Coverage & Claims

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In a previous entry, we discussed a recent Katrina-related whistleblower suit filed in the Eastern District of Louisiana.  As we discussed, the lawsuit claims that a number of insurers allegedly misrepresented claims to the National Flood Insurance Program so as to limit their exposure, and was filed by Branch Consultants on behalf of the U.S. government. …

As previously discussed here, on July 2, 2007, Judge Lewis Kaplan of the S.D.N.Y. requested, to assist in his decision on defendants’ motions to dismiss, that the federal prosecutors in the KPMG tax shelter case estimate the reasonable costs of a defense for the KPMG partners.  The U.S. Attorney’s office recently responded. 

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New York’s highest court recently considered whether, within the context of a CGL policy, liability must be determined before an additional named insured is entitled to a defense in an underlying personal injury action.  Affirming the decision below, the New York Court of Appeals held that additional insured coverage is not contingent upon a liability finding, and that the obligation of an insurer to provide a defense to an additional named insured under the policy exists “to the same extent as it does to a named insured.” 

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Recently, a magistrate judge presiding over an insurance coverage case involving more than a dozen insurers and one insured granted the insured’s motion to compel production of documents and information pertaining to reinsurance, loss reserves, claims handling manuals, and document retention policies. 

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New York’s highest court recently considered whether a plaintiff and defendant who enter into a high-low agreement in a multi-defendant action (frequently referred to as a “Mary Carter Agreement”) must disclose the terms of that agreement to the court and the remaining parties.  While these agreements are used routinely, with and without disclosure to all parties, this appears to have been an issue of first impression in NY. 

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On June 21, 2007, in a much anticipated ruling affecting the ability of federal securities fraud complaints to withstand a motion to dismiss, the United States Supreme Court resolved a dispute between the federal circuit courts regarding what securities fraud plaintiffs must plead concerning the state of mind of the defendants in order for a complaint to withstand dismissal. 

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In North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, 2007 WL 1453705 (Del. May 18, 2007), the Delaware Supreme Court, in a case of first impression, provided some clarity on the controversial issue of whether and to what extent creditors have the ability to assert fiduciary duty claims against directors. 

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