Last week, the United States Supreme Court refused to hear the appeal by policyholders of the Fifth Circuit’s pro-insurer August 2007 decision that held that various policies’ flood exclusions unambiguously precluded recovery for damages caused by breach of the levees after Hurricane Katrina. 

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Read More Supreme Court Denies Appeal of Katrina Coverage Cases from Louisiana Federal Court

In Bi-Economy v. Harleysville, 2008 N.Y. Slip Op. 01418 (Feb. 19, 2008), the New York Court of Appeals reversed summary judgment for an insurer and held that, under the factual circumstances presented and “in light of the nature and purpose of the insurance contract at issue,” the insured had stated a viable claim for consequential damages. …
Read More BI-Economy: New York’s Highest Court Sustains Insured’s Claim for Consequential Damages

The New York Court of Appeals recently held that consequential damages are a permissible remedy for an insurer’s breach of the covenant of good faith and fair dealing. …
Read More Panasia: New York High Court Permits Consequential Damages for Bad Faith Breach of Policy

As you may know, many of the major bond insurance firms in the municipal bond market have either seen their ratings down-graded or placed on negative credit watch or outlook by the leading municipal credit rating services (Moody’s Investors Service, Inc., Standard & Poor’s and Fitch Ratings).  These changes have stemmed largely from the insurers’ exposure to investment vehicles tied to subprime mortgage loans. …
Read More Bond Insurer Downgrades and Material Event Notice Filings

If outside counsel for a company drafts factual memoranda concerning an internal investigation conducted in response to alleged wrongdoing, and then voluntarily shares the memoranda at the company’s direction with government investigators, has the company waived the work product privilege?  According to a recent decision from a federal district court in New York, the answer is yes. 

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Read More Current Issues in D&O and E&O Coverage Investigations: S.D.N.Y. Holds that Credit Suisse Waived Work Product Privilege by Disclosing Internal Investigation Memoranda to the Government

On February 14, 2008, a divided New York Court of Appeals held that a member of a New York limited liability corporation (often referred to simply as a “LLC”) could bring a derivative lawsuit on behalf of the LLC against the entity’s managers. …
Read More NY Court of Appeals Introduces Derivative Liability Exposure to LLC Managers

The Internal Revenue Service announced on February 20, 2008 that it is withdrawing the proposed IRS Regulation §1.1502-13(e)(2)(ii)(C).  The withdrawn regulation would have disallowed as a current deduction for federal income tax purposes any premium payments to an affiliate captive insurer if the captive received as little as 5% of its total premiums from affiliates on the same consolidated tax return. …
Read More Proposed Captive Tax Deduction Rule Withdrawn by IRS

In Gater Assets Ltd v Nak Naftogaz Ukrainiy [2008] EWHC 237 (Comm), the applicant company, Nak Naftogaz Ukrainiy (NNU), applied to set aside an order permitting Gater Assets Ltd (Gater) to enforce as a judgment a New York Convention arbitration award issued by the International Commercial Arbitration Court of Moscow. 

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Read More UK High Court Dismisses Application to Set Aside Order in Favour of Monegasque Reinsurer Enforcing New York Convention Arbitration Award

Last week, the Supreme Court upheld a Second Circuit decision finding that the Food and Drug Administration’s extensive pre-market approval process for Class III medical devices preempts state law causes of action for injuries allegedly caused by those devices. …
Read More Update: Supreme Court Rules That FDA Pre-Market Approval Preempts State Law Torts

In an important recent decision of the United States Court of Appeals for the Second Circuit, testing the outer reaches of a bankruptcy court’s jurisdiction, In re Johns Manville Corp., 06-2099 (2d Cir. Feb. 15, 2008), the court considered whether claims that are not derivative of a debtor’s liability, but rather seek to recover directly from an insurer for its own alleged misconduct, can be enjoined by the “channeling” mechanism developed by the bankruptcy court. 

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Read More Second Circuit Rules Bankruptcy Court Cannot Enjoin All Claims Against Insurer