Summary
concluding on partial summary judgment that "under prevailing case law, Bear Stearns was excused from the obligation to obtain the insurers' consent prior to settle, and [Bear Stearns] was entitled to enter into a reasonable settlement based upon the terms of the policies themselves"
Summary of this case from Conduent State Healthcare, LLC v. AIG Specialty Ins. Co.Opinion
06-27-2017
J.P. MORGAN SECURITIES INC., et al., Plaintiffs–Respondents, v. VIGILANT INSURANCE COMPANY, et al., Defendants–Appellants.
DLA Piper LLP (US), New York (Joseph G. Finnerty III of counsel), for Vigilant Insurance Company and Federal Insurance Company, appellants. Drinker Biddle & Reath LLP, New York (David F. Albernethy of counsel), for Travelers Indemity Company, appellant. Kaufman Borgeest & Ryan LLP, New York (Scott A. Schechter of counsel), for Liberty Mutal Insurance Company, appellant. Clyde & Co. U.S. LLP, New York (Edward J. Kirk of counsel), for Certain Underwriters at Lloyd's London, appellant. D'Amato & Lynch LLP, New York (Luke D. Lynch, Jr. of counsel), for National Union Fire Insurance Company of Pittsburgh, Pa., appellant. Proskauer Rose LLP, New York (Steve E. Obus of counsel), for respondents.
DLA Piper LLP (US), New York (Joseph G. Finnerty III of counsel), for Vigilant Insurance Company and Federal Insurance Company, appellants.
Drinker Biddle & Reath LLP, New York (David F. Albernethy of counsel), for Travelers Indemity Company, appellant.
Kaufman Borgeest & Ryan LLP, New York (Scott A. Schechter of counsel), for Liberty Mutal Insurance Company, appellant.
Clyde & Co. U.S. LLP, New York (Edward J. Kirk of counsel), for Certain Underwriters at Lloyd's London, appellant.
D'Amato & Lynch LLP, New York (Luke D. Lynch, Jr. of counsel), for National Union Fire Insurance Company of Pittsburgh, Pa., appellant.
Proskauer Rose LLP, New York (Steve E. Obus of counsel), for respondents.
SWEENY, J.P., GISCHE, KAHN, GESMER, JJ.
Order, Supreme Court, New York County (Charles E. Ramos, J.), entered on or about July 7, 2016, which granted plaintiffs' motion for summary judgment to the extent of dismissing the affirmative defenses of breach of the contractual obligations to cooperate and to obtain defendants' consent to settle, and denied defendants' cross motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.
Defendants' unreasonable delay in dealing with plaintiffs' claims under the insurance contracts, consistently stated position that the various regulatory investigations and civil actions concerning plaintiffs' alleged late trading and marketing-timing transactions did not constitute claims under the contracts, and insistence that in any event disgorgement payments such as those demanded by the regulators were not insurable as a matter of law constitute a denial of liability under the contracts that justifies plaintiffs' settlement of those claims without defendants' consent (see Isadore Rosen & Sons v. Security Mut. Ins. Co. of N.Y., 31 N.Y.2d 342, 339 N.Y.S.2d 97, 291 N.E.2d 380 [1972] ). The record does not support defendants' contention that plaintiffs breached their obligation to cooperate, but in any event defendants' repudiation of liability for plaintiffs' claims also excuses plaintiffs from performance of that obligation (see Lentini Bros. Moving & Stor. Co. v. New York Prop. Ins. Underwriting Assn., 53 N.Y.2d 835, 440 N.Y.S.2d 174, 422 N.E.2d 819 [1981] ). The "reservation of rights" language in defendants' letters to plaintiffs does not change this result (see QBE Ins. Corp. v. Jinx–Proof Inc., 22 N.Y.3d 1105, 1107, 983 N.Y.S.2d 465, 6 N.E.3d 583 [2014] ).