were protected
from disclosure those documents
that contained actual legal advice. Turning to the other documents, the
lower court "found that the majority of the documents sought to be
withheld by
the attorney-client privilege or the work product doctrine or as materials
prepared in anticipation of litigation."
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