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Disgorge This: The Restitution Defense Meets the Duty to Defend
The restitution defense to insurance coverage proceeds from a simple and logical premise. If I steal money from you and am forced to return it, there is no loss for my insurer to reimburse because I never had a right to the money in the first place. I cannot insure against the risk of having to return stolen property. Life is rarely so simple, however, and insurers have asserted the restitution defense ' with varying degrees of success ' in a broad range of situations, some having little connection to the original premise. What if my payment to you includes both the money I stole and other items? What if I acquired your money innocently? What if I spent your money already and cannot repay it, so I assign to you my rights under the insurance policy? Or what if I exaggerated the value of my company's stock, which you then purchased from a third party without conferring a direct benefit on me?
The restitution defense declares that a claim for restitution or disgorgement is uninsurable as a matter of law. Nevertheless, the precise contours of the restitution defense remain unclear, in part, because of ambiguous terminology. Many courts articulate the defense as applying to the recovery of “ill-gotten gains” ' which could apply not only to stolen property, but also to personal injury caused by a corporation's unwillingness to incur the costs of adequate safety precautions. A merchant who exaggerates the quality or value of his products may be said to reap “ill-gotten gains.” The same could be true of an entrepreneur who “borrows” another's idea and develops it into a profitable enterprise. Plaintiffs typically allege that the defendant had a profit or cost-savings motive for his wrongful conduct, but that does not necessarily mean that the relief sought is restitutionary. Moreover, as difficult as it may be to determine whether a damages award represents the return of “ill-gotten gains” and for that reason is not subject to indemnification, that difficulty grows when determining whether the insurer owes a duty to defend or to reimburse defense costs associated with a claim for restitution.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.