Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
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.
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.
One Overlooked Element of Executive Safety: Data Privacy
Executives have access to some of the company's most sensitive information, and they're increasingly being targeted by hackers looking to steal company secrets or to perpetrate cybercrimes.