Court dismisses rescission action filed by Lloyd’s insurers and others concerning the professional-liability insurance policies issued to Firm client, Milberg LLP.
news | October 1, 2009
Chief Judge Loretta Preska of the US District Court for the Southern District of New York granted the motion filed by the Firm to dismiss a rescission action filed by Lloyd’s insurers and others concerning the professional-liability insurance policies issued to the Firm’s client, Milberg LLP (formerly Milberg Weiss Bershad & Schulman). Click here to view the opinion. Lloyd’s underwriters claimed that the Milberg firm had failed to disclose what later were admitted as criminal violations by several Milberg Weiss partners, which eventuated in an indictment of the Milberg firm and several of its now-former partners, and criminal plea agreements by individuals and a non-prosecution agreement by the Milberg firm. Lloyd’s underwriters brought suit in August 2008 seeking rescission and the recovery of prior claim payments under the policy. On behalf of the Milberg firm, Hollingsworth LLP filed a motion to dismiss the action on the ground that the statute of limitations barred the Lloyd’s underwriters complaint.
The District Court held in a 31-page opinion that, especially in view of the Milberg firm’s ongoing communication with the Lloyd’s underwriters promptly during the pendency of the US Attorney criminal investigation, “the only reasonable inference the record permits is that the London Insurers were on notice of the alleged fraud in either January 2002 or May 2002. . . . The most striking example of [insurers’] willful ignorance of their potential rescission claim is their failure to have made any inquiry after Milberg was indicted.” Consequently, the Court dismissed as untimely the insurers’ complaint for rescission and for recovery of claim payments made on behalf of the Milberg firm under the legal-malpractice insurance policy.
Partner Don McMinn represents the Milberg firm.
Click here to view the October 1, 2009 article “Insurers can’t rescind cover for Milberg law firm: Court.”