Insurers off the hook for $96mn defamation suit
Four insurers need not pay $96mn to defend the consultancy First Advantage Litigation against a defamation suit it lost in 2011, a second circuit appeals court ruled last week.
Zurich Insurance Group and US insurers Chubb, American International Group (AIG) and Tudor need not pick up the tab for libellous remarks made in a report issued to private investors, it was decided.
First Advantage is a consultancy that offers to investigate the affairs of financial firms that its clients wish to invest in or deal with.
It filed a report on the hedge fund NuWave Parties and its executives Troy Buckner and John Ryan in October 2002, after conducting background investigations.
The report included derogatory comments about the hedge fund, which derived from interviews with Hyman Beck - a competitor, and a firm at which Buckner and Ryan were former employees.
It published the report to four would-be investors between 2002 and January 2006.
A source closely involved with one such investor told Buckner of the statements in the report, and Buckner and NuWave promptly sued the consultancy in February 2006.
After First Advantage lost the case, the insurers claimed that the policies did not cover the consultancy for the period of publication.
Tudor issued its policies between January 2001 and January 2005, Chubb and Zurich both issued policies between April 2005 and April 2006, and AIG issued its policy between April 2005 and April 2006.
The appeals judge ruled that First Advantage could only sue for a breach of contract with regards to October 2002 - the date the investigative report was first published.
The judge affirmed that the complaint against Tudor was filed too late and the statute of limitations applied.
He said that the Chubb and Zurich policies' prior publication exclusions meant that the insurers were liable for no further defence costs.
Furthermore, AIG's policy had a retroactive date of April 2003, meaning it need not pay out, the appeals judge said.