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The Defense Must Go On: An Insurance Company's Rescission Defense Does Not Pre-empt Its Obligation to Defend Its Insured
Today's headlines are filled with stories about corporate scandals and trials of corporate executives accused of fraud, malfeasance, and incompetence. The natural fallout has been SEC investigations, hundreds of civil lawsuits, and criminal prosecutions. Directors' and officers' insurers (“D&O insurers”) have seen a dramatic increase in claims as a result of these events. The initial battleground relating to the corporate scandal claims is whether there is a duty to defend or pay defense costs. The D&O insurers have asserted numerous defenses to providing a defense or paying defense costs. One defense that is being asserted frequently is rescission or “unilateral” rescission (collectively “rescission”). The rescission defense attempts to extinguish the policy by declaring it void ab initio. Recently, the majority of courts that have considered rescission have rejected it or deferred consideration of it, while ordering the D&O insurer to pay for, or provide the policyholder with, a defense. This article discusses recent cases that have addressed insurers' rescission arguments and explores the arguments that rebut the rescission defense.
The Duty to Defend or Pay Defense Costs
D&O policies typically have either a duty to defend or a duty to pay defense costs. It is widely recognized that the duty to defend and the duty to pay defense costs is determined by comparing the allegations of the claim filed against the policyholder with the terms of the insurance policy. If there is a potential that the allegations may fall within coverage, the insurer has a duty to defend or to pay defense costs. Typically, D&O insurers' affirmative defenses are fact based and will not preclude a duty to defend or pay defense costs. Instead, D&O insurers must immediately defend or pay defense costs, and may seek to terminate their obligations only once the facts relating to their defenses are adjudicated.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.