Source: http://wwmlawyers.com/category/cases/
Timestamp: 2019-04-26 14:39:43+00:00

Document:
WWM Attorney Christopher A. Wadley successfully obtained the dismissal of an insurance coverage and bad-faith lawsuit against Illinois Union Insurance Company, which arose out of an underlying malicious prosecution lawsuit filed by Rodell Sanders against The City of Chicago Heights. Sanders was arrested in 1994 and convicted of murder, attempted murder, and armed robbery. More than a decade later, Sanders was granted a new trial and acquitted of all charges. Sanders then sued Chicago Heights for malicious prosecution. Chicago Heights sought coverage under a liability policy it had purchased from Illinois Union, which was in effect when Sanders was acquitted. Illinois Union denied coverage on the grounds that the alleged offense of malicious prosecution did not occur during the policy period, as required to trigger coverage. Sanders and Chicago Heights subsequently settled Sanders’s claim for $15 million, and they jointly sued Illinois Union for coverage and bad faith. The court, however, dismissed the complaint, agreeing with Illinois Union that the claim was not covered. In doing so, the court held that the offense of malicious prosecution occurred, for purposes of insurance coverage, when the charges were initially filed against Sanders, rather than when he was exonerated. Sanders v. Illinois Union Ins. Co., No. 16 CH 2605 (Ill. Cir. Ct., Cook Cnty., Jan. 2, 2018). Click here for PDF.
WWM attorneys Robert P. Conlon, Christopher A. Wadley, and Ryan J. Rodman successfully represented RSUI Indemnity Company before the United States Court of Appeals for the Seventh Circuit in a lawsuit alleging that RSUI failed, in bad faith, to settle an underlying claim. In the lawsuit, West Side Salvage, Inc. alleged that RSUI breached a duty to settle an underlying lawsuit arising out of a grain bin explosion at a ConAgra facility in Chester, Illinois. In response, RSUI argued that it did not breach a duty to settle because either the claim was not covered or, even if covered, it did not act in bad faith. The trial court entered summary judgment in RSUI’s favor, concluding that the claim was covered, but that RSUI did not act in bad faith as a matter of law. The Seventh Circuit affirmed. The court concluded that the claim was excluded from coverage under the policy’s exclusion for damage to property on which the insured was performing operations. Accordingly, the court held that RSUI did not breach a duty to settle. West Side Salvage, Inc. v. RSUI Indem. Co., No. 16-3928 (7th Cir. Dec. 18, 2017).
WWM attorneys Edward P. Gibbons and Christopher A. Wadley successfully represented Federal Insurance Company (“Federal”) before the United States Court of Appeals for the Seventh Circuit, in a case involving coverage for an underlying class action arising out of a bank’s imposition of overdraft fees. Specifically, on October 12, 2017, the Seventh Circuit affirmed that Federal did not have a duty to defend or indemnify BancorpSouth, Inc. (“BancorpSouth”) in an underlying class action alleging that BancorpSouth engaged in various practices and procedures that resulted in the imposition of overdraft fees on its customers. The court concluded that an exclusion in BancorpSouth’s professional liability policy, which excluded coverage for claims “based upon, arising from on in consequence of any fees or charges,” was unambiguous and applied to preclude coverage for the underlying lawsuit. In reaching that conclusion, the court observed that all of the underlying plaintiff’s allegations against BancorpSouth arose from the bank’s alleged imposition of excessive overdraft fees.
The plaintiff had initiated his lawsuit against BancorpSouth in May 2010, claiming that BancorpSouth engaged in a number of practices that resulted in the imposition of excessive overdraft fees, including resequencing debit card transactions and failing to provide customers with accurate balance information. BancorpSouth sought coverage for the lawsuit, but Federal declined. BancorpSouth later settled the action for $24 million and sued Federal for reimbursement. BancorpSouth also claimed that Federal had denied coverage in bad faith.
The United States District Court for the Southern District of Indiana dismissed BancorpSouth’s lawsuit, concluding that the exclusion applied to bar coverage. BancorpSouth appealed, arguing that the underlying complaint contained allegations related to BancorpSouth’s general banking practices and procedures that did not implicate the exclusion. The Seventh Circuit, however, rejected that argument. While acknowledging that the underlying complaint contained allegations related to BancorpSouth’s banking practices and procedures, the court explained that those allegations could not be “read in a vacuum” and that each alleged act was tied to the bank’s overdraft fee scheme. Consequently, the court held that the exclusion barred coverage, and it affirmed the dismissal of BancorpSouth’s complaint.
The case is BancorpSouth, Inc. v. Federal Insurance Co., No. 17-1425 (7th Cir. Oct. 12, 2017).
On August 10, 2017, Walker Wilcox Matousek obtained summary judgment for RSUI Indemnity Company in the U.S. District Court for the Southern District of New York in Abrams v. RSUI Indemnity Co., No. 16-CV-4886 (JGK), 2017 WL 3433108 (S.D.N.Y. Aug. 10, 2017).
The insured in Abrams sought reimbursement from RSUI under a Directors & Officers Liability Insurance Policy for defense expenses the insured incurred in defending an underlying lawsuit pending in New York Supreme Court, styled Southern Advanced Materials, LLC v. Robert S. Abrams, and John Does 1-10, Index No. 650773/2015 (the “SAM Action”). Specifically, the insured sought reimbursement from RSUI for defense expenses he incurred prior to giving RSUI notice of the SAM Action in April 2016. The SAM Action was filed in March 2015 and RSUI’s insured allegedly incurred more than $3.5 million in defense expenses prior to notifying RSUI of the lawsuit. While RSUI agreed to defend the insured under a reservation of rights after April 2016, RSUI denied the insured’s claim for defense expenses incurred prior to notice.
RSUI maintained that it was not responsible for the insured’s pre-notice defense expenses under the policy, stressing that the D&O Policy was a claims-made policy that required the insured to give notice to RSUI as a condition precedent to coverage. RSUI also noted that the policy required RSUI’s consent before the insured could incur any covered defense expenses, and that the insured in Abrams did not have consent prior to giving notice to RSUI. In response, the insured argued that the policy did not specifically disclaim pre-notice defense expenses and that RSUI must show prejudice before denying that claim.
On cross-motions for summary judgment, Judge John G. Koetl ruled in RSUI’s favor, holding that Delaware law (which applied to interpret the policy) enforces the plain language of the RSUI Policy, including the notice and consent provisions requiring notice as a condition precedent and consent prior to incurring any defense costs. 2017 WL 3433108 at *4. The Court rejected the insured’s argument that RSUI must show prejudice before denying the claim, stating that the policy language and applicable Delaware law did not support that analysis. Id. at *5-6. Accordingly, the Court granted RSUI’s motion for summary judgment and denied the insured’s motion.
RSUI was represented by the WWM team of William P. Bila and Kevin A. Lahm.
Walker Wilcox Matousek recently obtained judgment on the pleadings for insurer RSUI in the District Court for the Northern District of Illinois, with the court finding no coverage under a Directors & Officers policy pursuant to the Specific Litigation Exclusion in the policy. RSUI Indemnity Co. v. Worldwide Wagering, Inc., et al., 1:17-cv-01690 (N.D. Ill. July 17, 2017).
World Wide Wagering (“WWW”), sought coverage for an underlying bankruptcy adversary complaint filed against it in December 2016, alleging, among other things, that WWW transferred funds to avoid paying a $78 million judgment against it in a prior lawsuit: Empress Casino Joliet Corporation, et. al. v. Rod Blagojevich, et. al., Case No. 1:09-cv-03585 (the “Riverboat Matter”). The bankruptcy adversary complaint also re-alleged some of the allegations from the Riverboat Matter, specifically that WWW’s subsidiaries, a group of horseracing track owners in Illinois, allegedly paid bribes to former Governor Rod Blagojevich in exchange for his support for legislation that would require Illinois riverboat casinos to pay 3% of their revenue to the racetrack owners.
The adversary complaint further alleged that WWW intentionally shielded and fraudulently transferred some of its assets, knowing they were at risk for the judgment in the Riverboat Matter. RSUI denied coverage for the bankruptcy proceeding based on the Specific Litigation Exclusion in the D&O policy, which excluded coverage for any claims made against the insureds “alleging, arising out of, based upon or attributable to, directly or indirectly, in whole or in part” the Riverboat Matter.
On behalf of RSUI, Walker Wilcox Matousek initiated a coverage action and filed an early motion for judgment on the pleadings based primarily on the Specific Litigation Exclusion. WWW filed a counterclaim and contemporaneous motion for summary judgment, arguing that the bankruptcy adversary complaint triggered a duty to defend because at least some of the claims in the underlying lawsuit did not arise out of the Riverboat Matter. The Northern District of Illinois Court, relying on Delaware law, found that the Specific Litigation Exclusion applied to bar coverage for the entire case because the bankruptcy adversary complaint needed only arise “in part” out of the Riverboat Matter. Ultimately, the court granted RSUI’s motion for judgment on the pleadings and denied WWW’s motion for summary judgment, also dismissing WWW’s counterclaim.
RSUI was represented by the WWM team of Bill Bila, Jeremy Kerman, and Cassandra Jones.

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