D’Amato & Lynch Wins Major Victory in Setting Aside $2.28M Verdict

Coverage Litigation
October 9, 2018

D’Amato & Lynch partner Thomas F. Breen, representing Liberty Mutual Insurance Company, successfully petitioned the New York Supreme Court in Suffolk County to set aside a jury verdict in favor of the Plaintiff of $2.28 million and direct judgment in Defendant Liberty’s favor. In a decision dated September 7, 2018, Judge Jerry Gargulio threw out a $2.28 million jury verdict against Liberty for wrongfully refusing to provide insurance coverage in an underlying litigation over a failed corporate merger. The Judge’s decision concluded that the “Insured v. Insured” exclusion applied to preclude coverage for the underlying action.

Pursuant to the corporate merger, Plaintiff sold his Company to the Insured Organization and, as part of the transaction, became an officer of a Subsidiary of the Insured Organization. The deal closed in July 2008, but fell apart less than a year later when the Insured Organization failed to pay Plaintiff the agreed-upon compensation, leading Plaintiff to secure a return of his Company’s stock in the Insured Organization’s bankruptcy proceedings. Plaintiff then sued the directors and officers of the Insured Organization and, during the course of litigation, made admissions in pleadings and documents confirming the sale and acquisition of his Company to the Insured Organization. The underlying case against the directors and officers ultimately settled. As part of the resolution, one of the officers of the Insured Organization, agreed to the entry of a judgment in Plaintiff’s favor, while also assigning Plaintiff the right to pursue payment under the Liberty directors and officers insurance policy (the “D&O Policy”).

Plaintiff thereafter sued Liberty for breach of the D&O Policy and breach of the covenant of good faith and fair dealing. After a two-week trial, on April 4, 2018, a jury awarded Plaintiff approximately $2.28 million. Plaintiff’s central argument at trial was that the closing was never “consummated” and ownership of his Company never transferred to the Insured Organization, thus making the “Insured v. Insured” exclusion inapplicable. After the jury returned its verdict, D’Amato & Lynch filed a motion to set aside the verdict, asserting, inter alia, that the doctrine of judicial estoppel barred Plaintiff from reversing his position and countless admissions that the closing was “consummated,” as confirmed in Plaintiff’s affidavits, deposition testimony, and statements of his counsel at trial. D’Amato & Lynch therefore argued that Plaintiff’s claims were precluded by the “Insured v. Insured” exclusion. Judge Gargulio concurred and granted Liberty’s application in all respects. The New York Supreme Court decision dated September 7, 2018 is the subject of a Law360 article found here.  Click here to view the September 7, 2018 decision setting aside the verdict.


D’amato & Lynch, LLP

Notices & Disclaimers

Contents of this website are offered for informational purposes only, not to provide legal advice. An attorney-client relationship has not been created by visiting the site or by emailing an attorney a question from the site.